Recently I was watching the movie ‘The Big Short.’ There is a point in the movie where the mad genius, Michael Burray, who initially ‘discovers’ the housing bubble which eventually causes the worldwide recession in 2008, is shunned for his theory. He is criticized by his bosses and verges on losing everything. At the time, most people thought that housing mortgages were the safest investment to be making. Consequently, Michael Burray was thought to be crazy. Yet, he was insistent that he was indeed right in his prediction, eventually leading him to be one of the few people in the world who saw the recession coming.
Now, the question is, what does ‘The Big Short’ teach us? If you have seen the film, you probably know it does actually inform its viewers of various financial and banking terms. However, in terms of the Future Purpose Project, there is a much more valuable lesson here about incremental versus exponential thinking.
Michael Burray was an exponential thinker: he was focused on doing things differently and long-term payout. One of the first writers on incremental versus exponential thinking, Mark Boncheck, summarizes perfectly when he says, ‘The incremental mindset focuses on making something better, while the exponential mindset is makes something different. Incremental is satisfied with 10%. Exponential is out for 10X.’ He demonstrates this in the chart below:
So why is exponential thinking better than incremental thinking? The easy answer is that, at the end of the day, the exponential mindset should, well...exponentially, increase returns making yourself or your organization more successful. However, I think the real beauty of the exponential mindset is not about the part where you beat out the incremental thinking model; it’s actually the part where the exponential model is doing worse than the incremental model, the bit labelled ‘when people get impatient for results.’
Now why is my favourite of the exponential thinking model the part where it seems like it’s failing? Because that’s the part where the growing happens. Incremental mindsets train you to think if I put x into an initiative, I’ll get 10% plus x amount of returns. You learn to expect progress, at well, increments. Now with an exponential mindset, you’re not necessarily focused on doing more, or even doing better, but doing different. And doing things differently will always open you up to more criticism and doubt, as well as a different rate of growth than those following a traditional incremental mindset. Periods of uncertainty and struggle are also where people and organisations grow in ways which test their willpower and grit. Now, I won’t get quite into the ins and outs of grit (that’s for another day), but adopting an exponential mindset is an essential aspect of conceptualizing growth in terms of its journey, not its immediate results.
Exponential thinking might not always lead you to success (as success is dependent on a lot of factors and is often not straightforward), however it trains you to be more gritty and persistent in your goals. Furthermore, since your growth might be on a non-linear and less predictable scale, it forces you to plan in a way which attempts to anticipate the future.
Now, unlike Michael Burray who used this mindset to simply make money, here at the Future Purpose Project, we strive to help you adopt an exponential mindset to help you help other people. Our hope is that by helping you think exponentially, we can also assist your organisation in better strategically planning and anticipating the future. Wondering how we do it? Check out our Quick Start Guide which essentially guides you through the initial process of you and your co-workers/staff thinking exponentially about your future.