Strategyzer Webinar: How To Validate Business Ideas

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Joining us onto the webinar session. We'll be starting our broadcast momentarily, just waiting for a few more folks to join us. Before we kick off. Let's just give everybody another minute or two and then we'll get started, Okay? Welcome everybody. This is webinar number five of our Strategizer Webinar series. Today's live broadcast is going to be presented by Alex Osterwalder, and the topic is how to validate business ideas. A good morning to everybody who's joining us from North, Central and South America. A good afternoon and a good early evening to all you folks who are joining us from Europe and in the Middle east. And a good evening or I guess, late evening to those of you night owls that join us from Asia and the Pacific. At any time during this broadcast, if you want to share your extended thoughts on what Alex presents or have any extra thoughts of your own to add, by all means, please feel free to tweet us at Strategizer, follow us, and also feel free to use the hashtag, hashtag StrategizerWebinar. I am your moderator for this session. My name is Kavikupta and I'm part of the content team here at Strategizer. I generally manage the development of articles, webinars, podcasting, and all social media. Most of you may know me from the emails you've been getting about this upcoming session. You can also find me on Twitter at kavigupta. So our host today is Alex Osterwalder. He's co founder of Strategizer and he's also the lead author of the bestseller Business Model Generation as well as Value Proposition Design. You can also connect with him on Twitter as lexosterwalder and in a moment I'll hand over the reins to him as well. At any point throughout this webinar, if Alex or myself mention the types of tools or methodologies that we have, you can actually go and download them for free through the Strategizor platform. If you create an account, you'll have access to over 30 plus canvases, tools and templates that will be practical and useful for a lot of what today's session is going to cover. So by all means, visit strategizer.com register create an account and you'll have free access to a whole library of resources that we use and a lot of.

Businesses use as well.

So with that, I'm going to just change my screen and hand over the reigns to Alex. And Alex, whenever you're ready, go ahead.

Hello, everybody. I hope you can hear me fine. Kavi will tell me in case that is not working. Microphone. So, hi, everybody around the world. Super excited that we have hundreds and hundreds of people joining us for this webinar. I'm going to show you how to validate business ideas. And I'm going to show you this over a period of about 12 weeks. And I'm going to show you how we do this when we work together with larger organizations. Going from an idea which could be improving a business model, creating a new product, or any other starting point, all the way to validating an idea. Over here, I'm going to show you this in a large company context, but this applies to any type of organization. Some specifics that we'll point out are in particular relevant for large organizations. So we're going to split this into four weeks to start with, and then here another eight weeks, which will lead us up to the 12 weeks. And when you start out with an idea that you want to validate, and that again, could be improving an existing business model. If you have a business line or a business division, 500 million, 1 billion or more, and you have to rejuvenate the business model, this is your starting point. Now, when you start, you wanted to put together what I would call a business model, SWOT team or a value proposition SWOT team. And you want to make sure that you have a very diverse team. You also want to make sure that in this team you have somebody who you can call an entrepreneur. And what I mean with that is that we need to go beyond the typical project manager. We need to give ownership to somebody who will drive this project from the beginning all the way to the end to validation, which could go on and then go into scaling mode where somebody else might take over. Now, there are another couple of things that you want to make sure at the beginning of a project with this team that you give people enough time to work on a project like this. That sounds trivial, but how often do we actually really give people time to work on new ideas or to improve an existing business model in a very substantial way by rejuvenating. It doesn't happen all too often, and I'm speaking from experience here, that I often see teams that have to do this on top of their traditional work. And when there's a lack of time, we all know that the work won't be done in the right way. So that's the starting point. And surprising enough, we don't actually need A lot of money to start out. Innovation, when you start is not very expensive. It's actually pretty cheap. So we'll start here. The starting point and the first thing you really want to do is make sure, and we do this over four weeks, two to four weeks, want to make sure that people understand the tools. And those of you who are a little bit experienced, know that on top here we have the business model canvas. On the bottom here we have the value proposition canvas. These are our two tools that will lead us through the process where we will shape our ideas that we have at the beginning to turn them into business models. But if you're in an existing business, it might actually not start from an idea. You might start from an existing business model. Meaning that the first step here is to sketch out your existing business model. I like to call that the as is business model. So while people here are learning about the tools and we do this actually in an online environment where we help people learn about the tools with videos and online facilitators and at the same time they sketch out their as is business model. So after four weeks you have a really good starting point to do. And again, you can modify this process to your own kind of context and own needs. But what we like to do after this first initial online training is we like to do a workshop. First workshop. That could be about two days. It's a very good time frame two days to take your business model and ask yourself, what are the strengths and weaknesses? So how could we split up these two days? So let's zoom in here. Split this up into two days. The morning session, you'll take your as is business model. And you will ask yourself what's going on in the environment around this business model? What are the technology trends, what are the competitive trends, what are the customer facing trends and what is the ongoing economic environment? And once you have a good understanding of this environment, you can start assessing your business model. So what you're going to do is you're going to look at this environment again. Technology and legal trends, competitive trends, customer trends, and you will ask yourself within this context, what are the strengths of my business model and what are the weaknesses of my business model? And that is of course, if we're starting out with an existing business model and we want to reinvent ourselves or create new value propositions or new business models, that is a very good starting point. And again, you don't have to do this, but it's a very good starting point to work towards brainstorming. I like to do that the afternoon where we're going to come up with a lot of different ideas. All these little bubbles I'm drawing here are different things we could do based on the existing business model, the environment, and some very challenging trigger questions, like, what would I earn revenue with if I gave away my value proposition for free? So you'll have many, many different ideas. And you will try to distill these ideas into a couple of napkin sketches. Could be two or three napkin sketches, some drawings, rough ideas, narrowing it down from what could be all of these possible things into one, two or three ideas. And then you want to challenge these ideas. Like to do that with a technique that we call Black hat and yellow hat, where you get everybody to look at these ideas and ask themselves, oops. My drawing skills here are not very good. This is a black hat, why this idea is not going to work. And this comes from Edward de Bono's six Thinking Hats. And why this is a brilliant idea. So this is not yet real validation. Some of you will say, this is all in the building. This is what we do in a workshop. But that's okay because you want to shape your ideas, assess your ideas in the building before you get out of the building. So that was day one, Then day two, maybe make this clear. Day one did an assessment of the existing environment. We came up with new ideas. Day two, in the morning session, get people to present their ideas. After they were able to work them through, maybe even with the numbers, and digest them overnight. Open night session, and again you can do feedback sessions. I like to do this with the black hat and yellow hat. Again after we went through a couple of iterations, after people worked through the night, came up with some great presentations. You have again, very good assessment of your ideas. Then the next thing you will do is this could be one team, this could be several teams. You will take your ideas the shape of a business model canvas, maybe value proposition canvas if you had time to work on that, or maybe only value proposition canvases if you didn't work on the business model. So what's the next thing you do? Presented your ideas, you iterated them. Now you've got to ask yourself, what are the key hypotheses that need to be true, the things that need to be true for your idea to work. So you're going to come up with all of the things that need to be true for your ideas to work. You can see that my PA is working, scheduling, my calendar. You ask yourself, what are all the things that need to be true for this idea to work, this is what we call the hypothesis. But here's the most important step that you take these hypothesis and you rank them in terms of which one is the most important, the one that's going to kill your business. So very often you don't start with a pricing hypothesis that's not going to kill your business. But probably what could kill your business is if people even have the particular job you intend to address you, if they even are interested in the value proposition you hope to launch, or if they have a budget to acquire what you are working on. That is our starting point, this two day workshop. For now we are moving into testing mode. So get back to our eight week schedule. Had four weeks to learn our methodology, sketch out NASA's business model, brings us into the workshop and now we are ready for eight weeks of testing. We take the first hypothesis from up here. And we start getting out of the building. Steve Blank likes to say there are no facts in the building, office building or you're a startup in your coffee shop or your home office. You get out of the building and you start testing. And what testing actually looks like is a very messy process. Like you will advance, you'll learn that you were wrong, Messy, messy, messy. You will have to iterate, you'll have to pivot your ideas, you have to reshape them and eventually it will get a bit clearer. After eight weeks it's not a lot of time, but after eight weeks you'll have a pretty good idea of some of the things that could really work and some of the things that you've already proven with evidence that are not going to work. Now what's important here is if you're a team or if you're in a large company that you have weekly check inside because if you don't, it's likely that you're going to think hard about your ideas but you're not going to stress test them outside of the building in the market. So what's really important here is that you have somebody who you're accountable to for testing your ideas. Weekly check ins are usually very good either with an advisory board, with leadership or, or with external coaches. We do this online in Strategizer of course, because you can have a good tracking of how your ideas are evolving and how your hypotheses are evolving and how you're testing them. So this is a very simple 12 week process to go from a starting point to the first validation of your ideas. Now how does this differ from the traditional process? Number one, I'D say that traditionally we put a premium on ideas, that the idea is the most valuable thing. But it turns out I think ideas are free, ideas are almost worth nothing because your ideas are going to evolve over time. The ideas that go in here, the ideas that go into your workshop are going to change radically over time. What this means is don't get attached to your first ideas, don't fall in love with your first ideas. Accept that this is a real journey here where your ideas are going to transform. And this is very hard to do. Brings me to a couple of pitfalls here. In existing businesses, it's very hard for people to stay in this design thinking mode where they're not going to actually have to think about the idea that they're going to implement, but where we accept that the ideas that come in are going to transform radically. Very different at the very end. And once you accept that, it's going to be a lot easier to let go. And you're not going to get into conversations who has the best idea because you know you have to validate them with this four, eight week process. It's very, very important. So what are another couple of pitfalls here? I'll look at the workshop already as a starting point. What's important here also is that we accept that there are many possible ideas. And I'd go further than that. Take this, that ideas. Can have different business models. You can turn an idea into reality with different business models, launching a new product. You could do that by giving it away for free. That's how Google started out, became a great business. We could create a business model with switching costs that locks customers in. That's what Nespresso did. So what you need to realize is that every idea, every starting point can have different business models. In terms of design thinking. You need to explore alternatives thoroughly before you actually go test one of your ideas. And even then you need to accept that they're still going to transform in this process and you will be able to let go. So not falling in love with your first idea here, when you start out in the workshop, don't fall in love with your first idea or even here as a starting point is very important. So you, you can have a long term vision of where the potential is, of what the world will look like in a couple of years, but how to get there, what the individual steps are, that's what you will test and figure out in the market. You're going to design the business models and value propositions that get you from idea from starting point. From potential to a business model, that's what you're going to do in the market. Now, another trap in particular in large companies is like doing workshops. And the energy after a workshop is sky high. But what we need to realize and what we need to really teach people is that workshops are only the beginning. That's where the whole thing starts out. They're important because you're going to shape your ideas, you're going to have your first different broad directions. But then working on the hypothesis, what needs to be true for one idea to become reality, that's crucial. So after a workshop, you need to make clear to the participants that this is only the beginning of a journey, which we'll start here with eight weeks. And eight weeks seems like very short, but in eight weeks you can do some solid testing of your ideas. What Steve Blank would call customer discovery, where you go talk to customers, or you could even start building some prototypes, paper prototypes. What we see as a starting point in error, Crease's lean startup approach with Build, measure, learn. Now, another pitfall here, going the testing process. Once we're beyond the workshop and we know we need to test is in lean startup, that is what we're going to do. We say, well, how does the process look like? It's called Build, measure, Learn. People who start out with this, they take this too literally. They say, oh, I'm going to have to build something here, maybe after talking to a couple of customers here and I have to build something and then I'll measure it and I'll learn and I'll change a quick prototype. But what's really important to understand is that sometimes you don't need to build anything. And of course, if you're in a very capital intensive industry, you can't even do that. So what you want to accept is that, you know the value proposition canvas, here we have the value map which reflects the value proposition. And on the right hand side we have the customer profile which allows us to describe the customers. And as Kavi said, if you don't know this tool yet, you can go look it up on our blog and get free templates. The first thing you want to test before building. Over here you could think of how to build, oops, let me take green here. Maybe we could build a prototype of our value proposition, what we'd call an mvp. But that's not the first thing to do. Actually, the first thing to do is over here to ask yourself, do the customers have the jobs I intend to address? Do they have the pains? I think they have and do they want to achieve what I think they will achieve. So the first thing you want to test is the circle. You want to ask yourself, is the customer even interested? Meaning if you have some widget in mind that you want to build, say a new tablet with specific features, this is not the first thing you're going to test. You're not going to go to customers and talk to them about this feature? Nope. What you really want to do is first understand your customers, go out and you talk to them about what are the things that are important to them. You ask them what kind of devices they use today. You ask them what are the things they're dealing with in their work and in their lives, and what the biggest problems are, how they're solving those, what their expectations are. You first test the circle. That's very important because if you start testing a prototype of your value proposition, something that you intend to build, you might actually get off track because you're framing the conversation around what you're interested in here in the testing, instead of framing it around what the customer is interested in. So the first thing you want to do here is probably think about your customer and their profile, what's important to them before you start looking at the value proposition and how you intend to solve their problems. And then you will look a lot more at your business model and how you will go to market and scale. Now, this looks awfully linear. Of course, it's not like that. So another pitfall is that people tend to forget that if they have an idea for a value proposition, say I'm going to build this device or have this service, this solution for my customers that that is embedded in a business model and that every different value proposition. I need to ask myself what the business model is for that. And if the business model doesn't work, I need to revisit my value proposition and I need to do all this. This is where it gets complicated here in this messy process of going from idea to business. And that's what we struggle with a lot, that it's not a linear process. Maybe a couple more things, my little drawing, and then I'll open it up for questions, since I was a bit all over the place. But there's so many things here that are interesting. A couple more questions. Another thing that we see a lot in particular in large companies is that they're very good here. This process here in doing surveys, they will get out of the building, maybe talk to customers first or to reach a lot more customers. You're all the whole masses, they will do a survey. Two big errors here that often happen is number one, let me start with the biggest mistake that happens in interview settings in this validation process is that people ask for opinions. Would you be interested in this? Do you actually have this problem? Do you think this is an important problem to you? Opinion is not what we want. What we want is facts. Meaning that rather than asking somebody, is this a problem for you? Do you think this is a problem? Is this a pain you have? You want to ask them when is the last time you faced this problem? What were the pains that you had in that situation? What did you do to overcome those pains? You want instances of what they lived, not their opinion, what they think is important to them, but how they actually acted in real world situations. So that's the first mistake that I see a lot that people are happy with opinions. They ask people what they think, but we all know people don't do what they say. What they say and what they do are not the same things. So you want to ask about instances in the past. So that's one thing. And that often also applies to surveys here. The other thing is second big mistake in validations that we see is that survey or surveying not enough. Some of the large companies we've worked with are really good at doing customer surveys and they can predict with very strong accuracy if the survey was right or wrong. But that's in the context of an existing product, of an existing solution, of an existing business model. So what you really want to do is go beyond surveys and do so called call to action testing simple stuff that is now standard is for example, what's a call to action test is setting up a landing page on the web with a product description. Your value proposition does 1, 2, 3. It does this, it does this, it does this. And then asking people to sign up with their email. The most simple call to action test, and what's interesting here is that this, even if just a small one, is an investment, giving away your email is a small investment, is maybe not the money you would pay for a solution, but giving away your email, you don't do that for something you're not interested in at all. Or we could say instead of an email, we have a buy now button and we simulate the purchase. This is an investment. Or we pre sell. A lot of people now pre sell stuff on Kickstarter. Even corporations are starting to do that, sometimes under their brand, sometimes under another brand. So it's really important to go beyond what people say by asking for instances in the past or doing call to action testing CTAs in order to get an investment from them, which could be small like an email or bigger like a pre purchase or a purchase that was simulated. And that is very different and gives you a lot better evidence here in our eight weeks of testing. Now that is something that startups do all the time, in particular web startups of course. But you can apply the same thing in any kind of industry and we've seen it now being done in the pharmaceutical industry, capital intensive industries. There are no more excuses. What it does require of course is a lot of creativity. But now let me get back to the beginning here. We talked about our SWAT team. One of the things that is often missing are the testing skills. So when you set up a team, you want to have some people involved who can set up these landing pages with. It sounds complicated, but it's not. With the hundreds of services that exist out there now, some of you who are in large companies are probably screaming, well what about our legal department? They're going to shut us down. They're never going to allow us to do this. They hardly even allow us to talk to existing customers. Well that is true. You need to get buy in from the very top, from the C level in order to be able to do these kind of things. But if we go back to CTAs, some of the greatest consumer goods companies now are understanding that traditional marketing research is not enough anymore and they're going towards CTAs and they're starting to convince their legal department departments, and sometimes best legal departments, they work together with the teams to help them explore what really could be done. So they're not a chain anymore here, they become real enablers. So I was just pointing out a couple of things in this process that can hold us back. A couple of things that are important. Let me see if there's anything else on my wall. I want to have all the things I want to say sketched out on the wall. Last thing, maybe here, is that what's holding us back today. This one again, my favorite drawing. Like the chains here, what's holding us back today in large companies is still this. Some of you might know what I'm drawing here. This is a business plan where we require from people that they refine their ideas in detail with a lot of writing before they even test their ideas. Business plans are at this stage. Here we look at our 12 week process. Business plans are a waste of time. Where business plans become interesting is afterwards when we move here towards Implementation or where we move into the next phase. You only write business plans when, when you validated your ideas. So one maybe last thing here is that after this process you might be very happy you validated your ideas. Validated your ideas. You have proof that your ideas could work. Well, it's not done yet. The problem is that sometimes even validated ideas will get killed in companies. Why is that? I'll draw one last picture that in companies can say they're kind of split into two. Where we have existing business models that we want to improve with existing profit and loss. And this is what the business leaders for each one of these business models, business divisions are accountable for. But the problem is that new ideas that don't fit into any pl, they sometimes get killed, even if you've proven that they can work. Because here we're inventing often new things. And if they don't fit into an existing pl, sometimes what happens is that even the best ideas get killed and they rest in peace. So what you really want to create is a structure where the left hand side and the right hand side live in harmony. And you allow some of these structures, even if they create new P and ls, to grow. That means we need to have senior leaders here who create this partnership, create this space for new ideas to grow. And some of you might have heard talking about the chief corporate entrepreneur. So maybe in addition to the CEO, we want to create a chief corporate entrepreneur who manages the future. So one last thing here, since I've already drawn up existing improve business models that we want to improve and the business models that we want to build are the value propositions. We need to give these new ideas access to resources in the existing business. And when I say resources, yes it means money, but in particular it means things like customers, access to customers to talk to them or access to brand to use it in the testing process. If again, the people over here on the right hand side don't have access to to money, customers and brand. They're simply startups in chains with a lot of weight and they have to compete against fast and nimble startups. So what you need to do is in addition to your execution culture, you should have in your company people who can execute and scale existing business models. You need an innovation culture. Some of you have heard us talk about the culture map. This is a new tool that we created together with Dave Gray. It looks like this culture map, that's something you can explore on our blog or download on our website. So a lot of things going on. So we can make this simple little process over 12 weeks happen. Okay, so I touched a lot of things here, covered a lot of ground. Let me open it up for questions. I'll hand over back to Cavi and see if there are any questions before he wraps it up.

Awesome. Thanks, Alex. I'm just going to switch the screen for a moment just to remind our audience about a few things and then we'll dive into a few of the questions. There's quite a few from people. We may not be able to get to all of them, but we'll do our best. So just as a recap to a lot of what Alex was mentioning in the webinar, many of these resources, actually all of them are available for download for free from our platform. You simply have to go to strategizer.com register, make an account and download up to 30 + canvases, tools and templates, things like the brand new tool we've made with Dave Gray, the Culture Map, our more signature tools as well like the Business Model Canvas and the Value Proposition Canvas, as well as some of the testing and learning cards that will help you organize and design and manage and run many of the experiments that you'll be doing in your kind of 8 to 12 week validation experiments. So you've also heard Alex talk briefly and very quickly in some areas about how we're doing a lot of this stuff with big companies, or how a lot of big companies in both the B2B and the B2C realm are using our tools, our training and our methodology to actually implement a 12 week program. And that's something that we wanted to talk to you guys about today, which is an enterprise offer that we're currently running where we'll actually take a lot of the elements of this very session, the 8 to 12 week validation of a business idea, and work with your team in a corporate environment to actually achieve a validated business case that the team can then continue to explore. So what does that include? Well, like I mentioned, it's a 12 week process where you have a dedicated and experienced online coach to help you actually transform an idea the team has, whether it's something that you do from scratch or something that's already been kicking around in the organization but has been having trouble lifting off. And there's also remote and in person coaching that's available through that process. We talk about the workshop experiences that's part of it as well. There's the online course component where team members actually get walked through much of what we've talked about today in more detail in quick 30 minute exercises throughout a week. There's also access to the full Strategizer kit. You get the online training course offline toolbox as well as access to our web app. As Alex mentioned earlier on, there's a digital version of the Strategizer app that allows you to essentially collaborate and create, canvases and run tests and manage all kinds of experiments. The outcome is that your team is equipped with a process that will uncover future growth engines, that will uncover future ideas and validate them by reducing risk and uncertainty, which is obviously one of the biggest components of implementing new ideas or introducing new ideas into an organization. If you're interested in learning more about this, I will shoot everybody that's attended an email with the link to the webinar as well as a reminder of this offer. Again, you can touch base with our sales team@salestrategizer.com or call them on the line that's listed there. And again, I'll pass this through to everybody after the call again. But in summation, it's essentially an in depth guided process of what Alex has just presented today that we are doing with companies. And companies as big as MasterCard to Colgate to Medtronic in the healthcare sector have also implemented a lot of these processes with us. If you're interested in learning more about some of the concepts that took place, you can also visit our blog, which is blog.stragizer.com and you also see more in depth explanations of some of the tools that we've talked about, some of the concepts we've talked about, and some of the processes that we talk about as well. So what I'm going to do is actually Alex, flip it back to you in case you want to do any more visualizations and we'll jump into some of the questions as well.

Okay, so I'm listening. You can.

Awesome. So we have quite a few. What we will do is the ones that we don't get to we'll try and cover them in one of our Strat Chat podcast segments where we can go in more detail because of our time limit today. Let's jump right into it. There's quite a few. When talking with customers about jobs, pains and gains, how specific or focused should the experience be?

So I think what you're going to ask your customers really depends on the key hypothesis that you have. So coming out of a workshop where you kind of framed your ideas, where you shaped your ideas, you want to ask yourself what are the most important things that need to Be true for your ideas to work and you start with those most important hypothesis. And this is typically a place where people get derailed. So the question is not how much detail, but it's what do you really want to learn? What do you need to learn in order to make progress towards a validated idea? And because we actually, at the very beginning, when we started out with Lean Startup, we were all over the place with our questions. Different kinds of customer segments, different. We were talking about all kinds of different jobs, pains and gains and all kinds of different possible attributes of our value proposition. We weren't focused enough in our questions because of that. We did a lot of interviews, we did a lot of questioning, and we weren't focused enough. We came up with a tool that we call the Test Card. It was a very simple tool called the Test card that forces you to start with a hypothesis and then frame a test around that. That should ultimately lead to some learnings. And when you do this test Card, you'll be a lot more focused and you will make very explicit which hypothesis are you exploring? How are you going to learn this? And that might be a specific customer question set. So typically, I'm right now involved in a project with a large pharmaceutical company, one of the global players, and they're in a very heavily regulated environment. When they go talk to customers, they don't have a lot of time to spend with these stakeholders. So they have to be very specific with what they want to test and what specific questions they're going to ask. So the details depends on two things, what you want to learn. Number one, what's the hypothesis here? And number two, on where you are in your process. So at the very beginning, probably your questions are going to be a lot broader because you're not very clear yet on jobs, pains and gains. So your question set is going to be broader. Don't make it too broad, because otherwise you don't know in which direction to. And then the further you get in your validation, the more specific your questions should get, because the further you get in your validation, the more you should normally know and the more precise your testing should be. If you're too broad, you won't know which aspect really matters to your customers. So the further you get in your testing process, as a rule of thumb, the more precise your questions will get, the more precise your experiments will get.

Awesome. Here's another really good one, Alex. A lot of organizations in most cases have a traditional RD process with budgets that are allocated to existing business lines. Is traditional R and D A good process for supporting innovation or does it require a change in organizational design?

I think it requires. Thank you for that question, whoever asked it. I think R and D today has two issues. I do think R and D, the way it is today needs to remain the way it is today. But we need to create something in addition to that. R and D today is usually mainly there to improve and support the existing business models and value propositions in a company. That's the first thing they rarely focus on. What are the new value propositions and business models that we could come up with? Brings me to the second issue with traditional R and D is very focused on products and technologies. What you really want to do in addition to that is ask yourself which value propositions and which business models could leverage the technologies coming out of our R and D. Because the right business model can actually be the difference between success and failure. All of you know that I like to use Nespresso or many of you know that I like to use Nespresso as a good business model example because it had a spectacular business model. But the process getting there was not very good. So they came up in their R&D department with this new technology. But they didn't spend a lot of time on validating the value proposition business model. So that particular business almost disappeared because the first business model didn't work. The first value proposition didn't work. They didn't spend a lot of time on researching the right business model and value proposition. So it took a lot of time to get there. And it was almost by coincidence that they figured out a business model and value proposition that could help them grow to a multi billion dollar business. And I'll give you another example that comes out of R and D. Many of you know might remember this is a camera. Cameras used to be powered by Kodak analog film, right? The problem is they came up with the digital camera with their traditional R and D and they even found a value proposition in that case for digital cameras. But what they didn't find was the right business model for digital cameras. One that could help them didn't find that. One that could have helped them rejuvenate or reinvent the existing business model. Here Kodak was incapable of doing that. So they almost, you could say the R D innovated them to death in the sense that the digital camera disrupted their existing business model. If they had spent more time and more energy on really figuring out the right business model for digital cameras or if they had diversified into other areas like Fujifilm, did they were very successful with that for a very long time, they might still be standing. So traditional R and D is a must, but it's not enough at all. So if you take 10%, maybe just a little amount, 10%, that might almost be a lot. You could say 10% of your existing R and D and you spend it into processes like this, your returns will be spectacular. So I remember talking to the marketing council of a very, very innovative product company, telling them that I believe they could double their revenues in a few years if they took part of their RD budget to do these kind of things, to reinvent or invent new things around this spectacular R and D that they have. And they're slowly moving towards that. And I'm convinced if they moved a little bit faster, if they only took 5% of their existing R and D budget, they could double their revenues in a very short period of time. So R and D as it is today needs to survive and continue. But it's not enough. There's an and there. We need to find business model and value proposition R and D which will live in partnership, hopefully with the traditional rd. And it's not usually the case today, but that's the kind of partnership we need to create.

Awesome. So let's do a couple more as we round out the hour. Here's another great one, Alex. Can this approach be implemented with teams across different organizational boundaries, especially if they're cross functional teams?

So yes, it can, and I've seen that happen. But it's infinitely more complex in the sense that there is no such thing as one business model for several organizations, except if it's a joint venture with its own legal structures. So basically you will have this here that you will need to find. You can say, yes, we're going to find a business model that works to address a market opportunity. But if it's not a joint venture with its own legal entities with one legal entity, it means that you need to actually find a business model that works for each company, meaning that their business models need to find their interest within this shared business model. So it does mean you need to align these. There's an alignment here because at the end of the day these companies, they will decide based on self interest, except if they created together a joint venture where this is the one legal entity that's looking for success. If there's no joint venture, it means that this is a business model to address a market opportunity. But at the end, it's not one business model here, it's actually composed of three business models. That we need to get right. So I do think that's more and more important today. I think there are a lot of opportunities out there. I've seen a lot of telecom operators in particular working on this, but we're not there yet. And I think these kind of tools that are a lot more systematic will help us overcome this, because this helps a lot in collaboration. So yes, should be done, but it's infinitely more complicated and I'll just quickly add to that.

If you're interested in seeing an example of a large company doing this across cross functional teams, we've actually just published a quick case on Medtronic, which is a large, not one of the largest medical technology providers in the world. We actually had a discussion with one of their divisional teams that worked across engineers, marketers, sales as well as their customers, who are surgeons to achieve this kind of customer centric process. Last question and then unfortunately we'll have to end the session and we'll be sure to put it into a strap chat. Q and A. But Alex, what are the killer arguments or questions to ask the management who is still very focused on business plans, even if they intend to be innovative?

So it's pretty simple. So I'll take this process here. I'll draw a different graph. Some of you might have seen me draw this already. And I'll keep it very simple and quick, also in the interest of time. So when we go from idea to business, traditionally we write a business plan and we put a lot of detail in here. The problem is the detail might make it look like the idea is going to work simply because we put a lot of detail, but we have no evidence that it's going to work. So business plans work at this stage because they don't reduce uncertainty. They haven't been in the market to test their ideas. So business plans don't mean we reduce uncertainty. So our task is as innovators, as intrapreneurs and entrepreneurs, is to reduce the risk of innovation. And the only way to do that is by gradually investing more money. So take red here. People see costs, spend a little bit first on customer insights. You do interviews maybe with hundred people, maybe with 500. Then you might start doing some prototypes, you might start going a little bit further. So you gradually invest more money. And with every dollar or euro, whatever you invest, you reduce uncertainty. And that's exactly why innovation at the early stages is not expensive if you do it right, because instead of writing a business plan that might actually blow up in our face. So they usually go up in Flames or they're thrown away anyways. What you really want to do is gradually invest more money into testing because that will allow you to reduce the risk of innovation because it reduces uncertainty. And this is the killer argument that works all the time. Because risk is something that we understand in our existing business models and that's something we want to reduce. That's what we're afraid of in innovation and we think it's expensive, but it's not. Because if it's done right, you will start cheaply and you will invest more and more, which at the same time, and I'll end with that is the problem of innovation. Because we don't need a lot of people and a lot of money to start out with innovation. It's unsexy because what's attractive for people in large organizations is to have huge budgets and manage a lot of people. But that's exactly what we don't need when we start innovation. Innovation is about little money and very flexible swat teams that start out and gradually invest more. And only when we get into the scaling phase do we need a lot of money. That's why innovation today is often career suicide. Because it's not sexy. It doesn't require a lot of money if done right. I'm not talking about R and D here, I'm talking about business model research and value proposition research. It doesn't require a lot of money and a lot of people. That's why it's unsexy and that's why it's rarely a good career path in companies these days. But that's changing and I do think culture is changing and innovation is becoming a career path, hopefully in the coming years.

Awesome. Thank you so much, Alex. So that ends our session today on webinar number five and I'm just quickly going to to highlight once again the different resources that are available to you. After this session we will be sending out a link of a video to this presentation directly to your inboxes. So expect that in the next 24 to 48 hours. And once again, just to show you.

Guys.

We have the enterprise offer, which is essentially a deep dive with a dedicated coach from Strategizer with access to full tools and resources that will help your team get into. Sorry. Reduce and reduce risk and uncertainty within the 12 week process. Much of what we covered today, except you'll have an expert to guide you through the process and the outcome is a validated business case, a business model or a value proposition that can then be explored and evolved with the same process. If you're interested in that, then by all means please get in touch with salestrategizer.com or reach out with the phone number below. And I'll also be sure to send you this information in the email follow up as well. Alex, anything else you want to add before we go off?

No, I wish everybody good luck and I think this is something that is now becoming more and more popular. We have evidence that these things work and it's pretty exciting to be in this space these days. So I wish everybody good luck and let's just do it.

Thanks for attending everybody, and we'll hopefully have another session soon.