The step-by-step guide for companies to "survive" the new technological waves, according to Salim Ismail.

Salim Ismail has many facets. At 60, the Indo-Canadian was vice president of Yahoo and one of the founders of Singularity University . And today, he divides his time between the roles of writer, speaker, podcaster, strategist, futurist, investor, and entrepreneur, leading OpenExO.

With this background, he landed this week in Porto Alegre, where he is one of the guests at the South Summit Brazil , an event that will take place from March 25 to 27, and for which NeoFeed is a media partner.

As with the more than 150 annual lectures he gives around the world, two themes, in particular, will be the guiding threads of his presentation: the impact of disruptive technologies, such as artificial intelligence (AI), and how companies are being built or adapting to this scenario.

“There are two issues we’ve never seen before,” Ismail tells NeoFeed . “In the past, we had mobile technology or the internet accelerating. Today, there are a dozen technologies, like biotechnology , drones, self-driving cars , and AI. And all doubling in a few weeks or months.”

The second component, he says, is the fact that, for the first time in history, the most advanced technologies are very cheap. "Technology is becoming more accessible faster than we've ever seen."

To keep pace with the speed of these waves and their impacts, Ismail has reserved part of his busy schedule for a review of the model he designed to classify companies and operations that are born and advance rapidly in contexts like this.

This thesis is the central theme of his best-selling book "Exponential Organizations," written in 2014, which has sold over 1.5 million copies and has been translated into more than 20 languages. The book and the research that underpins its content are also the basis for a program created by OpenExO.

Founded and led by Ismail, the company has a program that provides a step-by-step guide for governments and traditional companies to adapt to and survive these new times of rapid and radical change. And, in addition to groups like P&G and Unilever, it has even served the Vatican.

In the conversation, among other topics, Ismail explains these steps, the characteristics that define an exponential organization, and gives an example of a Brazilian company that fits this concept.

Below are the main excerpts from the interview:

What makes this new wave of disruption different from other technology cycles?
There are two things we've never seen before. The first is that we have a dozen technologies operating in a doubling pattern similar to Moore's Law. This is something completely unique. In the past, we had mobile technology accelerating or the internet accelerating. Today, there are a dozen of them, like biotechnology, drones, self-driving cars, and AI, all doubling in a few weeks or months. AI, for example, is doubling its capacity every 10 weeks, which is insane.

And the second question?
For the first time in history, advanced technologies are very cheap. Sensors, solar energy, blockchain. You can spend $20 or $1 million a month on AI and get basically the same result. Technology is becoming more accessible faster than we've ever seen. And the rapid advancement of AI is impacting all these other areas.

"For the first time in history, advanced technologies are very cheap. Sensors, solar energy, blockchain. You can spend $20 or $1 million a month on AI and get basically the same result."

Are there any other technologies with the same disruptive power as AI?
It depends on the sector. If you work in healthcare, biotechnology is very disruptive. In transportation, autonomous or flying cars will be very disruptive. But, at the moment, the dominant paradigm is AI, because once it's incorporated into a company, it improves itself and starts a very powerful cycle. Other technologies are also very disruptive, such as blockchain or bitcoin. But AI is becoming the basis of everything and radically accelerating everything.

How is it changing the way companies are built and managed?
Today, you can build an entire company completely driven by AI. In the past, perhaps we had AI in a specific area, like credit card fraud detection. And all workflows, in any company, were person-to-person. Now, they can be just agent-to-agent. It's completely different. We're going to build organizations largely based on AI and very little on humans. My estimate is that we'll run companies, on average, with about 25% of the current number of people.

So, will there be a substantial impact on the job market?
At first glance, you might say this means a huge loss of jobs. But what will happen is that we will create four times as many companies and we won't have as many employment problems.

"My estimate is that we will be running companies with, on average, about 25% of the current number of people."

Long before AI reached this scale, you were already addressing part of this scenario in your 2012 book, "Exponential Organizations." How did you begin developing this concept?
The launch of Amazon Web Services in 2008 showed that it wasn't necessary to build an entire server park and then chase demand. It was possible to scale the company as fast as the technology, and a new generation of companies emerged. What we did was analyze 150 of the fastest-growing unicorns. And we created a list of their main strategies. This is what we now call the ExO model. But now, the model needs to be updated to reflect what is happening with AI.

What characteristics define an exponential organization?
You can imagine a diagram of a brain. In the right hemisphere, we have all the growth characteristics – like using the community, on-demand resources. And gamification to get very quick feedback on what your customers are doing. These are the externalities.

And in the left hemisphere?
We have five internal mechanisms, such as the lean startup mindset and decentralized decision-making. So, we identified a total of 11 characteristics. These companies have very fast feedback cycles, tolerate failure very well, and quickly rework their products. In simple terms, if you operate your organization with this model, you will scale 10 times faster than your rivals. The most emblematic examples are Uber, Airbnb, and Waze. You can scale Airbnb a thousand times faster than Hyatt.

What are some examples of the new generation of exponential companies?
Almost all the major blockchains, such as Solana, Cardano, and Ethereum, are examples. They create a community, add crypto-economy and gamification, and manage to scale that community very quickly, building a $30, $40, or $50 billion ecosystem in a short time.

What challenges do this new generation and these technologies bring to traditional companies?
For large companies, it's an existential threat. If they don't automate their processes, they'll go bankrupt very quickly, since there will be numerous startups performing the same process in a fully automated way. Take a company like DocuSign. They built a billion-dollar business just by automating document signatures. Well, today, I can do that in a day using AI and make it available as open source. That's a huge threat to a company like them.

And what about governments?
Governments, non-profit organizations, and large corporations alike are filled with a specific set of very well-documented tasks. And when something happens, you know you should follow those four or five steps. All of this can be automated now. The big problem is that trying to automate the existing mothership will never work.

So how do we make this transition?
The only way is to create a native AI digital twin at the edge and start migrating workflows to it, one by one, developing this entity, which is essentially an AI equivalent of your current organization. And then, migrate the people.

"If you try something disruptive in a large company, the immune system attacks. Because all our organizations are built to resist change."

Why is this the only way?
If you try something disruptive in a large company, the immune system attacks. Because all our organizations are built to resist change. So, our thesis for large organizations is that when you have a disruptive opportunity, you need to seize it on the periphery and not at headquarters. Because if it's truly disruptive, it won't fit perfectly into the headquarters, and you'll get into a lot of internal politics, and the company will attack you. And I discovered this at Yahoo.

As?
I was the head of innovation at Yahoo. And the more disruptive the idea we had, the less the company could handle it. It drove me crazy. So, I became a sort of expert on what I call the organizational immune system. And we created a program to solve that problem.

What, in general terms, is this program?
It's a program we tested with Procter & Gamble. We discovered a way to hack culture on a large scale. We've already done this 100 times with large companies like Siemens Energy, Unilever, and, in Brazil, Visa. Currently, we are working, for example, with the Ukrainian government and about 15 to 20 governments worldwide.

How does this program work in practice?
It's a 10-week program where you break down the immune system. In the past, if you tried to do something like that, you'd have to invest a lot. The CFO would hate you and try to cut resources as quickly as possible. Now, because the cost of doing disruptive things is very low, you can do several experiments outside the company and only invest more in them when you succeed. Amazon, for example, did many experiments before launching Amazon Prime and, as soon as they saw it was ready, they were able to scale. Now, everyone in the US has a subscription to the service.

Are there any examples outside the technology sector of companies moving in this direction?
Nestlé is a good example. They created Nespresso in 1976. And for 10 years, they tried to run it as a separate business line, but they failed because it's a completely different model from their traditional production of soup or baby formula. Finally, they relegated innovation to the periphery of the company and, voilà, now every hotel room in the world has a Nespresso machine.

What is the most difficult step in this transition?
It's a matter of leadership and having the willingness to do this at the forefront. Because all current executives will try to appropriate the initiative and say, "It's better to do this internally because we can manage it better." And the reality is that they can't, but they don't know it. So, a lot of internal politics arise. Therefore, the CEO or the board needs to have the discipline to do this at the forefront and let management take the lead. This is very difficult for most traditional leaders.

Could you highlight any Brazilian company that fits this concept of an exponential organization?
The companies in iFood's portfolio fit together perfectly. They are all scaling with on-demand people or assets. And they all have a grand purpose and operate using this model.

How has this whole context of such rapid change been reflected in Brazil?
Brazil has a good side and a bad side. The good side is that Brazilians are naturally very flexible and entrepreneurial. And they have a lot of passion. I'm Canadian, and in Canada you don't see that much passion. So, I think motivation and entrepreneurial spirit are present.

And what's the downside?
The problem is that the culture is very traditional, organizational, hierarchical, pyramidal, and command-and-control. This requires a much greater cultural shift within the company. So, Brazil has its pros and cons. But I think the opportunities are almost endless.