Alex Osterwalder (Founder/CEO, Strategyzer) - Building Invincible Companies

strategyzer.com
Building Invincible
Companies
Design, Test, and Manage
Business Model Portfolios
@Strategyzer
@AlexOsterwalder @YPigneur
@DavidJBland
blog.strategyzer.com

Co-founder
Strategyzer
Alex
Osterwalder
@AlexOsterwalder
Professor
University of Lausanne
Yves
Pigneur
@YPigneur
#7
@FredEtiemble

Testing
This book integrates with
Business Model Generation
& Value Proposition Design
International Bestsellers
40+ Languages
Series
You’re ho ding a fie d guide for rapid experimentation.
Use the 44 experiments inside to find your path to sca e.
Systematica y win big with sma bets by…
Business
Ideas
strategyzer.com/test
WRITTEN BY
David J. Bland
Alex Osterwalder
DESIGNED BY
Alan Smith
Trish Papadakos
CREATING
CLARITY
Transform your work with the power
of visual tools
This book is for you if you want to change the way you work
and build a solid future for your business.
You will learn to know a simple to use framework and a lot of
visual tools and techniques to help you create clarity.
by Holger Nils Pohl, Co-Author Alex Osterwalder
CREATINGCLARITYbyHolgerNilsPohl,Co-AuthorAlexOsterwalder

1
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discuss in groups of 2:
what are the
characteristics of an
invincible company?
Systematically Get from Idea
to Sustainable Business
(more than once)1
Compete on Superior
Business Models (not just
better product, tech, &
price)
3
Constantly Reinvent Your
Business (shift from old
business models & invent
new ones)
2
Testing
40+ Languages
Series
Business
Ideas
WRITTEN BY
David J. Bland
Alex Osterwalder
DESIGNED BY
Alan Smith
Trish Papadakos

Systematically Get
from Idea to
Business
1
Lean is not an engineering
process. Keep your eyes on
the prize
– Steve Blank, entrepreneur & author
“
”

D
ecide
idea business
TEST
BUSINESS
DESIGN
D
ecidee
hypothesize
experiment
learn
ideate
business
prototype
assess
decide
TEST
hypothesize
The Business Model Canvas
Customer SegmentsKey ActivitiesKey Partners
Cost Structure
elationships
Designed by: Date: Version:Designed for:
designed by: Business Model Foundry GmbH, Switzerland
www.businessmodelgeneration.com
This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit:
http://creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. strategyzer.com
Key Resourceurceurcerceurceurces
FF BILITEASIB
Customer ReV
DDESIRABILITY
TTTTTTTYYYYYTTYT VVVVVVVVIAABILITY
strategyzer com

Revenue Streams
Channels
Customer SegmentsValue PropositionsKey ActivitiesKey Partners
Key Resources
Cost Structure
Customer Relationships
uee PKey AcAcAcctivt VaVaVaVaVaVVaVaVVaitititivitvitivitivitiiitt esesesesesesesesesee
Key Resources
ValueActivities
FEASIBILITYT
Customer Relationsationationationstionstionstionsonstionstionon CustohipshiphipsppPropositions ionships
DESIRABILITYES
Channels
DESIRABILES
Revenue Streams
VIABILITY
Revenue Streams
Channels
Key Resources
Cost Structure
Value PrKey Activit ValuValuValuValutivittivittivitiivities
Key Resources
FEASIBILITYT
Custnshipsropositions Customer Relationsonsonsonshiphihh
DESIRABILITYES
Channels
RevenRe nuee Sttreams
VIABILITY
Revenue Streams
Channels
Key Resources
Cost Structure
Key ActivitiesKey Partners
Key Resources
FEASIBILITYBBILITY
Can we build it ?b
yy Channels
Customer SegmentsValue Propositions Customer Relationships
DESIRABILITYEESIRABILI
Do they want it ?o tt i
Reevenuenunenue Se SSStreamsCostt Structure
VIABILITYB
Sanity Check
ADAPTABILITY
hypo
important
unimportant
have
evidence
no
evidence
Revenue Streams
Channels
Key Resources
Cost Structure
what needs to
be true for this
idea to work?
hypo
hypo
hypo
hypohypo
hypo
hypo
hypo
hypo
hypo
hypo
hypo
hypo
hypo
hypo
po
purchasing
department willing
to pay for value, not
day-rates

hypo
important
unimportant
have
evidence
no
evidence
Revenue Streams
Channels
Key Resources
Cost Structure
hypo
hypo
hypo
hypo
hypo
hypo
hypo
hypo
hypo hypo
hypo
hypo
hypo
hypohypo
no
evide
hypo
hypo
hypo
hypo
hypo
TEST
Experiment
experiment
Testing
40+ Languages
Series
Business
Ideas
WRITTEN BY
David J. Bland
Alex Osterwalder
DESIGNED BY
Alan Smith
Trish Papadakos
Run experiments from
idea to business.

discuss in groups of 2:
what’s the boldest
experiment you’ve
conducted?
executionsearch
$
$
$
$
$
$
spending
uncertainty
discovery validation
Discovery Experiments Validation Experiments

3. Urgency: How much time do you have
until the next major decision point or
until you run out of money?
The selection of the right experiment may
depend on the time and money you have
available. If you have a major meeting
with decision makers or investors com-
ing up, you might need to use quick and
cheap experiments to quickly generate
evidence on multiple aspects of your
idea. When you are running out of money,
you need to pick the right experiments to
convince decision makers and investors to
t d f di
EXPERIMENT NAME / OVERVIEW
Experiment Name
Experiment description
COST
SETUP TIME
CAPABILITIES Design, Product, Tech, Legal, Data, Sales,
Marketing, Research, Finance
EVIDENCE STRENGTH
RUN TIME
COST
under $500
$500 – $1,000
$1,000 – $10,000
$10,000 – $20,000
$20,000+
1 – 3 hours
1 – 3 days
1 – 3 weeks
1 – 3 months
3+ months
SETUP / RUN TIME
DESIRABILITY · FEASIBILITY · VIABILITY
Experiment is ideal for—what it’s
ideal for
Experiment is not ideal for—what it’s
not ideal for
EXPERIMENTTYPE
Exploration Customer Interview p. 207
Expert Stakeholder Interviews p. 207
Partner & Supplier Interviews p. 207
A Day in the Life p. 207
Discovery Survey p. 207
Data Analysis Search Trend Analysis p. 207
Web Traffic Analysis p. 207
Discussion Forums p. 207
Sales Force Feedback p. 207
Customer Support Analysis p. 207
Interest Discovery Online Ad p. 207
Link Tracking p. 207
404 Test p. 207
Feature Stub p. 207
Email Campaign p. 207
Social Media Campaign p. 207
Referral Program p. 207
Discussion Prototypes 3D Print p. 207
Paper Prototype p. 207
Storyboard p. 207
Data Sheet p. 207
Brochure p. 207
Explainer Video p. 207
Boomerang p. 207
Pretend to Own p. 207
Preference &
Prioritization Discovery
Product Box p. 207
Speed Boat p. 207
Card Sort p. 207
Buy a Feature p. 207
COST SETUP TIME EVIDENCE STRENGTH THEMERUN TIME
Discovery Experiments
Validation Experiments
EXPERIMENTTYPE
Interaction Prototypes Clickable Prototype p. 207
Single Feature MVP p. 207
Mash-up MVP p. 207
Concierge p. 207
Life-sized Prototype p. 207
Call to Action Simple Landing Page p. 207
Crowdfunding p. 207
Split Test p. 207
Presale p. 207
Validation Survey p. 207
Simulation Wizard of Oz p. 207
Mock Sale p. 207
Letter of Intent p. 207
Pop-up Store p. 207
Extreme Programming Spike p. 207
COST SETUP TIME EVIDENCE STRENGTH THEMERUN TIME
DISCOVERY / EXPLORATION
Customer Interview
An interview that is focused on exploring customer jobs, pains, gains
and willingness to pay.
COST
SETUP TIME
CAPABILITIES Research
EVIDENCE STRENGTH
RUN TIME
Customer Interview is ideal for gff aining qualitative insights
into the fit between your value proposition and the customer
segment. It’s also a good starting point for prff ice testing.
Customer Interview is not ideal as a substitute for wff hat people
will do.

Discussion Forums
p. 207
Search Discussion Forums for
evidence of customers seek-
ing out solutions to a problem.
A Day in the Life
p. 207
Use what you learned in the
customer interviews to then
observe, and learn if, actions
match the words.
Salesforce Feedback
p. 207
Use Salesforce Feedback to
find a pattern of customer
behavior.
Discovery Survey
p. 207
Perform surveys using what
you learned in the customer
interviews to inform your
survey design.
Search Trend Analysis
p. 207
Search online for volume
around a specific job, pain,
or gain.
Paper Prototype
p. 207
Sketch out what the solution
to the customer jobs, pains,
and gains could look like on
paper.
Customer Interview
230
COST
SETUP TIME
CAPABILITIES Design / Product / Technology
EVIDENCE STRENGTH
RUN TIME
Speed Boat is ideal for goff ing beyond conversations
and having a visual representation ofo wf hat’s slowing your
customers down and learninrr g how it impacts feasibilityt .
DISCOVERY / PREFERENCE & PRIORITIZATION
Speed Boat
A visual game technique used with customers to identify what's
inhibiting progress.
ANCHORS =
“what’s
holding you
back from
doing those
jobs well?”
BOAT = “what jobs
are you trying to
get done?”
Speed boat
COST
SETUP TIME
CAPABILITIES Marketing / Research
EVIDENCE STRENGTH
RUN TIME
Card Sorting is ideal for gff etting insights into customer jobs,
pains, gains and value propositions.
DISCOVERY / DISCUSSION PROTOTYPES
Card Sorting
A technique in user experience design in which a person uses cards
with customers to generate insights.

Card Sort
TOP
1. Visualize Delta
2. Body Changes
3. Track Fat
4. Girth Metrics
5. Track Muscle
FLOP
1. Body Preview
2. Prediction
3. Track Volume
4. Timelapse
5. Goal ETA

COST
SETUP TIME
CAPABILITIES Design / Product / Research
EVIDENCE STRENGTH
RUN TIME
Product Box is ideal for rff efining your value proposition and
narrowing in on key features to your solution.
DISCOVERY / PREFERENCE & PRIORITIZATION
Product Box
A facilitation technique used with customers to visualize value
propositions, main features and key benefits in the physical form
of a box.
COST
SETUP TIME
CAPABILITIES Design / Product / Technology / Legal / Marketing
EVIDENCE STRENGTH
RUN TIME
WiWW zard ofo Ozf is ideal forff learninrr g manually, first hand about
steps needed to create, capture and deliver value to a customer.
WiWW zard ofo Ozf is not ideal for scff aling a product or business.
VALIDATION / SIMULATION
Wizard of Oz
Creating a customer experience and delivering value manually,
with people instead of solely using technology. The name Wizard
of Oz is derived from the movie, where you have a request that
is handled by a person. Unlike Concierge, the people involved aren’t
visible to the customer.
Wizard of Oz
Testing Business Ideas - David J Bland & Alex Osterwalder
Creating a customer experience and delivering value manually, with
people instead of solely using technology.
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Testing Business Ideas - David J Bland & Alex Osterwalder
people instead of solely using technology.
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COST
SETUP TIME
EVIDENCE STRENGTH
RUN TIME
WiWW zard ofo Ozf is ideal forff learninrr g manually, first hand about
steps needed to create, capture and deliver value to a customer.
WiWW zard ofo Ozf is not ideal for scff aling a product or business.
VALIDATION / SIMULATION
Wizard of Oz
Creating a customer experience and delivering value manually,
with people instead of solely using technology. The name Wizard
of Oz is derived from the movie, where you have a request that
is handled by a person. Unlike Concierge, the people involved aren’t
visible to the customer.
COST
SETUP TIME
EVIDENCE STRENGTH
RUN TIME
Concierge is ideal forff learninrr g first hand about steps needed
to create, capture and deliver value to a customer.
Concierge is not ideal for scff aling a product or business.
DISCOVERY / INTERACTION PROTOTYPE
Concierge
people instead of using technology. Unlike Wizard of Oz, the people
involved are obvious to the customer.
executionsearch
$
$
$
$
$
$
spending
uncertainty
executionsearch
$
$
$
$
$
$
uncertainty
1. Go cheap and fast early on in
your journey
2. Increase the strength of evidence
with multiple experiments for the
same hypothesis.
3. Always pick the experiment that
produces the strongest evidence
given your constraints.
4. Reduce uncertainty as much as
you can before you build anything.
Picking Experiments
B2B software
sequence
Testing Sequence
Single Feature
MVP p. 207
Discussion
Forums
p. 207
Boomerang
p. 207
Clickable
Prototype
p. 207
Presale
p. 207
Customer
Interview
p. 207

AgendaAttendeesTimeMeeting Type
Planning
60 minutes
Monthly Core Team
• Learning goal
• Prioritization
• Tasking
Standup
15 minutes
Daily Core Team
• Learning goal
• Blockers
• Help
Learning 60 minutes
Weekly
Extended Team
Core Team
• Synthesize evidence
• Insights
• Actions
Retros
30 minutes
Bi-weekly Core Team
• Went well
• To fix
• To try
Deciding
60 minutes
Monthly
Stakeholders
Extended Team
Core Team
• Learnings
• Blockers
• Decisions
M M M MT T T TW W W WT T T TF F F F
Experiment Ceremonies
Constantly Re-
Invent Your
Business
2
why is innovation so hard for
established companies?
EXPLOITEXPLORE
INVESTMENT PHILOSOPHY
CULTURE & PROCESSES
PEOPLE/SKILLS
cost cutting / efﬁciency
iterative search
experimentation, failure, insights
growth
linear execution
failure not an option
exploration, pattern
recognition, big picture
process & detail oriented,
rigor
FOCUS
VC-style investments guaranteed dividends

Low death/disruption
risk
Low innovation riskHigh innovation risk
Low
expected return
High
expected return
Low
real return
High
real return
High death/disruption
risk
Business Model Portfolio (EXPLORE)
Business Model Portfolio (EXPLOIT)
EXPLOIT
EXPLORE
$
death/disruption risk
risk
Low
expected return
High
expected return
Low
real return
High
real return
risk
EXPLOIT
EXPLORE
$
$
innovation risk
risk
Low
expected return
High
expected return
Low
real return
High
real return
risk
EXPLOIT
EXPLORE
$
$
innovation risk
risk
Low
expected return
High
expected return
Low
real return
High
real return
risk
EXPLOIT
EXPLORE
$
$
innovation risk

http://www.ﬂickr.com/photos/joeshlabotnik/2294656527/http://www.ﬂickr.com/photos/joeshlabotnik/
illustration Nespresso changed the
business model
for espresso
EXPLOITEXPLORE
Business model innovation in existing companies
B2BB2C
EXPLORE
High innovation risk
(little validation evidence)
Low innovation risk
(strong validation evidence)
Low
expected $
High
expected $
B2B
B2C
EXPLORE

EXPLORE
EXPLORATION
EXPLOITATION
EXPLORATION
TEST — >
DESIGN—>
Low
expected $
High
expected $
EXPLOITATION
6
Low disruption riskPROTECT — >
Low
real $
High
real $
High disruption risk
BOOST—>
!Nestlé produced 1 Nespresso-
sized success in 33 years!
How many $100k innovation
projects does it take to
produce 1 multi-billion $
success?
risk
Low
expected return
High
expected return
Low
real return
High
real return
risk
EXPLORE
EXPLORATION
EXPLOITATION
EXPLORATION
EXPLOITATION
will fail
will know
some success
High death/dis
risk
ru
will become a
growth engine
162
87
1It takes $100k
projects to produce 1
Nespresso
250

5.9% 2.5% 1.1% 0.4%
25.3%
64.8%
Return Distribution in U.S. Venture Capital
(2004 - 2013)
Source: Correlation Ventures (data from VentureSource and other)
0 - 1.0x 1.0 - 5.0x 5.0 - 10.0x 10.0 - 20.0x 20.0 - 50.0x 50.0x +
Return Groupings
70%
60%
50%
40%
30%
20%
10%
0%
%ofFinancings
6 out of 10 investments
lose money
4 out of 1000
are home runs
3 out of 10 makes
some money
1
162
87
Sum = 250
EXPLORE
EXPLOITATION
risk
Low
expected return
High
expected return
Low
real return
High
real return
risk
EXPLORATION
EXPLOITATION
will fail
will know
some success
will become a
growth engine
It takes projects to
produce 1 Nespresso
250250
you can’t pick the
winner without investing
in the losers !!!
s Model Portfolio (EXPLORE)
EXPLORATION
will fail
i k
know
riskrisk
kwill kk
e successesomee
High death/disrup
will becomw
growth eno
162
87877
1
ss Mod
m
en
FUNNELELLLLLL
ssss
Portfolio Map
EXPLORE
EXPLOITATION
risk
Low
expected return
High
expected return
Low
real return
High
real return
risk
EXPLORATION
Portfolio Map
On 10 projects
6will fail
3will know some success
1 Will succeed
risk
s Model Portfolio (EXPLORE)
EXPLORATION
will faillwill faill
will know some succeuw some
1
s Mod
ce
FUNNEL
”– Jeffrey Bezos, Amazon founder & CEO
failure and invention
are inseparable twins

Compete on
Business Models3
BUSINESS MODEL SHIFTS

Revenue Streams
Channels
Key Resources
Cost Structure
Sales
Platform
Low tech (physical)
High tech (digital)
Standardization
Customization
B2B
B2C (direct access)
Niche-market
Mass-market
High-cost
Low-cost
Closed innovation
Open innovation
Dedicated-usage
Multi-usage
Asset Heavy
Asset Light
IMPROVE-BMSHIFTS
Product
Service
CUSTOMER-DRIVEN SHIFTSRESOURCE-DRIVEN SHIFTS
FINANCE-DRIVEN SHIFTS
Product
Service
Product
Service
[sources: Mark W. Johnson, photo: Hilti.com]
illustration
Hilti shifted from a transactional to a
service-based business with recurring
revenues based on a tool fleet
management system.
Revenue Streams
Channels
Key Resources
Cost Structure
designed by: Business Model Foundry AG
The makers of Business Model Generation and Strategyzer
Danger !
https://www.letemps.ch/economie/ventes-hilti-ont-chute-18
Low
real return
High
real return
(profitable)
High death/disruption risk Low death/disruption risk
(sustainable)
htt // lhttps://www lhttps://www.lhttps://www.l t h/etemps ch/ecoetemps.ch/ecoetemps.ch/eco i / tnomie/ventesnomie/ventes-nomie/ventes hilti t hhilti ont chuhilti-ont-chuhilti-ont-chute 1te-18
ow death/disruption risk
(((su(su(su(su(su(su(su(su(su(su( ttstastastastastastastastastastaiiinainainainainainainainainainablblbleblebleblebleblebleblebleble)))))))))))))
FINANCE CRISIS in 2009:
Turnover drops by 20%
Hilti offers a new service with a
tool fleet management system
For a monthly subscription Hilti helps
you track, repair, replace and upgrade
your tools at no additional cost.
Online Fleet Management

FROM (as-is) TO (to-be)
Product
Service
Rendement
élevé
Danger !
CHF 5.6 b
2018
FLEET MANAGEMENT HAS BEEN
ADOPTED BY 100,000 CUSTOMERS
IN MORE THAN 40 COUNTRIESLow
real return
High
real return
(proﬁtable)
High death/disruption risk Low death/disruption risk
(sustainable)
g
d h/di i i k
ggggggggggggggggggggggggggggggggggeeeeeeer !
BUSINESS MODEL SHIFTS
Revenue Streams
Channels
Key Resources
Cost Structure
Sales
Platform
Low tech (physical)
High tech (digital)
Standardization
Customization
B2B
B2C (direct access)
Niche-market
Mass-market
High-cost
Low-cost
Closed innovation
Open innovation
Dedicated-usage
Multi-usage
Asset Heavy
Asset Light
IMPROVE-BMSHIFTS
Product
Service
CUSTOMER-DRIVEN SHIFTSRESOURCE-DRIVEN SHIFTS
FINANCE-DRIVEN SHIFTS
Sales
Platform
Sales
Platform

FROM (as-is) TO (to-be)
Sales
Platform
strategyzer.com
Innovation
Readiness
@AlexOsterwalder @YPigneur
@TendayiViki blog.strategyzer.com
strategyzer.com
Innovation Readiness
Leadership Support
Organizational
Design
Innovation Practice
Strategic
Guidance
Resource
Allocation
Portfolio
Managemen
t
Legitimacy
Power
Bridge To
The Core
Rewards
Incentives
Innovation
Tools
Process
Managemen
t
Skills
Developmen
t
x
x
x
x
x
x
x
x
x
Innovation Readiness
Leadership Support
Organizational
Design
Innovation Practice

strategyzer.com
readiness assessment
assess leadership
support
strategyzer.com
assess organizational design

strategyzer.com
assess innovation practice
strategyzer.com
assess your company’s
innovation readiness

strategyzer.com
identify three
improvement
goals
x
x
x
x
x
x
x
x
x strategyzer.com
share assessment
share your self-assessment with
your seat neighbour / what are
you most proud of & what’s your
improvement goal?
Strategyzer logo.
You can ﬁnd additional information on businessmodelgeneration.com/canvas/bmc under “Legal Info”.

Alex Osterwalder (Founder/CEO, Strategyzer) - Building Invincible Companies

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