Exponential projects progress along a different growth curve than incremental ones. Learn strategies to shift your organization’s thinking around vision, expectations, metrics and resources.
This chart compares typical curves for incremental vs. exponential innovation, with results along the left axis and time across the bottom.
The exponential curve starts more slowly than the incremental one but steepens over time. Gaps between the curves can stall or derail the path of your exponential journey.
As you consider the two paths of innovation, keep in mind that you need both incremental and exponential thinking.
The goal is to become “ambidextrous” and good at both so you can use the mindset that’s appropriate to the circumstances.
When you are on an exponential path, you don’t have line of sight to the goal. It’s like sending a rocket into space. You know it’s going up, but you can’t see where it is ultimately going to go.
This poses a challenge to the incremental mindset which wants to know exactly where you are going, how you will get there, how long it will take and how much it will cost.
To overcome the vision gap, you need to help people get comfortable with moving in a compelling direction towards an undefined destination.
A strong Shared Purpose and Strategic Narrative help create a compelling direction. You can also find a “horseless carriage” to help people make a mindshift that makes the new direction clearer.
Use this worksheet to find ways to make the direction compelling, even if the destination isn’t known yet. Think about how you currently communicate the vision for a new initiative. What kinds of messages help people move toward a known destination?
For example, Tesla relied on its strong Shared Purpose of “accelerating the world’s transition to sustainable energy” to help sustain enthusiasm while it worked to deliver on its promises. And early automobile-makers created the concept of a ‘horseless carriage’ to help bridge old and new thinking long before the age of Tesla automobiles.
How do you currently communicate the vision for new initiatives?
How can you make your direction compelling, even if the destination isn’t known yet?
On an incremental journey, if you are a third of the way towards your goal, you expect to also have achieved a third of your results.
On an exponential journey, results happen slowly at first as the network effect builds. This makes people nervous, because they aren’t sure if the curve will ever bend, and they are skeptical that growth and progress are imminent.
Think back to the blocks vs. the ping-pong balls. When you’re halfway through the time it takes to build a block tower, you have half of the tower built. At the halfway point of building a ping pong ball box, you’re still loading mouse traps. It doesn’t look like you’re making progress, because you’re still setting up the conditions for the network effect.
To overcome the expectations gap, you need to make sure people understand the difference between the incremental and exponential innovation curves.
Identifying and focusing attention on the right metrics to track network effects is essential (see also “The metrics gap”).
Use this worksheet to find ways to avoid frustration on your exponential journey when progress is slow at first.
How do you currently set expectations on progress for new projects? What messages and metrics help others accurately assess how the project is going?
Here’s how Jeff Bezos helped close the expectations gap for early stakeholders:
“Because of our emphasis on the long term, we may make decisions and weigh tradeoffs differently than some companies.” — Jeff Bezos, Amazon, 1997
How do you currently set expectations on progress for new projects?
How could you avoid frustration with an exponential journey, where progress is slow at first?
One reason for the expectations gap is the lack of metrics that provide guidance and accountability along the exponential journey.
Incremental metrics track progress against predefined goals. By contrast, exponential metrics measure progress towards the creation of network effects, which ultimately lead to exponential results.
You can design exponential metrics that tell you how you are doing towards creating the conditions that will generate exponential results.
One way to identify exponential metrics is to think about what the user wants and measure how well you are able to help them achieve that goal. Also consider what user behaviors are most essential for the ultimate success of the system.
Use this worksheet to identify metrics you currently use to track progress on new initiatives. What can you measure to show that network effects are building to “bend the curve”? Think about what kinds of data you rely on most. Now think about your exponential journey, and the kinds of network effects you’re hoping to build.
For example, Airbnb focused on metrics like number of hosts and number and quality of reviews early on to track favorable conditions for network effects, instead of traditional metrics like revenue.
What kinds of metrics are you currently using to track progress on new initiatives?
What can you measure to show the network effects are building to “bend the curve”?
Rather than focusing on traditional incremental
e-commerce metrics like sales, basket size and markup, Amazon focused on exponential metrics like numbers of reviews, affiliates and members, which demonstrated success in creating conditions for the network effect Amazon was aiming for.
By watching these exponential metrics, Amazon was able to test their progress in creating the right environment for exponential growth—and demonstrate that progress to stakeholders.
Where do you feel the landscape
has changed in your business or industry?
The resource gap comes later in the journey, when the network effect starts to kick in and growth accelerates.
You can’t support exponential growth by adding resources incrementally. You can’t hire people, add servers, or develop processes fast enough. But you also can’t afford to have all this in place ahead of time.
One solution is to look for opportunities to build out resources that can be leveraged both by incremental and exponential efforts. You might also change your hiring criteria or look for multidisciplinary talent.
It’s important to have partnerships, technologies and capabilities ready to go, and to ensure that these resources are able to scale quickly.
Use this worksheet to identify strategies to prepare for the resource gap. Consider how and when you currently decide when to add resources to a line of business. How do you know it’s time to build up? Now consider your exponential journey. How could you have resources in place before they’re needed to be able to scale rapidly once network effects start kicking in?
For example, a company in the early stages of building a multi-sided platform might put resources towards data governance and consolidation, which benefit both lines of business.
How do you currently decide when to add resources to a new initiative?
How could you have resources already in place
and be able to scale them rapidly once network effects start kicking in?