Alex Osterwalder is hot. He is co-author of the bestseller book ‘Business Model Generation’. The book inspired me as being one of the only books worth reading on business modelling. The model is simple, handy without being simplistic and it emphasizes the idea of testing and failing. Something I recognize from the field of organisational improvisation. And to prove his success, almost every organisation or business I visit uses the Business Model Canvas he developed. So I was grateful Alex freed some time for an interview.
Ruben: Your book has been co-written with more than 470 co-writers. Where did you get the idea to crowd-source your book?
Alex: So many business books are being published each year, so Yves Pigneur (main co-author) and I were thinking of a way to stand out. I saw that my doctoral thesis was being used a lot on-line and choose to crowd-source as an experiment. Being mainly an intellectual exercise and not too heavy on investments, it was relatively easy to set-up. The hard part was to let people pay for their participation, as this was a very new concept. We needed some money because the book would be very expensive to make.
Ruben: Weren’t there other ways to finance the book?
Alex: Initially we wanted to finance the book through sponsors like consultancies, banks, corporates, etc… We even created a role to cover that work: the book producer. But it didn’t materialise that way. Nevertheless his role proved to be very important as we would be self-publishing the book.
Ruben: Indeed, the role of producer is a role that’s common to movies and theatre plays, not books. It brings me to the concept of organisational improvisation, where products and services are innovated through an emerging process. Options, solutions emerge as the group is working together. The same as with a Jazz combo: their work is created during the process itself. How does the Business Model Canvas and its use relate to improvisation?
Alex: In a way, it’s similar to the Business Model Generation process because from the start you have no clue where you’re heading. You just start prototyping with the Business Model Canvas. But the Business Model Generation process goes a step further because you want to have good business model, so you should be prototyping 4 to 5 different canvasses.
Ruben: So basically you have 5 Jazz combo’s playing at the same time, prototyping 5 different canvasses?
Alex: Yes, you’ll then have several options to choose from. But the one thing that’s rigid is the process. We do have a clue about the process. In that respect the Business Model Generation process relies heavily on Design Thinking. It’s pushing people through a process to get to something new, to get them to prototype.
Ruben: How then should the ‘Jazz musicians’ prepare themselves? What does it require from the people that participate?
Alex: People should open up. Right from the beginning you should set-up cross-functional teams and have a mix of competencies in your group. This is not obvious at all because people with different expertise don’t easily talk to one and other. The canvas gives them a shared language because it’s so visual. It helps people not to get tangled into details.
Ruben: What’s the point about being visual?
Alex: Visual language is crucial. It helps others buying in. It expresses what’s needed when language is not enough. With business model discussions, before the existence of the canvas, people didn’t know what they were talking about. The canvas is a tool to help them in a practical way.
Ruben: Can everyone use the Business Model Canvas?
Alex: Everyone has the resources to use it. Prototyping is just an intellectual exercise. And you should prototype 5 radically different ones. The problem is that people fall in love with that one idea, that one model and they can’t see the others anymore.
Ruben: I recognize that. I often do an exercise with groups where I ask everyone to stand in order of birthdays. The first birthday of the year stands in front, the second birthday as second, etc… up to the last birthday at the end. But there’s one rule: participants are not allowed to talk. So they have to find new ways of communicating. It’s always interesting to see that participants all use the first solution that emerges. They never take the time to come up with a different solution. Can you explain why people fall in love with just one prototype?
Alex: We think too much like engineers and not enough like designers. Engineers learn to think in problem – solution. And it’s the way we’re being taught: solution focussed, linear. It’s a fundamental problem in our education system. Because when things get complex you’re not talking about solutions, you’re talking about trade-offs. For example if you want to make a new phone… there is no right solution for the design of a new phone. When solution A, B or even C is not the best, what do you do? That’s where the prototyping and experimenting kicks in. That’s where we should think in terms of alternatives. We have to thinks as designers. Designers think in possibilities, in alternatives and not in solutions.
Ruben: Is there a difference in use between small and big organisations?
Alex: Using the canvas becomes complicated for small business owners and start-ups when you enter the testing phase. They usually don’t have the resources to test 4-5 prototypes. And, starting from scratch they create their own set of values where alternatives get lost. Big companies have the resources but if you want to experiment in such organisations, you put yourself at risk. It’s not done. The challenge for large organisations is to organise a space for experimentation. So for both types of organisation, the challenge is to keep looking at alternatives and think as designers.
Ruben: Thanks a lot Alex!