How Exponential Organizations And Compassionate Leadership Could Define The Next Decade

The world is facing a leadership crisis. This leadership crisis has extended from the public to the private and nonprofit worlds. It is not just about individual leaders but about a system and set of institutions that are failing.

The incoming Biden and Harris Administration have a unique opportunity to redefine a new world order, based on the values of compassion, kindness and empathy, rather than competition, self-interest and rivalry, as the predominant value set among current world leaders appears to be.

Will the incoming administration choose to embrace this historic inflection point in world history, or continue down a ‘business as usual’ trajectory?

Moving beyond ‘business as usual’ leadership

The same staid management theories are doing the rounds as organizations flounder to find novel ways to rebuild after the coronavirus pandemic.

Platitudes to ‘build back better’ or ‘build back greener’ are seen as hollow slogans without the critical details for how this change can stick and becomes irreversible after the inevitable honeymoon period of a first 100 days in office.

Similar calls for organizations around the world to embrace digitalization appear to be two decades out of date, and could almost be lifted from any management textbooks issued during the last major tech bubble at the end of the last century.

The world is significantly more complex in 2020 than at the time of the last dot com boom and bust in 2000 when corporations were facing the pressure to transform with Web 1.0 technologies. Climate change, environmental pressures, more complex geopolitics, underlying gender and racial imbalances that have remained unaddressed for too long, greater cyber-security risks, growing inequality, rising expectations amid a frustrated middle class around the world, require a new type of organization and leadership to navigate the next decade. This leadership is much more than simply allowing more work from home policies, zoom meetings and moving all of an organization’s data into the cloud.

What sort of organizations are we likely to see by the end of the decade? How can they spur the industries of the future? Who will the winners be, and what characteristics will they have?

Two forces are driving these winners.

First, it is the growth of Exponential Organizations, and the use of a broad range of technologies to improve decision-making, transparency and acceleration of ideas. The second is more nuanced. It concerns the influences that could ultimately take possession of powerful new Exponential Organizations. It is this latter question of who will win the battle of the moral compass that will either propel the world toward a dystopian future at an ever increasing pace, or one that can bend the moral arc of the universe back toward a utopian and just one.

This will be the defining battle of the first term of the Biden-Harris Administration, both within the U.S. and internationally.

What is an Exponential Organization?

Through the coronavirus pandemic, every organization on the planet effectively became an Exponential Organization - many were simply unaware of it.

Exponential Organizations are a different way of organizing, building and running an organization (public or private) using new tools that technology has opened up - the power of algorithms, data, staff on demand, community insight, social technologies, rapid experimentation, innovative new dashboards and interfaces, the power of artificial intelligence and autonomy, to name just a few. The pandemic forced all organizations to adopt one or more of these attributes as lockdowns compelled new working and collaboration arrangements.

Not all organizations were successful. There is a spectrum for how effectively each organization has been in adopting the tools of an Exponential Organization (ExO). This has already led to an ‘ExO dividend’ for those who were more successful than others, what some are measuring as an ExO Quotient.

Just look at the performance in the stock market for companies who behaved more effectively as exponential organizations in the middle of the pandemic. These organizations who swiftly moved toward remote working, data-driven insights and rapid experimentation to run and refine their organizations, significantly outperformed traditional organizations who failed to adapt swiftly enough.

The notion of Exponential Organizations was developed by Silicon Valley veteran Salim Ismail based on years of closely observing startups and large corporations attempting to disrupt their industries. Ismail has been at the forefront of some of Silicon Valley’s boldest adventures. Formerly head of Yahoo’s Technology Incubator, Brickhouse, he subsequently was one of the founders of Singularity University based at the NASA Ames Research Center in Mountain View and focused on the power of exponential technologies, and he also sits on the Board of the X-Prize which helped pioneer private space flight.

His bestselling book, Exponential Organizations, is redefining how organizations operate and scale world-changing ideas. His network of almost 5000 practitioners though a community called Open ExO, are working with companies and Governments around the world to help them weather the pandemic storm and build back stronger organizations coming out the other side.

Already, innovative breakthroughs from exponential organizations in the fields of education, health, the environment, have achieved outcomes that were several orders of magnitude more effective than existing solutions available on the market previously.

ExOs defining the future

Salim Ismail explained what an Exponential Organization is.

“Exponential Organizations (ExOs) are a new breed of organizations disrupting entire industries by scaling as fast as exponential technologies do. In addition, the ExO model is the framework that finally allows both entrepreneurs and corporations to speak the same language and disrupt industries together.”

He explains that this is based upon a re-evaluation of traditional economic theory. “ExOs scale by exponentially dropping the marginal cost of supply. Airbnb’s marginal cost of adding a hotel room is almost zero, whereas a hotel chain has to build a whole new hotel. This happens similarly with Uber UBER -2.4% or Wikipedia or thousands of other such ExOs. We have never seen this before in business.”

Ismail goes on to explain how Exponential Organizations are organized around how the human brain operates. “Exponential organizations function like a human brain. On one side, there is the need for order, control and stability to take in the exponential amount of information coming your way. We have identified five organizational attributes critical for this. These are Interfaces, Dashboards, Experimentation, Autonomy and Social Technologies, and should form a core part of the internal control mechanism of the organization.

At the same time, just like the human brain, there is the need to unleash creativity and embrace uncertainty in order to grow. There are five organizational attributes that we have seen ExOs demonstrate. These are Staff on Demand, Community and Crowd, Leveraged Assets, Algorithms and Engagement. It is a way for organizations to grow without increasing their environmental footprint on the planet. We go into the characteristics of each in our book, and this has been borne out in work we have conducted with our partners around the world.”

The power of ExO are likely to be a major force over the next decade, for organizations who get this right. However, how can such organizations not become corrupted with overwhelming power of their success.

The dangers of ExOs without a moral compass

As Exponential Organizations start to accelerate over the next decade, there will be a need to balance this success.

The backlash against tech billionaires and tech giants has ballooned during the coronavirus lockdown.

While many of these companies started with inspiring underdog origin stories often born inside a humble Silicon Valley garages or college dorm rooms, almost every major tech company has suffered some sort of ethical leadership scandal in recent years that have highlighted the moral dangers of the companies they are building.

Most recently, Alphabet suffered the high profile loss of one of its leaders in Google’s GOOG +0.9% Ethical Artificial Intelligence program. Facebook has faced a barrage of criticism for not taking privacy concerns seriously enough and becoming responsible for the rise of authoritarian Governments around the world. Amazon AMZN +1.8% faces ongoing criticism about its sustainability policies amid attempts to throw money at issues without addressing the root causes of how its e-commerce technology continues to have an unsustainable environmental footprint.

The pursuit of hitting magical quarterly return numbers is what is forcing senior leadership of the corporations to forget their roots and lose sight of their organization’s moral compass.

At the moment, it is predominantly large technology companies who are predominantly in marketing and e-commerce (Facebook, Google and Amazon) that are seen as leading exemplars of exponential organizations. As a range of new exponential organizations emerge in healthcare, transportation, connectivity, food production, water provision, housing, a different form of leadership will be required to avoid a dystopian exponential organization future.

This leadership requires completely new skillsets, and one where senior leaders may have to undergo a personal transformation. It will require a new mindset, skills and the use of emotions in ways that the leading business schools and management consultancies have failed to imbibe in the majority of today’s cohort of business and Government leaders.

This is what Salim Ismail describes as the choice that society faces between a ‘Mad Max’ Future or a ‘Star Trek’ future, where technology can be used as a force for good or to do harm.

Leadership with Compassion

Compassion is a complex term to use in modern leadership, with origins that are several thousand years old. However, there are powerful concepts in compassion that are relevant to leadership of exponential organizations. Most importantly, it calls for understanding leadership decisions as part of an interconnected and larger system.

A new dose of compassionate leadership will be needed to oversee the change and impact of exponential organizations. This leadership is needed to provide the moral compass to ensure such organizations remain true to their visions. This loss of direction was epitomized by Google’s ‘Don’t Be Evil’ mantra being famously removed from its Code of Conduct in 2018.

A more modern form of Compassionate Leadership is now being developed as a curriculum for school children through a partnership between spiritual leaders like the Dalai Lama and Emory University in the United States. Such moral and ethical leadership is opening up new ways in which the global economy could be reinvented, harnessing new doctrines such as ‘Survival of the Kindest’ and a new ‘Age of Empathy.’

The Social, Emotional and Ethical Leadership framework teaches the power and use of emotions, thought and action for every key leadership decision. What was initially designed for school children is now rapidly finding itself entering the lexicons within Boardrooms and Senior Executive Leadership coaching around the world. The pandemic has shone a light on the need for leaders to be more present and thoughtful in the decisions they take, amid a rapidly accelerating world.

This work on compassionate leadership also helps leaders develop a wider understanding of their organization’s impact beyond their immediate footprint. It forces a redefinition of the boundaries of an organization. Traditionally, most MBA and executive leadership courses train leaders to think about leadership of the self and leadership of others in a hierarchical organizational setting. What is unique about the Social, Emotional and Ethical Leadership is the need to instill a new leadership mindset around ‘Systems Leadership.’ Understanding how the thoughts, actions and feelings through which a leader and organization both shapes and is shaped by a broader system, starts to reveal new pathways for change and leadership. These new pathways could lead to more just outcomes, than the current turbulence, self-interest and battle of ideologies that are likely to continue for years to come.

Exponential organizations are likely to become more powerful in the world over the next decade as they outperform traditional organizations. With the likelihood of causing harm significantly higher given the speed of exponential technologies, the power of compassionate leadership comes as a welcome safety valve and lens through which to consider ethical leadership of such organizations.

It will require a new set of leadership tools, oversight and muscles to be practiced and exercised in order for organizations to truly practice what they are preaching. Setting out a new leadership paradigm for a kinder world, could be an important part of President-elect Biden’s legacy.

Relevant for both the Public and Private sector

Compassionate leadership of exponential organizations is relevant not just for the private sector, but the public sector too. There is an urgent need to reinvent the public sector to become exponential organizations and demonstrate more compassionate leadership.

This will ensure the high quality citizens expect from public services can be delivered in efficient ways to ensure taxpayers are receiving the greatest outcomes for public funds invested. There is no reason why the public sector should not be able to achieve superior levels of service and trust in a product or service, than the private sector can achieve.

This is true not just for national regulators but international regulators too. Most of the 70 year old organizations within the multilateral United Nations, World Bank and IMF system are locked in traditional, siloed and hierarchical systems. This makes most of them unfit for the challenges of the next decade, as the coronavirus pandemic has revealed. It is imperative that most global multilateral organizations use the post-pandemic recovery to transform themselves into exponential organizations or face being considered as irrelevant as the League of Nations once was.

Compassionate Exponential Organizations

The combination of Exponential Organizations with Compassionate Leadership is a powerful model for change that could transform our societies, locally, nationally and internationally.

As the UN Secretary General has warned, the coronavirus pandemic was just a dress rehearsal for the changes ahead. With trillions of dollars of stimulus and a shared experience across humanity, now is the chance to build back better.

With Governments continuing to flounder for answers and tinkering on the margins, avoiding the profound changes that need to happen to their institutions, exponential and compassionate organizations could be a solution to take on the world’s biggest challenges.

It would give new purpose and tools for a younger generation, allow a wider group to be included in defining the future and build an innovative model for a more sustainable economy.

It is time that a new cohort of global leaders started to articulate the values that they wish to see in the world, and build the tools and organizations they need to achieve this vision.