[MUSIC]. When I did an NBA here and I business school in 2003, the memory stick, I used to carry with me with 64 MB. Now, my students have 64 GB, which is an exponential change. We all know things are getting bigger, faster but we don't perhaps appreciate by how much the difference between 64 MB and 64GB. It's a huge, huge difference. Exponential thinking and exponential technologies is why Facebook is killing the newspaper industry. It's also why Amazon is killing retail. Exponentially is a really powerful force and something you need to understand, especially when you're competing against an incumbent. And incumbent probably won't understand just how quickly things can change, just how quickly things can move. Salim Ismail has written a book called Exponential Organizations. You can see a video from him in the optional videos, it's about half an hour and I recommend you take a look at it. Salim has identified 10 characteristics of exponential organizations. 5 are external and 5 are internal. These allow teams to do what was once only possible by governments and large organizations. Exponential organizations look at the 5 external organizations that spell out scale, S-C-A-L-E. I'm going to take you through each of them. The 5 internal and the 5 external. First one is S, S stands for Staff on Demand. That's things like the Uber. That's things like handy. That's the idea of not having full time employees. Can be a controversial issue but also it's something that you can use. Think we're trying to working out some of the labor issues but still, I think it's a model that won't disappear completely. The next is C, the Wisdom of the Crowd. The idea that there's nothing, everything doesn't have to be created here. The idea that we can send out things that we want to do and get the wisdom of the crowd. That is something that happens in exponential organizations. Next is Algorithms. Algorithms that use information you have both within the company and also information that is outside of the companies say whether data or something like that. And it uses that to make decisions, algorithms is closely related to machine learning. Next is the L, L Is Leased Assets. The idea that you don't necessarily have to own everything you have. Again, this is something that is very different from traditional organization. So you need to think about, do you need to own the computer? No, not necessarily. You can have a least assets, these things do make a difference. It's very easy to think, make a vie. You need to think about whether you actually own things because in many cases it's more financially possible to just lease them. And finally the E, E Is Engagement that stands for incentives and gamification. That is the idea that you interact with your customer in the non standard you buy it or you don't buy a kind of way. Companies can have an ongoing relationship with a consumer even if the consumer isn't buying anything. It will in many ways have something called the toothbrush test whereby you, you interact with the company on a daily basis, even if you don't specifically by anything. Next, we're going to talk about the five internal characteristics and these are spelled out as ideas I-D-E-A-S. The I stands for Interfaces. Interface is a customized processes for how you interact with the consumer. The idea of I is that you don't just send emails or telephone to call centers. In other words, you have a relationship like an extra net or some way of interacting. The app store and Apple is one thing where it collects all sorts of information which Apple have on you, which then they make available for you to look at. That's a different way of doing business. Next Dashboards. Companies run dashboards in that they look on specific metrics and how these metrics are changing. Identify a metric and you make that metric available for all the employees to see. In hot hotels for instance, we look at the number of rooms that we sold overnight. Facebook I've had other metrics. YouTube have an engagement metric, how much, how many minutes of videos people look at. E is for Experimentation. This is something that comes from the start of phase and the Lien scale up methodology whereby you look to do different experiments. In other words, rather than guessing something you actually can validate it. And today's technology allows us to run experiments to find out which thing will work the best. Sometimes you'll hear that described as A B testing or ABC testing. Next you'll have Autonomy. This is what the way they let employees work. No longer do they have to arrive at 9 and leave at 5 and work in a desk. You give employees the freedom to do the things, some people are morning people, some people are evening people, some people are social people. Some people like to work on their own. That is your decision. You need to think about outcomes. You don't need to think about employment in a control type of way. And finally for ideas, the S stands for Social. Social is the idea that you communicate willingly information. You don't necessarily think about secrets. You have a blog where you you publish information about things you have done and you allow people to learn from that. Some ways you people will ask, well why would we do that? But actually your brand, your reputation and giving allows you to receive. At hot hotels we use a lot of these, were not perfect and we debate internally. Sometimes people responsible for some certain things do not believe so much in the ideas and the scale methodology. And it takes them a while to convince them. But I know from experience when you do it and when you do certain things and it works, it's absolute magic. This has allowed us to be in several countries. We would never have been able to be otherwise. Listen, I know what you're thinking. I've just called out a framework and I'm suspicious of framework. You write out the words ideas and you write out the words scales. And the idea that something just as a word can be can be the key to a successful scaling up company is in many ways a bit ridiculous. I understand that and I have been traditionally a suspicious of frameworks as anybody else. All i will say that within those 10 ideas, it's not a question of doing them all are doing them not, you need to pick out the one that works for you. I think in many cases scaling up requires moving from this idea of daily acts of terrorism to actual process. And process really does require, unfortunately, that you look at things in a detailed way. So that's what I would say to you, which is to write out the word ideas, right out the word scale and just take the time to look and see if any of these things that you can apply within your company. And if they apply, go for them big and these are the kind of things that you have to do that will make the difference. So I understand you're suspicious of frameworks. I get that I'm suspicious, but I tell you within the 10 concepts, if you look hard enough, you will find things of value. [MUSIC]
