How exponential organizations outcompete(d) their traditional counterparts (in the past eight years)?

What is it about?

Exponential Organizations (ExOs) are purpose-driven companies that leverage exponential technologies and exponential business practices to grow and scale rapidly, transform industries, and create massive value and impact. In contrast, non-exponential organizations follow a linear approach to business and organizational strategy design and execution. This article aims to validate the hypothesis, based on financial metrics, that ExOs outperform their competitors and linear counterparts. Furthermore, it also brings a new understanding of the gap raised in the past eight years about how ExOs can achieve significantly better performance, measured with financial metrics. For measuring how exponential an organization is, we elaborated a completely new assessment tool called Exponential Quotient (ExQ). We applied it to the 100 largest US headquartered companies as ranked by the Fortune magazine in 2014. Calculating the ExQ enabled us to rank these Fortune100 companies and identify the most and the least exponential firms. We tracked these companies as to how they performed on different financial metrics over the eight years of 2014-2021 and analysed the results. Through the analysis, we revealed that the top10 exponential organizations have significantly outperformed their bottom10 non-exponential peers, delivering 40x higher shareholder returns, 2.6x better revenue growth, 6.8x higher profitability, and 11.7x better asset turnover. Furthermore, we could identify commonalities and similarities between the two groups. This means that ExOs can thrive even in tough times and that accelerating technologies unlock abundance and allow every organization to become a disruptive innovator and stay ahead of the competition. These are novel results in the research focusing on the gap between exponential and traditional organizations. The results validated the robustness of the Exponential Organizations (ExO) framework and philosophy and shed light on the importance of exponential transformation – a proven method to increase an organization’s ExQ. Our framework is not a “how to be successful” guide. Instead, it uncovered some of the previously unknown and universal mechanisms of scalability – which, in turbulent times, make companies successful (based on financial metrics). Our study was among the first kind of in-depth analyses to validate the whole ExO model. Using our ExQ diagnostics tool, every organization can see how flexible, scalable, and agile they are, which is the starting point for an exponential transformation program. Although this approach has already found its way into practice and is applied globally by thousands of organizations (startups, scaleups, and incumbents), so far, the academic establishment is in its nascent phase. With our research, we wanted to extend this field of science. On the other hand, because of its novelty, no appropriate previous studies existed to compare the results.

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Photo by Afif Ramdhasuma on Unsplash

Photo by Afif Ramdhasuma on Unsplash