How Investing in Culture Ecosystems Leads to Innovation with Alex Osterwalder

"So?there are, now those outliers who have done exactly that--?they invested innovation, but it's not just the money.?They gave innovation power,?and they created this ecosystem for exploration, with tons of failures...?They hold up their failures and say, you can't succeed without failures and the bigger you get,?the bigger your failures, but,?you know,?that's the system you need to create for the winners to emerge. So, failure's never the goal, but it's an inevitable side consequence of exploration."?

This week on the?Outthinkers podcast ,?Alex Osterwalder shares his thoughts on why,?when all is said and done, innovation starts with culture, and how to ensure you're building the right ecosystem in your own organization.?In this episode, he discusses why innovation?must?begin with your culture, and?why if there were only one metric you should be tracking to unleash innovation, it should be your “innovation kill rate.”?He finishes our talk off with?some real-world examples of large enterprises who have been able to transform into agile, innovate organizations, proving it?can?be done.

Listen now.

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 and nominated for this year's Thinkers50 Strategy Award shortlist, Alex is known for simplifying the strategy development process and turning complex concepts into digestible visual tools. 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. And they really introduced into the strategy dialogue the idea that business models can be intentionally—and creatively—designed.??

Strategyzer , Alex’s company, is on a mission to evolve large established companies so that they inspire and activate and liberate their employees to be innovators. They do this using online courses, applications, and technology-enabled platforms.?

Alex’s Top Insights:

1. Build a Dual Culture:?Under every company’s?umbrella?there should be two?cultures?working harmoniously: the execution?culture and the exploration?(innovation)?culture.?The execution side is what brings in the cash?now, and the exploration side is what?will?create future financial opportunities.?It is important to??develop?this?partnership?to ensure that the?exploration?side can continue to disrupt and?the execution side can?continue to thrive.?In your organization, are exploration and execution working harmoniously? What changes need to occur for you to fully realize a dual culture??
2. Adjust your?Kill?Rate:?Many organizations get stuck investing?large?amounts?of capital?into a high number of innovations,?when only 4 in 1000 will succeed. Rather than?investing so much up front, company leaders need to learn to kill doomed innovations before they become?resource-suckers, and keep a small number of high-potential innovations to focus on. According to Alex, if you kill?75% of projects in the first three months, rinse-and-repeat, then the winners will emerge.?In your organization, are you strategically investing in?a few?high-promise projects, or are you stuck?with a?high?number of low-potential ideas??How quickly can you liquidate?and?reallocate funds to projects with?higher?promise??
3. Invest in Scalability:?To Alex, what distinguishes successful corporations from startups is the scalability of their ideas.?His company,?Strategyzer,?invests?more heavily in innovations that are scalable, and less in those that are not.?Before completely killing ideas, consider how scalable they are, and invest accordingly.?Some ideas may be worth $1 million and not a dollar more, while others may be worth anywhere between $25 million and $500 million. Focusing on scalability can?help these high-potential innovations rise to the top.?In your organization, consider your top three incumbent projects. How scalable are they??At what dollar will you be ready to kill those projects??

Listen to the full episode here.

More Resources:

1. Alex's books include the international bestseller?Business Model Generation ,?Value Proposition Design ,?Testing Business Ideas ,?The Invincible Company , and the recently launched?High-Impact Tools for Teams .?
2. Learn?more?about Alex’s?company and?access?free resources at: https://www.strategyzer.com .
3. Connect with Alex at his website:?https://www.alexosterwalder.com ?or on his LinkedIn page:?https://www.dhirubhai.net/in/osterwalder/ ??