Report on Workshop “Navigating Exponential Growth: Leadership and Decision-Making in Times of Nonlinear Change”
by David Hurst

Ed Catmull: co-founder of Pixar Animation Studios and president of Pixar Animation and Disney Animation.

Hal Gregersen: senior lecturer in leadership and innovation at MIT’s Sloan School of Management.

Moderated by Julia Kirby: Senior Editor, Harvard University Press

The workshop began with Hal Gregersen introducing the polling software Question Burst (questionburst.com) which was used to interact with the workshop participants.

Acknowledging the pandemic and its exponential features, he then told the story of Hungarian biochemist, Dr. Katalina Kariko and her 30 year-long quest to make RNA molecules in the laboratory and get mRNA into the cells of the body. Her work would form the basis for the successful mRNA vaccines that have been so instrumental in slowing the spread of COVID-19. Drucker would have called her a “monomaniac on a mission”.

Gregersen compared Kariko’s story to those of other visionaries like Jeff Bezos (Amazon) and Marc Benioff (Salesforce) who, he suspects, saw the world through an “exponential lens” identifying opportunities that others could not. He then illustrated the nature of exponential growth by referring to Azeem Azhar’s book The Exponential Age and what Azhar calls the “exponential gap” between organizations designed for a linear world and exponential growth.

Drucker Forum 2021

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
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Hal Gergersen’s opening remarks supplied the frame for Ed Catmull to introduce the concept of a Learning Power Cycle. He began by recounting his experience at the University of Utah in the 1970s. Although computers were big (in all senses) at the time, computer graphics was not considered part of computer science. Catmull, who believed that computer images would one day become part of feature films, could get traction in neither the computer nor the film industries. This was due in part he thinks to the difficulty people have in grasping the explosive potential of exponential growth from its usually modest beginnings. For example, it took Pixar twenty years to produce its first feature film, Toy Story.

Reality is complex. Many exponential activities are in play and the dynamics are unpredictable. Catmull and Gregersen describe this dynamic interplay as the “Learning Power Cycle”. They used the example to illustrate this of machine learning and its origins in neural networks, a concept that had been around for fifty years but sidelined by a lack of computer power. The catalyst for machine learning to take off was the rise of the games industry from it humble origins in the game of Pong (1972)to its explosive growth through arcades, consoles, desktops, handhelds and mobile devices. In 2020 the market was worth $165 Billion. Nvidia capitalized on this growth by releasing a new GPU (graphics processing unit) every six months, creating a positive reinforcement cycle. Out of this emerged the application of GPUs to neural networks, enabling deep learning. A second example is the power of apps on mobile phones, the emergence of which was unpredicted.

The workshop then went to Breakout Rooms. Questions for discussion were:

• What exponential events will or are affecting your organization? Who is seeing them? Who is missing them?
• What is one of the biggest challenges faced by your organization because of these exponential events? How well is your organization responding?
• “What Great Surprises are Machine Learning (ML) and Deep Learning (DL) creating in your organizational industry? How did those Great Surprises come about? How are you and your organization approaching them?

Ed Catmull told the workshop that at Pixar they make it clear to their people that the growth and economic success of their films is not their #1 priority. They intentionally make films (often short ones) that don’t make money to show they have other values, like encouraging people to push themselves creatively. People are often focussed on data to the exclusion of softer sources of information. Pixar tries to create a “classless” organization to enhance the sense of ownership.

Nice quote: “Tenant farmers don’t pick up rocks”

The Learning Power Cycle

The cycle is conceived as going through three phases:

1. Potential Arising
   • First steps in exponential processes seem small and inconsequential
   • They are not intuitive or obvious
2. Realizing Potential
   • The results affect large numbers of people.
   • They affect the environment in a broad sense, good and bad (unintended consequences).
   • Many transformational events are not exponential. (Do not confuse rapid with exponential)
3. Preparing for Transition
   • There is an end to exponential growth.
   • The outcomes are highly unpredictable.

Great companies operate in all three phases simultaneously.

Each of these phases requires a particular mindset to navigate in a dynamic environment:

1. Potential Arising
   • Recognize the implications of exponential change at the beginning of exponential growth – when it is not obvious.
   • Start with a challenge-driven, project-focused mindset.
   • Vote at least one-third of your growth innovation resources to longer-term initiatives that hold the potential for becoming Learning Power Cycles.
   • Learning Power Cycles are neither sparked or sustained by people operating in isolation.
   • Build a broad umbrella allowing uncertainty, noise, and a high volume of small but interesting developments, often unrelated or loosely related. (in Pixar’s case those that fail the “elevator test” i.e. cannot be explained in 30 seconds or even longer).
   • Seek out ideas that have great exponential potential.
2. Realizing Potential
   • Continually modify the processes in almost every aspect – far beyond what the originators could conceive.
   • Beware of the “sweet spot” trap (Innovators Dilemma).
   • Hold long-term and short-term views/approaches simultaneously. (and retain the ability to function)
3. Preparing for the Transition
   • Many look for replacement systems but often make the mistake of only wanting systems that are already far up the exponential curve.
   • Align people around what “might” work when systems are built for them to hold onto something that is working.
   • Are we actively looking for the end of exponential growth?

The session closed with a general discussion around which mindsets were most difficult to master and what questions and insights the Learning Power Cycle and the associated mindsets had surfaced.

Ed Catmull suggested that the secret of creating the right mindsets is to hire people who want to make a difference by working in a company that wants to make a difference. People who will help each other spontaneously without expecting rewards.

Closing Questions and Answers

Question: As a small cog in a large corporate machine how do I get management interested in these ideas?

Answer: In most large organizations management is rewarded for short term results. The challenge is to change that system – there is no simple answer.

Question: What learning, experience or educational design can help me get better at thinking this way?

Answer: Observe what’s blocking you. You still have choices about how you behave. Good role models are really helpful. Read books by and engage with people who think like this.

About the Author: David Hurst is a speaker, writer and management educator (www.davidkhurst.com). His most recent book is The New Ecology of Leadership: Business Mastery in a Chaotic World (Columbia University Press 2012)

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
#DruckerForum