“If you are in an organization that does not allow opportunities for experimentation and does not accept failure, leave that company.”
This is one of the quotes from Mr. Alex Osterwalder, one of the thinkers known for his expertise in management and business models, and the owner of the Business Model Canvas that is recognized around the world. The quote was brought up during the “Alex Osterwalder’s Corporate Innovation Masterclass” workshop recently organized by SCG’s Nexter Academy – an organization with the aim to promote corporate culture and drive the growth of new businesses under SCG’s Cement-Building Material Business. The activity received overwhelming interest from executives as well as large and small entrepreneurs nationwide who agreed that the two-day workshop offered both theoretical and practical knowledge for their businesses.
More Than One Business Culture
Mr. Osterwalder said that in the business world today, there are two types of culture. The first type is today’s business culture of ‘Exploitation’ that focuses on using resources to make a profit as quickly and with the fewest mistakes possible in order to introduce new products or expand their existing market in order to generate profit.
Meanwhile, the second type of culture is the business world in the future which is called ‘Exploration’. Though the direction of the organization may not be clear and it may be difficult to find out what the company will face next, this world of the unknown will allow businesses and organizations to survive in the decades ahead, depending on each company’s business model.
Organizations Need a Strong Innovation Team
As the theory and the business practice of these two cultures are vastly different, Mr. Osterwalder said that if businesses want to survive, they need to have a dedicated team to drive corporate innovation in order to create the right corporate culture that can cultivate new ideas while overcoming obstacles and changing the believe that new ideas or new things cannot be done. Meanwhile, the leader of the company must establish a safe zone, or a playground for employees to experiment with their ideas without the fear of punishment in cases of failure. Moreover, the company should reward employees who have the courage to try out their ideas and learn from their failures.
Accepting Failure in Organizations
Mr. Osterwalder also revealed that failure is important in creating business models, because the more we fail, the more we learn and the more opportunities we will have to create innovation. For every new innovative product or service in the market that has attracted a large number of customers, its developers have failed over and over again, and by testing their ideas and making new assumptions, they have discovered the best idea.
At the workshop, Mr. Osterwalder introduced participants to design thinking offers an opportunity for them to create a prototype for products and services. This method focuses on looking for new options then putting the prototype to test with customers to find the best idea later on during the process instead of settling on the first few ideas that had been suggested.
Determining the Company’s Direction with the “Business Model Canvas”
Then, Mr. Osterwalder invited participants to fill in the “Business Model Canvas” which is a draft business model on a rectangular template that divides the main topics into nine parts, including the Front Stage that customers can see, and the Back Stage that customers cannot see but is crucial in driving the success of the business.
The Front Stage is made up of Value Propositions, Customer Segments, Sales and Communication Channels, Customer Relationship, and Revenue Streams. Meanwhile, the Back Stage is made up of Key Resource, Key Activity, Cost Structure, and Key Partner.
Most importantly, the Business Model Story must be smoothly integrated into each area which will allow the people in the company to understand the overall picture of the business and accurately understand the priority of each activity of the business model.
“Value Proposition Canvas”: Seeking What Customers Want
As customers rarely know what they want, businesses and organizations must find out for them by taking note of what customers are trying to achieve. Mr. Osterwalder named this task the “Customer’s Jobs to be Done” which can be categorized into three parts: the functional, social, and emotional parts of the customer’s needs. However, he found that most organizations would focus on the customer’s functional needs while ignoring their social and emotional desires.
Therefore, apart from having a good business model, the key factor that will help businesses succeed in the future must include the right value proposition for customers that also addresses their social and emotional needs in addition to the functional aspect.
‘Leaders’: The Key Driver of Corporate Innovation
An important question for corporate leaders is whether executives should be the ones to promote corporate innovation while avoid making decisions based on their own opinions. One of the key things in developing innovation is that we must be careful not to fall in love with our own ideas, and constantly reminds ourselves that there are no right or wrong idea, just ideas that have and have not been tested among customers. Thus, leaders must cultivate an environment that allows employees to feel comfortable enough to try out their ideas and embrace the chance for failure. These opportunities for testing should involve a low level of investment, a fast-moving experiment, and quick adaptations once teams understand what works for customers. Moreover, organizations should reward those who demonstrate the courage to try out their ideas and embrace failure.
Moreover, Mr. Osterwalder led the participants to brainstorm for solutions to challenging questions such as how to attract and retain customers, how to find new customers from related businesses, and how to generate more income after the first sale. For every question, he would cite a case study from world-class brands in order to illustrate the key takeaways from the session in addition to the tools and ideas presented during the workshop from the Business Model Innovation, Value Proposition Design, Design Thinking & Innovation, Evaluating Business Model Mechanics, Testing and De-risking Innovation, Innovation Matrix, Innovation Portfolio, to Business Model Evolution. Therefore, the workshop proved highly effective for participants who learned about creating business models while it also encouraged them to build their own corporate culture.
The two-day workshop was a great success. Apart from the knowledge that can be adapted to create corporate innovation, all participants also received a Masterclass e–Certificate from Mr. Osterwalder.
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