Exponential Organizations: Why new organizations are ten times better, faster, and cheaper than yours (and what to do about it)

by Salim Ismail

For example, let’s look at the financial services industry. A classic bank offers many services such as payment infrastructure, trust, mobile and social wallets, e-commerce and m-commerce solutions, lending, investments, stocks, etc. It is a consolidated or aggregated offering of different individual financial services. Those banks are now being disrupted by a variety of financial startups, including Square, Clinkle, Stripe, Lending Club, Kickstarter, eToro and Estimize. We consider this fragmentation of individual financial services a form of unbundling. Now, what if all these startups decided to cooperate or merge within the next five years? What if they agreed to create alliances via open APIs? What if they partnered and rebundled? You’d end up with a completely new bank with at least 10x less overhead than that of its predecessors, as the new entity would require less real estate and fewer employees.