Here's how to re-engineer your firm for innovation featuring Alexander Osterwalder

During my MBA programme I was introduced to the business model canvas and the incredible work of Dr Alexander Osterwalder and his mentor turned business partner Yves Pigneur.

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.

I interviewed Alex in Season 1 Episode 2 of Where Ideas Launch the podcast for the sustainable innovator, and you can have a replay of that episode on Apple Podcasts here, and Spotify here.

My little podcast is packing a mighty punch - we are ranked number 7 in the UK on Innovation podcasts and I’m exceedingly proud! do celebrate with me in the comments below!

Thank you for supporting my podcast and this newsletter by continuing to consume and share this work! Now back to Alex.

Alex 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 ensure that its employees have an optimal work condition, enjoy their work, and go home happy.

There is a need for companies to transform their businesses into sustainable models that are crisis-resilient and this is where his team at Strategyzer comes in. 

• The key topics that came up in our interview:
• 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

Alex and Yves are ranked Joint No.4 thinker in the world by Thinker’s 50, and they are among an illustrious list of game changers and practitioners who are helping shape our global future.

His books are staples in universities and companies across the planet. 

 I am now the proud owner and avid user of 4 of their incredible books and they serve as 50 % of the foundation for my work in sustainable innovation:

• Business Model Generation
• Value Proposition Design
• Testing Business Ideas
• The Invincible Company

You can find out more about Alex and Strategyzer by clicking here.

I asked Alex, What's your “why.” What questions get you out of bed every morning with a burning desire to solve them?

His response: 

When we see people and companies who cannot innovate,  We ask ourselves. So what's still missing? What's wrong?

We don't blame the companies.

We don't blame the people. 

Me and Yves we ask ourselves - what are the tools and processes that are still missing? - or unclear? 

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. 

Then we prototype tools that we test with real business people out there and try to make them better and better.

We're very visual in the work we do. 

Then we write books around the tools around the topics, and it's just a fun process

And of course, it's very gratifying when you see people using the tools, reading the books, and actually making a difference. 

When asked about the role of businesses in solving the climate crisis, this is what he had to say:

I really think business can make a difference. 

Great companies, they create value in four ways. 

1 - they create value for customers. And we shouldn't underestimate that. Companies create new products, new services, that create value that advances the world. 

2- 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. 

3- We 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, you have happier citizens, families, and societies.

4 - having an impact on society. Take the founder of Patagonia, Yvon Chouinard, you know, he didn't settle for just building a company, the vision was to have an impact on society. Today, the mission of Patagonia is “we're in business to save our home planet.” 

Paul Polman, who was CEO of Unilever, 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 more and more this is 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 want to work for a company that they can stand behind, it's really making a difference. 

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.

I then asked Alex, is a happy employee the fundamentals of great business?

His thoughts were that we spend a lot of time at work as employees. 

Those hours are important in our life. Businesses who create a great work environment will really make a difference. Take founders, like Marc Benioff, founder of Salesforce, he wrote a book on the power of business as the greatest platform for change, his book was called Trailblazer. And he really makes a case for businesses as a change agent. And I really do believe that when we work on innovation and help large companies reinvent themselves, we also have to ask ourselves and the team at Strategyzer -  

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 to create more resilient companies that can survive a crisis.

That means, 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. 

Innovation is something that can really make a difference, not just financially, it's really something that can create enormous value for society. 

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.

If you take Tesla, it's the whole idea of not just building electric vehicles, but building a company that is transcending industry boundaries, and, 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.

I wrapped up by Asking Alex what are the top three things that companies with a great innovation culture do to sustain that culture and expand their economic lives.

He had this to share.

We created something that we called the innovation culture scorecard, innovation, readiness. And there, we focus on three areas.

First is leadership support around portfolio allocation which is the time that leaders spend on innovation. They need to invest in a portfolio of innovation initiatives, because it’s not possible to pick the winner before you do some healthy exploration. It turns out statistically that you'd have to invest in 250 projects in order to create one outlier. 

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’ve known 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 organisations.

Splitting your business portfolio between explore projects and exploit projects is a great way to channel and direct focus.

The second area is organisational design. Every company today has innovation activities, but mostly, it's innovation theatre. That's what Steve Blank, 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.

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, focuses on innovation. 

A great example is the Chinese company, Ping An in finance and insurance, they transformed themselves to 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, because then you kind of subordinate the innovation activities to the execution activities. It was at the same level of power. 

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. Both of these options give innovation power and signal to the company that it's very important. 

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 you don’t become a world-class manager overnight. So to become a world-class innovator, you have to gain experience. I like to compare this to the medical profession. 

A doctor, let's say, say, a heart surgeon, has to go through medical school, learn physiology, anatomy, for a very long time, and then become an intern, until they become a heart surgeon and this takes a lot of time, a lot of practice. It’s the same in business, you have to learn the anatomy and physiology of business, to learn how it works.

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. There are very strong similarities. The right talent and experience in innovation is crucial, because it's a completely different profession than management. 

It was so fantastic for me to have the experience of interviewing the phenomenal talent that Is Alex Osterwalder. Remember to tune in to Where Ideas Launch if you want to learn and listen in to this interview and other game changing guests.

My firm provides coaching and leadership development in the area of sustainable innovation and business development. You are welcome to reach out to me by direct message right here on LinkedIn, Twitter, or using my booking link here.