An exponential firm is based on technology to transform the material into digital format, and has ten times the impact of its competitors
An organisation can be defined as "exponential" when its impact is at least ten times higher than its competitors’, owing to the use of new organisational techniques, which leverage on technology.
Exponential organisations rely on information technologies, capable of transforming what was previously physical and material into digital. According to the authors, these types of organisations will surpass linear ones because they are able to take advantage of digital externalities, inaccessible to old-fashioned companies.
In 1971 Gordon Moore's law said that the price / performance ratio of computing power in integrated circuits doubles every 18 months. Today this is an established truth, valid for all information technology: every time a sector is computerised, the price / performance ratio doubles annually.
Exponential organizations are revolutionising the business world (and many aspects of our lives) so quickly that linear companies will soon be completely outdated.
The physical world obviously still exists, but the way we relate to it has changed. Already, for many of us, we no longer store our memories in our heads, but on our smartphones; social networks mean that most of our relationships are digital, and we communicate with electronic tools.
From this point of view, it is obvious that, sooner or later, all sectors will be disrupted, which means an upheaval which changes the rules of play that were valid up until the disruption hits. An exponential organisational structure has learned to adapt to the constantly evolving computerised world, and is able to take advantage of it.