Turning Science-Fiction into Reality – Bringing the future into your business
I strongly believe our actions are often too much influenced by the past. Rarely do we focus on the future free of any legacy constraints. Please do not get me wrong, legacy constraints are important and we should not throw our learnings and best practices overboard. This would be madness. I do believe preserving what is working well is an important quality of many established businesses. With learnings from our past, we can modernize our business, make it more flexible, more sustainable, and increase our chances to survive in the future.
But continuous updates alone are unfortunately not enough, especially if we want to maximize our chances to stay successful and create a better world for all of us. Think about the following analogy. You are a company that is printing books in the year 2006. Over the years you have successfully updated your printing press machinery. The quality of prints is significantly superior to the quality you could produce just five years ago. Your process and machines are more accurate and now you started to introduce an ERP system to streamline and digitize the key processes in your business. Then, in the year 2007, “Kindle” an e-reader is introduced. With the introduction of Kindle, many readers switched to e-reading devices and became customers of a new business model.
This analogy applies to many global problems such as climate change, health issues, or education, and to companies all around the world. We are trying to solve problems of the future with solutions from the past. But updating our current model is not enough anymore, we need a drastically new approach. In the printing press example, the company did a great job to continuously improve and modernize their legacy business. But they missed out on exploring opportunities on the edge of their business. New technologies, new business models, and new ways to connect with users arose but the company failed to explore and act on these opportunities. Holding on to structures and concepts from the past often does not allow us to take the much-needed step into the future. And rarely the problems of the future can be solved with solutions from the past.
I am convinced if we want to keep on thriving in the digital world, we need to do both, focusing on updating our legacy business AND exploring business opportunities free of any legacy constraints. Focusing only on one of the two aspects is not enough to maximize our chances for ongoing success.
In this article, I would like to take you on a journey of exploring the future of business and how you can start to identify new opportunities and design future-oriented initiatives for your business. I will discuss and explain some key concepts that will significantly support you to create a better future. I will also provide further sources and resources in the article for having a deep dive into some of the mentioned concepts. Enough said, now let us begin.
Understanding the future
We are all talking about digitization, digital transformation, and new ways to capture and deliver value. But all this does not matter. What matters first is understanding why we even should move or change something. It is about having a rough idea of how running a business will look like in the future. This is not about having everything digitized or having a digital webshop. No. It is about understanding key business changes that are shaping companies in the future. And it is about understanding how these changes will impact your business.
In my opinion, there are three major changes every one of us must be aware of. The first one is the change from scarcity to abundance-driven businesses. The second one is about profit vs. purpose. And the third one deals with humans vs. technology.
Scarcity vs. Abundance
Most businesses are currently built around scarcity. They have a scarce number of human resources – their employees – at their disposal. This means there is a scarcity of knowledge, skills, and human capabilities. Companies also face scarcity when it comes to their physical assets. Hotel chains, for example, have a limited number of hotels available. If they want to expand, they must invest a fortune in building a new building that again has only a limited number of rooms. And businesses are also built around scarcity in terms of intellectual property and digital assets such as data.
Examples of the scarcity-based approach can be found in all industries, such as logistics (scarcity of storage space, means of delivery/transportation,…), in consulting (scarcity of personnel, know-how, …), in retail (scarcity of stores, scarcity of storage space, …), in the software industry (scarcity of know-how, personnel, data,…), in telecommunications (scarcity of communication capacity, infrastructure, know-how,…), and so on.
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The reality is, however, that nowadays we are living in an abundance-driven world. There is an abundance of people outside your organization. This means an abundance of skills, knowledge, ideas, and capabilities you could potentially leverage for your organization. There is also an abundance of machinery, technologies, products, and devices out there that you can connect with and utilize. Plus, there is an abundance of data and digital resources you can tap into. And this abundant driven world is growing rapidly. Fueled by emerging technologies in combination with the internet and IoT, everything suddenly becomes accessible to everyone at almost no cost.
Some companies have already realized that abundance is the future. Airbnb, for example, is leveraging an abundance of empty rooms and became the biggest hotel chain in the world. Local Motors, a car manufacturer, is tapping into an abundance of people for designing new cars, reducing the costs and lead time by a factor of 10x. And Amazon is allowing you to tap into an abundance of computational processing power with their cloud computing services.
For the first time in human history, we can tap into an abundance of digital, physical, and human resources. This abundance-based approach comes with a remarkable advantage over the scarcity-based approach: It allows you to utilize resources outside of your company’s boundaries. The problem space is therefore shifting from “how can I own an asset to how can we gain/provide access to the abundance which is around us”?
Are you already tapping into abundance? If not, why not?
Profit vs. Purpose
Milton Friedman used to say a company’s only responsibility is to make a profit. This understanding of business changed drastically in recent years. We can not deny that we are on a journey to a much more purpose and impact-driven world. Does this mean the times for profit are over? I do not think so. Several studies illustrate the positive correlation between purpose and financial performance. The notion that you only can maximize impact when you are accepting a decrease in profits is not true. Look at Patagonia as an example. They have an impact-driven approach throughout their organization, and they pledged themselves to reduce water, energy, and waste as well as their ecological footprint.
As Peter Diamandis says, the world’s biggest problems are the entrepreneur’s greatest opportunities, and I strongly agree with him. Global challenges like poverty, climate change, health issues, education, science, and technology, and many more provide an immense opportunity for companies to start new businesses. Seizing these opportunities allows us to do both – generate impact and increase profits. Additionally, customers and employees are requesting more impact-driven initiatives and support companies that take meaningful actions. By 2030 it will be rather difficult to convince customers to buy from you if you do the opposite.
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Looking at these developments it is not hard to argue that purpose is here to stay. Purpose and impact-driven organizations perform better. Purpose and impact-driven organizations will attract more talents. And purpose and impact-driven organizations have a bigger pool of opportunities to leverage upon. Ultimately, what we will see are purpose-driven ecosystems that allow us to think and act beyond industry boundaries to maximize their results (Read the article of Francisco Palao about purpose-driven eco-systems here).
When we start to accept that the future is about maximizing impact and becoming purpose-driven organizations, new opportunities will arise. It is up to you if you would like to act on them now or in five years.
Human vs. Technology
To solve the biggest challenges, tap into an abundance of resources, and to further grow our business, we are required to leverage new technologies. New technologies are disrupting society and organizations at a rapid pace. Technologies like artificial intelligence (AI), blockchain, 3D printing, nanotechnology, gene sequencing, virtual reality, augmented reality, robotics, and many more are growing exponentially. These technologies are reshaping how we do business in the future and enable us to design completely new business models. Again, think about the printing press and e-reader example I have mentioned in the beginning.
And this is already happening right now. There is a great number of companies out there that are successfully leveraging emerging technologies or planning to do so soon. Uber air, for example, aims to transport people with their drones through cities by 2023. Redefine Meat is printing plant-based meat with 3D printers and some restaurants in France are already offering the 3D printed steaks to their customers. UPS is using augmented reality for stock management, allowing workers to locate parts easily. Ascent deploys artificial intelligence to ensure that companies are always up to date when regulations or laws are changing (It is important to note here that the software is not only sending the relevant paragraph to the company, but it also provides them with concrete action steps to take to adhere to the law again). And the olive producer CHO is deploying blockchain to provide complete transparency of their supply chain guaranteeing the extra virgin quality of their products.
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While technology is completely disrupting our status-quo, we must not forget about the role human beings play in the business world of the future. Creativity, empathy, and problem-solving are just some of the skills that differentiate us vastly from any technological solution. I do believe the winners will be those businesses that manage to enhance the capabilities of their employees through technology, instead of getting rid of them. A mere focus on technology will not suffice nor does a focus only on human capabilities.
It becomes rather evident that the business world in the future is extremely technology-driven. Organizations will leverage emerging technologies like AI, blockchain, drones, robotics, etc. to build new business models and redefine what is possible. At the same time, we will shift to a more human-centered approach at our workplace. Hence, exploring emerging technologies, their impact on your business, and identifying new ways how you can utilize the unique skillset of your employees becomes a must to stay successful in the future.
Identifying new opportunities and designing future-oriented initiatives
For identifying new opportunities and designing future-oriented businesses we must consider the above-mentioned changes in the business world. What is needed is to look ahead in the future and reverse engineer solutions that can be implemented now instead of being limited by what was possible in the past. I would like to introduce two concepts now that helped me and many companies around the world to keep on thriving in the digital world.
The Exponential Organization Framework:
The Exponential Organization Canvas allows you to become a purpose-driven company that is leveraging abundance. It supports you in conceptualizing scalable and future-oriented business initiatives or in modernizing your legacy business. The Exponential Organization Canvas has 11 core attributes which are illustrated in the picture below.
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The massive transformative purpose (MTP) is the foundation of your business. The MTP is about the positive impact you are driving to achieve in this world. It is your north-start, it inspires people within and outside of your organization, and achieving it changes the status quo of the world for the better.
Besides the MTP, we have five attributes on the left side with the acronym SCALE. They allow you to tap into an abundance of physical, digital, and human resources. Staff on-demand brings expertise into your business and provides you with greater flexibility. An example of it would be a consulting company, that is not employing a fixed consultant team but is accessing the abundance of consultants worldwide, releasing them again after a project is finished. Next to staff on-demand, we have the community and crowd attribute. Building a community and crowd fosters peer-to-peer communication, the exchange of ideas, and creates momentum around your purpose. Then we have algorithms. Algorithms allow you to automatize important processes and make them scaleable. Plus, they pave the way to become a data-driven business. Besides Algorithms, exponential organizations make use of leveraged assets. Leveraged assets provide you with immense flexibility and a significant decrease in fixed costs. Plus, you gain access to physical or digital resources that were not accessible when you were following an ownership-based model (The best example here is Airbnb becoming the biggest hotel chain without owning any hotels). The last attribute on the left side is Engagement. Engagement increases the loyalty and binds your customer and your community and crowd to your purpose. People are interacting with you, providing feedback, and are eager to come back to you.
Whilst the SCALE attributes allow you to tap into abundance, the IDEAS attributes on the right side allow you to manage the abundance inside your company. Long decision-taking times, slow information flows, and tall hierarchies are not working anymore. We need ways to connect the outside world with the inside of our company. We must find new ways to structure our teams, become autonomous and increase the speed of our information flows. And we should embrace constant experimentation, lean start-up thinking, and real-time metrics to ensure the future success of our business.
With the help of the Exponential Organization Canvas, you can design future-oriented business solutions. It is your choice if you would like to use it to upgrade your core business model or to design completely new solutions at the edge of your organization. Whatever you chose to do, the canvas will support you to focus on the future instead of the past (If you want to read more about the 11 attributes click here).
Exponential Organization Sprint:
The Exponential Organization Canvas is a great framework that supports you in bringing the future into your organization. However, it does not provide you with any process or guide for upgrading your current business model or implementing completely new initiatives at the edge of your organization.
This is where the 10-week ExO Sprint process comes into play. It supports you in developing future-oriented initiatives within (Core) and outside (Edge) your organization. As I mentioned at the beginning of the article, I strongly believe it requires both updating our legacy business AND exploring business opportunities free of any legacy constraints if we want to maximize our chances for success. With running the 10-week ExO Sprint process you bring together a comprehensive toolset of methodologies such as lean-start up thinking, design thinking, the exponential organization framework, business model canvas, rapid prototyping, and it opens up your mind to emerging technologies and disruptive start-ups within and outside of your industry. The objective is not to produce paper, it is to increase your innovation capability, permanently change the mindset of your employees, and have well-tested initiatives that can be implemented. Let us shortly have a look at the four distinct phases of the ExO Sprint now.
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In the discovery phase, the team is exploring what is happening outside the organization. Many opportunities are found in the intersection of global challenges, emerging technologies, and new abundance-driven business models. The discovery phase enables you to get familiar with these changes and to find new opportunities you might be able to exploit. You then start an ideation process and come up with as many problem/solution pairs as possible. It is quantity over quality at that stage. The importance here is that for each initiative you also define an MTP. Remember, we are aiming for purpose-driven initiatives, that have the potential to become global in scope.
After the ideation process, the team is getting out of the building. Everything we did so far is just based on assumptions and needs to be tested. Therefore, you are running experiments and validate or invalidate your hypothesis. With the learnings gathered from the testing, you then select the initiatives which you would like to further develop in the upcoming weeks. For these initiatives, you develop a business model canvas and design an exponential organization canvas. Plus, a presentation and pitch deck are put together to pitch in front of external disruptors during the disruption phase. During the disrupt phase, you will present your initiatives to an external team of disruptors. The idea is to gain new insights and feedback. It is all about learning at this stage and you will get valuable information on how to further improve your initiatives.
In the building stage, you start to further develop your initiative and start building a minimal viable product (MVP). The objective here is to have a product that allows you to further learn and test some additional assumptions. It does not make any sense to spend months building something that nobody might like. Instead, we are focusing on a minimum number of features that allow us to learn and iterate quickly. Having built the MVP, we again go out of the building and find early adopters to test the MVP with. The results of the experimentation are then considered for the further development of our initiatives. The last phase is the Launch, where we think about key milestones, the required budget, and present the best two initiatives to the management.
The 10-week ExO Sprint is a very intense process and it requires commitment from the management from the very beginning. But it is one of the most comprehensive and successful methodologies that enable you to truly move your business forward. And if you do not want to start with the 10-week Sprint, there is also the possibility to pack the entire Discovery phase and Disrupt phase into a 5-day Sprint. Five days to explore what is happening outside the organization, ideate and come up with problem/solution pairs and respective MTPs, validate and invalidate your hypothesis, and develop first initiatives that are presented in front of external disruptors. Truly transformational.
Now if you made it up this far, I hope this article was valuable to you. As promised I am adding some additional resources. Please note, that the entire sprint process is open-sourced. Therefore, I will also include two books that allow you to deep dive into the topic. Let me know if you have any questions or if you are thinking this might be useful for your organization.
Let me know in the comments what are your thoughts about bringing the future into organizations. Do you agree with me? Are there better ways?