Taking the Fuzziness Out of Innovation
Business model innovator Alex Osterwalder is not a fan of fuzzy spaces. He likes clarity, concrete definitions, and predictable processes. He likes tools.
He says we can bring all of these things to the “fuzzy space” of business model innovation by making it a more systematic profession.
And just as a surgeon uses a distinct set of instruments for a specific surgery, so should innovators have a reliable set of tools to create business models that respond quickly to market shifts.
We need to think differently about business model innovation, according to Osterwalder, co-author of the bestselling Business Model Generation and inventor of the Business Model Canvas, a strategic management and entrepreneurial concept. The company he co-founded, Strategyzer.com, delivers a set of methodologies, software tools, online courses, and practical techniques for making strategy and innovation more precise and manageable — just as it seems to be getting fuzzier.
We are “moving up the ladder of abstraction” because product innovation is not enough, Osterwalder says: “It’s something we already know how to do, and it is relatively easy to copy. It doesn’t give us a competitive advantage anymore.”
Today, the business model itself needs constant upgrading. But, Osterwalder notes, “as long as we have fuzzy tools, we can’t work seriously on these difficult problems.”
His proposal? “What if we prototyped business models and value propositions the same way we prototype products?” Start with an idea, and test it immediately. Change plans. Experiment, learn, and pivot.
Reliable innovation tools that perform regular adjustments to the business model could keep the organization tuned up and ready to maneuver.
“What is frightening for large companies, in particular, is the speed at which business models are expiring,” Osterwalder says. And although he is against “the dogma of speed,” he points out that “we move way too slowly in most organizations. Nowadays, business models inevitably expire like yogurt in the fridge.”
We can no longer rely on the conventional business plan that repositions the organization. We cannot luxuriate in the protracted process that moves in unhurried fashion from idea, to research, to exposition, to implementation. “If you continue to write business plans, you’re maximizing the risk of wasting your time and failing,” he warns.
But the problem with spending so much time on an idea is that we’re less likely to reject it. “We need to move away from a static approach where we refine our ideas too early,” he says. Plus, there is no such thing as the right business model, anyway. “There’s no recipe, there’s no algorithm that says, 'Do this business model and you’ll succeed.' But there is a right process to search for business models that work.”
Admittedly, rapid prototyping can be challenging, especially in large corporations that prefer linear processes. They are experts at execution, Osterwalder says, and those strengths should be preserved.
But he says that businesses today need a “dual culture” of execution and innovation —one group that executes, manages, and improves the current business model, and another group that tests better models: “You need people who prototype, experiment, and throw away ideas after brainstorming and rapid market testing. That’s what the other team does, the ones who create the future.”
Innovation should be a profession grounded in methodical processes that make business model creation predictable and accessible, according to Osterwalder. It shouldn’t have to depend on a sudden, brilliant spark that becomes the answer to everything. “Anyone who says, ‘I had this idea and put it into execution’ is usually a liar. Everybody likes to be the person who knew it right from the beginning.”
It’s true that some people are better at seeing the future, he acknowledges, but the reality is that every significant innovation comes from a series of trials, mistakes, and readjustments. Innovation does not spring spontaneously from the brains of creative geniuses. It does not arise organically from mystical regions.
“There is still this belief that the exciting new ideas come out of particular places like Silicon Valley,” he says. “The world is changing and business model innovation is happening anywhere.”
Osterwalder emphasizes that innovation tools cannot replace the very human qualities of creativity and risk-taking, but they allow us to systematize those things.
With the proper tools, business model innovation is no longer a fuzzy space. It is material for the maker, the new innovation professional who has a set of carefully crafted instruments laid out and ready for use.