In an excerpt from his new book, The Exponential Era, David Espindola explains the astounding impact of modern technology platforms, and how leaders must respond.

We are entering the most extraordinary times in human history, a new era characterized by the deepest, fastest and most significant transformation human civilization has ever experienced. I call it the Exponential Era.

These unprecedented changes are happening due to a number of key factors:

First, technology is growing exponentially. The exponential growth of technology has its roots in Moore’s law which states that computing capacity doubles every eighteen months. Since most technologies are now supported by digital capabilities, they are all subject to Moore’s law.

Second, there are eight exponential platforms with astounding impact to business and society: AI, Blockchain, Biotechnology, Quantum Computing, Internet of Things, 3D Printing, Robotics, and Material Science. We’ve never seen so many of these platforms flourish within such a short period of time. In the early 1900s, three such platforms - the internal combustion engine, electricity, and telephony – set the stage for the modern world as we know it today.

And third, these exponential technologies are converging, creating combinatorial multipliers that amplify their potential impact even more.

The implications to businesses are numerous, and IT leaders must pay attention as they lead their organizations through many of these changes.

Advanced Technology Capabilities Are a Must-Have

In the Exponential Era, every business is a technology business. If you don’t have technology capabilities, you are out of business. In other words, “IT is the business,” as Martha Heller points out in her book, Be the Business: CIOs in the New Era of IT.

The exponential era Espindola_2Technology convergence is creating new ecosystems that are changing business and society. Many technologies are ubiquitous across all businesses and industries, such as mobile devices, Artificial Intelligence (AI), cloud technologies, and the Internet of Things (IoT), to name a few. It has become paramount for businesses to assess their capabilities in these technologies and if they are not already in place, create a plan to acquire these capabilities.

The impact of AI is particularly noteworthy as it becomes increasingly embedded in our everyday lives. Amazingly, and frighteningly, AI has the potential to understand what we want more than we consciously do. Gradually, we are relying on AI to make everyday decisions, not just the shortest route from point A to point B or how to avoid traffic and toll booths, but also what purchases to make and where. AI may deduce what we need to buy based on past purchases, current shortages, conversations that personal assistant devices are listening to, facial expressions, pupil tracking, and other indicators that AI may gather imperceptibly to us. Imagine the implications this will have on all consumer businesses and the broader implications to all business processes across industries.

The convergence of 3D Printing, Robotics, AI, and Autonomous Vehicles will provide businesses the ability to provide “instant fulfillment” deliveries of individualized products manufactured en route to their destination. This is a game changer for all businesses that rely on logistics, transportation, and distribution to satisfy customer needs.

If you haven’t started to develop a digital operating model, I strongly advise you to begin soon. If your processes, software applications, and data are still embedded in individual and siloed organizational units, it is time to rearchitect. Some best practices you can follow include those used by Amazon:

  • Create a software architecture that is modular and distributed
  • Use APIs to expose data and functionality
  • Block direct access to data stores, direct links, or back doors
  • Prepare interfaces to be externalizable so outside developers can use them
  • Preserve a common foundation
  • Aggregate the data and build an AI factory that can process it
  • Experiment fast
  • Keep teams small and agile
  • Automate decisions

The environment is changing at a very fast pace, so minimize long-term commitments that are expensive and difficult to change, and experiment in the areas that look most promising.

Engaged Leadership is Critical

In an environment that changes at an exponential pace and that requires constant innovation, organizations simply don’t have a chance of winning without sufficient executive engagement. Successful organizations in the Exponential Era require a leadership team that is disciplined at investing time and effort into the strategic planning process. Senior leaders need to engage in the constant mapping of opportunities, risks, and capabilities, and make difficult decisions. The toughest decisions will inevitably find their way to the top.

Senior leaders must exemplify the change-embracing culture that characterizes organizations that thrive in the Exponential Era. CEOs set the tone. If they surround themselves with “yes-men,” shoot the messenger, reject signals that contradict their internally focused biases, and tolerate decisions based on long-held but outdated beliefs, they will not be able to lead the organization in an era that is unforgiving of slow-moving bureaucracies. The ego-driven leader-hero days are gone.

Unlike in the past, today’s leaders cannot simply order things to be done. They must set a vision that is compelling, exciting, and engaging. The organization must understand and embrace its “why”—its purpose.

The leadership team must persuade the organization to work in unison in passionate pursuit of a common goal. In an engaged organization, people through all levels of the org chart are empowered to take initiative and make decisions. If the CEO is the single decision-maker in the organization, it will discourage creativity and stifle innovation. Even though tough decisions will often find their way to the top, decentralization encourages leadership at all levels of the organization, creating better outcomes.

 

Related article:

How to Create a Culture that Outcompetes and Outperforms

By Frank Wander

 

It cannot be ignored that incumbent leaders face major challenges. Real tension can arise when they begin to chart a path that will move the company away from the current profitable, well-known, operationally efficient business model, towards unproven new ones. The problems become particularly acute when organizations seek to find repeatable operational solutions to complex problems that require innovative thinking.

Benefits of a Growth Mindset

Satya Nadella discovered that Microsoft was afflicted with this issue when he took the reins as CEO in 2014. According to his book, Hit Refresh, Microsoft struggled with a culture in which employees needed to look smart before they would be accepted and gain any real credibility.

Nadella recognized this as the 'fixed mindset' problem described by Carol Dweck in her books and research. People with a fixed mindset feel the need to spend a disproportional amount of time proving how good they are, and can be preoccupied with being right. On the other hand, people that have a growth mindset are inclined to learn from their experience, stay open-minded about new information, and be less concerned about looking good. They care more about getting better.

Instead of large commitments to a single preconceived idea about the future, what organizations need in the Exponential Era are leaders who embrace a discovery-oriented growth mindset, promote changes in behavior and encourage small investments in experimental activities. These leaders must actively emphasize continuous learning through a systematized feedback loop.

Liquid shapes exponential purple2

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