Strategyzer Webinar with Steve Blank: Business Model Design For Mission Driven Organizations

It. Hi everybody. Once again for those of us, for those of you that are just joining the session, we'll be starting the broadcast at the top of the hour. In the meantime, feel free to take a moment to think about what you'd love to get from get out of from today's session. And if you want, you can place it into the questions Panel within the GoToWebinar dashboard or you can share it on Twitter and mention us at Strategizer.

Ready to rock and roll. Alex, are you there?

Hi, Cynthia.

All right, let's get started. Hello everyone. Good morning to those of you on the west coast and the east coast and good afternoon or good evening to those of you in Europe and a very good night to any of you out here in Asia and Pacific. Welcome to another Strategizer webinar session. We have an incredibly exciting session today where we are joined by an amazing guest speaker. Along with co host Alexander Osterwalder, we have Steve Blank and we're going to be talking about Business Model Design for Mission Driven Organizations, an iteration of the Business Model Canvas, especially for organizations that value impact over revenue. And Steve Blank and Alex are going to discuss some examples of how this new type of canvas can be useful to those types of organizations. As always, if you want to take part in the conversation, follow us on Twitter Rategizer and use the StrategizerWebinar to share your comments and thoughts on today's session. You can also head to our blog, which is full of extra insights, tips and case examples of how companies and organizations around the world use Strategizer methodologies to level up on strategy and innovation. My name is Kavi Gupta and I'm your moderator. I head content. I'm part of the content team at Strategizer and I'm responsible for the production of articles, these webinar sessions, our Strat chat and social media. Many of you may have probably seen my name through all the emails that come through about these broadcasts. Your host is Strategizer co founder Alex Osterwalder. Alex is also the lead author of bestsellers Business Model Generation and Value Proposition Design. You can find him on Twitter as lexosterwalder. Our guest, Mr. Steve Blank. He's father of the Lean Startup movement champion and founder of the Customer development methodology number 20 in the Thinkers50 ranking of top business and strategy thinkers worldwide, which the Financial Times calls the Oscars of management thinking. And through all that stuff, he still finds time to teach at Stanford, Berkeley and Columbia. You can find him on Twitter Gblank. It's a huge honor to have him on our broadcast. Today we're going to be talking about the Mission Model Canvas, which you can see here. Some of you may be familiar with the prototype that was placed on the blog that Alex and Steve co wrote. This is a more refined version of that prototype. We'll be discussing this canvas today. And of course you can find the canvas in our resource library. If you visit strategizer.com register, simply create an account and you can get free access to the Mission Model Canvas, which is probably right at the very bottom of the resource library because we've just added it. It's such a brand new tool and asset that we placed in our resource library. I'll send this, send an email out at the end of the session, of course, with links to this resource. But apart from that, let's get into the discussion. Hello, gentlemen, how are you?

Good morning. How are you? Very well.

And I'm just. I'm just going to hand over the screen to our colleague Holger, who is going to illustrate the event. There you go, Holger. All right, gentlemen, whenever you're ready. Kick it off.

Great. Steve, thanks for joining us. This is awesome that you could find the time. I know you're extremely busy, retired, but doing so many things, it's. It's hard to follow. How are you doing?

You know, all our attendees ought to understand that regardless of where I am in the world, when Alexander calls, I show up. I'm doing great. And I thought this was a great topic because we've just run several classes through the Mission Model Canvas and can actually now speak instead of theoretically, can talk tactically on how it worked and how we implemented it, and maybe even more, Alexander, about why we built it and what the rationale for the mission monocanvas was. So I'm happy to start wherever you'd like.

I think that's a great start. How did this all start out? We got together to talk about customer development, Lean Startup applied to business models, and we worked with the Business Model Canvas. But then you were looking for something for mission driven organizations. How did this all start out?

Well, this started from a very specific request. I was working with a couple branches and continue to work with a couple branches of the US Government who adopted my class called the Lean Launch Pad in the US it's been adopted by our National Science foundation and now most of our federal research organizations to commercialize science in the US and for those cases where the intent was to build a commercial profitable company The Business Model Canvas makes all the sense in the world. But over time, several government organizations decided to use this methodology. That is the Business Model Canvas, customer development and Agile engineering, what we call the lean startup internally. And they pointed out that, Steve, you know, the Business Model Canvas is great. It provides a framework for all our hypotheses. But the couple things on the right hand of this canvas make sense for us. And the biggest one was, you know, we don't have revenue as a goal, we have other things as goals. And so we looked at that box and said, hmm, that's kind of interesting. Well maybe we could work around that. And then they kind of raised their hand again and said, and by the way, we don't really have a distribution channel like sales. You know, we're the government. We do have like a different problem was how to get this to all our users, kind of a deployment problem. And I said, okay, well we could work around that. And then they said, well, we really don't have customer relationships. We kind of do, but we have a bigger problem called buy in. That's when I got you on the phone and said, I think there's an idea here that the canvas has been inviolate in my mind. Maybe it's time to see if there might be another idea. At least that's my story and I'm sticking to it.

So we worked on this together and we came up with this adapted canvas specifically for mission driven organizations. And I know you've tested this intensively and I'd say it's now beyond the test. What's your feeling? How is the adoption of this?

This makes all the sense in the world for organizations. I think the first check mark is if your organization doesn't measure success via revenue but has other goals, this is probably a canvas worth looking at. And I'm almost tempted to say this is the canvas for you, but at least it's worth an intensive look at because it solves a lot of problems. And so it's gone seamlessly. People who love the Business Model Canvas but kept kind of squinting and try to force fit it now find the Mission Model Canvas works perfectly for them. And I'm happy to go through what we did for each box or remind your listeners how we brainstormed and what we changed. But your call. What do you want to talk about next?

Yeah, I think we can maybe go through the boxes. I mean, you already started talking about them. You know that we changed the revenue box and we turned that into mission achievement impact factors. Maybe you can outline A bit. The learnings also, just having seen this in practice and you've been doing this with now a couple of groups. So how did those boxes work out?

Yeah, we've put about so far, 50 or so teams through this at least. I have personally, gosh knows how many other people have just took it off our websites and have been running with it. It's worked great because it kind of helps people understand that you could use this framework for organizing and testing hypotheses instead of saying the business model canvas doesn't work. For me, the biggest one, and let me start with was on the bottom right where it used to say revenue. We now call it mission, achievements, success, impact, whatever the metrics are for your organization that are not revenue. This is where you get to sum it up. And when we go back later to what used to be the customer box, some of the learning here was a little different than the blog post we used to say. What went in this mission achievement box was the sum of the organization achievement and the sum of its impact. We now kind of have learned that you really need mission achievement and impact for each beneficiary or customer and you also need the organizational impact. I don't know if that just made sense or not.

Absolutely, absolutely.

And the other thing we changed is we changed what used to just say customer segment. The box on the top right of the canvas now is a bit broader. It says because in some government agencies and also nonprofits, they're not actually customers. They could be beneficiaries or they could be stakeholders, or you do it for a military organization, they could be war fighters. So we call them now beneficiaries stakeholders. And basically, much like in the customer segment box, you need a value proposition canvas for each one of them. But the language changes a bit just to recognize they're not revenue producing customers or they're not payers. They're actually different stakeholders or beneficiaries inside of an organization. The second part or the third part that changed, as I mentioned earlier, was how do you get your product or service to the customer? In a commercial organization we'd have a distribution channel. It was either through the web or app store or direct salesforce or whatever. In government organizations or nonprofits, those channels are actually not as clear. But you do have to get your product or service out somehow. And so we call that deployment. And basically it's how do you get what you're building to those beneficiaries, stakeholders you've identified in the right hand side of the canvas and then the Other major change was what typically was called, or what was called in the Business Model Canvas, customer relationships we now call Buy In. Because again, for large organizations who are not measuring revenue, the biggest problem that you first encounter, ultimately you'll have customer relations problems, but the first problem you encounter is how do you get the rest of the organization and all the stakeholders to buy into your idea? And then ultimately the long tail problem is not just customer relationships, but how do you support it in a large organization where profit isn't the motive. So the changes for the Mission Model Canvas are almost all on the right hand side, and they've made the canvas incredibly useful and applicable for nonprofits and government organizations.

So one of the things that you found time to do is to launch an entire new category of application for this with Hacking for Defense that you also publish quite a bit about on your blog. Tell us how that started out and what were the things that you learned there related to this new Mission Model Canvas?

Well, for our listeners who were not familiar with the class, Hacking for Defense is a class that started at Stanford. And much like my work with the Lean Launchpad, which scaled to 53 universities in the US under the NSF Innovation Corps, the goal was to connect students to the U.S. department of Defense and Intelligence community by working on problems that these sponsors from our DoD and Intel community actually offered up and using the Same methodology in 10 weeks to understand the problem deeply, figure out what value propositions might work for them. And then more importantly, the goal was not just to have an mvp. That's the easy part. The goal was to actually work through the entire Mission Model Canvas to figure out how do you actually acquire funds to build this and how do you deploy this at speed. And that's the distinction, by the way. And I just want to remind everybody that's the difference in using a Business Model Canvas or a Mission Model Canvas versus just throwing customer development and Agile engineering on the wall and calling it lean. I just want to remind people how important the canvas is in understanding how to make stuff that people actually want use and could get deployed in an effective manner. It's night and day. If you're not using a canvas, you're not doing lean. There are lots of definitions of lean, but again, I just want to emphasize it's using the canvas as the front end to test all the hypotheses. And now to get to specific for Hacking for Defense, our Department of Defense and Intelligence community have more demos than they'll ever need in their lives. So if all we were working on was value prop and customer and beneficiaries, we'd end up with demos. But once we forced the teams to actually think about, well, how does this get deployed, who's funding it, who's paying for it, what's buy in needed and who needs to buy in? Because in government organizations, buy in isn't about revenue. Who needs to look good, who gets promoted if this works, who gets demoted if it doesn't, what existing support organizations need to support it. And then all the traditional stuff on the left side of the canvas kicks in. What activities do we need to be expert in to pull this off? What internal resources do we need? Gee, what partners and partners typically for government organizations tend to be, what kind of contractors need to be involved? And by the way, one of the things in government organizations, the Mission Model Canvas allows you to understand and ask, is this a threat to an existing contract or a contractor, or is this new revenue that they're going to eagerly be partnering with you? And then finally costs come in. And for startups who were working on these government problems, this actually became kind of interesting because now all of a sudden we were faced with, are we just building a solution to this one government problem? Or could this potentially be a dual use product, which means can we make it for the government? But in having them help us spec the product, can we actually have a commercial product, then the government can turn around and actually in the US they tend to prefer to buy now off the shelf products rather than having something custom designed for them. And so the Mission Model Canvas just turned out to be perfectly suited for these activities. And I could not imagine A doing any of these activities without a canvas at all. And B, how much easier it was when the Mission Model Canvas was tailored for these government activities. And again, when I say government, you should also think about nonprofits and other organizations where revenue is not the driver of success.

So this is incredibly interesting. I see the equivalent in working with companies that we want to get them beyond the product or technology focused aspect, which you could basically do with the Value Proposition Canvas, but to get them to think of all of these boxes. Because at the end of the day, the success is when you get all of these right. Of course you need a technology that works, a product that works, a value proposition that works for the beneficiaries. But if you don't get the other boxes right, you still probably are going to fail. So did you see some resistance to this more holistic thinking or was that something so natural that once they saw that they would adopt it or did you have to emphasize get them back to thinking about all of these boxes? How did that kind of roll over.

Both in our class at Stanford in hacking for defense and inside one of our intelligence agencies that are running this program? It's not an option, so there's no choice. You are using the entire canvas to think holistically. Let me just point out for your listeners, this is kind of interesting because I've actually given this some thought. When I go into large companies and and government agencies who have heard something about Lean and almost the first thing that comes up of confusion is what's a minimum viable product. And I realized that the confusion of what's an MVP comes from mostly from people who don't know what a business model or mission model canvas is. They basically think MVP is kind of a a B test of a product or a defeatured product. Or I'm running tests on the product and a minimum viable product is all about the product. I want to remind our listeners that an MVP can be a test of the product. But if you're actually marching through the canvas, a MVP is what gets you the most learning about any one of the canvas components. So for example, when you first start testing your hypotheses, the two most important boxes you're testing are are the beneficiaries or customers in a business model canvas and the value proposition, which is why you design the value proposition canvases themselves, you can actually get the pains, gains and then jobs to be done matched with the features you were building. That's when you test MVPs for products. But if you look at the rest of the canvas, an MVP to test the channel is not the product. It might be a piece of paper or it might be a data sheet or it might be something else. An MVP to test mission achievement or mission success is not the product. It could be, hey, if I delivered X not the product, but these outcomes, would that be goodness or badness? Would you care or not care? Or an MVP for partners is again not a product, but maybe a gee, a contract or something else. And so understanding that the MVP is more than just testing value proposition and beneficiaries and customers is a key asset of the canvas in general. And sorry for the digression, Alexander, but it just happens to be one I came off with and came off of and finally understood what the problem was is people who don't use the canvas tend to focus MVP on product. People who do use the canvas understand that testing product is only one part of the hypotheses you're testing.

Yeah, I couldn't agree more. And I think it's very important to point this out and also to repeat this a lot because one of the, I think the issues when people think lean is they think, oh, we've got to build, measure, learn, and they take build way too literally. And they want to make a. A smaller version of the final thing.

They want to build, which is right. I think the failure is those people are not using the canvas. Those people are using the definition of lean, of get out of the building and use Azure engineering, which is just two thirds of, I think, the tool set. The minute you have a canvas in front of you, you're faced with a series of untested hypotheses. Now, what's really interesting is, and you nailed it with a value proposition design book, the first two things you do have to test is the product market fit value proposition canvas. And therefore, in that phase, yes, MVPs are products. But what I found is organizations that just stop there end up being surprised when the rest of the internal organization says, no, that's not what we wanted, or later on, legal says, yes, glad you built it, and glad people want it, but we can't deploy it because of reason X or you forgot that you didn't look at costs or partners. This solves the problem of GE getting shot down later. I see this a lot with corporate incubators focusing so much on product market fit, but not marching their teams through the rest of the canvas and therefore being surprised that the output of the incubator isn't really being adopted in the rest of the corporation or the agency. And so I really hammered that. The goal is not to make great demos internally. The goal is to get products deployed. That's different than just, I have a demo and here we're ready to go. And the way we emphasize that, the way we use the canvas, and the sum of all this learning is we invented something called the Investment Readiness level. And the investment readiness level is, takes all the data you've collected in testing hypotheses across the entire canvas and on a scale of 0 to 9, basically allows the teams to rank themselves about how ready they are for the next step in scale. And we have found that government organizations, particularly their finance and operations people, love using what we call an IRL Investment Readiness Level as kind of a gating item for additional funding internally.

So that's incredibly interesting. Do you think this is going to change the way that these kind of missions are going to be funded in the future? Because there's a lot of money involved in talking about not just the governmental contracts, but NGOs or governmental organizations in general outside of the defense. There's a lot of money being deployed there in different projects. Do you think this is going to have an impact on the way these missions are funded?

Well, this is going to change everything. But the biggest problem I found, though, in large corporations and large government agencies is coming in and telling them that they need to change everything on day one. For innovation, while great in theory, is somewhat of a fool's errand. And it's not clear who's the fool here, I think, and you've seen some of this, and I'll share it with our listeners for 10 seconds. What I realize is that the work McKinsey did 20 years ago on the Three Horizons of Innovation can be updated for the 21st century by using your business Model Canvas or our mission Model Canvas to actually describe innovation throughout an organization. And I'll get back to you about which part this could affect. If you remember the McKinsey Three Horizons said, Look, every organization, every corporation or government agency is actually innovating or should be innovating on three horizons. Horizon 1 is your core business or core mission in a government or NGO agency. That is, here's what we know how to do. It's what most of our people are focused on. 70% of our staff are working on this. It's turning the crank every day. And obviously innovation happens there, but it's managed by product management organizations using a stage gate like process. And God forbid you're still using waterfall, but it's essentially turning the crank. And of course, you might have better materials cost or you might have better pricing, but it's your core business in Horizon 2. And by the way, we use the Business Model Canvas to say in that one, you're executing the current business model in Horizon 1, and most companies are pretty good on the next Horizon, Horizon two, and that's where they're extending the business model. They know who their customers are and they're maybe doing additional products or maybe they want to try a new customer segment. And again, companies spend maybe 10 to 20% of their efforts here. But really what keeps companies in business over the long term is being able to do Horizon three innovation, disruptive innovation. It's Apple changing from a computer company to a music company. It's Amazon creating Amazon Web Services. It's these disruptive things where you realize we need to do this for survival. It's what Blockbuster should have been doing. And Becoming Netflix. That class of innovation that's creating entirely new business or mission models is in fact where all this effort of tools and measurements, et cetera, really come to foreign. You could use all this stuff in Horizon 1 and 2, but what we tell companies, if they don't have a 5 to 10% of their effort in innovation and engineering focused on Horizon 3, we might as well short the stock because you're going out of business. In today's disruptive environment, the life cycles of companies are being compressed for exactly this reason. What was your question?

I forgot. This is fascinating.

Me too.

You want to go on?

Otherwise I was only being facetious somewhat. So to answer your question, the tool set really makes people snap their heads back when they put it in context with three horizons of innovation. Companies think they know how to do Horizon one stuff. You know what, I'm not going to go argue with them about that. Truly they could use this business model innovation. But I just say let's think about this across three horizons. Tell me what you're doing for Horizon two and three. And normally you kind of get like lip service about an incubator and gee, and 98% of the time the minute people start talking about a corporate incubator, you kind of ask the uncomfortable question is, well, you've been doing that for a couple of years. Has it moved the needle in either revenue or profit? And then they show you their coffee cups and posters and you realize what they've actually been doing is innovation theater, meaning it looks good, great PR and whatever, but no one has really bought into it in the operating divisions and they're not actually making risky bets. And so the three Horizon framework with the Business Model Canvas being the driver or Mission Model Canvas being the driver actually allows senior executives who by the way, by definition they're senior because they're typically Horizon one or two leaders to kind of understand where innovation fits and actually how to integrate it into their day to day operations. That's a longer conversation for a different webinar.

Yeah, but I want to build on this idea of the horizons in particular in relationship to the Mission Model canvas. So absolutely. H1, H2, H3 big issue and large organizations, companies have a hard time dealing with. But if we think about some of the biggest issues we have in the world, some of our biggest challenges, we're probably not working enough on the H3. One of the things is actually the way we fund them. We fund projects. By definition, projects should be a sure thing. So you have milestones and you're going to fund something that is not going to fail. But you're not going to work on an H3 because failure is inevitable. It's part of this process of lean. So are you seeing that this could actually help us work on bigger challenges without actually.

Sure. So having the three Horizon model, with again, the canvas being the driver. We remind people that in Horizon 3, the steering wheel operates backwards in Horizon 1, because the canvas is an execution problem. Failure is not an option. Right. It's your core business. And in fact, each project needs to have a pretty high level of completion and success. But Horizon 3, we actually remind corporate executives that the model is not execution. The model is venture capital. Venture capitalists don't invest in one company per portfolio. They invest in 10 or 15, depending on the size of the firm and the fund. And they do that not because they want to have 10 successes, but they actually know most of the portfolio is going to fail. And that type of thinking is just kind of different than what Horizon one corporate leadership is used to. So the big idea, number one, is that Horizon three needs to be a portfolio of opportunities, not just one giant big bet. If it is a giant big bet, the data says you're more than likely going to might fail, which is why we have investment readiness levels that we could actually tranch the investments across the portfolio. Horizon 3 is an innovation portfolio management problem, not an execution problem. And as you pointed out, the type of people you want in Horizon 3 are radically different than the type of people you want for execution. Because while Horizon one is execution, Horizon three is the search for the business model. And again, your people that you've hired, the majority of them are coming to work to do the same job day to day. Doesn't make them better or worse. It just makes them different from the people who were in fact comfortable in chaos and uncertainty. Did that answer your question, Alexander?

Yeah, absolutely. I think I'm really fascinated by applying the three horizons model to the mission.

And by the way, to bring this back to mission model canvas, we talked about Hacking for Defense, using it, that is, for military organizations, government organizations. I haven't announced it yet, but so you guys could hear it for the first time here. Starting in the fall, in September at Stanford, the US State Department is sponsoring Hacking for Diplomacy. And we're using the Mission model canvas to solve diplomacy and policy problems, refugee problems, things that would traditionally be done by NGOs, et cetera. And we're also going to scale that class across the US So we're going to be offering both a curriculum for Hacking for Defense, where we curate defense and intelligence problems. And we're also going to be offering a curriculum for Hacking for Diplomacy and where we're going to curate kind of diplomacy class problems. And both of those will use the Mission Model Canvas.

This is fascinating. You might remember that I come from a political scientist background, so it's fascinating. Fascinating for me to hear that we're now starting to use this in international diplomacy.

Probably we need more. Well, the third one of course we've been talking about and again we don't have a class yet for it, but my goal is to have one more D after Defense and Diplomacy and that's Hacking for Development. And so again using the Mission Model Canvas working on real world problems. The minute you show the people in the State Department and NGOs the mission model Canvas, they slap their forehead and go oh, now I understand this thing actually is applicable for me in a non profit or NGO type organization or a government organization where again, where revenue is not the driver or metric for success, but there are a series of untested hypotheses. And by the way, in State, using the Mission Model Canvas is perfect because talk about multi sided market. The people in Washington are almost always not the ultimate end users, right? Refugee is not in Washington. They're in Syria for example, or in Turkey. But the provider of those services are also not in Washington. They might be some third party. And so all of a sudden doing value proposition design using the Mission Model Canvas to figure out all those beneficiaries become just wonderful case studies.

So I think I can't wait until you're going to get somebody knocking on your door talking about the whole health sector because you basically already applied this commercializing innovations in the health sector. But I guess there's some really big also issues that we're facing that it's not about commercializing products but health issues in particular in the US that we need to see. Did anybody already talk to you about this one about the H? Not a D.

Not yet. It's your turn to take a couple, Alexander. And it's people in our audience who could do that as well. I just want to remind our listeners what at least in my context, when I use the Mission Model and Business Model Canvas as a front end. This is why customer development and the canvas were such like peanut butter and jelly or two things that just went perfectly together for new ideas. I can't imagine starting anything without a canvas to frame your hypotheses. The way we used to do this in the past is write a 250 page business plan and declare each paragraph a God given fact. The distinction here about using the canvas in the beginning of a new opportunity or a new program is you're actually acknowledging what we all used to know but never had a way to express is that while there might be one or two facts, maybe starting with your name, almost everything else you used to write in a business plan was creative writing. And the canvas allows us to write them down, but just kind of admit, because we're using yellow stickies, that as soon as we get out of the building, facts are going to change those hypotheses. This is just, I think the canvas has been, whether it's business or mission model, the best and most efficient way to use time and resources to start new projects that didn't exist before. And that's why, by the way, put them in context of three horizons in organizations. In Horizon one, that canvas is known, you know your customers, know your channel, know your. I mean those are facts on the ground. You're generating revenue, you've got products or customers or users or nonprofits. You actually know who that is. It's just that in Horizon 3, you don't have a clue. So I just think these three components of what we call lean the Canvas, customer development and agile engineering are just the perfect fit right now. And I'm sure in another 10 years someone will invent something better. But for now I think we got something that works pretty well.

Yeah, I fully agree. Maybe you can share one example that you found interesting of a team that used the mission model canvas, something maybe that they tested. That would be.

I got a great example which was. And by the way, if anybody wants to see these presentations week to week, you could go to slideshare.net sblank and scroll down to the Stanford University presentations and you'll see all the final presentations and their videos from the Hacking for Defense class. And also if you just Google hacking for defense, you'll go to the website, the class website, and see what we've been talking about. As a specific example, there was a team that was trying to solve a problem of defusing mines, I.e. landmines in Iraq and Afghanistan. It's called an explosive ordnance disposal problem. People planted land mines and the US when we had lots of troops on the ground were helping diffuse them. And when we left, or most of our troops left, the Iraqis and Afghanis now had to defuse those mines. And there was a real problem in that we had a lot of expertise and equipment and they no longer have that same expertise in equipment. So now the question was, how do we, you know, what equipment do we need to send them? Make a long story short, everybody started, including our problem sponsor, thinking that this was a hardware problem. We need to send our allies more equipped. Both depressing and kind of interestingly, after six weeks, they discovered the problem wasn't hardware at all. The problem was an organizational problem, is that people had siloed communication into literal organizational silos. And that if all we had been doing is actually reorganizing the way the military was communicating with our allies, a lot of lives would be saved. And so the deliverable, when they thought it was going to be an MVP in terms of hardware, turned it out to be an MVP of an organizational restructuring to the military who actually adopted it and said, yeah, we kind of knew this, but gee, you just like saved us a couple years and couple million bucks of consultants telling us what we kind of figured out we probably shouldn't be doing. I don't know if that's helpful.

That's an amazing example. Did you hear from the people who put up these challenges that this approach really speeds up things? The assumption is, of course, but did you hear that explicit feedback from.

Oh, yeah. So I have the. The answer is yes, this is catching on in multiple organizations in the U.S. military and intelligence community. Because as I said, the difference is it's not that we didn't have incubators before and we didn't internally in large companies and government agents, everybody incubators and hackathons. It's the difference, though, between a demo and a deployable solution. What we were building before was we had lots of great demos coming out of these activities. But the Mission Model Canvas now actually gave us solutions that we actually understood, a path to deploying something at speed. And I want to emphasize the at speed part. We didn't build things that people didn't want. We didn't build things that we didn't know how to get funding for. The Mission Model Canvas forced you to figure out, where's the funding coming from? Who in the chain of command needs to approve this thing? Who else are the users or the payers or the war fighters or the concept developers or the program managers? And it just forced the teams to talk to each one of them. And by the way, it turns out in half the cases, the problem sponsors didn't even understand all these pieces, which is always kind of fun where they go, really. We didn't know someone else was working on this or we didn't know there's an active solution already. Wow.

Learning on steroids. I'll hand it back over to Kavi, who's going to take a couple of audience questions that were coming in and he's just going to pick some of them and ask you. Let's see if we have some good ones.

Absolutely. This has been such a sprawling and engaging discussion. A lot of really interesting questions coming to you. I'll pose them to both of you and whoever feels like answering them first. By all means, jump in. One of the interesting ones, it seems that the audience really clicked with Steve and Alex is the idea of the MVP the minimum viable product. What are some concrete examples or tips you can give to the folks that have to work with an MVP in highly regulatory environments, especially if they're working within the government or NGO sectors?

Yeah, again, this goes back to the, you know, the concept that the MVP is a. Is it a prototype or are you trying to get maximum learning? Let me just pick a set of highly regulated markets. This class, the Lean launch pad National Science Foundation Innovation Corps has been taught at the National Institute of Health for therapeutics, diagnostics devices and digital health, where I can't think of a more regulated market than therapeutics or things you're going to implant in a body. For medical devices and for scientists, they always kind of like fall into this trap on day one is, well, we can't test a therapeutic. What are you going to have? A half good cancer drug. And this is where, in fact, understanding that you're testing the entire canvas makes sense. I'll give you an example. So if you're testing a therapeutic, let's say a drug to cure cancer, one of your biggest problems is understanding what are the clinical end points. Who knows what success looks like? Have you talked to the head of research at Pfizer or Merck, or do they have things in their pipeline? Have you talked to other clinical research organizations? Have you already talked to the fda? Do you understand what the FDA trials are? By the way, if you're a scientist, do you have any idea how much money you're going to need to raise to get to a phase three drug? Or gee, if you have success in phase one or two, is this when you're going to sell the company or do licensing or partnerships? Understanding that you're testing the entire canvas and you might not be able to test the actual product is what really makes the canvas really powerful here. In thinking about MVPs, I'll give you another example. A medical device understanding in the US whether it's a PMA or a 510 approval process is the difference between success and failure and getting funding. 510, you could get approval in six months to a year. And PMA, you're going to be doing years of clinical trials. And I find technologists in particular who start these companies don't have a clue on day one because what they were thinking about, about product, market fit and an MVP about that, not thinking about what does it take to build a commercially viable and successful company which requires you to understand all the canvas components. Alex, I don't know if I answered the question.

No, absolutely. I think there are two aspects to it that I see. One is that you need to test all of the different aspects of your business model canvas. I'll take the other direction and say, well, even when you thinking of something you're going to make a drug or a device, medical device in a highly regulated environment, well, maybe you want to test something else first that you need to look at before you go. Think about some kind of physical thing you're going to make, which is the customer segment or the stakeholders, the jobs, pains and gains. And you can test those jobs, pains and gains before you think of the so called solution. And that is very, very possible. I'm involved in working with a large pharmaceutical company at the moment and they are looking at the jobs, pains and gains. The customer profile of the value proposition canvas was for them something very enlightening. They said we never thought of the stakeholders or customers so systematically before. So it was very new for them to come up with the job's pains and gains and say, well, we're not actually sure. There's a hypothesis that they have this particular job, that this is the most important job, that this is the most important pain. So you can test all of those things a lot before you ever think of anything you're going to make. So I think there's this focus on product, on this thing excessively which at one point you're going to have to figure out. But there's, there's the entire business model canvas and in particular there's this circle to test. To use the value proposition canvas language, you need to figure out the jobs, pains and gains of your customers probably a lot before you think of the solution.

So what role in the organization would own the development of the mission model canvas?

Alex, you want to take that?

I'll frame the question differently and hand it over back to Steve. So what kind of organizations, maybe what kind of stakeholders were interested in doing this for? Hacking. Hacking for defense. Because I guess that would answer the question, not necessarily just in the organization, but who is interested in solving these big issues to get people to work with the this mission model canvas.

So let me just speak specifically about hacking for defense and then we could broaden it to government and NGOs in general. We were kind of surprised in a positive sense to find out that there are what I call islands of innovation inside the mass of execution in any large organization. Some of them manifest themselves as something as as organized as there are incubators and a VP of innovation, etc. And some of them are what we call insurgent cells inside large government organizations who are trying to figure out how to break out of the product management stage gate process. How do I manage this thing? The answer is it really depends on the maturity of your organization thinking about innovation across these three horizons. My point is, and why I talk about three horizons is the political and kind of organizational inertia of trying to change the entire company is like trying to boil the ocean. At least on day one, starting on horizon three and educating organizational leadership that should at least be 5 to 10% of budget people and resources on disruption or else your organization itself will be a victim of disruption is a more tenable and digestible kind of goal. I don't know if that answered the question.

I think it's a great point. Let me just build on that for a second. Because if you're a government and you want parts of your organization or other organizations to work on particular issues, particular challenges, missions that you need to solve, well, you probably want to have that portfolio approach, right? You want to have some safer bets that would be more the H1 and you would want to have some that are closer to H3. And I think while we probably do that in defense, particularly the US has a long track record of defense being at the forefront of innovation. I think when it comes to other mission driven challenges like health, actually we play it pretty safe outside of maybe what pharmaceutical companies do to commercialize drugs or medical devices. So I think having a more H1, H2, H3 approach for development issues, for health issues would be a very interesting one. And then what you want probably as a government or an international organization or government, governmental organization, is entrepreneurs, social entrepreneurs who work on H3 challenges with completely new ways of solving a particular challenge as entrepreneurs, because they don't have to build on an existing organizational structure, on an existing business model or mission model. They can come up with completely different approaches with radically different approaches. And I think there's not enough of that happening. Maybe on a larger scale, small scale for sure, but on a larger scale in the health sector. I worked in the health sector years ago, or in international development, economic development on different continents in the world, or for social issues that we have inside countries. So I think that there could be a lot of ways and a lot of people who could apply the Mission Model Canvas in very different contexts.

So let's talk a bit about monetization because a lot of people have been wondering how to address the issue of financial sustainability. Does the Mission Model Canvas complement the type of work we would have to do with the Business Model Canvas? Do they work side by side or can one replace the other? In this instance.

At least for the projects and programs I'm working on, they replace it. But obviously There are some NGOs and nonprofits that work on double or even triple bottom lines where I think some hybrid of using the Mission Model Canvas but actually having some revenue goals embedded in that as some success factors might be a better start than just using a plain canvas, I think. Alexander, I'll see if you agree. The goal of the canvas is not to have some rigid document that you need to say this only works one way. I think the goal of the canvas is to give you a framework that allows you to understand the things that are important to you and your organization, that we've kind of over time tested and seen that these are the things you need to think about for success. So if there's not a framework that accurately fits, take the best of both the business and Mission Model Canvas, though. My belief here is you could easily adapt the Mission Model Canvas to have revenue as a goal if that was the question. Alexander yeah, I agree.

At the end of the day, what we want to help organizations with or people who are trying to build new solutions, we're trying to give them some structure to think in a better way. So ultimately everybody has to decide what's the best tool for them. Specifically to that question, revenue or not revenue. If I take social entrepreneurship, I think there is not enough effort today yet. There are a lot of funds that are investing in social entrepreneurs who try to harmonize revenue and impact. I think that is possible. Some organizations try to build business models where the more profit you make, the more impact you have. So they are not actually in competition. Profit and impact, I think we need to invest in that. But in some cases it's clearly never going to be profit driven. We have a budget for certain health issues, educational issues, and it will stay that way and it should stay that way. We should have budgets for that. That's what governments are for, to provide some infrastructure. And there we can apply the mission model canvas. I think you need to ask yourself, okay, in which category do you think you fit? And then maybe also challenge yourself. If you're in that category that has a budget from government or if you are the government, you might want to ask, could we play with business models where impact and profit live in harmony and try to brainstorm and come up and play around with different potential business models? I don't think it's an either or simple answer. I think you need to play around with it. I'm pretty excited about social entrepreneurs who try to build profit driven business models where they still have an impact and even further where profit helps making more impact, achieving more things. I think that is possible. But I think both canvases can really live in harmony. And the example that Steve mentioned at the beginning, you might have some organizations that are trying to work with the government in the defense area and at the same time they might use exactly the same technology to build a traditional for profit business model. So they will use the mission model canvas to help the government achieve its goals. In the case, as Steve mentioned, that would be the Department of Defense, I guess. And at the same time they can.

Think of what would a for profit.

Business model look like and they use the business mall canvas for that. So I think the same organization can very well work with both. And I would say that's the case that Steve mentioned at the beginning.

So this is one of my favorite ones. And guys, I'm pretty sure it's one of your favorite ones too. A lot of these organizations that we talk about still focus on long term business planning and business planning documents. What are some killer arguments you can give our listeners on how to maybe steer the leadership or decision makers in these mission driven organizations away from business planning and into an iterative, lean testing approach.

So let me try that one. And then since Alexander, this is your business, I'll let you take the definitive answer. But my experience is, you know, if you're in the middle of an organization, the odds of you changing your leadership's view is close to zero. You might as well update your resume. This really requires leadership, which is almost always horizon one leadership, to at least appreciate that over time in almost every industry, whether it's government or nonprofit or for profit, disruption is happening so fast in the 21st century that unless they're thinking about how to be and how to disrupt their own business, they're not going to be a long term player. And if they're not allocating innovation resources across three horizons, this business is not long for the world. The problem is, and one of the root causes is that both boards of directors and exec staffs don't have incentives baked in for Horizon 3 investments. And my first litmus test about how successful a company or nonprofit is going to be is if there is no incentive plan or comp plan based on any Horizon 3 activity, then your odds of creating one have been greatly diminished. Alexander?

Yeah, I think you're really pointing to a very important issue, which is the incentives today, your incentive not to fail. So you're definitely not going to run experiments and you're definitely going to avoid working on H3 projects because that's career suicide. So to convince senior leaders, and maybe this is again, when you're in the middle of the organization, as Steve said, you're probably not going to be able to convince senior leaders. But there are conversations that you can have to convince people who still insist on business plans and long refined documents to get away from that. What has worked best, I think as an argument for me and for Strategizer, what we're trying to say is that of course you can make a business plan or a large deck that looks very refined because you put a lot of thought in it, because the numbers look very polished. It makes you feel like the idea is going to work just because it looks so good and because the arguments are so great, but you have no evidence that it's going to work. And the argument that works there is to say, well, isn't it that you're increasing, you're maximizing the risk of failure by spending a lot of time on refining an idea that you haven't proven at all. You're making a long document and then you're going to invest on how to execute that idea because you're saying, hey, this is the idea, this is how we should build it. Now all I need is $10 million to implement it, to roll it out. And that could be a mission, or it could be a new business unit in an organization that's actually maximizing the risk. Because you're investing in an idea you just made up and you made up the numbers. And everybody agrees that you make a business plan, you make up the numbers. It's creative writing. As Steve pointed out earlier, what you really want to do is as an entrepreneur, intrapreneur, or somebody who's on an important mission, is you want to decrease the risk and the only way you can decrease the risk is by experimenting, by trying out things rapidly and in fact failing cheaply and failing quickly. Because you're going to learn from that. You're going to integrate that learning into your next iteration. That's the only way to decrease the risk of failure, to minimize blowing up, wasting, burning a lot of money. And that argument usually works very well. When you draw it, you say, okay, you start out with an idea. Maximum is at its highest level. Your task is to decrease that uncertainty, that risk. And you do that by slowly investing more money. First, small experiments, you're inevitably going to.

Fail, you're going to learn.

But when you learn, you can invest more and gradually you're going to increase your investments. So I think that argument has worked so well that it's now easy and I can see Holger drawing it, that you can actually start convincing leaders when you use the words they understand, which is maximum risk and burning money, because they do understand that. I think we sometimes try to use the language that they don't understand, which is lean startup, I mean startup already. If you're a senior executive running a billion dollar business or business unit or $100 billion business, startup is more scary than anything else. So long answer to a question I'm.

Very passionate about and let me just double down on that. Specifically, the metrics for Horizon 1 activities are pretty simple. In large organizations, whether they're nonprofit or profit, you have budgets, you have program plans, you have how are we doing, et cetera. Where in Horizon 3 activities historically was? Well, it just kind of felt like we throw stuff in the wall and we're being innovative and there's no rigor at all. If you really think about it now, this lean methodology using the canvas, customer development and agile engineering actually provides enormous rigor. In fact, it allows us to create evidence based innovation and entrepreneurship and allows us by using an investment readiness level to actually give finance and operations and exec staff real visibility on how the innovation portfolio is proceeding. And I really want listeners to think about that is for the first time you can now have metrics which are different than the metrics for Horizon 1, but you can have metrics that you could provide to Horizon 1 leadership that shows them, gives them a dashboard of this innovation activity.

Thanks very much guys. It's been an incredible conversation. We're at the top of the hour. That's going to be it for the audience. Q and A session. Steve, I want to thank you for taking the time to come and have such an engaging conversation about such an incredible tool. And Alex, as always, for hosting the webinar session, and Holger, who visualized the entire session for our listeners. To everybody that's listening, I'll be sending out an email with a recording of the session, as well as the links to the mission model canvas in our resource library and the blog post that Steve and Alex co wrote together, introducing the tool and going into detail about a lot of the stuff that we discussed here today. Gentlemen, thank you very much. That's the end of our session. Everybody else have a great day and a fantastic evening.

Thanks a lot. Cabby. Thanks a lot, Steve.

Thank you guys.

Bye all. It.