Ep002: Exponential Organizations

In this episode, we delve into the rapidly changing world of technology and its impact on businesses, particularly in the context of AI-driven tools through the lens of the 2014 book "Exponential Organizations" and its relevance to small businesses today, as well as how AI is helping to improve processes and reduce costs. We also explore the opportunities and challenges that come with adopting exponential thinking, as well as the importance of personalizing customer experiences and leveraging AI solutions for various tasks.
So, join us as we navigate this exciting new landscape and uncover the many possibilities it holds for businesses of all sizes!

Download Transcripts: 🇬🇧 | 🇫🇷 | 🇪🇸 | 🇵🇹

KEY POINTS

Topic.	Application/Reference	Description
Exponential Technologies	The Exponential Age	A book that discusses the rapid advancements in various technologies and their implications.
Artificial Intelligence	AI in accounting	The use of AI to automate tasks such as data entry, reconciliation, and report generation.
Business Process Automation	Zapier	A tool that connects and automates tasks between different web applications.
Robotics	McDonald's staff-less restaurant	A reference to a McDonald's restaurant that uses automation, reducing the need for human staff.
Creativity and Innovation	Intellectual space	The concept of expanding one's range of ideas to foster creativity and innovation.
Future-proofing businesses	Staying ahead of the curve	The importance of adopting new technologies to remain competitive and avoid becoming obsolete.
Natural Language Processing (NLP)	AI for content generation, chatbots	Examples of NLP applications in businesses to automate content creation and customer support.

LINKS

Get the book: Exponential Organizations
More of ExO: OpenExO

Making Intelligence Accessible | 90-Minute Books | YourPodcast.team

Aalok Y Shukla About Aalok

Stuart Bell About Stuart

---

TRANSCRIPT

Aalok: Hey, Stuart, how are you?

Stuart: Aalok, how's it going buddy?

Aalok: Very good 24th of April, another week is gone.

Stuart: It goes fast. Blink and you might miss it.

Aalok: Absolutely. So let's talk about where things are now. I think there's like, a good quote we can start with I think Mark Zuckerberg has been laying off even more staff. And because he they're going through the year of efficiency at Meta, or Facebook. And I think one key phrase he said is, we're in a different world now. Right. And I think that's, I think that's a point to just reflect on. Because all of us if we're in business, we started our businesses five years ago, seven years ago, even two years ago, and the world was a very different place, based on COVID, or cost structure or staff. And now in this AI first world, or this cognitive first landscape, things have changed. And this just one bit, I want to touch a bit on that we can kind of go into a bit more detail, as we always do, talking about a book, which can actually help give some answers on this as well. Right. So on the Olin podcast, literally just from last week, and Chamath, and they were looking at funds, and he was basically saying to himself, like, I don't know, if I want to raise a fund now. Because before I would have raised a billion or whatever like this, but maybe I need to have a 50 million fund or a smaller, and I need to write lots of 100,000 checks or 5000 checks or something because the cost structure needed to do a new business, a technology business startup has changed. You don't need 10 engineers, 20 engineers, if engineers can use tools like auto GBT chat, GBT, copilot other things like this, even Amazon have come out with their own code version of it. So you don't need as much staff as much cost. So maybe you know that there's a lot more innovation that can take place. So I think, this phrase of this different world that we're in now, and even companies that are looking to start now, because I think they were also talking about these companies, which are at Series C, which is basically when they've done two rounds of funding beforehand. Normally, some big investor put some loads of money. And they were saying the Series C investment has actually dropped. Because no one wants to be putting in those big amounts of checks for legacy cost structure businesses, like if you're creating a business, they basically called you a zombie corn, because like, you're not going to go anywhere, right, like, and so I think that that becomes quite interesting, because it's all about now having a much lighter, leaner, more exponential organization, what are your thoughts on that?

Stuart: The speed of change, and the ability, so even had a personal experience that is even in the last week. So we manage a pretty, not massive, but it's a number of podcasts for different people as part of the your podcast team brand. That organization was set up mid COVID, a couple of years ago, or early COVID, I guess, a couple of years ago. And we had some exponential opportunities using some of the technology at the time. And since then, we've lost some and brought some on. But we're pretty much using the same setup our show last week, because it's kind of mean you do it. We did it pretty quickly. So I just set up first one I've set up for a couple of years, because usually, I've got the team doing it. Exactly, yeah, you kind of put something in place, you kind of build that mechanism, and then hand it off and move on to the next thing. So it's a little enlightening going back in and now, I mean, probably it's only 18 months, but 18 months later looking at some of the tools, which almost look like legacy tools. They were cutting edge a couple of years ago. And some of the things that we were using for the show notes and the setup that we've done for this one, would you've only been around for a couple of months now. I mean, that speed of change, and having that different mindset. So again, we're not a VC funded size for for that project. But I can completely understand why people will be looking at investments and saying this company was a fantastic idea 18 months ago, but now, do I want to put another massive money into it? Not in this world, right. So that speed of change, and the what exponential means like, so we're gonna look at exponential organizations, the book as a lens to kind of judge it. But that was 2014 That book was written. So I think as we get into a little bit, it'll be really interesting to see just how quickly that has changed. So that means the mentality of us as business owners. That is the thing that needs to fundamentally change. And it's very dangerous now to sit back on something that's worked even in the in the realm.

Aalok: I mean, like in that bin or in podcasts, they were they were also talking about like, one guy that they said he was quite cutting edge in AI, he literally had spent six weeks training a model and he let go of like, you know, maybe like a, you know, I can't remember exact percentage, but it was a significant centage of staff, right, like, so it's not about letting go of people, right. But it just being clear, but the point is, if tasks can be done more efficiently through technology, and don't have variance or quality issues, then your your team can be reallocated to other things. But it's become quite clear that like many tech companies, and many employees we're not doing so much isn't, you know, so I think I think this having this kind of like, zero mindset of, if I were starting again, would I do what I would I would I do everything that way, I'm doing it now. And I think having that kind of like almost beginner's mindset of like, every 12 months, rethinking everything in your organization, because literally, the tools and the possibilities are upgrading week by week, and it's not question of like, just get confused. Just make a cost saving. And then, you know, Theory of Constraints go to the next constraint basically, isn't it? Right? Like, I think, I think that's the framework. So exponential organizations is quite an amazing book, really, that came out in 2014. And that was the whole that was about, like, the Uber ification of everything, and like how to build these kind of like faster businesses, which are like they say, like, why new organizations are 10 times better, faster and cheaper than yours, and what to do about it? And I mean, let's start there, right? Like, how does that relate to like, small business? Because we have with us in like, 19 90%, the business of the world, like small businesses, basically. Right? So I think is completely irrelevant. But like, I'm interested in your viewpoint.

Stuart: Yeah, me too. And I think I perhaps think it's maybe more relevant now to us as a frame to judge where we are against then it was when I first read it in I was looking on, on Amazon, and it popped up and reminded me, I bought it in, I think it was February 2015. So I mean, eight years ago, now, it was crazy. But I remember at the time reading it and thinking, this is a I can see where this is coming from. But it's a bit like blue sky thinking. Because

Aalok: you don't resources to implement some of those things, isn't it? Right? Like,

Stuart: yeah, it was too big. All of the examples that are given our big organization example. So I think,

Aalok: millions and all that kind of stuff, like Yeah, so yeah,

Stuart: so it was it was an interesting theoretical concept, but it was not particularly applicable or accessible as a small business owner. I think now, there is that accessibility, because some of the tools, it's easy to dismiss them as just big tools, like the label of big data. But when you think about, Okay, what does that mean for small organization? A years later, it's much more addressable. So a couple of notes that I was taking the book itself, if you haven't read it is split into kind of two chapters, or two sections. The first part is kind of describing what exponential organizations are. And then the second part talks about building an exponential organization. Now that second part, the examples there, I remember going back to that get ready for the show. I remember at the time, that was too big, it was very, it was big, Earth changing scale, which didn't really resonate

Aalok: more like ways versus like Nokia, or like, you know, like, like, if you're, you know, you're a business, you're not gonna be getting your app onto like, millions of handsets. And it's just not realistic, isn't it? Right, like, but I think, I think if we talk about the kind of like framework, and then we can kind of look at how it's relevant to your business because like, for example, this morning, I was watching a video where they've they've linked chat GPT, to computer vision software, which basically watches YouTube videos, and the chat up ticks. So then the Siletz was a picture of a panda, like a video of a panda like lifting the arm up and stuff. And then it was sort of the prompt said, what is happening in this video? And then chat, GBT looked at it through the interpretation from the computer vision saying, it's the panda is eating bamboo. And it's like, why did the hand raise its hand to get bamboo? You know, like, it will eat all the bamboo? No, it's unlikely to. And then it was like showing a lady doing yoga on a roof. And it says, what's here? So it's like, it's a lady doing yoga. And it appears to be on a roof. And so like, what makes you see that? Well, I can see the sky and I can see this pot like it, you know, that's now.

Stuart: Yeah. And the explanation, its ability to explain what's happening. I think that is an element that isn't often talked about, like a lot of the videos, you're talking about the sorry, a lot of the videos that you see talking about the capability just talks about use cases and instructions going in. Some of them talking about as you're prompting, asking for confirmation, the system understands which I think that's useful as well, but it always seems a little bit. Like the answer is always yes. I'm sure the answer wouldn't always be yes. If you didn't understand that in the examples. It's always yes. So okay, what's it?

Aalok: Like here? It was actually like giving more DNA to describe?

Stuart: Yeah, and for ulcers as people who are trained to interact with the system and understand what he understands, I think that's essential. So when you think about trouble talking to someone in a foreign language when you're just learning, going slow taking bite sized steps and making sure that there's feedback all the way. Yeah, that is important. You wouldn't just blurt out a whole load of things that you learned, and hopefully the other person understood because you know, as a foreign language learner, there's probably going to be some misinterpretation there. So it's easier to deal with that in bite sized pieces. So helping us as the AI language learner understand what's going on? Yeah, very helpful.

Aalok: So exactly. So like, so I think in this in that framework, there's a really nice image, basically, where he talks about on once on the one side is like ideas scale, basically, and your massive transformative purpose, which is basically like, what your vision is, and what you want to, you know, dramatically impact and for the kind of, like scale side of it, like you've got, like staff on demand, community and crowd algorithms, leveraged assets and engagement, and like staffing demand as contractors, basically, right, and using like, you know, these Upwork, freelancer, all these different places have worked. But now you've even got AI agents that could even do this that contractors were doing before, isn't it? Right, you know, so that, that adds another element to it. And then community and crowd we all know very well about, you know, like having forums, open source communities. I mean, the whole AI movement is actually spun by, you know, auto GPT was a community project basically. Right, you know, so that that was kind of like coming out in that way. Algorithms and leveraged assets, I think were the ones where I thought, something accessible to a small business, but now it's not because the ability to essentially create your own or almost like, your own programs, your own algorithms, and like to make it simple, like, how do you answer customer support emails, you've got your own templates already from all your hundreds and hundreds of emails that you've sent out. Now, using different systems, you can actually use that as a fine tuned data set. So your emails would all automatically go through that area. I mean, that's huge to already have that bit coming out now.

Stuart: And things like an easy one. So a lot of people that are asking comes up in conversation, this idea of algorithms confuses the small knots, which confuses but small business owners don't necessarily see the use case for it. So the one that I've used often is to just explain it, or to make obvious how accessible it is, is kind of off the shelf sentiment models. Because we always say, of big companies can build big algorithms, that's fine. But me as an individual business owner, or small business owner, where does that come in sentiment analysis is an off the shelf product, now the you can just load the input, and it gives an output or case by case it will give an output. And that's very easy to understand. So you can imagine a scenario where the support tickets that initially come in to your feedback channel. Yep, and then automatically go to sentiment analysis. So the either on a agent by Agent case, you can just deal with the, the dissatisfied people rather than the happy people, or at an organizational level, you can get that kind of metric or or monitor of, of how much is happy versus how much is sad. So there's definitely off the shelf more and more off the shelf models that become

Aalok: and you see people in an off the shelf we're talking about, like literally, like Zapier is like you do require no technology, you just create the account, you just click which program you want to connect to which program based on what action, and then it's literally like If This Then That Right? Like and then it just, it just runs, you know, like I mean, I for accounting A while ago, I made like the email that we get all our invoices to I just made a zap where anything email with a PDF automatically saved into Google Drive. And that was the invoice you know, like, and then the accountant just looks at those things. So it's, it's like completely accessible at like, next to no cost now, you know, like in these sorts of in these sorts of areas. And I think, I think that's, I think there's one kind of like idea that I'm looking at more and more is like, how to go through a process and I'm calling this tool, the process cognitive fire, where you're literally doing two things where you're looking at, you're really looking at whatever process let's call it sales or customer support or whatever. And you're thinking in two parts, how to make it better, in terms of like, you know, more personalized, more engaging, more timely, you know, whatever, through video, you know, sound whatever like this, and how to make it cheaper. So how do I like, you know, automated parts of it, or have it pre packaged or pre filtered to the doctor, the doctor, the dentist, the customer support person spends less time and I think that that two elements of like, make it better, make it cheaper, you know, like you can you can literally just go through your whole customer journey in that way. And then that's where you get into this whole new cost structure, which is the whole opportunity really here isn't it right, you know, to kind of increase your quality, but cut your cost structure, and then you're gonna be in a much stronger place basically, isn't it you know,

Stuart: I think will stink the the image that you were running through that exponential organization formula image from the book, we'll stick that in the show notes. I think that's, that's fair use. And then we'll link to where people can get the copy of the book as well, obviously, but going through the bits that we're talking about, it'll just be easy for people to kind of see where they sit. But that point they're making about reducing costs. I think often times, particularly non business owners, I guess, we're mainly talking to business owners, it's probably less of an issue. But certainly when you see the news or hear people who aren't responsible for businesses talking about it, they see the bad side of staff reduction and think of cost cutting as profit maximization. But the reality is that we're, I mean, particularly in the US now. So we're, I mean, we've probably been teetering on the edge of recession for a nine months or so. But we're, I think we're potentially officially in recession, depending on how they change the definition of this month. Semantics. Yeah, exactly. But that is an issue. So cost reduction isn't about profit maximization. It's the Bane live. ByVal. Yeah, exactly. Exactly. It's

Aalok: hemorrhaging blood, you can't lose. You can't keep losing blood. If you're losing money. You can't just raise the money, right?

Stuart: Yeah. Yeah, maximizing one staff position into something more automated. That's unfortunate for that individual. But if that means that the organization survives, then, yeah, it's, it's a necessity. So the the, the efficient use of capital into away from things that are manual tasks and repetitive there's that saying, eliminate automate delegate, in order, like eliminate what you can using this as an opportunity to not only address it in an automation sense, but in an elimination sentence,

Aalok: and then need to be done. Isn't it? Like I agree with you?

Stuart: Yeah. Yeah. How many of the things even from a perspective of kind of the AI automation? When you think about AI, I can't speak from a turn back. And when you think about AI automation, the initial thought I think for a lot of people is automating the manual tasks that things are already done by humans. But then when you get to the stage of thinking, Okay, well, why are we doing that job for humans? So filing PDFs in an email? Are we doing that because it's then easier for the humans to at a later date? Go back to what do we even need to do that? Now? I mean, I don't know how your mailbox looks, but mine looks horrendous. Because anything because I just searched something. And the robots in the email surface it

Aalok: agree, like, who was I talking? Like, I remember, like, everything has kind of changed in that regard. And I think the key thing is like, you need to kind of like relook at what you are spending money on, and see where you could reallocate that to better usage, or reallocate people who are creative and understand things into like, rather than a repetitive task into something much more creative. And that's where that kind of opportunity is, and I think, on the other side of the ideas scale, we talked about scale, basically, like your the interfaces, dashboards, and experimentation, and autonomy and social media, basically. So interface is just like ways of interfacing but it could it could be like chat, GBT is interface right? You know, like, so it's making it easier for people to kind of like, do stuff use stuff? Or it could be a voice based interface, or having a dashboard about showing that? Okay, these are all the customer support emails that came in today? How many of them are angry? How many of them, there's how many of that, you know, like, and then seeing their experimentation, like, you know, like, trying, you know, okay, let's send a video greeting message to all of our new customers this week, and see, you know, does that change the perception? Or is this so many things you can actually do with less people? So you can actually do it quicker, basically, you know, that's the kind of, that's the thing now

Stuart: that I'm very biased toward Zapier because we've used it for many, many years. Fantastic, and reuse it pretty extensively. So there are other tools out there. But I wonder if maybe it's worth doing a slightly deeper dive on Zapier at some point in the future for those people who don't know it, because I think it's the most accessible, firstly, at all. So when we're looking at things like leverage assets is one of the exponential the scale opportunities. So leveraging assets, this idea that you can have a system that takes the one source piece of material, but then create several different things from it, and then bundles that together and then sends it out of the door. So we are still doing this somewhat manually. I guess. It's it's an opportunity for us to make a difference. So on the book business, so 90 minute books, our key asset that's created is that is the book itself. And then from a design and a social perspective. It's the Cover, Once the cover is done that then feed is the visual element that feeds into everything else. But from a leverage assets opportunity to take that cover to push it into one or two of the mock up creation tools to push it into mid journey to create variations, to then pull all those into a place, and then have that place monitor to then send out an email when you're

Aalok: adding more illustrations, right. So if they if they've got like a story type book, where they're like, basically, it's like a business book, but they're giving a story where you could actually have illustrations as part of that, that becomes additional service, which can be done, isn't it? Right, you know? And then, and then then you've got like, from that you can also go audio books we talked about as well, isn't it? Right? You know, that's, that becomes like another thing, because now with trained voice, you can actually recreate that person's voice, you know, digitally, you know, so you don't have to read out all the audio books, all the messages, and it can still be done in the way you want it to be done. You know, like, I think I think it's nothing strengths. Yeah, exactly. And I think I think the key thing here is that, like, people just want a more personalized customer support customer service experience. Like that's what everyone wants, and they want it as quickly as possible. So if technology can help you filter it, and help people focus on where it needs to be focused on, that can only be a good thing.

Stuart: Yeah, I think there's so many opportunities to leverage and streamline and scale. One of the things that's always interesting, and I think it's maybe again, a personal bias, like so much stuff is because I don't engage that much on social media, I'm trying to get better, just in terms of a channel to market but it doesn't come naturally. So say biased against it, this idea of the crowdsourcing element. So 2014 like to say when the book was written way years as a as a counter to what was the big navigation, like the back end Legion system, and Nagi, what the one that kind of sits behind it, NaVi. At now. Yeah, it was a behind the scenes one. So most people wouldn't know the name, but a lot of the maps were powered by it. So this idea of that company, going down and mapping all the routes individually and putting sensors on all of the routes to deal with traffic flow. Like he used to see it in the UK all the time, you'll be on every bridge on the motorway, he's on the freeways, there was like the little radar sensors that weren't speed traps, but they were just traffic monitoring, compared that with the crowd source element of ways, which is just the massive data going around. So 2014, that was a big thing around crowd and community is that idea at scale. But now when you take it to 2023, and a smaller scale element of it. So one of the things that always makes me think about small businesses being able to manage community is this idea of polarization. And particularly since like 2016, managing your community and having a community manager and making sure that it doesn't go off the rails, it's very interesting. But that's where something like, they're gonna keep going back to sentiment analysis, just because it's I think it's the easiest way into an AI algorithm world, having a social platform built into your environment, to bring customers into the family to make them feel involved, to give them access to you as the business owner to give you a conduit to share your unique perspective and skills and personality, but then layering in sentiment analysis so that it very quickly traps the negative or traps, the trolling, some reasonable communities, being able to add in that extra element. So I think we've started off by

Aalok: we'd have to have like someone who was like, literally on call to catch the troll, isn't it right, like, and now now you can have like, if a sentiment company, if a comment comes in, which looks majority negative, it could automatically be like held in that list. It just changes the allocation of attention really, isn't it? Right. Yeah.

Stuart: Which goes back to the point that you first started off within the call when we were saying about it's a mindset switch now. So the biggest thing, the biggest takeaway, I think, from exponential organizations is not necessarily the nuts and bolts. Yeah, it's the mindset. And the fact that in 2023, that mindset that need to adopt a learning mindset is Gionee accelerated. So some things that you might have dismissed in the past is as too difficult or too time consuming or out of scope. Now is the time to reevaluate those and think again about okay, well, is it now essential? And is it now achievable in a way that is, is something that we can actually do as an organization? Because that metric has probably changed?

Aalok: Yeah, and the thing is that if you don't do it, your competition someone someone will do it, you know, so, so fast. They want to quicker and cheaper. So I think I think the key is like, having the time to like rethink, and so almost like document and think, Okay, where are we kind of like slowing down? You know? And where could we speed up? And then from that, by applying technology to it, it automatically organized around costs, you know, improvements and and that kind of thing. But I think the key thing to think about is like, how can you make it better with technology? Because this technology will automatically make it cheaper now at the same time, right? You know, like, I think I think that's the thing. That's the kind of like framework.

Stuart: When I was Googling around for something last week, I saw there was a website that popped up in a search result is there's an AI for that.com. So always remember, again, probably 20. So the iPhone, what was the iPhone 2008 2009, I think I got my first one in 2011. And back then there was that website, there's an app for that, and it can became like a meme. Well, now there's an API for that. So whatever you're thinking about before you dismiss it, just search, and there's almost certainly a project that's out there.

Aalok: I think that's the key thing, really, I think, like, what we're trying to do here is that, like, I think one, one concept I came across is like to be more creative, you need to almost increase, they called it like, I forget what it called, but like, it was like intellectual space. It's like the space of ideas, and the number of disparate or separate ideas you've got in your head. And the thing is, the more you kind of get exposed to wow, that's possible, this is possible, this is possible, then you you've got that link of that space to move within. So you can think that, okay, you know, I'm a small business, I've got this, and I want to do that, and I need to manage this, how can I do that? Well, I could start with this part. Maybe it makes maybe that saves half the time of somebody, basically, then they could help with something else or do something else, like whatever it is, but there's, I mean, it's all coming. I mean, I shared the other day, that McDonald's that's that was like from December 22, they were announcing it were had no staff, you know, like no staff, you know, like, and, and so, it's, it's all going that way, you know, like so it's I think the question is like, you still want team members to apply creativity to enhance things, but you need to be thoughtful about where you're gonna allocate those people to really make the difference really, isn't it? Right, rather than absorbing all the creativity and energy in tasks, which technology could do better?

Stuart: Yeah. Just said, it's not even so much that if you don't do it, you might be behind the curve. It's if you don't do it, someone else is going to, and if the organization could suffer if you don't make these decisions now to stay ahead, because it's not, it doesn't it's surprising how quick things change. So an almost the the speed of change doesn't capture it, but it's like, this is fine. This is fine. This is okay, this is okay. Now, what's wrong and it doesn't work. And vegan avocado.

Aalok: It's like an avocado. Basically, you've got like a no, no, no, yes. No, no.

Stuart: It was like my studying as a kid in school too early, too early, too early, perfect. milliseconds. Oh, well, no, it's too late. It's not worth it.

Aalok: So I think I think so, highly recommend people definitely just look at the effects. So formula which will put like on there with the visual, but then also like, you know, read the book, scan it and dig into the bits, but I think the key thing is now start thinking about like, you know, which which areas are you interested in and looking at it I think what we can do, maybe in our next episodes, we can start going a bit deeper, like you said, into actual search, you know, natural process at some actual tools and, and what kind of improvements are possible from that, basically?

Stuart: Yeah, I think because it's definitely accessible by starting slow, and there is a window of time where you've maybe got a little bit of opportunity to start slow but that that window is going to change. And I really don't know how short that is. I mean, just look for the last few months that book it this has been an interesting exercise going back and looking at the book I was reminded how when I first read it, it was too big and broad. But now taking it again and looking at the opportunities of which there are many more so just that that put a different pair of glasses on to to look at it well worth it.

Aalok: Yeah, you put your exponential glasses on right? You really look at your but listen, great catching up with Stuart as always and look forward to our next conversation.

Stuart: Fantastic look forward to seeing everyone is you're listening or watching check out the website go for it. Augmented ideas don't show because we will have the image that we were talking through and then the video of the recording clear. And she has a message I'll put some contact details on the on the website where if there's anything that you're struggling with or a particular thing that you want us to dive into, shoot us a message and we'll we'll incorporate that

AI Tools Used:
Transcript: Otter.AI
Sound Leveling: Auphonic
Description & Summary: Podium
Translations: DeepL