5 Guiding Principles for Switching to an Exponential Business Model

a business operating in an exponential growth model

The way we conduct businesses is changing faster than ever. Most companies are expected to shift from linear business models to exponential business models to succeed in the modern market.

However, ensuring exponential growth isn’t only about scaling. Instead, it requires you to fully change your perspective about your business and the industry it operates in. You also have to exponentially enhance your imagination and creativity.

Additionally, you must leverage the abundance of technology in a key business model block, such as customer segments, value propositions, etc. Many global leading companies such as Amazon, Spotify, Netflix, Airbnb, etc. have successfully done this.

Today, we’re discussing how to switch to an exponential business model with the help of a systems integration company like Vates.

What Is an Exponential Business Model?

We’re living in one of the most fascinating times in human history where technologies are developing rapidly. Most people now have free and unlimited access to information. This trend in exponential technologies is changing the business landscape.

A business model determines how a company creates and delivers value. It enables a business to map out successful operations such as identifying sources of revenue, key resources, intended customers, partners in your value chain, etc. This also includes building blocks, such as:

  1. Channels
  2. Cost structures
  3. Customer relationships
  4. Customer segments
  5. Revenue streams
  6. Value proposition

Exponential business models understand the same key areas as linear models do, but they have completely different objectives.

company employees working

Linear business models aim to increase profits by 10 percent. On the other hand, exponential business models aim to make changes that are ten times greater than the current value.

Exponential growth is calculated using a number of equal time intervals. To put it simply, when a business doubles their growth over various time intervals, its starting value experiences a boost. For example, exponential companies aim toward doubling their size every quarter. They achieve this by utilizing abundance in technology, which helps them operate on fewer resources.

Do you want to follow in these major companies’ footsteps and switch to an exponential business model? Here are the guideline principles to help.

Principle #1: Solve Consumers’ Problems

It’s vital that your business solves a common problem that consumers face. Now, why is that? As long as customers have a problem, they will look for a solution. Companies have a lot of room as consumers are always looking for smarter, easier, and simpler ways to accomplish everyday tasks. The exponential business model can enable your business to tap into these markets to close the gap between the consumers and the resources they need.

In this way, you need to focus on creating a product or service that’s a necessity and not something nice to have. For example, Uber is an exponential organization that understood consumer needs and expanded its services to create more solutions with UberEATS and UberHEALTH.

Principle #2: Digitize Services

Digitization of products and services doesn’t just mean that businesses are creating new versions of their traditional services. It also means they’re generating completely different marketplaces. Your business, regardless of the industry it’s in, should re-imagine its services and digitize them to serve customers better. This enables you to digitize their current value propositions to create openings for brand new foundations of value.

For example, though the concept of short-term rental is not new, Airbnb re-imagined it on their platform to earn billions. Another example is Uber which took the concept of cabs and reimagined them digitally.

Principle #3: Utilize Revolutionary Scalable Processes

Consumer demands are changing and shifting continously as technology alters how companies conduct their businesses. This is why businesses should utilize technology to analyze and automate their systems, operations, and processes. In the modern age of instant gratification, exponential businesses are utilizing machine learning and AI technology to make their processes more efficient for quick services.

For example, Amazon utilizes AI robots to stock and retrieve products from their warehouses.

self managed teams working on a project

Technology also helps businesses provide a better customer experience and reduces the risk of error with automation technology. Data analytics software can also aid businesses in gaining deep insight into their business, helping them make better informed decisions.

Principle #4: Utilize Algorithms

This principle is connected to the previous one. Exponential companies utilize algorithms augmented by machine learning to shape the way they operate. That’s because algorithms allow businesses to gain deep insight as well as predict and explain events. Companies use algorithm data to enhance their decision-making process and their general business performance.

Algorithmic companies like Amazon and Google utilize algorithms to operate almost all parts of their business.

Principle #5: Enable Self-Managed Teams

Exponential businesses must enable employees to operate in networks to work and share real-time insights and experiences. This open and supportive work culture gives employees autonomy to accelerate the decision-making processes. For example, Zappos is one of the pioneers to empower its workers. Microsoft also enables collaboration efforts between their employees and supports network-building.

Principle #5: Use a Lean Approach

Exponential business models make for lean businesses that maximize their value while minimizing waste. Using a lean approach for all core functions enables businesses to identify value streams and optimize them. This is extremely different from just working on those that aren’t working.

the employees of an exponential business

Are you ready to switch to an exponential business model? Then try Vates’ services today!

At Vates, we take pride in being a renowned nearshore systems integration company that helps businesses boost their operations. We utilize cutting-edge technology and top 10% IT talent to ensure companies get leading IT solutions for their company.

We are a South American software development company that provides various IT solutions such as custom software development, a big data analytics consulting services, software quality control and testing services, IoT solutions, consulting services, and more.

Contact us today to learn more about our services.



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