The Exponential Era. David Espindola

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Figure I.2 Series of consecutive S curves.

Dealing with Chaos

      So far, we have made the case that we are living in a new era where changes are happening at unprecedented speeds, and where the rapid convergence of technology vectors is creating ecosystems imbued with new threats and opportunities that accelerate with astonishing speed. We have identified the importance of seeing the inflection point in exponential curves before it happens in order to benefit from the resulting changes. We have also recognized that culture plays a critical part in a company's strategy and ability to embrace change, and that the leadership team of incumbents needs to have an ambidextrous strategy, exploiting the existing S‐curve, while simultaneously exploring new ones.

      This may seem fairly straightforward on the surface, but the reality is that companies struggle to detect the early signals that warn them of an impending inflection point. Even if they see the signals, unless they have a carefully crafted methodology that guides them through their strategic planning processes, chances are they will not take the actions necessary to leverage the opportunities and mitigate the threats of exponential changes.

      So how can large companies develop the same capabilities as startups that enable them to detect early signals? How can they “see around corners” as Rita McGrath calls it? How can the leadership team incentivize the organization to pursue new opportunities and create a culture that embraces exponential change, and the chaos that it can create, as a natural part of doing business in this new era?

      We believe the answer lies in adopting a robust methodology and a set of tools that the organization can use to guide it through the disruptive nature of the Exponential Era. We call it Strategic Planning for the Exponential Era, or SPX for short.

      We will spend a significant portion of the book unpacking the basis of SPX and its fundamental activities. SPX was born out of a set of principles and methods from disciplines as diverse as software development, manufacturing, design, and the military. It applies to strategic planning the benefits that other methods that embrace agility and experimentation have brought to the solution of complex problems when operating in an environment that is uncertain and that changes at fast speeds.

Uncertainty Must Be Managed

We can't promise you that we will eliminate uncertainty. Nobody can. But what we can tell you with a high degree of confidence is that there are robust methodologies and techniques that have been used effectively in diverse disciplines to manage uncertainty and the complexities associated with change. In the software field, where requirements are constantly changing, and the development of complex algorithms requires collaboration from individuals with diverse skills, the Agile movement brings much‐needed stability to a discipline that tends to be chaotic. In manufacturing, where rapid changes in customer demands, supplier schedules, engineering configurations, and production capacity challenge the ability to plan, Lean thinking provides innovative ways to address those challenges. In the world of design where there are no fixed solutions and no right or wrong answers, Design Thinking comes to the rescue. In the military, where lives are at stake in the battlefield, and leaders must make decisions under time pressure to outsmart opponents in the fog of war, the methodology developed by the US Air Force for air to air combat – Observe, Orient, Decide, Act – known as the OODA loop, provides a helpful framework to deal with such uncertainties.

      As we explored how different disciplines deal with the types of challenges that executives encounter in developing strategies amid uncertainties typical of the Exponential Era, what stood out to us was just how much commonality was found in how these disciplines approach the problem. Our belief, and an important tenet of this book, is that the convergence of these principles, methods, and techniques used in multiple disciplines to deal effectively with the uncertainties of fast‐changing environments, connected in unique ways, form the basis of an effective methodology for strategic planning in the Exponential Era.

The Premise Behind SPX

      SPX helps organizations identify, explore, monitor, and intercept “horizons” – the changing trends and the technology convergences that can be hugely advantageous to the business if caught early enough, allowing timely and targeted investments, or disastrous if recognized too late, regardless of how much investment is made attempting to catch up.

      The premise behind SPX is that it is possible to detect the early signals of transformative disruptions and to map risks, opportunities, and capabilities, allowing the creation and prioritization of actionable plans designed early enough to keep ahead of exponential change. Let's make one thing clear. We are not suggesting that SPX will help companies predict the future. What SPX does is help companies navigate through this new era of swift changes in technology, business, and society. It does this by monitoring the early signals that help anticipate changes and by mapping risks, opportunities, and capabilities, facilitating the prioritization of actionable plans to keep ahead of these changes.

Table I.1 Sample list of products shut down by Google.

      Source: Data from Google Graveyard, Killed by Google.