Today the shift from “I’ve got a neat idea” to “I run a billion-dollar company” is occurring faster than ever.
This is possible, in part, because the structure of organizations is changing. Rather than utilize armies of employees or large physical plants, 21st century start-ups are smaller organizations focused on information technologies, dematerializing the once physical and creating new products and revenue streams in months, sometimes weeks. As a result, these lean start-ups are the small furry mammals competing with the large dinosaurs — meaning they’re one asteroid strike away from world dominance.
Exponential technology is that asteroid.
Today, exponential technology is not just putting linear companies out of business, it’s also putting linear industries out of business. It’s shifting the entire landscape, disrupting traditional industrial processes—like the process by which consumer goods are invented and come to market. For the right entrepreneur, there’s considerable opportunity within this disruption.
Today linear organizations are at dire risk from the Six Ds of Exponentials: digitalization, deception, disruption, demonetization, dematerialization, and democratization
Digitalization. This idea starts with the fact that culture makes progress cumulative. Innovation occurs as humans share and exchange ideas. I build on your idea; you build on mine. This type of exchange was slow in the early days of our species (when all we had as a means of transmission was storytelling around the campfire), picked up with the printing press, then exploded with the digital representation, storage, and exchange of ideas made possible by computers. Anything that could be digitized—that is, represented by ones and zeros—could spread at the speed of light (or at least the speed of the Internet) and became free to reproduce and share.
Deception. What follows digitalization is deception, a period during which exponential growth goes mostly unnoticed. This happens because the doubling of small numbers often produces results so minuscule they are often mistaken for the plotter’s progress of linear growth. Imagine Kodak’s first digital camera with 0.01 megapixels doubling to 0.02, 0.02 to 0.04, 0.04 to 0.08. To the casual observer, these numbers all look like zero. Yet big change is on the horizon. Once these doublings break the whole-number barrier (become 1, 2, 4, 8, etc.), they are only twenty doublings away from a million-fold improvement, and only thirty doublings away from a billionfold improvement. It is at this stage that exponential growth, initially deceptive, starts becoming visibly disruptive.
Disruption. In simple terms, a disruptive technology is any innovation that creates a new market and disrupts an existing one. Unfortunately, as disruption always follows deception, the original technological threat often seems laughably insignificant. Take the first digital camera. Kodak took great pride in things like convenience and image fidelity. Neither were present in Sasson’s original offering. His camera took twenty-three seconds to snap and store a .01 megapixel, black-and-white photograph. Well, no threat there…
Demonetization. This means the removal of money from the equation. Consider Kodak. Their legacy business evaporated when people stopped buying film. Who needs film when there are megapixels? Suddenly one of Kodak’s once-unassailable revenue streams came free of charge with any digital camera.
Dematerialization. While demonetization describes the vanishing of the money once paid for goods and services, dematerialization is about the vanishing of the goods and services themselves. In Kodak’s case, their woes didn’t end with the vanishing of film. Following the invention of the digital camera came the invention of the smartphone—which soon came standard with a high-quality, multi-megapixel camera. Poof! Now you see it; now you don’t. Once those smartphones hit the market, the digital camera itself dematerialized.
In times of dramatic change, the large and slow cannot compete with the small and nimble. But being small and nimble requires a whole lot more than just understanding the Six Ds of exponentials and their expanding scale of impact. You’ll also need to understand the technologies and tools driving this change. These include exponential technologies like infinite computing, sensors and networks, 3-D printing, artificial intelligence, robotics, and synthetic biology and exponential organizational tools such as crowdfunding, crowdsourcing, incentive competitions, and the potency of a properly built community. These exponential advantages empower entrepreneurs like never before.
Welcome to the age of exponentials.