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In this episode of The Speaker Show, Sean Pillot de Chenecey interviews Alex Osterwalder.
Alex is one of the world’s most influential strategy and innovation experts, a leading author, entrepreneur, and in-demand speaker whose work has changed the way established companies do business and how new ventures get started.
Ranked No. 4 of the top 50 management thinkers worldwide, Osterwalder is known for simplifying the strategy development process and turning complex concepts into digestible visual models. Together with Yves Pigneur, he invented the Business Model Canvas, Value Proposition Canvas, and Business Portfolio Map – practical tools that are trusted by millions of business practitioners from leading global companies.
Strategyzer, the company he co-founded, is an innovation powerhouse, providing online courses, applications, and technology-enabled services to help organizations effectively and systematically manage strategy, growth, and transformation.
In this dynamic episode, we discuss a range of his viewpoints on issues including:
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Sean Pillot de Chenecey (00:11): Hello, this podcast is care of Speakers Associates, the global speaker bureau representing a select group of the business world’s finest thinkers and thought leaders. Founded in 1999, today Speakers Associates operate out of nine offices across seven countries covering the UK, Europe and Middle East. I’m Sean Pillot de Chenecey, author of The Post-Truth Business and Influencers & Revolutionaries, which are being followed by The New Abnormal. In this series, I interview a range of fascinating individuals, proudly represented by the bureau. These change agents and industry experts give an update on their specialist areas of knowledge, and also on their motivations and viewpoints regarding the future of business.
Sean Pillot de Chenecey (01:08): So today I’m really pleased to be joined by Alex Osterwalder. Alex is one of the world’s most influential strategy and innovation experts, a leading author, entrepreneur, and in-demand speaker, whose work has changed the way established companies do business and how new ventures get started. He’s ranked number four of the Top 50 Management Thinkers Worldwide. He’s known for simplifying the strategic development process and turning complex concepts into digestible visual models. Together with Yves Pigneur, he invented the Business Model Canvas, Value Proposition Canvas and Business Portfolio Map – practical tools that are trusted by millions of business practitioners from leading global companies, including Microsoft, Coca-Cola, Nestle, MasterCard, Sony, Fujitsu, 3M, Intel Rush, Colgate Palmolive, and many more. Strategizer, the company he co-founded in 2010 is an innovation powerhouse providing online courses, applications, and technology-enabled services to help organizations effectively and systematically manage strategy, growth and transformation. His books include the international bestseller Business Model Generation, Value Proposition Design, Testing Business Ideas, and his latest one, The Invincible Company.
Sean Pillot de Chenecey (02:30): Finally, Alex holds the Strategy Award from Thinkers50 in the European unions, Inaugural Innovation Luminary Award in 2019, he chaired the prestigious Drucker Forum, the premier annual business management conference, a frequent and popular keynote speaker. He travels a world discussing his ideas and strategies at Fortune 500 companies, premier innovation events and leading universities. And he held a doctorate from HGC Lousanne and is a founding member of the constellation, a global, not for profit organization, connecting local responses to global issues around the world. So Alex, after that glittering CV, how are you?
Alex Osterwalder (03:11): Thanks for having me. Oh, that’s, that’s always nice to listen to all of those things sometimes, you know, just get deep down into work and you forget, oh, there cut a couple of good things that were there. So pleasure to hear that.
Sean Pillot de Chenecey (03:22): Exactly. Well, I mean, on that exact point in terms of going through some of those extraordinary and highly impressive sounding achievements, be great to, yeah. Please just take us through them in terms of background and exactly how you got to where you are right now.
Alex Osterwalder (03:39): Yeah, that’d probably be a long and maybe not so interesting story or anything. The most, you know, interesting is what I’m passionate about and how that actually helps business people do a better job. So I’ve always been interested in institutions, you know, studied political science, then did a PhD on management information system to understand how computer systems management information systems can help better manage organizations. And then ultimately I’m starting to work on business malls with Yves Pigneur, I really started to see that there are a couple of jobs to be done in management or managing institutions that are not served very well yet. And that visual tools can really help make a difference. And when I say visual tools, that sounds very abstract, right? But the first one we created this business model canvas simply allows, you know, entrepreneurs and leaders of business units and established companies all the way to the biggest companies in the world. Just map out their business model. Now that sounds trivial, but it’s not right. You want your management team to be aligned on the business model. You need to reinvent your business model as a startup or corporate venture. You need to come up with the right business model. So having tools, just like a surgeon has tools, you know, for surgery, we need tools as business surgeons or as innovation surgeons, and we tried to make those precision tools for very specific jobs to be done that help business people do a better job.
Sean Pillot de Chenecey (05:12): And can you tell me on that, in terms of what was the, the spark, the sort of the moment of inspiration that led you to think actually there is a gap there that no one has really taken on board.
Alex Osterwalder (05:27): So 20 years ago, I started a PhD in doctoral program with Yves Pigneur who was my PhD supervisor. And his idea was that look, business plans don’t really work with that technology. And you know, all of the possibilities today in communication, entrepreneurs can design better business models. That was a starting point. So, we try to figure out what could, what could the tool be to do that? And we were already thinking about, you know, a management information system, but what really took off was this very simple business model canvas, like a spinoff from my PhD and people started to use this. So while we knew it works because we designed it and tested it, we didn’t expect it to be used by millions of people like you can, you can’t foresee that. And that was really interesting. So we try to ask ourselves, why is this really working?
Alex Osterwalder (06:23): So we did some research and what came out is, it’s a very practical, very simple, very visual tool that helps people, you know, just have a shared language and map out their business models. So that was an really an aha moment where we said, wow, what if we could do the same thing for other topics, like value propositions, like corporate culture, like, you know, innovation portfolios, all of those abstract things are strategy. Those are things that sound like, oh, that’s clear what it is, but what is corporate culture? And it’s not very clear, but if you create the tools for that, you can actually design corporate culture strategy, et cetera, and you can manage it, right. But you need some tool to do that well. And we started to learn how you can actually create these kinds of tools to, just create more impact.
Sean Pillot de Chenecey (07:14): And was there a, again, a sort of breakthrough moment from the point of view of a particular client or whatever that, you know, literally was an early mover and buying us in, yeah. You think, wow,
Alex Osterwalder (07:28): There’s a funny story there where I don’t know how many years ago that was probably 15 years ago or something like that. I was working with TUI, the German tour operator and, you know, they brought me in to speak to the CFO, to the chief financial officer and present this business small canvas. And I thought, wow, you know, this is a person who manages a multi-billion dollar business from the financial side. He’s gonna throw me out of the room with this simple tool, the business model canvas. And it was actually quite the contrary. And again, sometimes, you know, things, but hearing it from a, you know, practitioner who works at that level, when you hear it the first times, it’s pretty interesting. So the reality he said was, well, you know, we all do our specific jobs, marketing, operations, mark, the financials, all of those things.
Alex Osterwalder (08:24): And we’re all very focused and specialized, but we don’t really talk about these topics as a team to get a really good shared understanding of the current business model and how we could transform that business model. So it was pretty amazing to hear that for the first time, when you’re a young practitioner from a CFO managing a multi billion dollar business or multibillion Euro business. It was an eye opener. And then from then onwards, I started to realize the value of these very simple practical tools, because you can facilitate many, many different situations where people only sit around a table and I like to call it blah, blah. You know, Dan Romes kind of word for people talking, but maybe not giving it enough structure to get the best out of it. So visual tools, you know, using not just sticky notes, but actually some structure that help you think through business challenges like innovation, like new business models, like new value propositions, that structure is mostly lacking at the strategic level. So while it seems kind of trivial, it’s not the case, there’s still too much talk. That’s abstract. It’s all over the place. Not because people are not smart, these are, you know, the most experienced and smartest people you can imagine, but because we don’t have a tradition of using these kinds of tools, so that was breakthrough for me. And then from then onwards, we just started promoting this stuff and we saw wow there that really, really makes a difference in every single conversation.
Sean Pillot de Chenecey (09:53): And then what about, sort of positives and negatives you say, or sort of barriers to be overcome from the point of view of sectors where your style of thinking has gone down very well? I mean, have you found specific sectors that have really taken this on board with open arms and others where you’ve there’s just been a sort of, you know, close door.
Alex Osterwalder (10:17): I, so in my experience, it was less the sectors. It was the leadership of the organization. So, you know, funny enough, the challenges of innovation and reinventing in organization, they’re actually very similar across the types of industries, across the type of countries, even across geographies. The bigger you get, the harder it is to innovate. Why? Because you actually get better and better at what you do, right? The whole Clay Christensen.
Sean Pillot de Chenecey (10:45): Yeah, yeah.
Alex Osterwalder (10:46): Area of disruptive innovation. It’s a paradox. You get better at what you do. So you kill anything that looks differently. That’s the big challenge. So what we’ve seen is when the leadership, and it is sounds trivial, but it’s not the case. When the leadership strategically invests their time and energy and innovation, then the whole organization can move in many companies, you know, they actually invest quite a bit of money, but they don’t have a strategic kind of point of view or strategic investment in innovation.
Alex Osterwalder (11:18): And then all you get is activities, innovation, theater, you have all these incubator.
Sean Pillot de Chenecey (11:21): Yeah. Yeah.
Alex Osterwalder (11:23): And I don’t wanna, you know, I don’t wanna, you know, this kind of these efforts is actually a tragedy because there are a lot of smart people working in these incubators. There are a lot of good ideas coming out of them, but they remain homeless ideas because the organization is not ready for them. So if you don’t work top down, the bottom up is not gonna work. So for me, the big kinda learning insight, the last decade was we need bottom up and top down and one alone without the other doesn’t work. And that’s when you get organizations that radically transform. And again, these are trivial things to state. The real magic comes when you start putting these processes in place, because the good news is we now know how to do this. This is becoming a profess you know, innovation is beyond innovation myths. We now know how to do this. And when I say we it’s, you know, all of the innovation practitioners that have put energy into this, not just strategize in our tools, but there is a huge body of knowledge. Now we’re in the phase of adoption and that’s exciting because organizations are changing.
Sean Pillot de Chenecey (12:31): So there’s not a sort of a sector barrier. What about a cultural barrier?
Alex Osterwalder (12:37): Oh, yes.
Sean Pillot de Chenecey (12:38): So again, in terms of, as you, I mean, obviously you travel very, very wildly, very widely, but, yeah. So as you traveled around the world and as you talk with clients and businesses around the world yeah. Are there particular, you know, on a sort of geographical and cultural level areas that you found more difficult than others?
Alex Osterwalder (12:56): So partially, but I, again, I don’t think that’s the biggest challenge now, of course, in some of the Asian countries where you still have very strong hierarchies in organizations, you know, this idea that you experiment and fail and ultimately the best ideas will emerge are a little bit more challenging to put in place, but it can be done. So typically the Sony accelerator that they put in place, which was right under, you know, the CEO worked out really well, and they were able to do that in Sony, in, you know, with the traditional Japanese business cultures, not so easy to implement and fail. So while that is true, again, I think the bigger challenge and that’s the same, you know, east, west, north, south is the culture in organizations. So I would say the entrepreneurial startup culture versus the management execution culture, that is the cultural gap. I see, not in geographies, but in terms of, you know, innovation, culture, exploration, culture, entrepreneurial culture, versus the execution culture and inside countries, you know, take the United States, of course in Silicon Valley, you have an entrepreneurial culture, in established companies you don’t right. So it doesn’t matter if you pick a country it’s actually more the different types of business cultures that you have. That’s the biggest challenge I’ve found the cultural challenge in terms of geographies, easier to handle, because we know them a lot better.
Sean Pillot de Chenecey (14:38): Yeah. Yeah. And then what about the, I mean, one of the really major events this year that I and you, spoke at, was The Recovery Summit. I think that when that was run over a course of a week earlier in the summer. I think the biggest sort of webinar of 2020, I think viewed by whatever, nearly 10,000 people during the event in many more since now, can you just take us through what you were speaking about there, because that issue about Invincible Companies, I think to sounded to be absolutely, yeah. Fascinating, which obviously links into exactly what you’ve been discussing so far.
Alex Osterwalder (15:17): Yeah. So I talked about the Invincible Company, our latest book, and the title sounds very arrogant because of course, no company can be invincible. What you need to, you know, become almost invincible is the ability to constantly reinvent yourself, to compete on superior business models, not just product services and price, and the ability to transcend industry boundaries. Those three characteristics is what we’ve discovered, you know, differentiates the leaders today from the pack, if you want it so that this ability to constantly reinvent yourself, that’s hard to do sometimes what academics call the ambidextrous organization, world class at managing the existing and world class at inventing the future. Those are two different objectives that require different culture, different metrics, different people even, you know, and they still need to live in harmony. They can’t be enemies because then, you know, if you do that, you won’t get the best from established companies.
Alex Osterwalder (16:21): So that’s what I tried to kind of outline in 60 minutes. I remember 60, 50 minutes, you know, to give people a teaser, a taste of that while making a it practical, right? Because I believe inspiration is almost overvalued. We over, we almost have overstimulation when it comes to inspiration. I’m a big believer in now is the time to adopt and implement the processes and tools of innovation to create invincible companies. The inspiration part is a, you know, the easy part. And I think it’s a bit overrated because the hard work starts when you actually put this in place. So I tried to give as much as I could in 60 minutes, so people could walk away with a concrete sense of, okay, what are some of the things we could do to create an invincible company without, you know, sounding like a snake oil or a lender because of your hard it’s to a certain extent, we know how to do it remains hard, but when the leadership is committed, you know, I’m seeing organizations getting, getting really, really good results.
Sean Pillot de Chenecey (17:24): And then in terms of, that you’ve also written in great detail about testing those ideas. So perhaps if, you know, just talk us through the idea of, you know, of exactly what your approach is there.
Alex Osterwalder (17:37): Yeah. So that comes back to some of the myths that still exist in innovation. So people overvalue ideas, they think, oh, if I just find the right idea and the funding I’m gonna win, right. Or, you know, management team saying, okay, we need to have a big breakthrough in multi-billion dollar new growth engine. We need to find the right idea, invest. That is the worst thing you could do. And, you know, there’s some venture capitalists that even say, if you give a team too much money, you increase their risk of failure. Wow. That sounds weird. Why would that be?
Sean Pillot de Chenecey (18:12): Yeah. Yeah.
Alex Osterwalder (18:12): Because when a team has money startup or corporate team, they’re going to build something before knowing if people want it. So building something nobody wants is what I call the business plan phenomenon. We make a, an idea, look great on paper, we make a business plan.
Alex Osterwalder (18:31): We show how we’re gonna execute this wonderful spreadsheet because the numbers look great. You know, the presentation was, was awesome. And then we start building, and then in the process, we start to realize, Hey, people actually are not interested. Good example to make that concrete is a better place like, let me take one from the past, the vision was amazing. It was to make electric vehicles accessible and make them usable very quickly. So, better place thought that if they promoted a battery swapping infrastructure, where you could drive in with your electric vehicle, it would swap the battery. You could drive out. They would take away the biggest pain of electric vehicles. Wow. Wonderful vision. They raised 850 million and they started building that infrastructure. Well, guess what? Nobody came. Right? So the few thousand customers they had could never, you know, bring in enough revenue and they ran outta money and they had to kind of close down.
Alex Osterwalder (19:33): So they lost 850 million. Now that’s a good example. Now what’s the counter example, Tesla, because Tesla from the start, not everybody knows this from the start they had testing in their DNA. They actually got the first customers to make a down payment. So they already knew, Hey, there’s a demand before they had the plans for the finished vehicle, then they started playing around with a prototype. It was a Lotus Elise with a Tesla battery pack. They kind of cobbled that together and they could start to test. So that is the counter example and you can see Tesla’s now a, you know, a real disruptor. So it’s not about the big ideas. It’s about testing ideas. And if you test you decrease the risk and the more you decrease the risk, the more you can invest. So innovation only gets expensive when you scale. It’s actually very cheap at the beginning.
Alex Osterwalder (20:32): As you make very cheap experiments. There’s another myth there. And I get a little bit excited about this stuff, but you don’t need to build something to test it. So you can start testing customer job’s pains, and gains. Understanding, again sounds trivial, understanding customers, but today the innovation processes in companies, don’t start with testing desirability. They often start with feasibility, RND, can I build it? And if I can build it, I’m gonna make a prototype. And then you already spend, you know, hundreds of thousands of dollars, if not millions. So the whole world is, you know, kind of designed the wrong way around. Now, the question is why, because companies are geared towards world class execution. In execution you can make big investments with relatively little risk building a new warehouse, a new supply chain. You’ve done it before. That is a scaling effort. The risk is relatively low because uncertainty is low. You’re investing in new customers, new value propositions, new business models, risk is at its maximum. So you have to test otherwise you’re irresponsibly taking risks. So that means senior leaders need to distinguish between exploit and explore and put in place different cultures and different processes and different metrics, even different people in order to succeed at both in parallel.
Sean Pillot de Chenecey (21:57): You said both in parallel. Again, I know one of your key topics there is managing and innovating simultaneously.
Alex Osterwalder (22:06): Yeah. And that’s the challenge. Now today, many innovators still call themselves pirates or rebels inside companies. And I think that’s very dangerous because what do we do historically with pirates and rebels, we kill them. So you actually want to be seen as a strategic partner. So my colleague, Tendayi Viki, he talks about pirates in the Navy. So you’re still kind of operating, you know, with different rules, but you are now part of the Navy. And the same thing, you know, should be the case for innovators. You should have a different set of rules, so you can quickly experiment. Your goals are different you need to de-risk your ideas, your culture is different, very fast, you know, paced and decision making iterations. What was true yesterday is changes today. But you’re working, you know, in the context of a larger organization for which you’re inventing the future and the people who, you know, manage the company, they need to understand they have no future without, you know, the pirates in the Navy without the innovators.
Alex Osterwalder (23:15): So it becomes a true partnership because innovators, they need access to customers to test, sounds trivial again, but guess what key account managers will say, don’t talk to my customers. I need my bonuses. Now. You’re not gonna talk to them about new ideas that I won’t be able to close my deals. So what sounds trivial needs to be down to the level, you know, of granularity, that’s insane. You need to start to put in place really good structures. So innovation and exploitation or management of the existing can really live in harmony. Otherwise you’re just a startup in chains, right? So this is something we now know how to put in place. The it’s starting to be clear how to create design and manage and innovation culture besides an execution culture. So, you know, what’s exciting is that companies are now moving in this direction and it’s more of a implementation challenge than, you know, really still, you know, 10 years ago, people maybe didn’t know how to do this.
Alex Osterwalder (24:14): And, you know, the tools were only coming together. Today, there are many more answers than questions, still, of course questions, but there’s a lot that can be done. And that’s exciting because companies are also moving and we’re moving beyond innovation theater, right? Those pirates and rebels that at the end of the day, you know, can’t really produce results. Not because they’re not good enough, it’s just because the whole organization is against them. And that is the problem, the antibodies today in companies. But we now know how to better manage that. So you can have this company that does exploit and explore in harmony and can become, you know, invincible in the sense that they constantly reinvent themselves because you wanna innovate while you’re successful.
Sean Pillot de Chenecey (24:58): Yeah. And then what about the issue of, where we are right now? So as we’re, as in sort of, you know, going to autumn 2020 after this horrendous year for many, obviously most around the world, do those points become even more important? And in terms of risk, have companies who may in the past have been risk averse, are they not now gonna become sort of risk paranoid should they become risk welcoming?
Alex Osterwalder (25:31): So we’re seeing two trends. The, and that’s where, you know, I qualify the title of our book was chosen before the events of 2020. We probably would’ve called the resilient company if
Sean Pillot de Chenecey (25:46): Yeah, yeah, yeah.
Alex Osterwalder (25:46): we had known, but nobody could know. So what we’re seeing is too phenomenon that companies who were already good at inventing the future and managing uncertainty, they came into this crisis with an incredible ability to, you know, innovate very quickly because they have a whole ecosystem to deal with uncertain. Innovation is nothing else, then coming up with great new growth engines in a context of uncertainty. And it’s not that that uncertainty didn’t exist before. It’s just that companies only focused on the certain part. And there were disruptions, just not as, you know, one big one that affected everybody. So companies that already worked like this, they come into this a lot more agile and able to cope with the pandemic. The second phenomenon we see is companies who started this innovation journey before. So they were already investing and they’re now scaling up. So for strategizers, surprisingly, we couldn’t know this at the beginning.
Alex Osterwalder (26:48): We actually can’t help ourselves. You know, there’s so much demand because companies want to scale up their innovation capabilities, because again, innovation is about dealing with uncertainty and when a lot of your core business is under threat, you have to come up with new, you know, growth engines, new revenue streams. So, the lot of the companies that we’re working with in pharma, in utilities, cause also, you know, green, the transition is becoming more urgent than ever before. Consumer goods, you know, new ways of selling, maybe more in a virtual remote context, they just accelerated because again, there’s this myth that innovation costs a lot because we’re thinking RND but RND you know, may or may not be a driver of innovation. It doesn’t have to be technology. So innovation starts with small teams, experimenting with ideas.
Alex Osterwalder (27:47): You invest in many small teams, small amounts, and then some teams will show success. You invest more. And then only, maybe after a year or two, are you in the scaling phase where you really need to invest big time. So innovation only gets expensive in this scaling phase. So now it actually the best time ever. And some of the research from McKinsey shows companies that invested in innovation capabilities during a crisis, they came out a lot stronger. So now is the time too. Of course the qualification here is when you protected the core. So think of an example here, Airbnb had to first, you know, assure survival because they’re in the worst hit industry travel. They first had to assure survival and then they could continue with their innovation efforts. But it’s not because of this crisis that you should stop innovating quite the contrary, make sure you can survive.
Alex Osterwalder (28:48): So you might have to, you know, reduce some of those efforts. You might have to cut back and, you know, letting go of people, never easy, but there’s a human way to do it and explaining that. So you can actually hire them back when things are good again. And then not cutting all of your innovation efforts. So we’re seeing quite the contrary where a lot of our clients actually invest heavily in innovation, which is exciting to see because we did not know what would happen because this is an unprecedented event. So it’s pretty encouraging to see that leadership is now very smart and they understand the value of a long term growth innovation. And they’re investing in it because it’s such a different logic.
Sean Pillot de Chenecey (29:32): Yeah. Yeah. And can I ask, in terms, you mentioned there about, sort of humanizing companies or rehumanizing companies and taking a very, sort of a human or humane approach. I mean, one of these sort of, you know, to take a really, really macro almost sort of existential view on the whole thing has been, you know, determined. The Great Reset that has really sort of grabbed the sort of, the business world’s imagination, over the last few months since Charles Schwab, the CEO, to the World Economic Forum termed, you know, the 2021 Davos meeting, The Great Reset. And as he says there, you know, so COVID19 has torn up the script in terms of how to govern companies live with others and take part in the global economy and, you know, changes are needed, create a more inclusive, resilient and sustainable world.
Sean Pillot de Chenecey (30:26): So particularly from the point of view, that issue about all things sustainable and linked to the circular economy and linked to the, obviously the environmental crisis, just, I wonder that your points of view there, because there’s been a lot of talk again, and it’s a long question. Those from the Washington post or the New York times saying that one of the losers in all of this during 2020 has been the environmental lobby, too many businesses have taken this opportunity, inverted commerce to quietly walk away from some of the actions that are take with regards to the environment. Where do you stand there in terms of the importance of still remaining or increasing a focus on all things environmental?
Alex Osterwalder (31:14): So let me first start maybe with the humane aspect.
Sean Pillot de Chenecey (31:18): Yeah. Yeah.
Alex Osterwalder (31:20): And I don’t think the, we need to tear up script and start new. I think, you know, the pandemic was an accelerator of things that were already there and it’s just getting companies to realize that what they have been doing hasn’t been sustainable from a society employee point of view and from the environmental point of view. So if we first take employees. You know, if you, from one day to another, send people to work from home and you expect, well, okay, now I need to be able to trust you. Or you start installing, you know, spying software. This is not gonna work out pretty well, but you know, that is not new. So you just didn’t have the trust of your team members before. And that’s when you get these statistics where very few people at their workplace are engaged.
Alex Osterwalder (32:13): So the statistics were already there is just that the problem was not as visible. Now they’re working from home. You can’t control them anymore. So the thing that we had, oh, how much time are they spending at work? You can’t even control that one anymore. So the script was already completely broken before. It’s just that companies didn’t realize. So, you know, now people are working from home and you can’t trust them. Well guess why? Because you never gave them the, you know, you never allowed them to trust you because you didn’t put in place a system where there was mutual trust. That should have happened before. Now we can just see it or companies that are letting people go in the most terrible ways, you know, through a text message or they don’t even know. And then they somehow figure it out through the press or something like that’s too is not, that’s not human, right.
Alex Osterwalder (33:00): It’s not humane. So that’s why I admire, Airbnb, because they had to let 25% of their staff go. They just didn’t have a choice, but they went through, they really put an effort into explaining why to their employees and, you know, separating past in the most humane way possible, because guess what? They’re probably gonna wanna hire many of those people back. Well, guess what, if you haven’t done it in a fair way, in a humane way, people won’t want to come back. So that’s what we see right on the human level. And I believe so just, you know, companies create value in four ways. They create value for customers. They create value for their organization. They create value for their staff and they create value for society. That’s what the best companies do. And what happened now with the pandemic is we could see which ones focused merely on customers and the organization, but not on staff and society.
Alex Osterwalder (33:57): And that’s what we’re seeing now is really is split. So I think the problem was already there is just that now we could see it because there was this, you know, once in 150 year time disruption. So that’s what we see. Now, if we go to the sustainability part, I think there are also, we’ve already seen some transitions start. There’s some beautiful examples. Take Unilever with Paul Pullman shift, you know, towards sustainable living. So there were efforts there, some businesses already started. So I don’t, I wouldn’t say all businesses were bad. You know, Patagonia as a smaller actor, you know, put the, put it even into their mission statement and vision statement that their mission is to save the planet. Wow. And then you have companies like Ørsted, they transitioned from, you know, oil and gas to a hundred percent green energy.
Alex Osterwalder (34:51): So those examples are there. Now, what I do think we’re clearly seeing is the role of the government. Also, like I don’t believe companies will ever be able to self-regulate, that’s just an illusion. And while, you know, the way we implement laws might not always be the best way. And as an entrepreneur, dealing with GDPR, you know, data regulation laws in Europe is a headache. Well, guess what? We wouldn’t have any data protection in Europe, either, if there hadn’t been a law. And if you look at today, 15% of car sales in Europe are electric vehicles or hybrids. Well guess why? Not because of consumers or because a car manufacturers were enlightened. No. Because of regulation. So I do think it’s the role of the state in a democracy that requires a functioning democracy, right? So I’m not saying the state, you know, terror of rules and bureaucracy.
Alex Osterwalder (35:53): No. It’s a citizens that need to elect the right people who can put in place the right laws. There is a role to play there. So, while I believe businesses can be a force for good and you have leaders, you know, take Marc Benioff from Salesforce. He actually even advocates. It’s a, that businesses can be a huge force for good. We need some guard rails. And that’s where, you know, society and regulation come in. Regulation can be a good thing. And again, as an entrepreneur, these things don’t come easily from my lips because less regulation we’d say, well, that’s good for entrepreneurs. Well, when it, if it comes at the expense of society, guess what? I’m not very happy for my children. They’re gonna be a long around a lot longer than me. So even as entrepreneurs we need to and managers, you know, we understand the value of good rules because the enlightened business leader, if we just trust that there will be too few. So my standpoint on that is businesses can be a force for change, but to get to a sustainable level of change or one that actually will, if we take sustainability, we’ll save our planet. We’re gonna need guidelines from regulators as well, because without regulation, you know, you, it won’t work on itself. And again, not easy coming from the lips of an entrepreneur who has to deal with regulation every day. GDPR is not an easy thing for us as a company.
Sean Pillot de Chenecey (37:26): Yeah, yeah, yeah.
Alex Osterwalder (37:28): But, you know, if we want our data to be protected, you know, something needs to be done.
Sean Pillot de Chenecey (37:33): Yeah. Yeah. Very interesting. Okay. Moving on in a complete, sort different tack here, what about, I mean, obviously your renowned is being an incredibly inspiring speaker and the book speak themselves. So what inspires you then? So, are you a great reader or viewer or listener what, et cetera. So, yeah. Where do you get your inspiration from?
Alex Osterwalder (37:54): So from frustration, I guess in the sense that I believe that, you know, us thinkers and doers, like I have run my own company and we’re, you know, scaling a technology platform. But when we look at our clients, we ask why aren’t they innovating at a large scale? And rather than blaming them, we always ask first with my co-author Yves Pigneur, with our team at strategizer, we always ask, what are we not doing? What’s missing? So the inspiration for me is that as long as we don’t get 40 to 60% of companies to really innovate and create value on a large scale, I’m not talking efficiency innovation, but really breakthrough transformative innovation. If they’re not doing this, it’s almost our fault, right. We’re not helping them well enough yet because, I do believe companies have everything they need to innovate except maybe yet the right leadership and structures.
Alex Osterwalder (38:56): So we have to ask ourselves, what are we missing? What are we missing? And that goes from the talks to the workshops, to the scalable programs and the technology we’d put in place. So I always see it as a personal challenge, almost like, damn I failed. I failed. If we don’t get 60% of established companies to innovate on a large scale, it’s our fault, right? That’s the way I see it. And that nourishes the inspiration and the way we look at it is in chunks, every little job to be done that we see, well, maybe not little, but the big ones we try to tackle it. First one was business smalls. We believed business, small innovation was important. So we started were working on that. Then we saw, Hey, companies are struggling with testing their ideas. So we worked on that. Now we see, look, they’re all the tools, they’re all the processes there.
Alex Osterwalder (39:47): Even the people have the right skills. They’re even incubators that do good work, but there’s zero impact. So it’s still innovation theater. Wow. What if it could create a language at the leaders level? Just like we had at the doers level, business small canvas was more for doers if you want. So we said, well, we need something that allows senior leaders in small, medium and big companies to work on their portfolios. Because at the end of the day, they don’t really care that much you about the business model, but resource allocation to business units, to projects. So we started creating the portfolio map and then last book, the Invincible Company. So we tackle one big challenge after the other and in the Invincible Company, there’s also the culture part because that’s the biggest kind of blocker today. So if we can, you know, tackle one of these after the other, ultimately we should get there. So we’re getting closer because we’re seeing companies move now. But until we succeeded, we, we still believe it’s our kind of role to push and push and push until we give the, gave them the right tools, not the answers, but we help them ask the right questions.
Sean Pillot de Chenecey (40:56): Very interesting. And then what about, what’s on the horizon for you then Alex? What’s coming up for you over the next few months?
Alex Osterwalder (41:08): So for us, the whole challenge now is scaling the, you know, what we call growth portfolio inside organizations. So the one piece I haven’t mentioned so far is, is not just about testing is actually, if you are in a, let’s say a company of the size of Nestle, you know, how many innovation projects you’d need to invest in to get a breakthrough growth engine, like, you know, you have with espresso, you actually need to invest in at least 250 projects, a small amount of money, and then immediately kill projects after three months and only invest in those show results. And that means they need to, in any kind of company of any big size, they need to have many, many innovation projects in parallel and let the winners emerge and you invest more in the winners. So you small start with small investments in many projects and you do follow up investments.
Alex Osterwalder (42:07): Why do we know that that works? Now we see the first cases. So take Bosch or Bayer, they started out with approximately 200 projects over one year, and they ended up with 10 to 12 that made it to the exploit portfolio. That’s the ratio you can expect. But then we have a much larger data set from early stage venture capital and it shows, and that’s why I’m saying 250, probably the ratios even larger. We know now that in early stage venture capital six out of 10 projects will fail, they won’t return capital. Three out of 10, they will return some capital and only four out of a thousand will return 50 X capital. So if, as a manager, you just need to be realistic and just accept you can’t pick the winner in innovation. And if you believe you can, you are delusional because you you’re saying you’re better than decades of venture capital investments.
Alex Osterwalder (43:04): Now you can think whatever you want a venture capital investment investors, but that is their job. So why do they not pick the winners? Why do they invest in portfolios? Because they know they can’t to pick the winner. So what we need to put in place is these portfolios, and I’m not talking corporate venture capital, I’m talking internal projects, the same approach for internal projects. Doesn’t always have to be hundreds of projects. You can start with 10. If you’re a smaller company, you start with 10, 50 or so. But if you want a multi million dollar return, guess what you’re going to have to invest in many, many projects. This is exactly what companies like Amazon do. It’s exactly our favorite case study. Pingan does all of the leaders invest exactly this way for the winners to emerge. And they will have many, many losers in quotes, but they’re not losers because they’re just experiments.
Alex Osterwalder (44:00): And there’s small amounts of money until the winners merge, scaling that in the companies, in which we’re in, that’s our challenge now to do it in a systematic approach. Cause I don’t believe, you know, you should do it as a consultant. You should, you should almost do it like a system. So what we’re helping companies now is to do this very systematically, almost like a software as a service. So you actually know if you put this much money in, this is what you’re gonna get out as results. Now we’re talking, we’re talking human systems. So it’s a little bit more complicated, but that’s exciting because again, many of the answers are here now. We know how to ask the right questions. We know some of the answers, this is more a question of commitment than a challenge of innovation to put innovation systems in place.
Sean Pillot de Chenecey (44:48): Wow. Okay. Well, I mean, Alex it’s been absolutely fascinating. But I’m aware that time is getting against us. You are a very busy individual to put it mildly. So just the last couple of questions, just in terms of the, sort of perhaps the key sort of takeaway points or insights that you’d like to leave for the Speakers Associates audience.
Alex Osterwalder (45:07): Yeah, I think the, there are a couple of innovation myths, right? In innovation ideas don’t matter as much as the ability to transform and turn ideas, iterate to turn them into value propositions that customers care about in business models, embedded in business models that can scale. That’s the hard part. To do that you need to put in place the right processes, the right investment structures, the right people’s skills. So don’t overestimate the ideas, you know, this can be systematically done. The other key takeaway for me is another innovation with that innovation equals technology. So my favorite example is Nintendo. We, they disrupted the market with an inferior technological platform when they launched the Nintendo Wei, it was off the shelf, non proprietary components, but with motion control and simple games, they could conquer a underserved market of casual gamers and actually earn money from the games and the consoles while their competitors Xbox and the Sony PlayStation two at the time, they were losing $500 per console and they had to make up for that with the games.
Alex Osterwalder (46:23): So think of it, that’s, you know, really exciting an inferior technology disrupts an industry. So again, there’s a couple of myths there and the last myth is it’s all about finding great products and services. So, you know, there are numerous examples out there that show that the same product or technology with the right business model will succeed with the wrong business model will fail, Nespresso, you know, coffee machines and pods is one of my favorite, really old examples because yeah, your first business model didn’t work, same product technology, but targeted at a different segment with a different business model led to a multi-billion dollar business. So we need to really understand that business models is a huge opportunity. It’s not just about product and services because it’s harder and harder to create any kind of competitive advantage based on a product or service because everybody can copy it.
Alex Osterwalder (47:23): And then the last one, maybe, you know, shifting business models, I love how some companies have been really good at shifting business models and transcending industry boundaries. I’ll take an old one for use the sake of illustration. Fuji Film, you know, they were in the number two when Kodak was number one just before they went bankrupt, Fuji film transcended industry boundaries went into a new arena, like Rita McGrath likes called. You know, what they went into from analog film? They went into cosmetics, right? Because they had 20,000 patents on understanding chemical compounds, which actually apply to aging skin almost as much as it applies to aging and film, so they could break out of their industry and actually, you know, go into a new one. The equivalent example today would be Amazon Web Services. They transcended industry boundaries moving out of e-commerce only towards using the same infrastructure for B2B technology infrastructure, which is, is now their most profitable business. So companies that think of themselves in an industry, I think many of those are gonna die. You need to think beyond industry boundaries, the unit of analysis today is the business model and your ability to constantly reinvent your business model and invent new ones. If you can’t do that, I think, you know, you’re gonna expire like a yogurt in the fridge.
Sean Pillot de Chenecey (48:56): And on that very visual note, Alex, just so everyone is crystal clear of where they can track you down because this podcast does have a very, very wide listenership around the world. So, yeah, just to remind everyone exactly where you are, so they can get in touch.
Alex Osterwalder (49:13): I’d say just Google, Alex Osterwalder, you’ll get to our content on strategizer.com. We give a lot of ways. So we have a tradition, we call it the premium business model. You know, we give away one third of every book, so people can get a feel because they’re very visual, not just text, we give away online courses. So just Google Alex Osterwalder, and you’ll find quite a lot of content that you get access to.
Sean Pillot de Chenecey (49:36): Okay. Well, on that note, what can I say? But, Alex Osterwalder, the co-founder of the fantastic Strategizer, entrepreneur, speaker and business model innovator. Thank you very much, indeed.
Alex Osterwalder (49:52): There was a real pleasure. Thanks for having me.
Sean Pillot de Chenecey (50:05): Thank you for listening to The Speakers Show podcast. Please leave a rating on iTunes. We’d really appreciate it. And also it’d be great if you could subscribe to the podcast itself, you’ll find it also on Google podcasts, SoundCloud, or your favorite podcast app. Thank you.
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Foresight strategist, author and podcast host Sean Pillot de Chenecey is an inspirational speaker, who’s also consulted for some of the world’s biggest brands.
Sean has a very deep level of knowledge regarding the genuine issues impacting brands from a cultural, social and business perspective.