The Exponential Imperative

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By Mark Lundegren

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In the life of every person or organization seeking to have an enduring impact, there is a regular need to look at and assess our place or point in time – and especially to see the natural windows of opportunity that time continually opens and closes for us all.

Unfortunately, many of us chronically look at time and its trends in a linear, straight-line, incremental, or piecemeal way, assuming that the future will be a little more or less like the present. In theory and practice, this rarely is the case. Instead, significant trends in time and thus opportunities to create value in the world tend to unfold in exponential, curving, leaping, or building ways, with conditions often becoming very different over time.

To better understand both that and why this is so, we can consider valuable innovations, large and small, from the past. These include the rise of technologies such as trains and planes, novel household products, new retailers and restaurants, popular music or drama, and even humorous internet memes. In each case, if you trace adoption or proliferation of the innovation, you likely will discover that it began somewhat modestly and owing to considerable effort, eventually grew rapidly or exponentially, and then became a more stable or typical condition or phenomenon – and perhaps before being displaced or marginalized by a still newer innovation. When probing innovations in this way, you also may find that a fairly small number of key factors – economic, technological, social, psychological- combined first to enable or allow the innovation and later to promote or usher its eventual obsolescence.

The Exponential Imperative infographic above summarizes these ideas and describes the typical trendlines or curving nature of innovative change. Overall, the graphic is intended to help you: 1) better sense when past innovations are becoming worn or less valuable, 2) consider the corresponding potential for and identify new value-creating opportunities, and 3) lead the essential entrepreneurial processes of opportunity identification or location, successive or serial innovation, and progressive or compounding value creation in time.

Perhaps the most crucial idea and element in the graphic is the s-shaped, sigmoid, or logistic curve (labeled #1). This model of trends in time emphasizes that innovative or displacing change – whether in nature, society, or other complex systems – occurs as I described above: figuratively beginning with a trickle, surging to a torrent, and eventually flattening to a more placid or lake-like state. Importantly, this model of environmental change has been extensively studied and validated (for example, see Growth and also Modis), and I have little doubt that you readily can find examples of these dynamics at work around you.

As suggested, this general shape of change can occur not only with specific iterations of technologies or product offerings, but equally with the larger trends and enabling enterprises that contain and facilitate these specific iterations or successions. Thus, a movie production company may promote several admired actors whose careers each have one or more logistic or sigmoid trendlines, while the company itself and its larger industry may be subject to a similar, if more elongated, life cycle or trajectory over time.

This simple but important model of innovative or upending natural change has at least four key lessons for anyone seeking to begin or sustain an organization, endeavor, or cause. First, it suggests the need for and desirability of value-elevating or incumbent-displacing innovation in all new ventures, products, processes, and offerings. Second, it counsels a degree of patience or resilience when developing new modes of value, since they may take time either to develop in mature form or become recognized as valuable. Third, and conversely, the idea underscores that value-increasing innovations (and not merely novel ones) should achieve dramatic growth or adoption in a reasonable period of time, or should be re-worked or abandoned if this is not the case. Fourth, the idea of s-shaped or logistic innovation curves, or life cycles, underscores the need for innovators, entrepreneurs, and organizations in all domains to regularly look for and act on signs of commodification, obsolescence, maturation, and diminishing value (whether in their work or that of others).

This last idea is the focus of the second and third elements in my graphic. In the process of successive innovation (labeled #2), maturing but still viable products, offerings, efforts, or processes are used to fund and promote new innovations, whether within or beyond existing areas of effort. In this way, there is conscious and strategic disinvestment in or leaning of mature or established operations or functioning, with freed resources used to test and build out higher value and thus naturally more promising offerings for the future.

Within a particular career or organization, there of course may be multiple efforts or value creation processes underway in various states of both maturity and overall success. But overall, the model suggests an ongoing natural or inevitable need to use or leverage the economics and learnings of mature endeavors to enable new and progressively more valuable ones. The model equally underscores that, elementally, there are only two core personal and organizational strategies available to us – that of pursuing valuable new innovations, and then the subsequent and leveraging making of efficiency improvements to existing innovations, especially with their natural maturation and mastery.

The third element on the graphic (labeled #3) extends this set of ideas to emphasize the natural need and opportunity not only to successively or iteratively innovate in one or more domains, but to do so compoundingly or exponentially. By this, I mean the pursuit and realization of accelerating, compoundings, or upwardly curving, and not simply steadily increasing or additive, levels of value creation in time. Crucially, this third graphical element at once describes the natural landscape that existing organizations must traverse when seeking to innovate progressively and endure in time, and also which new entrepreneurs or groups face when attempting to enter existing value processes, domains, or ecosystems.

As I said at the start of our discussion, many of us look at the world and trends in time incrementally or linearly, and perhaps naturally so. Importantly, this is true not only of people at large, but also professional analysts, planners, organizational leaders, and their regulators. This idea explains why and predicts that many of us often will be wrong, and even widely wrong, in our forecasts and expectations for the future – including those pertaining to product, technological, economic, and social trends, all of which normally and often unintuitively are exponential in their basic nature.

In a frequently decisive sense, and as my infographic highlights, any dynamic natural phenomenon that appears trending in a linear fashion probably is being observed too narrowly or closely in scope or time. Nearly always, examples or cases of linear change typically and insightfully can be recast as part of the early nose, middle body, or eventual tail of one or more larger exponential or curving trends.

As always, I am happy to respond to your comments and questions on this often crucial topic for personal, enterprise, and societal success.

Mark Lundegren is the founder of EconomicaNatura.

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