Beyond the Norm: How Exponential Organizations Challenge the Status Quo to Achieve Strategic Success
In today's business world, there are a variety of terms used to describe different types of companies. From "gazelles" to "cockroaches" to "unicorns," these labels are often used to classify companies based on their growth rates, risks, and valuations. However, what's more important than the label itself is the fact that some companies are able to achieve exponential growth and impact thanks to their unique organizational techniques.
Organizational techniques can be a critical factor in a company's success. As such, talent-optimized companies should select an organizational structure that aligns with their business strategy. Once this is done, implementing new organizational techniques can further maximize strategic success.
One powerful technique to consider is strategic outsourcing. For example, Netflix was able to greatly improve its movie-rating algorithm by leveraging the global force of innovation. In 2006, the company created a competition in which contestants were tasked with improving its current algorithm by 10%. The winner would receive a prize of $1 million. Over 51,000 people from 186 countries applied for the contest, and after three years, there was one algorithm that reached the goal.
The cost of conducting R&D to achieve the same result would have been astronomical. By outsourcing the innovation, Netflix received $14 billion worth of R&D for just $1 million. While this approach may not work for all companies, considering what innovation can be outsourced could potentially save money and free up in-house teams to focus on more critical projects.
Another important technique for driving innovation is to fail fast and small. Google has a team whose sole job is to find a way to disrupt Google's current business model. This approach allows the company to stay one step ahead of the competition and drive innovation through trial and error. The Lean Startup Movement emphasizes the importance of "failing fast, failing often, and eliminating waste," and trial and error has been shown to be a powerful tool for driving innovation.
To facilitate this approach, companies can create a culture that rewards failure, tinkering, and experimentation. For example, the Martin Trust Center for MIT Entrepreneurship has developed a process called 5x5x5x5 in which five teams with five members design a new minimum viable product (MVP) for five weeks and with a maximum spend of $5,000. After five weeks, the teams present their findings using business model canvases, competitive analyses, and product-market fit. This process is a great example of how to fail fast and small, and while most MVPs will likely fail, some will be developed further and turned into products.
It's important to note that not all organizational techniques work for every company. When considering new techniques, it's essential to evaluate what worked for other companies and determine if it's applicable to your market, size, and reality. Companies should try out new techniques on a smaller scale before implementing them on a larger scale.
In conclusion, organizational techniques can be a critical factor in achieving exponential growth and impact. Companies should consider outsourcing innovation and implementing a culture that rewards experimentation and failure to drive innovation. By evaluating and testing new techniques on a smaller scale, companies can better determine what works best for their specific needs and goals.
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