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002 How to build a resilient business

About this Episode

Where Ideas Launch was curious to learn what inspires the world's #4 Management Thinker.

We asked Alex these 3 questions:

  • What’s your why – what question gets you out of bed every morning with a burning desire to solve it?
  • We know in our world today we have a burning platform of sustainability. What do you currently see as the role of business in solving these problems?
  • We know from your work that Innovation is heavily influenced by a company’s culture. What are the top 3 things that companies with a great innovation culture do to sustain that culture and expand their economic lives?

Dr. Alexander (Alex) Osterwalder is one of the world’s most influential 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.

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, Osterwalder’s company, provides 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: How to Create Products and Services Customers Want, Testing Business Ideas and The Invincible Company published in Spring 2020. To learn more about Alex's work you can subscribe to the Strategyzer news letter by clicking here

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Episode Transcript

Innovation expert, Dr. Alex Osterwalder has created and tested tools for simplifying strategy development processes for businesses and emerging business ventures. He works by turning complex concepts into digestible visual models. Examples include Business Model Canvas and Value Proposition Canvas.

He believes that for a company to be truly sustainable, it must be able to solve a problem and create value for society, its stakeholders, and more importantly and ensuring that its employees have an optimal work condition, enjoy their work, and go home happy. There is a need for companies to transform themselves into sustainable models that are crisis-resilient and that is where their work comes in to help companies reinvent themselves through the innovation they incubate and launch at Stragegyzer.

Key points:

  • Technological Innovation can help businesses to be more sustainable 
  • Business organizations must have a profound “why” that brings value and creates an impact on society
  • If a company is sustainable and crisis-resilient, it is able to serve its purpose and create value to its most important stakeholder, its employees

Katherine Ann Byam  0:02  

Where Ideas Launch - The Podcast for the Unexpected Innovator. 

We are all incredibly creative, but maybe we’ve forgotten how. I spent my career working with people from more than 150 countries traveling the world and experiencing cultures, and what have I found? Creativity is everywhere. We've got a gargantuan challenge facing us, as we need to redesign a more sustainable planet. This podcast explores modern-day innovation in the age of sustainability. I interviewed some of the most prolific thinkers, creators, and educators on their journey to create sustainable incomes and businesses. My guest tonight will teach you how to be creative, create business models and explore curiosity with the courage to level up in your career. Join me every Wednesday for a new edition of “Where Ideas Launch - The Podcast.” Welcome to our episode. 

Dr. Alexander Osterwalder is one of the world's most influential 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. Alex is known for simplifying the strategy development process and turning complex concepts into digestible visual models. He invented the Business Model Canvas, Value Proposition Canvas, and The Business Portfolio Map - practical tools that are trusted by millions of business practitioners from leading global companies. Strategyzer, an Osterwalder company provides 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: How to Create Products and Services Customers Want,” “Testing Business Ideas,” and “The Invincible Company” that was published in Spring 2020. So I'm excited to welcome Alexander Osterwalder to “Where Ideas Launch - The Podcast.” 

So, Alex, you were ranked Joint No.4 thinker in the world. Your books are staples in universities and companies across the planet. And you are creating methods that change the trajectory and outcomes of many businesses. I believe that business leaders, especially the influential ones, have a burning unanswered question that propels them forward. Alex, I'd love to know, what's your “why.” What questions get you out of bed every morning with a burning desire to solve them?

Alexander Osterwalder  2:47  

Good question. What gets me out of bed every morning. I just love what I'm doing. You know, making business tools to help people do a better job is something I really enjoy. You know, when we see people and companies who can innovate can't innovate. We ask ourselves. So what's still missing? What's wrong? We don't blame the companies. We don't blame the people. We ask ourselves. And when I say we, it's with my co-author, Yves Pigneur. We ask - what are the tools and processes that are still missing? - or unclear? You know, where could we contribute to help them do a better job, to create change, or to create impact. And then the fun part is once we kind of figure out the challenge, we try to work on it, we play around with different concepts. And then we prototype tools that we test with real business people out there and try to make them better and better. And we're very visual in the work we do. So then we write books around the tools around the topics, and it's just a fun process. And then, of course, it's very gratifying when you see people using the tools, reading the books, and actually making a difference. So that's what gets me up every morning.

Katherine Ann Byam  4:07  

That's fantastic, Alex, we know in our world today, we have a burning platform of sustainability. And I don't just mean the climate. There are many levers of sustainable development, which include education, health care, water, and food for all, as well as general well-being the climate crisis. In your work, what do you currently see as the role of business in solving these problems?

Alexander Osterwalder  4:35  

Interesting question. How do I currently see the role of business in solving these problems? I really think business can make a difference, you know, great companies, they create value in four ways. So number one, they create value for customers. And we shouldn't underestimate that. You know companies create new products, new services, that create value that advances the world. Then, they create value for their organization, for the owners, for the shareholders, and that is very good as value creation. But of course, that's not enough, right? That keeps companies alive. We also, you know, love companies that create value for employees, a really important stakeholder. And don't underestimate the impact, you know, you can have as a leader, or as an owner or CEO of an organization. When you have 10 people, 100 people, 1000 people, 10,000 or 100,000 people, and you create better working conditions. You create a space where people can enjoy their work every day and do their best work. You'll actually create a better world that will have a big impact. You know, happy employees will go home and be happy, and, you know, citizens in their families and happy in society. So that's very important. But then there's the third, the fourth one. And I think that area is extremely important, which is, you know, making a difference in society, having an impact in society. And you know, take the founder of Patagonia, Yvon Chouinard, you know, he didn't settle for just building a company, the vision was to really, you know, have an impact on sustainability. So today, the mission of Patagonia is “we're in business to save our home planet.” So there, you know, they definitely, definitely make a difference, or Paul Polman, who was CEO of Unilever, you know, who reoriented the company, to focus not just on profits, but really on sustainability, and not at the expense of profits, but in harmony with profits. So I think that is very important and impressive. And I think you know, more and more, not just a nice to have, it's something that companies need to do, just to retain their employees and to attract new talent. Because today, you know, a lot of young people are, you know, great talents, they want to work for a company that they can stand behind, it's really making a difference. So creating value for society is something that's incredibly important for organizations. So those are four layers where no company can really make a difference.

Katherine Ann Byam  7:28  

Alex, it's so exciting to hear senior leaders in strategy, recognizing that a happy employee is a happy business. You know,

Alexander Osterwalder  7:36  

We spend a lot of time at work as employees. So those hours there are important in our life. So businesses who create a great work environment will really make a difference. And you know, take founders, like Marc Benioff, founder of Salesforce, he wrote a book on, you know, the power of business as the greatest platform for change, he wrote a book called Trailblazer. And he really makes a case for businesses as a change agent. And I really do believe that you know, when, when we work on innovation and help large companies reinvent themselves, we also have to ask ourselves and strategise? Why are we doing that? What's, what's our “why” and the reason is not just to help them make more money or for us to have great assignments that are interesting and pay well, no, it's also and I think that's the main motivation for myself, it's to help more to create more resilient companies that you know, can survive a crisis. And that means, you know, having more stable workplaces, because when a large company has to layoff 10,000 20,000, or 50,000, people, as has been the case, you know, in some companies with COVID-19, that is very, very painful for the employees, and it's very costly for regions and governments. So innovation is something that can really make a difference, not just financially, it's really something that can create enormous value for society. So that's what gets me excited about innovation, you know, creating value for customers, creating value for businesses, and of course, creating value, you know, for employees to create more stable workplaces and ultimately, some of the great innovations they create value for the society for the environment. So if you take Tesla, its the whole idea of not just building it, you know, electric vehicles, but building a company that is transcending industry boundaries, and, you know, focusing on solar energy in general with rooftop tiles with batteries, in order to fuel the electric vehicles. That's a great, great case of an organization that is making a difference. And there are more and more of those. And that's what's really exciting these days is that you have leaders and businesses that really understand that they can make a difference in the world. And they can be agents of positive change. And that's exciting.

Katherine Ann Byam  10:22  

Alex, thank you so much for that. You shared with us four great ways of creating and sustaining value in organisations, which is “focus on the customer”, “focus on shareholders”, “focus on employees”, “focus on society”. And this is the ingredient, the key ingredient to having a resilient company. Now, I know from your work that innovation is heavily influenced by a company's culture. I attended your Strategyzer masterclass in May.

What do you think are the top three things that companies with a great innovation culture do to sustain that culture and expand their economic lives? I'm very interested in how you have brought this into your work.

Alexander Osterwalder  11:03  

Great question, how about the top three things you do to help companies sustain an innovation culture, we created something that we called the innovation culture scorecard, innovation, readiness. And there, we focus on three areas. And they sound kind of trivial when you mentioned them like that, but I'll give you some examples. So the first area is leadership support, you know, around portfolio allocation, the time that leaders spend on innovation, etc, etc.

Alexander Osterwalder  11:41  

That's where leaders can make a difference, they need to invest in a portfolio of innovation initiatives. And not just one because in innovation, you can't pick the winner. Turns out actually that you'd have to invest in 250 projects in order to create one outlier. So when you're an established company, you need to invest in at least 250 projects to create a big success that can go into the hundreds of millions of dollars. Now, if you're a smaller organisation, that might be three projects to invest in to get one winner. But the ratio is that you can't pick the winner. And in the venture capital world, in the startup world, we know that for ages, because there is no venture capital investor that believes they can pick the winner, they've done this for a long time, and they still can't, so they invest in a portfolio, where one company they invest in, will create the return for the entire portfolio. So we need the same kind of logic in established organisation. So besides the execution business, the execution portfolio, managing the businesses that you have, you need to create a portfolio of innovation projects. So that's, you know, one of the themes in the first area leadership support, and investing in a portfolio and resource allocation. The second area is organisational design. So no company today doesn't have innovation activities. But mostly, it's innovation theatre. That's what Steve Blank, you know, the inventor of the Lean Startup movement, Rita McGrath, from Columbia Business School, myself, we call innovation theatre, it's for the show, there are activities there, but they're not real. So what you really want is to give innovation power, and that's a relatively easy thing to do. You know, so either it's the CEO who spends time on innovation, my favourite example is Bracken Darrell, who spends 40 to 60% of his time on innovation, or you need to have a co-CEO, who fully, you know, focuses on innovation. So a great example there is that Chinese company, ping on in finance and insurance, they transformed themselves to, you know, a company that transcended industry boundaries and became a tech player, when Peter Ma, the founder, said, we're gonna get disrupted, we need to invest in innovation. And he established a co-CEO with Jessica Tan, who focused entirely on innovation. So it wasn't somebody reporting to the CEO, you know, because then you kind of subordinate the innovation activities to the execution activities. No, it was at the same level of power. So it's very, very important that you give innovation power, either by having the CEO focus on innovation that symbolically signals that innovation is important. People will realise that it's not a career suicide to go into innovation, or the alternative is that you install innovation at the same level as the CEO. So both of these options give innovation power and signal to the company that it's very important. And then the third area of innovation culture is actually the easiest one. It's an innovation practice. So you need to establish the right tools and processes in your organisation, but also establish the right skills and experience. Because just like, you know, becoming a world-class manager, that you don't do that overnight. So becoming a world-class innovator, you know, you have to gain experience. I like to compare this to the medical profession, you know, a doctor, let's say, say, a heart surgeon, has to go through medical school, learn, you know, physiology, anatomy, for a very long time, and then become an intern, until you become a heart surgeon takes a lot of time, a lot of practice, the same in business, you have to learn the anatomy and physiology of business, to learn how it works. But you also have to practice because you can't learn business, from reading books, entrepreneurship, from reading books, innovation from reading books, just like you can't become a doctor or surgeon, just by reading books. So there are very strong similarities. So the right talent and experience in innovation is crucial, because it's a completely different profession than management. So those are the three areas you need to invest in leadership support, organisational design and innovation practice. And that's how you will help innovation become sustainable. In your organisation. It's fun, you know, to see with the Strategyzer, how we're getting into companies, and we do these assessments to see how companies are innovating or not, you know, they're performing innovation theatre. And then once you visualise that, the leaders really realise that they need to change, and they need to, you know, perform their innovation activities in a completely different way. So innovation, I think today's growing up is maturing, and companies are really realising that what was good 5-10 years ago is not good enough anymore.

Katherine Ann Byam  17:17  

Alex, thank you so much for joining us on Where Ideas Launch - The Podcast. This session was so informative, so indicative of what makes a company strong and resilient. Thank you for all the work that you do. And we look forward to you joining us again in the future. Thank you, Alex, and thank you to our listeners. 

Thanks for listening. This podcast is brought to you today by the Dieple Virtual Service Hub. The Dieple Service Hub is a digital transformation strategy service that supports startups needing to optimise their processes and their performance to scale up growth. We also help medium-sized firms and modernising their operations and our services include sustainable strategy, analytics, and tech enablement. To find out more contact Katherine Ann Byam on LinkedIn