Exponential Organizations: Why new organizations are ten times better, faster, and cheaper than yours

Salim Ismail, Michael S Malone (Authors)
Diversion Books (October 14, 2014)


This book is an indispensable guide of anyone starting or running a business from entrepreneur to Fortune 500 CEO if you are not running an Exponential Organization (ExO) you will be disrupted or displaced no matter how wide or deep your current economic moat. The book states in a very clear terms what constitutes an ExO and how to transform your organization into a ExO.

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Tesla Motors’ Master Plan

Tesla’s Master Plan was revealed in a 2006 blog by Elon Musk the founder of Tesla Motors. It states that Tesla wants to promote the production of fully electric vehicles in 3 steps.

Step 1: Build a high performance sports car to remove negative preconceptions of electric vehicles (that they are slow and don’t have much range).

Solution: Tesla Roadster is produced in 2008

  • 250 mile range
  • 0 to 60 miles in 3.7 seconds
  • Total built 2,600 


Step 2: Build a cheaper more functional, higher production vehicle

Solution: Tesla Model S is produced in 2012

  • a luxury 4 door sedan
  • 300 mile rage
  • Base price of $70,000 vs. base price of $110,000 for the Roadster
  • Current production of 800 car per week, production of 100,000 cars per year at the end of 2015 including Model X (SUV Crossover variant of the Model S)


Step 3: Build an even cheaper mass market, mass production vehicle

Solution: Tesla Model III is projected for production in 2017

  • 200 mile rage
  • Base price of $35,000 (half the price of Model S)
  • Forecast production of 500,000 cars per year

So far Tesla Motors has achieved the 1st two steps by production of the Roadster and the Model S. And it has started on step 3 by initiating the preliminary design of the Model III as well as beginning the construction of the Giga Factory that will supply the large quantities of lithium batteries needed for the Model III production. The introduction of the Model III will forever change the perception of electric cars and will start on the inevitable displacement of internal combustion vehicles.

Tesla Motors Direct Drive – The “D”

Elon Musk last night tweeted a teaser:

The internet is running wild with speculation of what it might be. Another Tesla model? A “Tesla Model D”? A new variation of Model S? A renaming of Model X or Model III? The speculation is abound!

Elon even had a good time with all the speculation:

I’d like to add my own:

What if Tesla Motors is revealing Direct Drive (DD) for its cars, it might be a long shot, but I bet even if this is not something that will be unveiled on October 9th, its something Elon Musk has his Tesla R&D team working on.

This is how it might look:

Tesla Direct Drive

Update: October 3, 2014

There is an image floating around the net of Tesla Model S P85D


My suspicion is that “D” stands for Dual motor (meaning 4 wheel drive, as we know Model X will have an option for two electric motors one front and one back making for a 4 wheel drive).

Model X Skateboard shown below:


Solar Energy Transition

We are in the midst of a major energy transition from fossil fuels to solar energy. This energy transformation will revolutionise every aspect of our society. Solar energy will not only give us virtually unlimited energy but also will bring down the cost of energy to a fraction of what can be achieved with fossil fuels. Photovoltaic (PV) panels unlike most other sources of energy require virtually no maintenance and approach zero marginal cost once they are constructed. More and more efficient photovoltaics are being build on mass production lines and higher and higher efficiency records are achieved in the laboratories every year. In fact the efficiency gains are themselves accelerating.

US Solar Energy Growth

Solar energy is growing at an exponential rate, the deployment of photovoltaic panels is increasing rapidly as the cost of the panels is decreasing. US photovoltaic total capacity has increased from just 167.8 MW in 2001 to over 11,972 MW at the end of 2013, an increase of 71 times. Yearly US installations have grown even more from 29 MW in 2001 to 4,751 MW in 2013, an astonishing increase of 163 times in just 13 years.(1) What is even more interesting is that the Year Over Year (YOY) total US capacity growth is itself accelerating, between 1992 and 1999 average growth was about 15%, between 2000 and 2006 it was 27% and between 2007 and 2013 it was 53%. US yearly PV power generation has increased from 6 Gigawatt hours in 2004 to 8,327 Gigawatt hours in 2013, a total power generation increase of 1,387 times at the same time wind power generation increased 12 times, a growth rate excellent for any sector but still 2 orders of magnitude less than PV growth.(2)

Global Solar Energy Growth

The global solar energy growth is following the same feverish pace as US. Total global PV capacity has increased from 1,400 MW in 2000 to a wapping 138,900 MW (139 GW) by the end of 2013, that’s 99 times in just 14 years. YOY total global average growth was 29% between 2000 and 2006 and increased to 55% between 2007 and 2013.

Prices are Decreasing

As photovoltaic production is increasing throughout the world, the prices are dropping dramatically benefiting from mass production. This fact lead Richard Swanson the founder of SunPower Corporation to observe that for every doubling of global shipments of photovoltaic cells the price drops by 20%, this is now known as Swanson’s Law. This effectively means that costs decrease by half every 3 years.

Installation costs are rapidly decreasing spurred on by economies of scale as well as more efficient photovoltaic cells, the same square foot of newly installed solar panels is providing increased energy output; therefore, decreasing the cost of each watt produced. SunPower currently holds the record for commercial PV modules at the efficiency of 21.1%. First Solar’s cadmium-telluride (CdTe) cells have reached efficiency of 14% and 21%, production line and laboratory respectively (also a record for CdTe).(3) In the laboratory setting triple-junction cells have reached 44.7 percent efficiency notably by Fraunhofer. (4)



There are often other overlooked major costs associated with solar panel installations. Those are also decreasing, some of which include mounting brackets, power inverters, time spend by installation crews on site, marketing costs as well as access & cost of capital and insurance. SolarCity is making great strides in shaving off installation costs going from $3.16 per watt in Q2 2012 to $2.29 per watt in Q2 2014, that’s a 27.5% drop in just 2 years.(5)

Solar energy access to capital is becoming cheaper and more readily available as more projects are finished and longer histories are build for existing projects. Banks and Wall Street are slowly realizing that photovoltaic projects are in fact less risky to investors than virtually any other energy projects. Solar energy projects are much more predictable as a monetary return, they have no oil spills or explosions, no environmental catastrophes, no moving parts to break, no uncertainty in relation to resource exploration, no feedstock, no future carbon tax/cap and trade risk, not affected by regional conflicts as the sun shines throughout the globe and not isolated to a few concentrated pockets.


Current major energy players are poised to be disrupted. In the shorter term electric utilities will see erosion of electricity demand as well as decreased profits from lucrative peak power charges as commercial and residential solar systems reach greater penetration. In the longer term electric utilities will see their existing energy generation projects (coal, natural gas, nuclear) undercut in price by significantly cheaper solar power projects.

Solar cell producers and installers will see large growth for the foreseeable future as the world accepts the solar cell as the dominant source of energy. However, only most efficient companies with the lowest overall costs will survive, economies of scale will be paramount. The winners will enjoy the market share of electric utilities and a large part of fossil fuel industry combined. As the world moves from internal combustion engine vehicles to electric ones the solar power will provide the watts (this is a topic for another article, so I will not go into detail here). Current electricity generation from solar is only 0.54% (124.8 TWh) of the world’s total (as of 2013)(6), meaning that solar generation capacity has room to grow at least 200 times (~24,000 TWh), electric vehicles can provide an additional ~4,500 TWh of electricity demand.


Ray Kurzweil observed that the total solar energy is doubling every 2 years and that we are only 8 doublings away from 100% solar energy, predicting that this is something we will achieve in 2028 (video here). It might seem fantastic that solar will be at 100% of energy use in just 14 years, but in order for this to happen no new technology breakthrough is needed, no new legislation needs to be passed, in fact nothing new needs to happen at all, solar power just needs to develop for another 14 years as it has been developing for the past 40 years. To learn about solar industry developments in the past 40 years, Sun Above The Horizon is an excellent read.


Solar power in the United States [Internet]. Wikipedia, the free encyclopedia. 2014 [cited 2014 Sep 15]. Available from: https://en.wikipedia.org/w/index.php?title=Solar_power_in_the_United_States&oldid=623599580
Table 1.1.A. Net Generation from Renewable Sources: Total (All Sectors), 2004-June 2014 [Internet]. eia; 2014. Available from: http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_1_01_a
First Solar. First Solar Q2’14 Earnings Call [Internet]. First Solar; 2014. Available from: http://files.shareholder.com/downloads/FSLR/3466737945x0x773467/f4d156e1-1b55-46dd-8539-f3361256476a/Q2_2014_Earnings_Call_Presentation.pdf
World record solar cell with 44.7%% efficiency [Internet]. ScienceDaily. [cited 2014 Sep 15]. Available from: http://www.sciencedaily.com/releases/2013/09/130923204214.htm
Solar power [Internet]. Wikipedia, the free encyclopedia. 2014 [cited 2014 Sep 27]. Available from: https://en.wikipedia.org/w/index.php?title=Solar_power&oldid=625887698