The Invincible Company

Insights into
The Invincible Company
@AlexOsterwalder @YPigneur
#4
Resilient

Map your business,  
idea, or innovation
strategyzer.com
Gain Creators
Pain Relievers Pains
Gains
Products
& Services
Customer
Job(s)
The Value Proposition Canvas
Value Proposition Customer Segment
strategyzer.comThe makers of Business Model Generation and Strategyzer
Copyright Business Model Foundry AG
Map your product  
and service
TEST
BUSINESS
DESIGN
D
ecid
e
D
ecid
e
D
ecid
e
D
ecid
e
Ide
Assess
H
Experiment
rn
hypothesize
experiment
learn
ideate
business
prototype
assess
decide
Test and de-risk
business ideas
strategyzer.com/invincible
Written by
Alex Osterwalder
Yves Pigneur
Fred Etiemble
Alan Smith
Designed by
Chris White
Trish Papadakos
You’re holding a guide to the world’s best business models.
Use it to inspire your own portfolio of new ideas and reinventions.
Design a culture of innovation and transformation to become…
This book integrates with
Business Model Generation,
Value Proposition Design,
& Testing Business Ideas
International Bestsellers
40+ Languages
Series
The
Invincib e
Company
The Culture Map
Outcomes
Beta
Behaviours
Enablers/Blockers
copyright: Strategyzer AG & Dave Gray, 2015
The makers of Business Model Generation and Strategyzer
dave gray:
davegrayinfo.com strategyzer.com
A Change Management Tool
Designed by: Date: Iteration:Designed for:
Manage your BM portfolio &
create an innovation culture

1. Constantly Reinvent itself 
2. Compete on Superior  
Business Models 
3. Transcend  
Industry Boundaries
The Invincible Company

NEW TOOLS IN THE INVINCIBLE COMPANY
Culture MapPortfolio Map
EXPLOIT
EXPLORE
Death & Disruption Risk
Return
Exploit
rn
siness idea
mpany if it
uccessful.
Return
How lucrative a business area
is for the company.
Exploit
1 3
nnovation Risk
he risk that a (convincing)
usiness idea is going to fail.
isk is high when there is little
vidence beyond slides and
preadsheets to support the
uccess chances of an idea. Risk
ecreases with the amount of
vidence that supports the desir-
bility, feasibility, viability, and
daptability of a business idea.
The risk that a business is
going to die or get disrupted.
Risk is high when a business
is either emerging and still
vulnerable, or when a business
is under threat of disruption
from technology, competition,
regulatory changes, or other
trends. Risk decreases with the
moats protecting your business.
Business Model Patterns
different invent patterns
t new ventures and
anies can apply to build
etitive business models.
pattern so that you can
a reference library.
ration
o highlight a pattern
outline the company’s
del—just show how
ular pattern to build
e business model.
business model might
atterns.
Each pattern has two or
more different flavors.
These are variations of a
particular pattern to help
you understand different
ways to apply the pattern
in question.
Legen
– Gree
– Busin
Patte
– Case
Illust
– Patte
Build
– Optio
Build
– Origi
Mod
– Othe
Mod

1. Portfolio Management
2. Competing on Business Model Patterns
3. Establishing an Innovation Culture
AGENDA

High uncertainty Low uncertainty
THE EXPLORE/EXPLOIT CONTINUUM

D
ecide
Decide
Ide
idea business
SEARCH
GROW
High uncertainty Low uncertainty
AMBIDEXTROUS

Innovation Risk
ExpectedReturn
Return
-
-
+
+
Exploit Portfolio
Explore Portfolio
The Portfolio Map
SEARCH
GROW
SEARCH
(INVENT)
GROW
(IMPROVE)

The leading cloud
peripheral player [...]
A place where I could
be a big ﬁsh in a small
pond.
“
- Bracken Darrell, CEO of Logitech

Return
+
ExpectedReturn
Return
Exploit
Explore Innovation Risk
The risk that a (convincing)
business idea is going to fail.
Risk is high when there is little
evidence beyond slides and
spreadsheets to support the
Expected Return
How lucrative a business idea
could be for the company if it
turned out to be successful.
Death & Disruption Ris
going to die or get disrupte
Risk is high when a busines
vulnerable, or when a busin
from technology, competitio
regulatory changes, or othe
trends. Risk decreases with
Return
is for the company.
Return
Exploit
Innovation Risk
rea
-
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
The Business Model Canvas
Revenue Streams
Channels
Customer SegmentsValue PropositionsKey ActivitiesKey Partners
Key Resources
Cost Structure
Customer Relationships
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
MUSIC
$507M
+42%
VIDEO
$1’323B
SMART
$50M
-44%
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
MUSIC
$507M
+42%
VIDEO
$1’323B
SMART
$50M
-44%
CREATIVITY &
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
Revenue Streams
Channels
Key Resources
Cost Structure
GAMING
$648M
+32%
-10%
MUSIC
$507M
+42%
VIDEO
$1’323B
SMART
$50M
-44%
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
MUSIC
$507M
+42%
VIDEO
$1’323B
SMART
$50M
-44%
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
VIDEO
$1’323B
Revenue Streams
Channels
Key Resources
Cost Structure
SMART
$50M
-44%
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
SMART
+10%
GAMING
$648M
+32%
-10%
MUSIC
$507M
+42%
Revenue Streams
Channels
Key Resources
Cost Structure
VIDEO
$259M
SMART
$50M
-44%
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
MUSIC
$507M
+42%
VIDEO
$259M
SMART
$50M
-44%
CREATIVITY &
PRODUCTIVITY
$1’323B
+10%
GAMING
$648M
VIDEO
$259M
SMART
$50M
-44%
+10%
CREATIVITY &
PRODUCTIVITY
$1’323M
GAMING
$648M
VIDEO
$259M
SMART
$50M
-44%
+10%
CREATIVITY &
PRODUCTIVITY
$1’323M
GAMING
$648M
Revenue Streams
Channels
Key Resources
Cost Structure
CREATIVITY &
PRODUCTIVITY
$1’323M
Revenue Streams
Channels
Key Resources
Cost Structure
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
+42%
VIDEO
$1’323B
SMART
$50M
-44%
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
Revenue Streams
Channels
Key Resources
Cost Structure
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
MUSIC
$507M
+42%
VIDEO
$1’323B
SMART
$50M
-44%
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
MUSIC
$507M
+42%
VIDEO
$1’323B
SMART
$50M
-44%
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
MUSIC
$507M
SMART
$50M
-44%
Revenue Streams
Channels
Key Resources
Cost Structure
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
MUSIC
$507M
+42%
VIDEO
$1’323B
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
MUSIC
$507M
+42%
VIDEO
$1’323B
CREATIVITY &
Revenue Streams
Channels
Key Resources
Cost Structure
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
MUSIC
$507M
+42%
VIDEO
$1’323B
SMART
$50M
-44%
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
MUSIC
$507M
+42%
VIDEO
$1’323B
SMART
$50M
-44%
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
MUSIC
$507M
+42%
VIDEO
$1’323B
SMART
$50M
-44%
Revenue Streams
Channels
Key Resources
Cost Structure
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
MUSIC
$507M
+42%
VIDEO
$1’323B
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
MUSIC
$507M
+42%
VIDEO
$1’323B
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
MUSIC
$507M
Revenue Streams
Channels
Key Resources
Cost Structure
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
MUSIC
$507M
+42%
VIDEO
$1’323B
SMART
$50M
-44%
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
MUSIC
$507M
+42%
VIDEO
$1’323B
SMART
$50M
-44%
+10%
CREATIVITY &
PRODUCTIVITY
$1’323B
GAMING
$648M
+32%
-10%
MUSIC
$507M
SMART
$50M
-44%
Improve
A
B
Acquire
A
A
A
A
Divest

EXPLOIT
EXPLORE
SEARCH
Design / Test
nd
Process of
ign
Post-search
Evolve
The heart of Value Proposition Design is about applying
Tools to the m
essy Search for value propositions that
custom
ers want and then keeping them
aligned with what
custom
ers want in Post-search.
Value Proposition Design shows you how
to use the Value
Proposition Canvas to Design and Test great value propo-
sitions in an iterative search for what custom
ers want. Value
proposition design is a
never-ending process in which you
need to Evolve your value proposition(s) constantly to keep
it relevant to custom
ers.
Manage the m
essy and nonlinear
process of value proposition design and
reduce risk by system
atically applying
adequate tools and processes.
Progress
Desig
n Squig
gle
adapted
from
Dam
ien Newm
an, Central
STRATEGYZER.COM
/VPD
/INTRO
XIII
EXPLORE
Innovation Journey
ExpectedReturn
+
ExpectedReturn
Innovation Risk
Return
Exploit
Explore
1 3
Innovation Risk
success chances of an idea. Risk
decreases with the amount of
evidence that supports the desir-
ability, feasibility, viability, and
adaptability of a business idea.
Expected Return
Return
is for the company.
-
Innovation Risk
Return
Exploit
eturn
a business idea
he company if it
be successful.
Return
is for the company.
Innovation Risk

EXPLOIT
EXPLORE
12
1Design
Design the Team
p. 2 0 7
Shape the Idea
p. 2 0 7
TEST
DESIGN
Ideate
Prototype
Assess
Learn
D
ecide
Hypothesize
Experiment
Discovery
Increase Expected Return
Reduce Innovation Risk
Ideate
Prototype
Assess Hypothesize
ExperimentLearn
EXPLORE
Design and Test

EXPLORE
EXPLOITExpectedReturn
+
ExpectedReturn
Return
Exploit
Expected Return
moats protecting your business
Return
is for the company.
-
Return
Exploit
Innovation Risk
ness area
Innovation Risk
A
Ideate
A
B
Pivot
A
Retire
A
Persevere
Transfer
A A
EXPLORE
Actions

“Failure can be the beginning
of something beautiful
- Ayse Birsel Seck, designer & innovator

Question for You
 
How many $100k innovation
projects does it take to
produce a mega success?

EXPLORE
projects
+
ExpectedReturn
Return
Exploit
Expected Return
Return
is for the company.
-
Return
Exploit
Innovation Risk
ness area
Innovation Risk
250
66% failures
1 Mega
Success
Funnel
somewhat
successful33%
?
EXPLORE

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
STARTUPs

The Bosch Accelerator Program has allowed
Bosch to implement a fast, structured, and
capital-efﬁcient process for validating business
models at scale and has led to the establishment
of a Bosch-wide innovation portfolio
DR. UWE KIRSCHNER
VP Business Model Innovation, Bosch Management Consulting
“
Accelerator Program

EXPLOIT
EXPLORE
ExpectedReturn
+
ExpectedReturn
Return
Exploit
Expected Return
Return
is for the company.
-
Return
Exploit
Innovation Risk
ness area
Innovation Risk
Accelerator Program
PHASE 1
200 teams (3 months, €120’000)
PHASE 2
60 teams (€300’000)
70% fail
75% fail
15 businesses
EXPLORE
Bosch
You can’t pick the
winner without investing  
in the losers!!!

2
Competing on Business
Model Patterns

‣A repeatable conﬁguration of different
business model building blocks to strengthen
an organization’s overall business model
Business Model Pattern
particular pattern to help
you understand different
ways to apply the pattern
in question.
– Business Model
Pattern
– Case
Illustration
– Pattern
Building Blocks
– Optional Pattern
Building Blocks
– Original Business
Model Blocks
– Other Business
Model Blocks

Exploit
Pattern Libraries
Shift Patterns
Invent Patterns
Explore

+
ExpectedReturn
Return
Exploit
Expected Return
Return
is for the company.
-
Return
Exploit
Innovation Risk
ness area
Innovation Risk
Business  
Design
SEARCH
(INVENT)
INVENT
Explore Portfolio

Pattern
New Business Model
INVENT
Invent Patterns
Business Models Canvas

Backstage
Disruption
• Resource Castles
• Activity Differentiators
• Scalers
Proﬁt Formula
Disruption
• Revenue Differentiators
• Cost Differentiators
• Margin Masters
Frontstage
Disruption
• Market Explorers
• Channel Kings
• Gravity Creators
226
Shift Pattern Library
EPICENTERS
Invent Patterns
Library

Question for You
 
What do these three business models
have in common ?

They created a competitive
advantage with key resources
that are difﬁcult or impossible
for competitors to copy
Resource Castles

RESOURCE
COST
VP THAT
DEPENDS ON
PROTECTED
RESOURCE
HARD
TO COPY
RESOURCE
rce
s
etitive
th key
t are
possible TRIGGER QUESTION
Key Partners Key activities Value Proposition Customer SegmentCustomer
Relationship
Key Resources Channels
Cost Structure Revenue Streams
Resource  
Castles
Build
Moats

- James Dyson,  
inventor & founder of Dyson
“The key to success is
failure… Success is made
of 99 percent failure.

RESOURCE
COST
VP THAT
DEPENDS ON
PROTECTED
RESOURCE
HARD
TO COPY
RESOURCE
RESOURCE
COST
VP THAT
DEPENDS ON
PROTECTED
RESOURCE
HARD
TO COPY
RESOURCE
PREMIUM
CONSUMER
APPLIANCES
High-end
mass market
Research &
development
R&D
Costs
100 million machines as of 2017
Premium
Price
Intellectual
proprietary
& patents
$700 Vs $40
Resource  
Castles
IP Castle
Build
Moats
Key Partners Key activities Value Proposition Customer SegmentCustomer
Relationship
Key Resources Channels
Cost Structure Revenue Streams
6x
more
investment
in R&D than
competitors,
on average.³⁸
Dyson's R&D
Investment
Average Competitor
Investment

TRIGGER QUESTION
How could we make difficult-to-
copy resources a key pillar of our
business model?
ASSESSMENT QUESTION FOR LEADERS
Do we own key resources that are difficult
or impossible to copy and which give us a
significant competitive advantage?
Resource  
Castles
Build
Moats
RESOURCE
COST
VP THAT
DEPENDS ON
PROTECTED
RESOURCE
HARD
TO COPY
RESOURCE
Resource
Castles
Build
Moats
Build a competitive
advantage with key
resources that are
difficult or impossible
to copy by competitors.
TRIGGER QUESTION
How could we make difficult-to-copy resources a key pillar of our business model?
Our key resources are
significantly inferior to
Our key resources can’t easily be copied or
emulated for the next couple of years and
Assesment Question
Do we own key resources that are difficult or impossible to copy and which
give us a significant competitive advantage?
+3+2+20-1-2-3

Frontstage
Market Explorers: How large and
attractive is the untapped market
potential we are going after?
+10−1−2 +3+2−3
Channel Kings: Do we have large-
scale and, ideally, direct access to our
end-customer?
+10−1−2 +3+2−3
Gravity Creators: How easy or difficult
is it for our customers to leave or switch
to another company?
+10−1−2 +3+2−3
Backstage
Resource Castles: Do we own key
resources that are difficult or impossible
to copy and which give us a significant
competitive advantage?
+10−1−2 +3+2−3
Activity Differentiators: Do we create
significant value for customers because
we perform and configure activities in
disruptively innovative ways?
+10−1−2 +3+2−3
Scalers: How rapidly and how easily can
we grow our business model without sub-
stantial additional resources and activities
(e.g., building infrastructure, finding talent)?
+10−1−2 +3+2−3
Profit Formula
Revenue Differentiators: Do we use strong
revenue streams and pricing mechanisms to
monetize value creation for customers?
+10−1−2 +3+2−3
Cost Differentiators: Is our cost structure
conventional or disruptive?
+10−1−2 +3+2−3
Margin Monsters: Do we have strong
margins from low costs and high prices?
+10−1−2 +3+2−3
Assessment Questions for Leaders
Frontstage
+10−1−2 +3+2−3
end-customer?
+10−1−2 +3+2−3
to another company?
+10−1−2 +3+2−3
Backstage
+10−1−2 +3+2−3
+10−1−2 +3+2−3
+10−1−2 +3+2−3
Profit Formula
+10−1−2 +3+2−3
+10−1−2 +3+2−3
+10−1−2 +3+2−3
Frontstage
+10−1−2 +3+2−3
end-customer?
+10−1−2 +3+2−3
to another company?
+10−1−2 +3+2−3
Backstage
+10−1−2 +3+2−3
+10−1−2 +3+2−3
+10−1−2 +3+2−3
Profit Formula
+10−1−2 +3+2−3
+10−1−2 +3+2−3
+10−1−2 +3+2−3
Backstage
Disruption
Proﬁt Formula
Disruption
Frontstage
Disruption
attern Library
Value
Proposition Shifts
p. XXX From Product to
Recurring Service
p. XXX From Low-Tech to High-Tech
p. XXX From Sales to Platform
Frontstage
Driven Shifts
p. XXX From Niche Market
to Mass Market
p. XXX From B2B to B2(B2)C
p. XXX From Low Touch
to High Touch
Profit Formu
Driven Shifts
p. XXX From High C
p. XXX From Transa
to Recurring
p. XXX From Conve
to Contraria
Backstage
Driven Shifts
p. XXX From Dedicated Resources
to Multi-Usage Resources
p. XXX From Asset Heavy
to Asset Light
p. XXX From Closed to Open
(Innovation)
ASSESSMENT
Questions for Leaders

EXPLORE
Return
+
xpectedReturn
Return
Exploit
Expected Return
Death & Disruptio
The risk that a busines
going to die or get disr
Risk is high when a bu
is either emerging and
vulnerable, or when a
is under threat of disru
from technology, comp
Return
is for the company.
Return
Exploit
Innovation Risk
ess area
-
A
B
Improve
GROW
(IMPROVE)
IMPROVE
Exploit Portfolio

Shift Pattern
New Business Model
Original
Business Model
IMPROVE
Shift Patterns

226
Value
Proposition Sh
p. XXX From Product
Recurring Ser
p. XXX From Low-Tec
p. XXX From Sales to
Frontstage
Driven Shifts
p. XXX From Niche M
to Mass Mark
p. XXX From B2B to B
p. XXX From Low Tou
to High Touch
Backstage
Driven Shift
• From Dedicated to Multi-Usage
• From Asset Heavy to Asset Light
• From Closed to Open (innovation)
Proﬁt Formula Driven Shift
• From High Cost to Low Cost
• From Transactional to recurring revenue
• From Conventional to Contrarian
Frontstage
Driven Shift
• From Niche to Mass Market
• From B2B to B2(B2)C
• From Low to High Touch
Value Proposition Shift
• From Product to Service
• From Low-Tech to High-Tech
• From Sales to Platform
EPICENTERS

From Product
to Recurring Service
SALES
CHANNEL
PRODUCT-
RELATED COST
PRODUCT-
RELATED
ACTIVITIES
∗
PRODUCT
CUSTOMER
SEGMENT
SALES
PRODUCT-
RELATED
RESOURCES
Original product business model
Recurring service pattern
CUSTOMER
SEGMENT
Original product business model
CUSTOMER
SEGMENT
231
is the shift from manufacturing (and/or buying) and selling products toward providing a
recurring service. Selling products on a transactional basis requires a continuous effort for
every sale and it is often unpredictable. Recurring services require upfront customer acqui-
sition costs that lead to recurring revenues. Revenues become more predictable and grow
exponentially, because you build on top of a continuously growing base of customers.
predictable revenues by providing
a recurring service, rather than
selling a product?
Upfront acquisition costs per
customer might be higher,
but revenues become more
predictable and the lifetime
value of customers often
increases. Product and/or
technology innovation can
often provide the foundation
for new services.
EXAMPLE
HILTI
to Recurring Service
COST OF
SERVICE
SERVICE
DELIVERY
CHANNELS
GET CUSTOMER
TO USE SERVICE
UPFRONT
CUSTOMER
ACQUISITION
COST
RECURRING
REVENUE
CUSTOMER
SEGMENT
∗
SERVICE
SERVICE
PROVISIONING
SERVICE
RESOURCES
STRATEGIC REFLECTION
How might we grow recurring and predictable
revenues by providing a recurring service,
rather than selling a product?

[sources: Mark W. Johnson, photo: Hilti.com]
Illustration — HILTI
Hilti shifted from selling high quality tools
to selling tool ﬂeet management services

“The big beneﬁt of recurring service
revenues helped us to stabilize our
business during the ﬁnancial crisis,
a time when most contractors
wouldn’t purchase new equipment
- Christoph Loos, CEO of Hilti

From Product to Recurring Service
2000 2003
Sales
force
Customer
acquisition costs
Tool
manufacturing
& distribution
High
quality
tools
Builders
Transactional
Transactional
tool sales
1 From Product to Recurring
Service and Revenues
Managers of building companies have a lot
more to worry about than just buying tools.
Hilti recognizes that in 2000 and starts offering
to track, repair, replace, and upgrade the
whole tool fleet for their clients. This increases
their productivity by ensuring they always
have the right tools, properly maintained and
reliable at all times. Hilti allows customers to
lease the tools through a monthly subscription
rather than paying for them upfront – enabling
predictability of costs for building company
managers and recurring revenues for Hilti.
2 From Product-Related
Activities to Service
Provisioning
Hilti evolves its key activities
from its core of manufacturing
and sales to fleet manage-
ment activities that enable
tool tracking, repairing,
replacement, and upgrading.
3 From Sales Channel to
Service Delivery Channels
Hilti retrains its sales force to speak to execu-
tives rather than project managers, and about
logistics and efficiency rather than tools. It
adds new online service channels to the tradi-
tional sales channel, raising awareness about
the service, helping fleet customers access
their inventory online, and enabling them to
access Hilti easily in case of a problem with
their tools.
4 From a Product to a Service Cost Structure
Hilti’s cost structure adapts to this new service
orientation with new fleet management costs.
To date, this shift has added over CHF1 billion
worth of receivable volume to Hilti’s balance
sheet. Even customer acquisition costs (CAC)
increase, due to the longer sales and contract-
ing process with building company managers.
The CAC, however, is now a one-time cost,
leading to recurring revenues and opportuni-
ties for additional revenues with the long-term
relationship.
2
3
4
1
Service-focused
sales & marketing
Fleet
management Tool fleet
management
Construction
company
managers
Monthly
service
revenue
Fleet
management
infrastructure
Inventory
of tools
Online
Fleet
management
costs
Long-term
contracts
Sales
force
Customer
acquisition
costs
Tool manufacturing
& distribution
High
quality
tools
BuildersTransactional
Transactional
tool sales
From the original product model...
…to new recurring service model
From Product
to Recurring Services
SHIFT PATTERN

Illustration — Ørsted
Multiple Shift Patterns
From oil/gas/coal  
to green energy

- Henrik Poulsen, CEO of Ørsted
“We must dramatically accelerate
the transformation of the world's
energy systems from fossil fuels
to renewables to help protect our
planet for future generations
https://orsted.com/en/media/newsroom/news/2019/01/orsted-is-the-worlds-most-sustainable-energy-company

From Dedicated  
to Multi Usage Resource
From Transactional
to Recurring Revenues
Oil/gas/coal-
fired plant
operations
Government
CapEx
Oil/gas/coal-
fired plant
Commodity-based
pricing (variable)
Oil/gas/
coal-fired
plants
Oil/gas/
coal-based
energy
Sales force
Energy
distribution
Offshore
know-how
Energy
consumers
(residential
and
commercial)
Energy
distributors
Multiple Shift  
Patterns
Energy
distribution
CapEx
Salesforce
Reduced
cost due to
government
subsidies
Renewable
energy
(wind farms)
V alue-based
relationship
(sustainability) Energy
consumers
(residential and
commercial)
Energy
distributors
Offshore
know-how
Wind
farms
Wind farm
operations
Wind farm
production and
operations
Wind turbine
manufacturers
G overnment
Higher prices
(green energy
premium)Fixed pricing
for renewable
energy
From Low-Tech
to High-Tech
From oil/gas/coal  
to green energy

3
Establishing an
Innovation Culture

‣ﬁnd the right idea
‣execute the plan
‣check the results
‣avoid failure
‣predict the future  
based on the past
Innovation is complicated in companies
because they often believe that:

EXPLOIT
Death & Disruption Risk -
Return
+
EXPLORE
Innovation Risk -
ExpectedReturn
+
INVENT/IMPROVE
The Portfolio Map ‣ ﬁnd the right idea
‣ execute the plan
‣ check the results
‣ avoid failure
‣ predict the future  
based on the past
?

Your exploitation culture
cherishes the management,
systematic improvement, and
growth of existing business
Your exploration culture cultivates
the creation, discovery, validation,
and acceleration of new ideas that
are foreign to an organization
Cultivate Explore and Exploit
Under One Roof

“If you want to understand a
culture, you need to map it.
- Dave Gray, author and entrepreneur

The Culture Map
Outcomes
Beta
Behaviours
Enablers/Blockers
copyright: Strategyzer AG & Dave Gray, 2015
The makers of Business Model Generation and Strategyzer
dave gray:
davegrayinfo.com strategyzer.com
A Change Management Tool
Designed by: Date: Iteration:Designed for:
What enables and blocks
us from our goals?
What behaviors will
allow us to achieve
our desired outcomes?
What are our
desired outcomes?
DEFINITION
The Culture Map
policies, processes, reward systems, rituals, …

“Cultivate corporate
culture like a garden” What you want to “harvest”
from a garden (fruits)
Elements that allow a garden  
to ﬂourish (water, fertilizer)
The heart of your culture
The Culture Map
Outcomes
The concrete positive or negative
quences resulting from people’s
Behaviors
How do individual and teams ac
themselves within the company?
they do or say? How do they inte
What patterns do you notice?
Enablers/Blockers
The levers that lead to positive o
behaviors inside your company.
“If you want to understand
culture, you need to map it.”
DEFINITION
The Culture Map
Together with Dave Gray, Strategyzer developed
the Culture Map as a tool to design better-
performing companies. The Culture Map is a
practical, simple, and visual tool to understand,
design, test, and manage the corporate culture
you want to bring to fruition in your organization.
In this book we use the Culture Map to map
and design an innovation culture.

INNOVATION CULTURE
Designing an Exploration Culture

what kind of behavior does an
innovation culture require?
Outcomes
Behaviors
Enablers / Blockers
Team Behavior
eas based on evidence
ot their opinions or
. Risk and uncertainty
atically measured and
heap and quick experi-
ime and costs increase
ence and decreasing
accumulate skills over
nd learn and grow from
ct.
Culture Map: Innovation Culture Blockers
Leadership
Support
Organizational
Design
Innovation
Practice
Leaders provide
guidance for
innovation
Eagerness
to invent
and pioneer
Innovators
& executors
collaborate
Ideas cho-
sen based
on evidence
People grow inno
skills over sev-
eral projectsCEO spends 40%+
time on innovation
Innovation
funnel reviewed
every quarter
Start with
cheap
experiments
People choose
innovation as
a career path
Systematic
measurement
of risk reduction
Inno & growth
integral part of
strategy
Resilient to
change and
disruption
Company assets
leveraged for
future growth
New growth engines
Retention and
leverage of
innovation talent Reduced
innovation risk
Higher return
on R&D
Inno on agenda
of important
meetings
Nobody gets
fired for
experimenting
INNOVATION CULTURE
Behaviors
Eagerness
to invent
and pioneer
People choose
innovation as
a career path
Systematic
measurement
of risk reduction

what kind of behavior does an
innovation culture require?
which outcomes do we expect
from an innovation culture?
Outcomes
Behaviors
Enablers / Blockers
Team Behavior
eas based on evidence
ot their opinions or
. Risk and uncertainty
atically measured and
heap and quick experi-
ime and costs increase
ence and decreasing
accumulate skills over
nd learn and grow from
ct.
Leadership
Support
Organizational
Design
Innovation
Practice
Leaders provide
guidance for
innovation
Eagerness
to invent
and pioneer
Innovators
& executors
collaborate
Ideas cho-
sen based
on evidence
People grow inno
skills over sev-
time on innovation
Innovation
funnel reviewed
every quarter
Start with
cheap
experiments
People choose
innovation as
a career path
Systematic
measurement
of risk reduction
Inno & growth
integral part of
strategy
Resilient to
change and
disruption
Company assets
leveraged for
future growth
New growth engines
Retention and
leverage of
innovation talent Reduced
innovation risk
Higher return
on R&D
Inno on agenda
of important
meetings
Nobody gets
fired for
experimenting
INNOVATION CULTURE
Outcomes
Resilient to
change and
disruption
Retention and
leverage of
innovation talents Reduced
innovation risk

what blocks the development of
a Lean Startup culture today?
Outcomes
Behaviors
Enablers / Blockers
Practice
ession in itself, just like
or operations. You don’t
ight, but with experience
g a substantial team
heir sole job description
nization from develop-
novation practice. Just
r operations, innovation
sses, key performance
d culture.
Leaders provide
guidance for
innovation
Inno & growth
integral part of
strategy
Reduced
innovation risk
Company assets
leveraged for
future growth
New growth engines
Retention and
leverage of
innovation talent
Resilient to
change and
disruption
Higher return
on R&D
Eagerness
to invent
and pioneer
Innovators
& executors
collaborate
Ideas cho-
sen based
on evidence
Inno on agenda
of important
meetings
People grow inno
skills over sev-
time on innovation
Innovation
funnel reviewed
every quarter
Nobody gets
fired for
experimenting
Start with
cheap
experiments
People choose
innovation as
a career path
Systematic
measurement
of risk reduction
Locked
into current
business
model
Innovationis seen as a
black box
General fear
of failure
Innovation
lacks power
Rewards systemgeared toward
execution
Short-term/
quarterly focus
of leadership Lack of skills,
knowledge,
and experience
Lack of
innovation
strategy
Linear
processes
Execution
KPIs
Lack of access
to customers
The highest
paid person
selects ideas
Bureaucracy
slowing down
innovation
INNOVATION CULTURE
Blockers
X Short term/
Quarterly focus of
leadership
X Rewards systemgeared toward
execution
X Execution
KPIs

what enables the development
of an innovation culture?
INNOVATION CULTURE
Enablers
Outcomes
Behaviors
Enablers / Blockers
sign
Power: the status that
tion and teams working
within the organization.
e: the access that growth
s to resources and
business and the part-
ng businesses build with
entives: a dedicated
at differs from manage-
ns and is tailored
n around growth and
e
the application and
f-the art innovation con-
at are practiced across
ons.
ment: dedicated innova-
d metrics that measure
k and uncertainty from
usiness.
ent: the existence of
tion skills and experience
zation, from professional
o existing business units.
Resource
allocation
Portfolio
Management
Strategic
Guidance
Bridge
to the core
Rewards
and incentives
Legitimacy
and power
Skills
development
Process
management
Innovation
tools
Organizational 
Design
Leadership 
Support
Innovation 
Practice
Bridge
to the core
Legitimacy
and power

INNOVATION CULTURE
Leadership Support
Resource
allocation
Portfolio
management
Strategic
guidance
Strategic Guidance
Resource Allocation
Portfolio Management

INNOVATION CULTURE
Organizational Design
Legitimacy and Power
Bridge to the Core
Rewards and Incentives
Bridge
to the core
Rewards
and incentives
Legitimacy
and power

Question for You
 
How much time does your CEO personally
spend on innovation every week ?

0-10%67%
10-25%16%
25-50%10%
> 50%7%
How much time does your CEO personally spend on innovation every week ?
Is it possible to have ambidextrous CEOs ?

Legitimacy, Power  
and Bridge to the Core
EXPLOITEXPLORE
ORGANIZATIONAL DESIGN
Org Chart
Chief Entrepreneur CEO

INNOVATION CULTURE
Innovation Practice
Innovation Tools
Process Management
Skills Development
Skills
development
Process
management
Innovation
tools

Portfolio  
Guidance
Innovation Tools
Corporate  
Identity  
Triangle
Portfolio  
Map
Culture  
Map
Innovation Metrics Test Card Learning Card
Learning CardTest Card
Business Environment Map
Business Model Canvas
Value Proposition Canvas

SCORING
Innovation Culture Readiness

BEGINNER
We have little
to no experience
with this topic
We have
some
experience
INTERMEDIATE
We regularly
work this way,
but not systematically
We
frequently
work this
way
WORLD CLASS
Our practice is
used as a case study
for others to learn from
Leadership
Support
Strategic
Guidance Leadership does not provide
explicit strategic guidance for innovation
There is some strategic guidance for innovation but
not everybody in the company knows it
Leadership provides strategic innovation guidance
at important meetings and everybody knows it
Resource
Allocation Resources for innovation are
bootstrapped or on an ad-hoc project basis
Resources for innovation are available, but they are
not substantial and not protected
Resources for innovation are institutionalized and
leaders commit at least 50% of their time to innovation
Portfolio
Management Leadership is
mainly focused on
improving the core business
We make some investments to
explore the future and new business models,
but it's not systematic
Leadership is eager to pioneer and invests in a
large innovation pipeline of small bets of which the
best get follow-up investments
Organizational
Design
Legitimacy
and Power Innovation projects are skunk work
and outside official channels
Innovation is officially in the org chart,
but lacks power and influence
Innovation is at the very top of the org chart
and has power and influence
Bridge to
the Core Innovation teams have limited or no access to cus-
tomers, resources, and skills of the core business
The core business and innovation teams
collaborate, but there are conflicts
There are clear policies that help innovation teams
and the core business collaborate as equal partners
Rewards
and
Incentives Innovation does not have a dedicated incentive
system that differs from the core business
We have some incentives in place to encourage
innovation and reward it differently from execution
Innovation has a dedicated incentive system that
rewards experimentation and new value creation
Innovation
Practice
Innovation
Tools We do not use business model, lean startup,
or design thinking tools for innovation
Business model, lean startup, or design thinking
tools are used in pockets of the organization
Business model, lean startup, or design thinking
tools are widely adopted and mastered
Process
Management Our processes are linear and
requiredetailed business plans with
financial projections
We occasionally use iterative processes
and systematic business experiments
to test business ideas
Our processes are optimized for innovation
and we systematically measure the reduction
of risk in new ideas
Innovation
Skills We don’t hire for innovation skills and experience
and don’t develop them
We occasionally hire experienced innovation talent
and train some specialized staff in innovation
We hire and develop world class innovation talent
with extensive experience across the organization
1
1
1
1
1
1
1
1
1
3
3
3
3
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3
3
3
3
5
5
5
5
5
5
5
5
5
2
2
2
2
2
2
2
2
2
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4
4
4
4
4
4
4
4
ASSESSMENT
Innovation Culture Readiness

The Invincible Company

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