Applying Exponential Thinking to Organizations with Salim Ismail
"Exponential thinking is applicable to any part of an organization."
Today’s podcast is all about exponential organizations — and we welcome back special guest Salim Ismail! If you haven’t already listened to my first conversation with Salim, you can check it out
Today’s business climate has been marked by the rise of organizations built on the principles of exponential thinking—think Github, Airbnb, and Uber. Companies stuck in old linear thinking patterns, like Kodak, have gone out of business. We can no longer rely on repetitiveness and old ideas to get us through—to achieve success in such a competitive climate, we need to be thinking bigger, and constantly changing and developing.
Imagine if you could improve the performance of your organization by 10x — what would it look like? How can we raise the collective intelligence and wisdom of our organizational teams? Today’s guest Salim Ismail is here to tell us how to transform the way your company does business. As the founder of Singularity University, a board member at XPRIZE, and an internationally bestselling author, Salim has built his career on thinking big and teaching others about industry disruption and exponential thinking.
Legacy organizations—for example, the old way of doing education and government, or organizations based on older business models such as exclusively physical stores—are struggling to keep up with the pace of technological change. The slow-paced operations of these organizations are causing a great deal of tension and stress in the world, and they will face existential threats unless changes can be made. Today’s show is about trying to answer this question: how can we transform legacy organizations to keep up?
We cover a lot of ground in this short conversation. We review what makes an exponential organization, explain why new ideas tend to be rejected by legacy organizations and why this is causing stress around the world. We’ll go over some examples of businesses failing due to their inability to take on exponential thinking, and explain why this happens. We’ll talk about how to successfully transform organizations and solve problems. Lastly, we’ll talk about creativity and share a great hack to completely change the way you thinking about saying ‘no’ to ideas.
WHAT IS AN EXPONENTIAL ORGANIZATION?
- An organization growing at a rate of minimum 10x better, faster, cheaper than their competitors
- Check out this list of Top Exponential Organizations as listed in Salim’s first book
- Concept mentioned: blitzscaling by Reid Hoffman
- Exponential thinking is applicable to any part of an organization, not just the management
- Salim wrote Exponential Transformations to address the biggest challenge of all: how to retrofit into a legacy environment
- Most of us operate in or interface with legacy environments all the time: the old ways of doing education, government
- Problem is the metabolism of our legacy environments aren’t operating as fast as the external world, causing incredible cognitive stress in the world
- Incredibly easy to say no to a new disruptive idea in a legacy organization as they’re optimized for efficiency and predictability (e.g. trying to deliver an identical service in 50 countries) and success previously came from this model
- As soon as you introduce a new idea, it creates an ‘antibody response’ — the idea gets attacked, so you spend time in politics and nothing gets done
- Salim has spent 5-6 years trying to solve this problem
THE AMYGDALA PROBLEM
- If a foreign body tries to invade you, the amygdala (the part of the brain the generates the fear response) and immune system response kicks in to reject it: the same mechanism acts in our organizations
- Example: Walmart tried to introduce e-commerce four times in order to compete with Amazon, but the immune system came in to kill off the idea each time until the last attempt as Walmart was optimized to physical stores
- The time and resources spent by Walmart during those four attempts was too much, by which point Amazon had grown beyond the point of Walmart ever being able to catch up
- We do not have the time in legacy environments to stand around for a few years working things out, we need to move fast
- Found that it took around 3 years for a C-suite to come around to an idea — but in today’s environment, you can’t wait around for this amount of time before moving
- Salim has been working on this problem: could we do it in 10 weeks rather than 3 years?
FIGHTING LINEAR THINKING
- Peter Thiel: how do you reach your 10-year goal in 6 months? To do this you can’t go a traditional or linear route
- Another entrepreneur mentioned: Peter Diamandis
- When you return to a legacy environment and suggest the 10x concept everyone rejects the new idea — immune system response
- People are vested and incentivized at a cultural level to stay stuck in linear thinking
- In past, we had a generational change to solve this problem, but today things are moving much more quickly e.g. for a 12-year-old Facebook is for old people
- Tension with legacy environments is so strong it is breaking the world
- We have to up our game to keep up with technology, increase the metabolism of our legacy environments to keep up
- The change is going to happen regardless of whether we’re fearful or embrace it
- New technologies can’t be regulated because they’re too democratized e.g. EU Central Bank has said they can’t regulate cryptocurrencies
- We’re at a breaking point where traditional systems don’t match, yet when we try and update them you get the immune system response
- 10 weeks process: conduct a ‘shock and awe’ initial workshop for key management (e.g. 500 of top management), then take 20-25 young leaders and teach 10 weeks of a coaching model
- Divide young leaders into 2 streams
- First looking at: “What totally disruptive ideas can I create at the edge of an organization to blow it open?” e.g. Nestle spinning off Nespresso
- Second stream: “How can I increase the metabolism of the organization, and how do I intend to do this?”
- Young leaders own the ideas, and when they present their ideas to higher management the ideas don’t get rejected because of initial ‘freakout’ workshop session
- Salim has used his new book Exponential Transformation to open source this methodology and make it widely available because he’ll never get to everyone otherwise
- Every one of the global 5000 will have to go through something like this or they’ll face existential threats
- Salim disagrees that we’ll lose all the teachers
- Examples: banks not losing employees due to automatic bank tellers, automated factories in Germany yet employment has not dropped at all due to roles in problem-solving, design thinking
- Rather than shoving kids in a classroom and forcing them to learn algebra when they’re not well-rested or eating right, which won’t be effective, we can ask kids: what’s your MTP?
- They can then pull the information to them that matters in order to solve the problem they want to solve
- In this instance, the teacher becomes the mentor and guide rather than the information pusher
- Everyone remembers the 1 or 2 teachers that took the time to mentor them: all of us are successful due to this person
- Education suffers from an immune system problem: trying to update government structures takes forever
- Incentivized the Triquarter handheld device: someone would win when that device could outperform 10 doctors in diagnosing health problems
- For information about more XPRIZE projects check out XPRIZE Foundation
- Grand problems of the world aren’t going to be solved by organizations but by small teams thinking outside the box
- Creativity can be driven by restraints e.g. time, resources: these restraints force concentration and commitment
- Hack: Amazon relies on a hack called the ‘institutional yes’—if you present a new idea, the person that wants to say no has to write a 2-page thesis on why the idea is a bad one and post it on the internet
- This methodology creates friction and embarrassment around saying no, so more ideas get tested, and the org will succeed more dramatically because poor ideas get pushed out
Don’t forget to take a snapshot of this episode, tag us both on social media (@salimismail & @jimkwik) and share your greatest “aha!” moment with us!
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Episode 89: 10X Your Mental Performance with Salim Ismail