We’ve heard a lot about disruption and technology in the workplace over the last few years, to the point where we’re a bit over it. Uber and Airbnb have done … blah blah blah. It’s easy to be dismissive about such massive companies and the truly remarkable, but over-cited, growth figures these businesses have achieved.
As Simon Sinek would say, it is far more important to understand why these ridiculous growth patterns have been made possible. The simple and exceptionally important answer is: exponential growth through technology. That word ‘exponential’ is the key to the future of all business growth in the world for the foreseeable future.
Every business is in a constant struggle to achieve growth. But where can that growth keep coming from? We want 20% growth to prove we have shot the lights out. The population isn’t growing that much. The economy isn’t growing that much. We can’t cut costs by that much. We are out of ideas to create impressive growth, and if we somehow do it this year, that just means our base is impossibly high for next year. The internet creates equality so that our competitors are right there with us – aware of every promotion we launch, every streamlining process we install. We’re stumped.
But then you read about a company called Peloton. These guys have a cycling class. How can someone launch a cycling class and make money when there are literally thousands of cycling classes and they all entail peddling a bike? But Peloton haven’t tried to improve in a traditional sense. They realised that the biggest barrier to growth is the limitation imposed by the class size. How do you scale a business where everyone needs to be on a bike in the studio? Well, you don’t. You realise that, if everyone uses a bike at home, you aren’t limited by the studio; and, more importantly, your customers (a) don’t have to travel through traffic to get to class, (b) don’t have to pay for a gym membership, (c) don’t occupy a bike in class, which means there is endless space for more clients, (d) don’t worry about arriving late and the class being full, and (e) have more time with their kids in the evening. You get the picture.
So now the real difficulty confronts you: how do you get these people to pay you to ride a bike at home? The answer: by being aware of exponential technology. You get the riders either to buy a Peloton bike with a built-in screen (the company has sold over 50 000 Peloton bikes at about $2 000 each since 2013), or to put their existing bike in front of a screen, where they can pay to live-stream the class. Your clients feel part of the class as the instructor shouts encouragement to their screen names through one of four video cameras; they are pushed to participate and achieve goals with the class; they get a challenging, imaginative group work out; and, at the end, they turn off the screen and walk the five metres to their own shower.
So what’s exponential about this? That just sounds like normal technology. Maybe it is today, but think back to two or three years ago in South Africa and the infuriating buffering you would encounter while trying to live stream anything. Moreover, the cost of the data would have been preclusive. Today, on your fibre line or with LTE, you could stream a New York-based cycling class without missing a beat at a very reasonable cost ($39 a month for unlimited classes). Certainly cheaper than a subscription to a spinning class. Now think about adding a virtual reality headset into the mix. Now we’re talking.
The price/performance ratio of computing power doubles every two years or so. Doubles. Plot that on a graph and the line goes very vertical, very quickly. We, as human beings, don’t understand exponential growth. We like linear growth. It’s predictable. It’s safe. But there are increasing numbers of people who realise that if you can move your business from being physical to digital, your ability to scale hops onto the exponential curve. All of a sudden you are looking at 100% growth as being a more realistic benchmark.
The market is filled with people who will speak and advise on how technology is amazing (and it is) and how it can change your business. But we are left with the same thought: “I love this stuff, but how can I use it to my benefit?” It is easy to list new technologies, but the real component to creating exponential organisations with 100% year-on-year growth, is something which has always defined winning and losing businesses: namely strategy.
Exponential technology will only work for you if you can understand how to use it within a winning strategy. A great strategic leader needs to understand what these technological innovations are capable of, and the scale of their impact, so that the innovators themselves can multiply their own talent to come up with a game-changer. A disruptor. It also helps to see some examples of how others have succeeded. Not just Airbnb and Uber; we’ve seen those.
We need diverse examples to make this stuff tangible. We need to learn about exponential technology in such a way that we can walk into work and have a very clear idea about how we are going to pursue a disruptive strategy that removes limitation and opens up virgin market opportunities.
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Michael Stannard is a Co-Founder of the Exponential Africa Institute and a Director at Paper Plane Consulting and Ventures. The Exponential Africa Institute (xA) is an initiative of the University of Stellenbosch and its innovation partners (including USB Executive Development), founded with the purpose of exposing decision makers to exponential technologies and cultivating a nonlinear mind-set in order to harness the power of exponential trends. Michael is an expert on exponential technology strategy, and lectures and writes on the subject in numerous different forums.