Why do business models matter?
In today's business landscape, industry boundaries no longer define success. Instead, business models take center stage. Companies like Apple, Alphabet, Amazon, Microsoft, and Facebook span multiple sectors, making traditional industry labels irrelevant. To thrive, you must master business model thinking, reinvent your approach, and prioritize customer value. Senior leaders face the challenge of building adaptable 21st-century companies and forward-thinking organizational structures.
Why isn't there someone already inside the organization to own the business model?
The CEO's role has evolved. In the past, CEOs focused on optimizing existing business models within well-defined industries. But today, things have changed. Business models are rapidly evolving in sectors like technology, pharmaceuticals, and more. CEOs are now at the forefront of the business model challenge.
CEOs face a critical question: How can we ignite new growth engines? Relying solely on technological innovation may not suffice. It's crucial to consider business model innovation. The landscape is fraught with potential disruptions from unforeseen competitors. CEOs must master the art of managing the existing business model while also exploring and executing new ones. This dual role, often termed the "ambidextrous organization," is the challenge that today's senior leaders must embrace.
What will this transformation toward business model innovation mean for company culture?
The shift towards business model innovation brings about a significant transformation in company cultures. It necessitates the creation of a dual organization—an ambidextrous structure. On one side, you have the exceptional executors who excel at managing and enhancing established business models. On the other side, you find the entrepreneurs or intrapreneurs—the dynamic individuals who spearhead new growth engines, effectively acting as startups within larger organizations. The key here is to make sure these two components coexist and collaborate seamlessly.
The partnership between the executors and entrepreneurs is pivotal. Without it, startups within large companies can find themselves constrained by corporate structures. Unlike standalone startups, intrapreneurs may have access to existing resources, such as the brand, customer base, and sales force. However, the challenge lies in breaking down the barriers that often separate those focused on execution and those dedicated to creating new growth engines. Overcoming these barriers is essential for achieving the desired transformation.
How can we make this challenge a bit more tangible?
Firstly, create an organizational space—both physical and cultural—that provides innovators with room to thrive. This space should foster a culture of speed, experimentation, and embracing failure as a chance to learn.
Secondly, fill this space with the right people—entrepreneurial individuals unafraid of uncertainty and willing to turn failure into opportunity. Their profile differs from those excelling in execution, but you likely have such talent within your organization.
The third step is to empower these innovators. Grant them the authority to shape the company's future. Don't keep them hidden; give them the license to invent and reward them as you do those growing established business models.
Also, consider changing your incentive structure for corporate innovators. Encourage experimentation, learning from failure, and quick iteration. Monetary rewards alone are not enough for those responsible for building multi-million or multi-billion-dollar businesses.
Why do you think tools are so important for this challenge?
To establish an environment where innovators and intrapreneurs in your organization can thrive, you must provide them with the right tools, structures, and methodologies. It's akin to the rigorous training a surgeon undergoes, mastering various tools and techniques over years. Similarly, innovators and strategists, those crafting the future, need a structured approach—no randomness allowed.
We've identified key tools for this purpose. It's not limited to The Business Model Canvas; it also encompasses The Value Proposition Canvas and the ability to shape the right culture with The Culture Map. Moreover, it involves the concept of testing ideas rather than getting bogged down in extensive business plans—a concept rooted in customer development and the lean startup approach. Innovators and strategists shaping an organization's future require a comprehensive toolset. We must receive proper training to become highly skilled with these tools. Just as in sports or surgery, proficiency doesn't come without training. While business schools teach tools for execution, such as accounting and marketing, we're now realizing that the innovation toolset is distinct and requires different mindsets and processes for success.
What companies can we look to as great examples of business model innovation?
While we often hear the same names, two that deserve the spotlight are Apple and Amazon. Apple goes beyond inventing new technologies and products; they expertly design potent business models around them. They aren't afraid to disrupt their own older products and business models, as seen with the introduction of the iPhone, which had a transformative impact on the iPod.
Amazon is another fascinating case. They've expanded into different industries, blurring traditional lines between retail and IT. The unit of analysis has shifted from industries to business models, revealing strong synergies. Amazon's remarkable growth isn't coincidental; it's the result of their organizational culture and structure, fostering experimentation, learning, and the creation of new growth engines.
These companies remain favorites because they approach business model innovation as strategy, not chance.
Strategyzer's mission extends beyond conceptual tools
For Alex Osterwalder, It's genuinely exciting to consider the impact of The Business Model Canvas. The level of adoption has been truly remarkable. While he acknowledges this achievement, he firmly believes that things are just getting started.
Strategyzer's mission extends beyond conceptual tools; it embraces software-based tools designed to empower senior leaders and doers worldwide, facilitating swifter and more systematic thinking provided by Strategyzer methodology. This is an enthralling journey, one that aligns with a vision Alex had 16 years ago—an idea of computer-aided design for business that is now manifesting.
With Strategyzer, we're working toward a strategic operating system, akin to the evolution from desktop to mobile operating systems. It's a challenging path as we carve out a new market, but it's an immensely enjoyable one.
We're at the inception of something extraordinary, with numerous minds yet to inspire and transform.
