What do we want to accomplish?

To reinvent the industry and transform our organization so that it's able to adapt to external industry disruption. Creating ExOs will allow us to build a new global ecosystem.

If so, run the full ExO Sprint with Edge teams and Core teams.

To transform our organization so that it's able to adapt to external industry disruption, which will help us to adapt our organization to existing ecosystems.

If so, run the ExO Sprint with two Core teams.

What are we trying to transform?

The organization as a whole, including all markets and industries in which it is positioned.

A specific business unit focused on a particular industry.

To launch an ExO or multiple ExOs in order to transform the industry.

If so, run the ExO Sprint with one Edge team focused on the ExO(s) you want to build and launch.

What's our playground?

Any industry. The goal is to build an ExO (or ExOs) in any industry, whether that industry already exists or has yet to be created.

Note that this approach will provide outcomes (new ExO Edge Initiatives) far beyond those feasible with your existing business.

Adjacent industries, so we can create an ExO or ExOs in any industry related to our current one.

This option gives you the opportunity of leveraging existing assets or relationships that will aid your foray into adjacent industries.

Our current industry, with a goal of creating an ExO.

If you are also trying to reinvent an industry, any ExOs you launch as the result of the ExO Sprint might well disrupt your own organization. Nonetheless, this would still represent a successful outcome, because if you don't disrupt, someone else certainly will. In fact, the best thing you can do is disrupt your own organization, thereby creating the next leading enterprise within your industry.

Optimal team size is four to six participants per team.

All team participants should be available to spend a minimum of 10 hours per week on the ExO Sprint (we recommend approximately 20 hours per week). The workload should be spaced throughout the week.

Each team should select a coordinator to represent the group and ensure that assignments are progressing on schedule. Some teams may choose to rotate this role weekly, which gives each team member the opportunity to take on the role once or twice during the 10-week process.

Having two Edge teams and two Core teams not only creates friendly competition but also adds to the range of resulting initiatives.

Form as many teams as you feel is practical for your organization. Anywhere from two to six teams is generally a good number, although experience has shown that four teams (two Edge and two Core) seems to be optimal. Remember that each team consists of anywhere from four to six people and is focused on either the Edge Stream or the Core Stream.

When you were considering the number of staff to commit to the ExO Sprint, what came up for you? Did it feel as though you were pulling too many senior people away from their daily commitments for too long? What does that tell you about where current priorities lie for running existing operations as opposed to making space for a project designed to prevent disruption?

Each team will require different kinds of people and talent:

Description

According to Moore's Law, the performance of anything powered by information technologies doubles, on average, every two years. Looked at from a theoretical point of view, it's easy to understand that technologies evolve in an exponential way. Meaning, for example, that the computing power of our phones may double every couple of years.

However, because our brains work in a linear way, it can be difficult for humans to grasp exponentials. For example, if you want to know how many meters you will travel taking 30 linear steps (one meter per step), the answer is easy: 30 meters (one step, 1 meter; two steps, 2 meters; three steps, 3 meters; and so on). But if you want to know how many meters you'll advance taking 30 exponential steps, the answer is not as easy to calculate: one step, 1 meter; two steps 2 meters; three steps, 4 meters; four steps, 8 meters; and so on, for a total of 1,073,741,824 meters. Who knows where you'll land after taking those 30 exponential steps. (You'd need a calculator to figure out that they equate to more than 26 trips around the world!)

Assuming a 1-meter-long stride, 30 linear steps…

Assuming a 1-meter-long stride, 30 exponential steps will take you around the world more than 26 times

The key point about exponential technologies is understanding the implications they can have for your organization and industry. The result is often impossible to predict, but you should at least have the right mindset to understand the implications of exponentials.

Experts often fail at predicting the future of their fields. Why? They make a linear correlation from the past to the future and mistakenly assume that straight-line growth, rather than exponential growth, will continue.

■ Exercise

Apply linear thinking to the examples below and use exponential thinking to consider the implications. Next, take an exponential view in considering the implications.

Taking into account an exponential evolution, drones should be able to carry up to 50,000 kg eight years from now. Consider also that batteries should evolve at an exponential rate, which means that in just a few years, we're likely to see drones capable of carrying containers weighing some 30,000 kg.

In just a few years, the ability to sequence DNA will be cheap (and fast) enough to enable access to DNA-based medicine, also known as personalized medicine. Such technological advancements will render current medical diagnostic methods and treatments obsolete.

By applying the ExO approach—and the Leveraged Asset attribute, in particular—Airbnb can reduce the cost of supply to almost zero. The implications of using exponential technologies to disrupt the hotel industry are enormous (which is why in 2017 Airbnb became the largest hotel chain in the world).

Recommended content

ExO Sprint participants should be familiar with the following:

The management team will need to cultivate an exponential mindset and understand the ExO framework. It should thus be familiar with:

As an alternative to in-person training—and recommended as a complement to it—ExO Sprint participants can complete the following exercises, which explore the concepts, processes, and tools recommended for executing an ExO Sprint.

Description

Both ExO Edge Initiatives and ExO Core Initiatives will be generated during the course of an ExO Sprint. While the goal with ExO Edge Initiatives is to create new and scalable businesses that have the potential to disrupt an industry by leveraging exponential technologies, ExO Core Initiatives help an existing organization adapt to external industry disruption and become more agile.

■ Exercise

Choose a sample organization (not your own) for the following exercises. It's best to choose a company that offers a product or service, such as a bank or retail business; B2C business models are comparatively easy to analyze from the outside.

The idea is to generate ideas for ExO initiatives that will help the organization adapt to external industry disruption (ExO Core Initiatives), and to create new and scalable business models that can disrupt an industry by leveraging exponential technologies (ExO Edge Initiatives).

Description

As described earlier, the ExO Canvas is a tool to help visionaries, innovators, top executives, and entrepreneurs design new Exponential Organizations on one page. The ExO Canvas requires an MTP and makes use of the 10 ExO attributes.

■ Exercise

Using one of the ExO initiatives defined in the previous exercise, fill in the ExO Canvas, taking into consideration applicable ExO attributes.

We recommend using an ExO Edge Initiative so that you can think about how to connect this new organization to abundance (using the SCALE attributes). Next, consider how to manage it (applying the IDEAS attributes).

Description

By definition, a business model describes how an organization creates, delivers, and captures value so that it is a profitable (or at least a sustainable) entity.

The Business Model Canvas, originated by business theorist and entrepreneur Alex Osterwalder, is a tool for developing new—or documenting existing—business models on one page. It is made up of nine elements, or blocks:

Customer Segments: The different groups of people or organizations an enterprise aims to reach and serve.

Value Proposition: The bundle of products and services that create value for a specific Customer Segment.

Channel: How to communicate with and reach each Customer Segment to deliver a Value Proposition.

Customer Relationship: The types of relationships a company establishes with specific Customer Segments.

Revenue Streams: The cash a company generates from each Customer Segment.

Key Resources: The most important assets required to make a business model work.

Key Activities: The most important things a company must do to make its business model work.

Key Partners: The network of suppliers and partners that make the business model work.

Cost Structure: All costs incurred to operate a business model.

For more information, check out the book Business Model Generation by Alex Osterwalder.

■ Exercise

Using one of the ExO Edge Initiatives defined earlier, fill in the Business Model Canvas. Further define the initiative while thinking about how the different ExO attributes can be applied.

Description

Blue Ocean Strategy is a marketing theory focused on product innovation. It stems from the idea that every industry offers opportunities to move from ultra-competitive battles around price and features (Red Ocean) to a new market reality in which competition is either nonexistent or very limited (Blue Ocean).

The Blue Ocean Strategy Canvas is a X/Y graph designed to give you an immediate snapshot of how your business, product, or service stacks up against the competition. The horizontal X axis lists product attributes, or factors of competition. The vertical Y axis evaluates each product's attributes/factors of competition.

The basic idea of the Blue Ocean Strategy Canvas is to group the product/service attributes of the X axis in four categories. It's a good idea to organize the Y axis as follows:

• Raise: The factors of your competitors' product or service that you want to bring well above the current industry standard with your own product or service (e.g., “Price” in the Nintendo Wii graph).
• Eliminate: Competitor attributes that you want to eliminate from your product/service (e.g., “Hard Disk,” “Dolby 5.1,” “DVD,” and “Connectivity” in the Nintendo Wii graph).
• Reduce: The existing attributes of the product/service of your competitors that you want to reduce in yours (e.g., “Processor Speed” in the Nintendo Wii graph).
• Create: The attributes you want to create for your product/service that don't yet exist (e.g., “Motion Controller” and “Large Public” in the Nintendo Wii graph).

To illustrate: the Nintendo Wii found a new market among older consumers (i.e., Blue Ocean) after simplifying its video game devices and adding motion sensors.

For more information, check out the book Blue Ocean Strategy by Renée Mauborgne and W. Chan Kim.

■ Exercise

Using the Blue Ocean Strategy Canvas for your case study, find an uncontested market for a hypothetical new product or service. Compare it with at least two competitors.

Description

By definition, any new innovative idea (such as an ExO initiative) is composed of a set of hypotheses. When designing a Business Model Canvas or an ExO Canvas, it's important to remember that each of the elements may be nothing more than a hypothesis. It's thus crucial to test the key hypotheses that are most relevant to a successful outcome. For example, when thinking about a new business, begin by testing the hypotheses linked to Customer Segments and the Value Propositions.

A great way to identify key hypotheses and design evaluation experiments is to follow the Customer Development model created by Steve Blank. The process is quite comprehensive, but in short: Pick one Customer Segment as a hypothesis and design an interview for it.

• Ask potential customers about their needs and pain points in order to ascertain whether or not you're on the right track.
• Query potential customers on what they see as the perfect solution to their needs; they may offer ideas you've never considered.
• Describe your Value Proposition to determine whether or not potential customers like your proposed solution.
• After the interview, validate or invalidate the Customer Segment hypotheses according to whether or not the interviewees have the problem you think they do. You'll also validate or invalidate the Value Proposition hypotheses based on whether or not the interviewees like your solution.
• For more information, check out the book Four Steps to the Epiphany by Steve Blank.

Another good (and complementary) way to evaluate and evolve innovative ideas is to use The Lean Startup's Build-Measure-Learn loop, which should be continually executed throughout the different stages of a project. The goal here is not to validate that your ideas are right (remember: take all ego out of the equation), but to learn the truth.

Build: The first order of business is to define your ideas (hypotheses) and build experiments to test them. In the early stages, experiments might consist of little more than interviews with potential clients or stakeholders. Later experiments will result in a prototype—or even a final product.

Measure: Once you have built or designed something, it's time to test it. You'll interview potential clients and then measure the percentage who liked your ideas (hypotheses). In later executions of the loop, you'll build a Minimum Viable Product (MVP) and measure its performance.

Learn: Once all information has been gathered, you'll need to make data-based decisions about whether your ideas (hypotheses) have been validated. Regardless of the outcome, any learning is great progress. Remember that the goal is not to validate specific ideas, but to learn as much as possible in a relatively short period of time. After completing this step, you'll revisit the build stage, iterating based on your learnings and continuing to build your project.

For more information, check out The Lean Startup by Eric Ries.

■ Exercise

Using the Business Model Canvas and one of the ExO Edge Initiatives defined earlier:

• Pick one pair from the Customer Segment/Value Proposition hypotheses.
• Design an interview (an experiment) to test the selected hypotheses. The interview should include a list of questions and evaluation criteria—usually a percentage of the Customer Segment and the Value Proposition that will indicate whether the hypothesis can be validated.
• Run the experiment to test the hypothesis.