Transforming into an ExO
Transcription
So people out from ask. Okay, great. The ExO model is great, fabulous. What
do I do if I have an existing or legacy company or organization? And actually
that was the reason I wrote the book kind of analyzing the hundreds of
unicorns and figuring out how they're scaling so quickly was, was great. But the
real intellectual challenge is how do you adapt this to a legacy environment?
How do you retrofit this thinking? And so we spent a big chunk of the course
and the work that we do now on that piece of work, and there's kind of four
major components to what we suggest to legacy environments. Number one,
update your leadership that we are in a new world, right? If you're a C suite
and even that, not just them, but your board is not fundamentally aware that
we are kind of in a fundamentally transformed space you have existential
threat. Take the company, BMW. Their tagline is we're the ultimate driving
machine. Which is great, except that we're pretty clear nobody's going to be
driving. And so that's a huge transformation to make .
Think about that company, every manufacturing process, every engineering
specification, every design aesthetic, and hundreds of thousands of employees
and processes and so on is saying optimize for the driver and the world is going
180 degrees the other way. So if you're kind of, education has to be a key
component of the, and the starting point of where this goes. Number two. is, if
you go back to the, example, the ExO example of local motors, if you're a
legacy car company, you cannot compete with that.
You have our suggestion, there is partner invest, acquire ExO's and figure out
what they're doing, and then leave them at the edge and then learn what
they're doing and bring it back into your organization. The third idea is to
implement some of these characteristics internally into your organization.
We found that in a legacy organization, if you apply fully four out of the 10
characteristics, depending on your industry and size of company and so on,
four out of 10 will give you a 10X ,a deployment capability.Number four is kind
of do this disruption for yourself, but do it at the edge of the organization
pointing outwards.
For example, Larry Page came to me a few years ago and said, Hey, your unit
at Yahoo is really successful. Should I do that at Google? And I said, no,
because you'll have this immune system response, but do something like it,
keep it stealth pointed away and you see the result. There are lots of other
pieces to it, but he, he took that on to some extent, we have see the result with
Google X, where they have their core ability to manage information and they
use hardware to go into adjacent spaces.
Google car, Google contact lenses, Google loon and so on. The master of that
technique, by the way, is Apple ,a hyper successful company and yeah, they
have a great design capability and a great technology supply chain. I will argue
that Apple's core capability and core value add and core disruption is actually
organizational.
Because what they do, unlike anybody else in the world is they'll form a small
team that's really disruptive. They'll take them to the edge of the organization.
They'll keep them completely stealth. And they'll say to them, go disrupt
another industry. Right. And nobody does this. So they started with what
music and then phones and then tablets.
And now. Retail watches, payments, cars. There's literally no limit to their
market cap. They can just keep knocking over industry after industry by
creating new, disruptive things at the edge and folding it back into the iTunes
platform. So today, if you're not the disruptor, you're disrupted. And pretty
much, you have to make a binary choice as to which side you will be on.
And so the two, several suggestions for larger organizations, do this education,
do the ExO at the edge, put four characteristics inside your core mothership
and invest in these things is a critical piece of how you adapt your old
organization to a new one. In the book, we have this ExO diagnosis survey
where you can actually score how flexible and [00:04:00] adaptable your own
organization is.
And we actually went on CNBC three years ago and ranked the fortune 100.
We took all of the fortune 100 companies and scored them on how adaptable
and flexible and how exponential, they are. Here's the full list, as you can see.
And we now have really interesting evidence, Hult business schools did an
academic research project and found that your stock market performance
correlates to how flexible and adaptable your organization is.
Which makes sense, right? As the external world becomes more volatile, your
ability to adapt is going to drive market value. Even more interesting if you had
invested it in the top 10, most flexible and adaptable organizations on our
index over the last two, three years, you would outperform the S&P by more
than three times.
And so there's very compelling numerical and money evidence, value
evidence, stock market performance evidence that having an ExO model
fundamentally has you outperformed the status quo?
