The shift to scalability: practical lessons from Strategyzer

So we're going to talk today about the shift to scalability and we've got some practical lessons from what we've learned on our journey at Strategizer. So today we're going to start with a mentee asking you a couple of questions and then we're going to have Alex talk about the innovation phases. Tendai is going to talk a little bit about some of the tensions that we've experienced in our journey and then Kurt is going to follow up with a demo and then at the end we'll have time for Q and A.

I am just quickly going to start with Strategizer and the story before we kind of get into our lessons learned. Right. So many of you in the webinar, always super fun to have. A lot of you have been following our evolution over the years before it became a company. Well, there were some tools coming out of the University of Lausanne with east and then we wrote Business Model Generation expanded that. You have the other books that weren't, you know, until 2010. But the tool world is where we kind of started out. Then we did launch the company and really kind of scale and we'll see that in the service space even if that wasn't the original vision and got a lot of traction with big brands around the world. That's fascinating how we got into that. But it also got us a little bit stuck to a certain extent. When you have a business that works with great margins well, it's really hard to do other stuff right and where you don't know yet what the margins are going to be and then we're going to end kind of really in the phase where we're in today. That's the most interesting is where we are scaling and just very quickly. So from a product perspective, we started out as a company offering services, but very quickly we productize services. So we would run our coaching with our program. So bundle of processes, service workshops, slides on our platform and we charged a fixed fee for that. So good news for us was already we got out of the hourly business into fixed fee for sprints, but services per se, not really scalable. Even if we did it on our platform, we, you know, we had decent margins but we said, well, what if we unbundle? And that really took off the beginning of this year where we now actually go into companies self disrupting saying, hey, you don't need us as consultants, we're going to help you at the beginning, maybe for a year or so because with the programs on our platform you can run this on your own. So we help them do that. What happened afterwards, so we have a price here per team is what happened is that even small companies got interested because they couldn't afford the services, but they wanted something that is just as good. So that was very surprising. We can get a little bit into that because we had a team of explorers working on that. We identified that as the second kind of customer segment. And then the last phase that we're starting already to move towards a little bit is, well, you know, what if you could design your own innovation programs and run them with your own coaches, all that on the Strategizer platforms, that's kind of the overall big picture vision and direction. Now that's a starting point. But what's interesting is going back kind of to the story of the phases of innovation and how we kind of went through this to end up with this one. And then Tenday will talk quite a bit about the tensions in, in an organization that is trying to, you know, build something new while running a business, which was the case for us, built have running a service business, trying to build a platform business. So this is general, that you have a number of innovation phases, something we've been talking about a lot in, in our webinars around, you know, methodology and so. But we went through these phases and we pivoted three times. And it's really when we stopped and said we want to scale one thing that things change. It strategizes. So it's almost a little bit like we were a lifestyle business for a couple of years, you know, making a couple of million of revenue but not stopping to scale one because the scaling is actually the hard thing in innovation. There's no right and wrong. Lifestyle businesses, you know, with 10, 50 people is fine. But if your ambition is to change how businesses innovate and work, well, that's not going to be enough. So what are these phases of innovation? Let's first define what you want to end up with. What is success? Success is when you a found a value proposition that customers care about, number one. And you embed that in a business model that can scale profitably. And it's not that one is first and the other is second. You actually iterate between the two until you really figure it out. So people sometimes ask, what's the sequence, the sequences? You go through this, through it kind of a cycle until you figure it out, search and iteration. And we've talked a couple of times about the process. I'm not going to go into that too much red Is business design coming up with value propositions and business models. Yellow is testing that. So constantly going through this, that's what we did. And we got towards a couple of businesses that were worth a couple of million in revenue. But what we really didn't do is stop and scale one of the promising things or iterate to move towards one that could scale. So this piece here is one, I think we were pretty good at getting it to a certain level. And this piece here is something we really had to learn. And we'll show why this is actually hard when you're beyond even the startup phase. So startup phase number one, then going beyond this. So that's where you want to end up with. So what's the process? Well, number one, you need to find a customer that actually cares. Once you have those jobs, pains and gains that customers care about, you start to figure out, find the solution. You try to prove that what you have works for them. And once you have that, you start to focus on acquiring and retaining customers. And throughout the process you will always talk about willingness to pay. Now I'm presenting it as a linear thing, but it's basically jumping, you know, between these all the time. But it is clear that without customer job spins and gains, your solution won't resonate and you can't really focus on acquisition. So that's kind of the phases, right? If we keep it pretty simple. Now we did that first. So the original vision was let's build an iPad app. Because we had a successful book around the business model canvas and we said we're going to test this with an iPad app. Turns out because we understood kind of the readers bit, we created an iPad app that worked pretty well and the app store helped us scale this. Super cool. But we already knew that you can't scale a real business around a thirty dollar app, which is a one time transaction. You can do that in certain areas, but you can't do that in kind of a niche domain like, like consulting. So then we said, okay, that works, let's pivot to the next thing. And what we knew we wanted to pivot towards was a web app. So that's already, you know, 10 times higher price. So same thing, we said, okay, similar customer base did the same thing, new value proposition on the web. But here's where already things started to fall apart. Where we realized, huh, now there's a part here around feasibility. Can we build in, in the same kind of way, an application with the same kind of ease that we had with the iPad app so that we weren't able to do, which then mean the value proposition wasn't as strong. So even technically that didn't really work. But then once we figured that part out was about okay, can we acquire and retain customers and build a business that you know, you make more revenue than you you actually consume? Turns out that we had a leaky bucket. So the web business didn't work because we had something that people like to use, they like to buy, but it was not a recurring problem. They would sketch out their business models, they'd be super happy buy. But you know, startup got to certain phase, now it's execution. So we didn't then really pivot towards the right thing until we realized, huh, there's another pivot we need to do which is working with this platform stuff. But actually different value proposition. Customers don't care about software. What they really cared about was. And here Tendai, I think has a story to tell is the bundling of processes slides. Every time we left a company, they didn't want the software, they wanted this stuff. Right. So I think that that was a big insight. I think you had that question how many times Tendai, where people wanted everything but not software.

Yeah, no, they'll be saying, so you've spent time with us, we've done the workshops, you've done the training with us and everything is really cool. But you're leaving tomorrow so are you going to email us the slides? Are you going to.

And there was no way you could actually charge over, you know, a recurring period of time for content for slides. There is no way to charge a licensing fee for that. So what we then actually realize is if we package these things as programs, all of a sudden there's a two customer segments that emerge. Large companies that want to rapidly scale innovation process, small companies that just want a world class innovation process, they have these jobs, pains and gains. Oh, that value proposition starts to resonate. So with program licenses that bundle everything on the platform like I showed before. Wow, that really worked. So this is fine. Now we're in this phase of scaling and acquiring. Knowing the customer, knowing the value proposition. We just need to be in front of more customers like that to actually close more deals. So it's a, the whole idea of revenue generation with lead generation. Now if we look at that zooming out a bit from the process just to the idea of portfolio and then tend. I will show you what's the tension when you have a portfolio like this. The vision, the original vision that we started out with, as I said, we wanted to Build a software business. So we said, let's, you know, build that platform around innovation. So, okay, tried that, but turns out that we became an innovation company, an innovation services company. Now we did do that on our platform, but we were not able to build a viable business with recurring revenue around platform. What we did see is there were a group of people who loved using the platform after the iPad app and, you know, using it for a certain time, but no recurring need, which means we just couldn't scale that thing. But now in about 2023, we saw that value proposition emerging, as Tendai said, around packaging all we have as a program on our platform. And then we put that on the web and people started to actually inquire and pay us a license fee for that and said, okay, wow. Now the challenge was also that we had a platform fee here for software and a program fee here to, for everything together. And one was about ten times more expensive. So we had this cannibalization. So we were willing to kill a business that was bringing in some money but couldn't scale rather than letting that continue and cannibalize. So program licenses really started to take off. We were able to double our revenues every quarter for 2024. So you see this new vision emerging. We're not a platform business, but we actually transform companies with these program licenses. That's what we're scaling now and saying, hey, innovation, pretty large domain. We can, you know, if we look at the total markets, probably around $10 billion just for licenses. But you know what, transformation is much larger. So we start to think about what other things could we start to address. That's that third phase in that image that I drew before. What, what other areas could, could we help transform? So that's where we are today. And now that all sounds really easy and smooth sailing. One of the things, the, probably the last thing I would have expected is that we saw the explore exploit challenge that we tell companies about. We help them learn, we live through that, you know, life. And Tendai is going to show you kind of that tension in some of the lessons. And maybe Carol can also jump in as the freshest bloody year incurred because we're all living this tension of a company that runs a business with a couple of million in revenue, but is trying to build a new growth engine that will replace the old one. Wow, that's a super interesting thing to look at. So.

So what I'm going to be doing is I'm going to be talking across each one of these topics, right? Resource allocation and, and Sales and marketing and product design and just exploring some of the tensions that we've, we've had together. These tensions that I'm going to discuss led Alex Osterwalder to start calling me drama queen. And that was because of how I used to react emotionally to every single one of these tensions used to drive me absolutely crazy as we were trying to resolve them. And the reason is because again, when you're trying to navigate this journey of going from having an existing business and then trying to having an existing business here, while you're trying to explore something new over here, there's always a real tension about how do you balance these kind of scenarios, right? And so that's a real interesting challenge that we kind of face as an organization ourselves. And we kind of had to figure out as we were actually doing, as we actually doing the work, because what tends to happen is you get the split attention. You get like your head is turning this way, then your head is turning another way. You're trying to explore the future while at the same time exploit your current success. It's really difficult to kind of manage that tension. And how do you balance the management of that tension can be something that can kind of create problems for you as you're going forward. And so I'd like to sort of start to explore some of the tensions that we faced and we had to deal with. And the first one here was the resource allocation kind of tension. And here, you know, the existing business is insatiable. There's always more things to do. Always more things to do. In fact, just before I jumped on this webinar, there was always more things to do. A client email, a problem with this product or service that we're delivering, something is happening in some other country, et cetera, et cetera. There's always more things to do and always problems to solve. And what's fascinating about the, about the service business that we have is that it always gives you good money. Like it's just enough money to keep you interested and to keep your business going. And what happens with that good money is that it distracts you from then investing sufficient attention to your. Exploring your new opportunity. And so, as Alex said, right, the, the, the, the, the explorer side of our businesses, we're trying to build these various sort of platform products. We would, we would get there 2 million, and then we would never keep going because again, our attention kept getting drawn back to this, to this kind of service business. And so that tension was really, really tough. And we had to sort of start thinking about how do you actually let go of good money so you can actually create space for creating the business of the future that you actually want? Go ahead, Carol.

Just want to shout out. Juliana just said the existing business is the pacman of resources in an organization.

It is definitely the pack when the resources definitely it's the kind of thing that like eating up all the resources. That's exactly what's actually happening. And it chews up attention and it chews up energy. And then the ill discipline is to then say, with the remainder of our attention in the remainder of our energy, we'll do something in the explore side, right? And that's where the tension really starts to arise. So let's move on to the next one, which is product design. Right now, on the product design side, again, as we keep delivering the service business, what we're doing is we just keep improving the existing business and making it better. And it's really attractive because it's quite familiar. So you're drawn to the familiarity of the existing. You can keep focusing your energy on that. You can keep doing whatever it is that you need to do to drive that, that, that, that, that the existing business. And that's where I was right at the time when these tensions were starting to kind of bubble up. Alex's mind had already started shifting, shifted quite strongly to what we need to be doing in the future. And I was still like, man, this is rocking. I'm doing services, I'm talking to customers, I'm delivering value, I'm running workshops, we're doing programs and everything is going really well. And of course, people are also patting me on the back so I feel good. And then the moment when the drama queen Monica was birthed was when Alex said to everyone, we are going to make sure that we. Let me just go back a bit, sorry, slide problems. Let me make sure. So when the drama queen Monica was born was I was sitting in a parking lot in Birmingham and Alex had just decreed to the whole company that every single thing we do will now be delivered via our platform. But from a product standpoint, the. The product wasn't actually really in a sort of great state, but just like we teach the companies we work with, just like we teach the companies we work with, right, what you want to do is to launch it before you're ready so that you can actually learn. But if you launch it before you're ready so you can learn, you're basically hurting me and my commitment to delivering a quality service. And that's what created a very interesting conversation between me and Alex on that particular day. So go ahead, Alex.

Yeah.

And, and that's also the difference between me kind of driving the company towards the future, knowing, hey, look, this is good enough as a, you know, CEO and owner, I'm okay to take that risk. Right. Because I was not naive and thinking, oh, everything's going to be great. I knew exactly it's going to create tensions. But then again, you know, I'm not on the front line having to look good so I, I could under, fully understand that tension. And that's exactly what you have in companies like, okay, can you always look good? Well, sometimes you have to make that compromise so you get to that next phase of growth. So it was a pretty conscious decision, but not an easy one. Right. So it's never easy. That's the challenge. It's never easy.

So let's talk about sales and marketing now. So when, when, when it came to sales and marketing again, you know, our sales teams are, when you're delivering an existing business, they're really focused on hitting the numbers. We, we happen to have a CFO that's also telling us, updating us on the numbers every now and again and setting us golden targets and things like that. So we're having to hit that. And the way we do that is by trying to grow the existing. It's almost like the energy of, of, of, of running a business. The energy of running a business is you try and grow revenue, you try and grow customers, you try and grow. So you're constantly drawn into that. And when you're building a professional sales team, that's what they're really, really good at. Right. They're not, they don't want to run experiments. Right. Which is what's actually necessary for building a new value proposition is that you have to kind of run these experiments and try and figure out what works and try to figure out what was actually going to sell. But when you're running experiments, you run the risk of failing. So then you don't close the deal. You don't hit the number that you were targeting. And then the sales team has this tension in terms of, you know, what they're actually trying to do. And also, you know, a question about whether they have the right entrepreneurial skills to actually drive that conversation. So these were the tensions that we kind of faced. Let's just talk about how we started to resolve these tensions. So remember we said around resource allocation is the tension between having split attention between these two things. So what we decided to do there was to Have a dedicated team. Just have a dedicated team that's an explorer's team that's focused on building the new value proposition and business model and actually driving that work. And then it's easier to deal with the split attention thing. Now we also have things that are interesting, like as soon as they land a deal, how do we deliver it and all that. So we still have to rally around them as an organization, but at least we have a dedicated team that is going to focus on that. And then in terms of product design, referring back to my, to my drama queen days, the first thing that had to happen was to create buy in. And the way buy in was created is really fascinating. And you'd never think that this would happen inside a company like Strategizer, talking to someone like me who's like a thought leaderish person inside innovation. But it took Alex half a day in Nashville to convince me that this was something worth doing. Like, we spent like a lot of time together going back and forth in terms of what does it mean for the company, the fish model? Are we going to swallow the fish and see a dip in revenue before we see a growth in the platform? So we were going back and forth and back and forth. And the effort that Alex put into creating the buy in was kind of part of the, you know, the thing that you need to do to actually unlock these things, to be able to actually move forward and then also be transparent about the transformation and how it's happening. And then finally, in terms of, you know, sales and marketing, it's really important for us to focus on, like, building the, you know, the entrepreneurial skills. And we're really working on that now, particularly with the, with the, with the, with the dedicated team and even just a consistent reminder to everyone that works in our sales team that all money is not good money. We really want to start building a business model that's focused on taking us into the future. And that's another sort of bind that you need to have. Go ahead, Carol.

Just a point on that. Transparency, I think that's a real challenge that can be underestimated. I suppose when you're building something new and still selling the old, you need to make sure that everybody knows what is new and it's constantly being developed and iterated on. So ensuring everyone within the company has an easy way of knowing what's happening to keep everyone on the same page.

That's a real, that's super important. Right? Because that comes up often in questions like, okay, do I integrate this? Do I separate this and it's like a pendulum. So companies tend to make the mistake is either too separate or too integrated. That doesn't work. You need to find this right balance. The end of the day, I, I believe personally that you need to have a vision as an organization, as a leadership team and everybody in the team needs to buy into that. Because if you start to have antibodies, doesn't work. If it's too far out, people will not know. I had this conversation with the CEO just a couple of days ago. Too far out is going to get killed afterwards. You know, too close in is going to get killed right away. So both are wrong. So you want to keep that distance, the right KPIs and governance so that it can happen. It's that balance, right?

Yeah.

It's really fascinating that this is actually like the, like it's almost like why doctors shouldn't cure themselves. Like the human side of my personality impacted the stuff I know about innovation. Right. And so that's really fascinating and it's just like strong leadership and strategic vision and kind of driving that that then keeps us focused on, on, on what we're going to do going forward. So thank you so much for that. I'm going to now hand you over to Kurt for the demo.

Let me go ahead. So you guys will get a little bit of a sneak peek when Alex said, tenday, you have to use this platform. I'm going to show a little bit of the old but also some latest, newest things that are just coming off hot off the press. But I'm going to share with you guys kind of three areas where we have kind of significantly evolved the platform. The first is around this idea of from Coach as a guide to moving to where the platform can act as a guide as well. And then the second one from visual workspaces to data powered workflows. Super excited. We actually have some stuff that's coming out right now related to this that I'll be able to touch on with you guys. And the last one is super fun for manual progress management. So there's so much manual aspects to chasing down teams, understanding where they're at as they're taking an idea and turning it into a business as you're helping them innovate to. Now looking at some new automated Coach dashboards on our platform which we are super excited. Again, these are hot off the press. So let's look at that first one here from Coach as a guide to platform as a guide. So if we look at the before scenario, if you think of us Providing a service. With our innovation, we're having our coaches come in and provide guidance. And the platform, once we rolled it out, it still provided guidance, but it was primarily a resource hub. It's a central place for people to collaborate and work off of. And the coach was needed over here to be able to navigate that platform, to be able to know how to make the most use of it. And what we're beginning to see now is a new picture where the platform has everything baked in. So it's not trapped in the head of a coach, but it's actually baked into the process and the flow. And we'll look at an example of what that looks like. So if we look at the before picture, we had, if you're familiar with digital whiteboard spaces, or these boards or workspaces, we had a collection of these different workspaces and these are just a couple of the categories. We had some E learning workspaces, some team and workshop workspaces, and we packaged all of this amazing knowledge into these different workspaces. But again, it still required that coach to know, when do I need to offer the team this resource? When do I need to lead them through this set of activities? And we kept refining and kept refining. And if you go now to our platform, when you're at that homepage, this dashboard is what we call it, you have this sequential timeline and you're kind of going step by step through the process. And even if I was to open up and to go into some of these spaces, there's guided activities that's going to give you prompts, it's going to give you tips, it's going to help you know exactly where you are and what you need to be doing next. So that before and after transformation has allowed a massive change. And we're just seeing some really cool data points coming in. I saw this quote a couple months back and I just kind of wrote it down. But we had a coach and they were being asked to lead for the first time as an innovation coach. And they said, okay, I'm willing to do that, but only if I have the Strategizer platform. And there's just this baked in idea of that timeline, that guidance, that, okay, here's what you need to be doing next. Again, it's not in the coach's head, it's packaged on the platform that allows people, even as someone who is brand new, this coach is leading right now in Australia and they're doing a fantastic job because they're able to kind of have that guidance baked in now, lots more I could say there, but I'm going to jump to something I'm really excited about this paradigm shift from visual workspaces to data powered workflows. So if you think about the innovation process, you're going to get your hands dirty. There's going to be a lot of work that you do. And we had these visual static workspaces where you would have and even up here you're seeing a ton of work that was done. This is a workspace where we're analyzing results from running customer interviews in a very structured way. So if I zoom in here, you can kind of see this was even interviews that we were running. And you can see some analysis here where they're kind of panning all around the workspace. Go this way, scroll down here. But it's just these massive workspaces that contain so much information. And now what we're beginning to do is have a data powered enable workflow. So if I take that same view, what we now have is folks are able to use, we have this experiment widget. There's kind of these three different phases that guides you through. You design your experiment, you run and test it and you analyze it. And this is for running a very structured form of a customer interview. And now I'm here on this analysis page and I can immediately see the top job right here. I can see the second rank job, the third rank job, similar with pains gains and some of the context pieces that we're trying to gather and this ability to kind of aggregate and have this data powered enabled workflow. We're super excited because one of the biggest pain points we have with our clients is time and the amount of time saving that we've been able to do with stuff like this is super cool. Another way in which that has happened is in the past you would be taking screenshots. So a typical scenario might be a senior stakeholder wants an update on what's happening. And like, oh, we're, we've mapped out our customer profile, we're doing some interviews, we're having these updates, we're testing these hypotheses. But a lot of that work and there was ways in which we were enabling, exporting from the platform, but it was a lot at different moments of just taking a screenshot, putting it in a slide deck, putting that together. But now we have a new feature that we've rolled out this year where as I'm going down my timeline, as I'm going through the program in these different moments, it's Capturing the work that I'm doing. The program knows where you're at, knows the work that you have done. And then there's these moments such as this one here is a midterm review presentation and you can review with your senior leaders. You come here, you hit this button, it's going to open up this dialog box and it has a sample presentation and the ability to just download a presentation and it's going to take all of your work that you've been doing so far prior during the timeline, during your time on the platform and it's going to put it into a pre structured template. So stuff like this. Again we've seen significant time savings for teams to be able to not just have to hobble these things together but have it ready to go at those key moments when they want to report out. And the last one, this one almost feels silly because the before is just almost non existent. But this idea of from manual progress management to automated coach dashboards and really I was like what, what do I even put? There's no platform piece that I can put here. So I just put an image of email communication of these back and forths where if someone did want to know. So a scenario that is typical for us is you might have five to 10 teams in a cohort and you have coaches who are helping guide those teams along. But when that innovation manager comes in and they want to know like where are these teams are at? Or a coach is coaching three teams like where was that team for this? Where are they at? Where there's so much email communication, so much back and forth jumping into call is chasing down together information. And what we're doing some beta testing right now with is having some coach dashboards. So this is kind of a view of it where you have some key metrics up here you can see there's program completion, elearning completion, we get some motivation feedback, we see progress in terms of the activities, have they completed the stuff that they need to complete? Are we on track? And then we have progress of the business model as well. So two different types of progress. Another screen that we have ridge that coach dashboard is just providing some guidance. So what's coming up? Here's some guides and information that you can look at. Here's some videos to prepare you. So like you see here, prepare for ideation workshop number one. So that in this scenario we're looking at they have a workshop coming up, here's some guidance for that and then being able to give them the information based on what's happening again. Super excited. There's much more we could talk about, but hopefully you got a little bit of a snapshot of what the original picture looked like where Alex is saying to Tendai, like, hey, we need to start using this and how it has progressed. And every six weeks, we're shipping out new updates to the platform. And like I said, if you want more information, don't be afraid to reach out. There's lots of other features we'd love to be able to share with you guys.