2020s - the decade of the ExO’s

Revisiting the Fortune 100 data, you’ll remember, in terms of Revenues, between 2014 and 2021, ExOs enjoyed a 13.04 percent compounded growth rate compared to a meager 0.14 percent CAGR for their non-exponential counterparts. 

Similarly, in terms of profitability, top ExOs enjoyed profit-to-sales ratios of 18.68 percent—making them 6.8 times more profitable than their non-exponential counterparts. Most tellingly, the profitability of the best ExOs stayed firm at 18 percent during the pandemic year—even as their non-exponential peers suffered a catastrophic negative 2.3 percent.

Regarding asset utilization, the best ExOs had a median asset ratio (revenues/assets) of 88.2. That was almost 11.7 times better performance leveraging assets compared to non-ExO companies. Such performance gaps can be firmly attributed to a median score on the specific exponential attribute of leveraged assets. The top 10 Exponential Organizations had scored 2.5 out of 4, compared to their bottom 10 non-exponential peer-group score of only 1.5.

And here’s the most impressive discovery: the market cap for the top exponential firms grew at a median 13.6 percent CAGR between April 2014 and December 2021. By comparison, traditional companies during this period went backward, managing only a negative 2.4 percent CAGR in their valuations. Together during that eight-year interval, top ExOs achieved a combined 5.3X in their market valuations—a figure that wildly exceeded even the otherwise impressive S&P 500 Index of 2.5X. 

Now, imagine what it will look like from the point of view of traditionally organized and run enterprises as the first of the new ExOs enter their marketplace. It will be like horse-drawn wagons encountering their first automobiles—the newcomers will seem so powerful, so fast-moving that they will be likely to create terror and despair. Entire industries will attempt to create barriers to the arrival of these alien companies—new laws, warning off customers, special taxes—but nothing will stop these ExOs because they are too quick, too adaptable, too efficient—and ultimately too popular with employees, suppliers and most of all, customers.

By the end of this decade, we can safely predict that almost all top-down, traditionally hierarchical businesses and nonprofits (even the biggest and most venerable ones) will have metamorphosed into Exponential Organizations—or they will be on the brink of oblivion. That’s why you can be certain that in the boardrooms around the world, this inevitable fate is being discussed—and that radical changes are already in the works.

And that is a good thing. Because if we are to live in a world beyond scarcity, we will need ExOs to best take advantage of that new abundance.

We wrote this book to give you the best possible preparation to build your Exponential Organization—or use the latest information to fine-tune the one you already have—to best prepare yourself for success in the stunning world that awaits us just around the corner. 

Now, set your mind to win. And good luck.