Chapter 3 - What is an Exponential Organization?

“Indeed, the rate of change is so high everywhere these days that you now must assume that someone will disrupt you, and often from a direction you least expect.”  —Exponential Organizations, First Edition

In the original Exponential Organizations, we told the story of one of the most iconic events of the era: the introduction of the Apple iPhone in January 2007. The birth of the iPhone was an augury of a revolution in the business world. Everything in high tech turned upside down that day. All existing strategies in consumer electronics were quickly rendered obsolete. Almost instantly, the entire future of the digital world was up for grabs to those willing to pursue the implications of this new model.

Six months before the iPhone launch, however, a less heralded but ultimately much more important event took place, at least for our purposes. In August 2006, Amazon launched its EC2 cloud services, now known as AWS or Amazon Web Services. 

These two events, occurring within months of each other, comprise the asteroid impact that changed the business world forever. This was the birth of the Exponential Organization. The iPhone created a new model for consumer engagement via the App Store. AWS allowed any startup to move computing off the balance sheet to a variable cost. Collectively, these two developments applied Peter’s Six Ds to computing. The cost of a Silicon Valley startup dropped from several million dollars to several thousand dollars, and a Cambrian explosion of new organizational forms emerged.**