As the world changes, new business models are needed. Sometimes this is because companies must provide additional or better value to the customer, or because new competitors have more efficient business models..

Alex Osterwalder says the innovation process is never lean. It's about experimentation, including new business processes and procedures. Understanding this difference is the key challenge for large companies as they embark on innovating their business models.

Transcript

A lot of the things that are possible today require very different processes, very different ways of working. You can do things today that you couldn’t do five years or maybe a decade ago. And in large organizations, you know you tried to make standardized industrialized processes. And that’s very good, you know what they are supposed to be rigid to a certain point because you know what works. You want to make that leaner, faster, better and cut the cost out of it.

The problem is, when the world changes and new choices become possible you might to think of creating totally new processes. To create new types of value propositions. And change doesn’t come easily to anybody, right. So the difficulty is, in addition to this execution engine that you built – which is very good, you need to be lean and cut costs to produce efficiently.

In addition to that you need to open up and say okay, well some things are new, some things are different what if we experimented in that space and experimentation is never lean. Experimentation always requires a culture where you can fail, where failure is a good thing to do because you are going to learn and you’re going to change.

So again, it comes back to these two different cultures, that’s why it’s so hard because when you do new things to experiment and when you create new processes it might be very different to what you’ve done before and those processes are in process hand books, right. Those are almost cast in stone.

A lot of the things that are possible today require very different processes, very different ways of working. You can do things today that you couldn’t do five years or maybe a decade ago. And in large organizations, you know you tried to make standardized industrialized processes. And that’s very good, you know what they are supposed to be rigid to a certain point because you know what works. You want to make that leaner, faster, better and cut the cost out of it.

The problem is, when the world changes and new choices become possible you might to think of creating totally new processes. To create new types of value propositions. And change doesn’t come easily to anybody, right. So the difficulty is, in addition to this execution engine that you built – which is very good, you need to be lean and cut costs to produce efficiently.

In addition to that you need to open up and say okay, well some things are new, some things are different what if we experimented in that space and experimentation is never lean. Experimentation always requires a culture where you can fail, where failure is a good thing to do because you are going to learn and you’re going to change.

So again, it comes back to these two different cultures, that’s why it’s so hard because when you do new things to experiment and when you create new processes it might be very different to what you’ve done before and those processes are in process hand books, right. Those are almost cast in stone.