Alex Osterwalder: Coaching & Leadership in Remote Companies

Alex discusses his journey from author and expert on business models to being CEO and Founder of Strategyzer, the product business that he has built from his mountain retreat in Switzerland. He discusses how he manages and leads a fully remote team spread across 12 countries, how some of his biggest breakthroughs as an entrepreneur have come from being coached, how coaching has helped him to resolve team conflict and why at the heart of the business is a commitment to transparency that allows everyone to be part of the journey.

Being Alex, you should expect to interact and be challenged in an interactive session.

Slides

Transcript

Alex Osterwalder 

Thanks, Mark for having me. It’s it. I’ve done a couple of I looked back then a couple of presentations, right at Business of Software. And of course, all a lot of it was really, you know, not from the practitioner leadership perspective, but from the practitioner Doer perspective, how do you create value propositions, how he prayed culture? How do you manage this or that, today, I’m going to do something, you know, almost embarrassing, definitely humbling, to show you, kind of usually the end result, but it’s the end result of how I became a CEO. You know, it’s not just the title, it’s, you have to become a CEO. So you can have the title for free everybody, the CEO these days. But today, you know, it’s really, it’s a journey of a tonne of mistakes, and also give you some data that will show you you know, born a CEO, I never thought I’d be a CEO, right. And actually, I became an accidental CEO to certain extent, but I’m going to show you the journey and the key things that those of you who are, are CEOs or becoming CEOs of your company, in particular software company, you know, what you can learn, so you don’t have to do the same silly things I did, over the course of a decade. So I call this I changed the title a little bit, and I call it my CEO, apprenticeship. Because there’s a lot of theory and stuff there that you should learn. So you’re not born as CEO. It’s something you can learn like becoming a medical doctor. But of course, like in an apprenticeship and like becoming a doctor, there’s the practice, right? So it’s, it’s a back and forth. And I’m going to talk about this, get where we arrived today. And where I arrived today is the result of many, many mistakes on my own money. Because we haven’t been venture backed, backed, we did some debt financing, and now we’re most moving towards equity financing. But I made the mistakes on my own wallet, right? And some of the I guarantee you very expensive, very expensive. Okay, so now, the starting point I want to take is how entrepreneurship and leadership is often portrayed in popular culture, in particular, when it comes to software or platforms, right, like the kind of Silicon Valley wave, you know, there’s, there’s something there that I think what’s really fun at Business of Software, we don’t use that image. But it still pushes us and it did, I’ll take myself, you know, can I always wait there a little bit, I felt like as I’m a fraud, I’m running a business, you know, with with, with close to 50 people and a coaching network around the world. And I felt like I didn’t achieve shit, right? Like, I’m not worth a billion dollars, and I don’t employ you know, 3000 people. But that’s not what it’s about. And it shouldn’t matter. But there’s always this looming pressure. I’ll give a silly one as an example. Right? Everybody put this gentleman here really nice guy if you want the criminal, probably but a nice guy, you know, sandbank been freed on the cover of magazines. The next Warren Buffett, you know, the what’s the other thing, they’re the only, you know, only Zuckerberg has been as rich this young 29. So there’s this glorification of one image that doesn’t really correspond to the reality of entrepreneurship. And we need to constantly remind ourselves, this is not true. And this obviously is a very extreme case. They’re successful billion dollar software companies and scale ups. But there’s a lot of this that puts a pressure on the real world, the real world is not the few unicorns that exist. The real world is yes, there’s small, there’s medium and there’s unicorns and there’s no value judgement in any of this. But let’s not forget building a business with 5500 people. That is extremely hard and extremely good. If you achieve that and succeed with that we shouldn’t never neglect that and say, oh, yeah, you know, 1050 100 people as a lifestyle business, it’s still hard to achieve if you really create value. But the crazier thing here is that if you take these cases, because there was so much fear of missing out, that the investors didn’t do their due diligence, and here, I can tell you, it’s criminal neglect. So even if maybe, you know, our friend here, that didn’t have a criminal intent, it’s definitely a complete failure as a CEO, as a founder, because the job of the founder is not just to raise money, it’s actually to run a company, create value for customers create value for the business, great value for the stakeholders, which is the team and the shareholders, but then also, hopefully create value for society. So that’s what I’m going to talk about. And, Mark, if you see comments coming up in the chat window, don’t hesitate to interrupt, right. But you can’t become a great CEO or founder with life hacks, it doesn’t exist, it’s hard work. And a lot of it is experience. So we looked at the cliche image in pop culture, and again, I have nothing against unicorns. But I think we should not, you know, succumb to the pop culture image that this may create. So what I want to do now with all of us here, and it’s not gonna work for those on YouTube in the live stream, I want you to participate in a quick mentee quiz. And there’s a winner right? Quiz is not just questions, you can win something. So my suggestion is, you win, you know, a couple of strategies or books from our series. Or alternatively, just ask me three questions that personally take the time to answer them for you and for you only the person who wins Okay, so typing the mentee code, or use the, the, the, the visual code there that you’ve seen, I’m going to switch and see if I can make this happen more or less elegantly, to the web. So we can actually play together. Okay, here we go. The CEO apprenticeship. mini quiz. There are four questions now and three questions later. So two rounds, you can win the first round. But what really matters is who’s the winner at the end? Okay. Let’s see. Ready? Okay, we got a couple of players here. So we’re going to start together? If the web does want to work with us, okay, somehow. It’s always then when the web fails? Nah, we got it. We got some players. Okay. Let’s go. So we got eight questions, overall, two times for first question.

Average age of entrepreneurs in tech, VC backed and patent owning firms. Which What do you think is the average age 2133 4351? Or 81? What’s the average age of tech entrepreneurs, or software entrepreneurs, we tweet very anything scalable is in this data set. Okay, so great. A lot of people have had a lot of here, they know the data. That’s great. Okay, so this is the average. So it’s not the young, you know, university dropout. And it’s even more extreme. If we go to biotech, right, the agent goes even higher up. But what we’re interested in now is who’s successful, we just looked at the average age, what we really want to know now is who was actually successful. So we’re gonna look at the average age of the top 0.1 most successful entrepreneurs as to Team growth over five years, right? So we’re not talking revenues, we’re not talking how much money they raised team growth. So is it 2736 4550 to 78? Let’s see. Okay, so many of you say 52 is actually 45. So it’s a bit older than the average age. So, you know, for some of us there, I’m 48 should succeed, pretty comforting, doesn’t mean you can’t succeed if you’re younger, but it’s not it’s outside of the norm. And if you look at that data set, this actually comes from some research, I’m gonna send you out all the slides after you have the data in the slides. Under 25. founders do well, extremely rarely, okay. That doesn’t mean you can’t succeed, but it’s not likely that you’re going to succeed at scale, after 25 is actually a sharp increase in performance. So it’s not so often that the younger ones really succeed. Well guess why? Because there’s an experience component and becoming a great founder and leader and CEO. And then after 35, the probability of six SAS increases, right? So I take this from some of the research that you’ll find the link in, in, in, in the slides. And then there’s another surge in performance, you know, when you get to 4546. Pretty amazing. It’s completely counter to the pop culture. And that’s what I want to emphasise here. Third question, let’s go for it. Slightly different. Now we’re going to we are going to look at unicorns. So how many unicorn founders have directly relevant work experience in the industry? That they’re disrupting? So we’re looking at, you know, software, VC backed founders, also biotech? How much industry experience, do you think they have 2020 20% of them, 30% of them, 40% of them, okay, crass bit of a mix, it’s actually only 40% have experience in their industry. And here’s maybe the thing that it’s actually, it’s actually about the experience as a leader, as a CEO, as a founder more than the industry experience. So if we look at the data set here, I took it from Super founders, a book by Ollie Thomasnet, who’s a VC who looked at the most successful entrepreneurs in terms of now, unicorns, and I hope he took some of those frauds out of the data set. But those are still the exceptions, right? So if you look at it, the relevant industry experience does not matter. And it matters even less for the senior leadership team. This was actually a big surprise for me, but not entirely surprising, because it’s actually more the experience as a leader than the industry experience that makes the difference. So last questions for this first round. And we’re gonna get to work and look at some slides. Question four. So now, slightly different framing, how many unicorn founders are repeat entrepreneurs? How many are repeat entrepreneurs? And not saying successful repeat entrepreneurs? You know, maybe a failure? Is it 20% 30% 40% 50% 60% 70%? How many are repeat entrepreneurs?

Some say 20%. Right? It’s actually 60%. And this includes, you know, also failures, because guess what you learn as a leader from failure and success. And it makes a real difference. So the data set here is very clear. Almost 60% are repeat entrepreneurs of those who go on to become what we call super founders who have success at a very large scale. And don’t get me wrong, I’m not saying that’s, that’s, you know, our target necessarily, it’s absolutely fine to build a company, that’s not a unicorn, but the data will still apply, right? It’s all about the experience. Now, the other data set here is like, how many how many years have they spent as founders or CEOs before? So it’s generally two to three years. So it’s not a crazy amount of time. But some of them, you know, we’re entrepreneurs for 20 plus years, in, you know, two or several companies. So experience does matter, and learning and improving matters. So if you’re getting things wrong, well guess what most actually do, because they have no clue what they’re doing. And Mark grey, that’s one of the found that was one of the founding drivers of Business of Software, is to help software entrepreneurs, right, become better leaders. And I think we just need to remind ourselves that all the time. Now, how many of the repeat founders had at least one successful funding founding experience? It definitely here I’m in the way, it’s actually 70%. So success does matter. So it’s not just about learning about failures, success does matter. That repeat, you know, success doesn’t mean necessarily unicorn before, but smaller success and exit maybe at 10 million or 50 million or something that really created real value in real revenue. Okay. So I wanted to go into this, because I want to kill this pop culture image of you know, it’s your mate, winning entrepreneur and CEO, and you have you get to do that at a young age. So we have venture who is leading at the moment, whoever venture is, it’s not done yet. You’re not the winner. You’re the leader. He’s gonna form more questions a bit later on. Okay. So good start. Right. And, and, you know, Mike, you said, I’m gonna make it interactive. So I felt a little bit pressure there to actually make it interactive. So we are going to continue with our little game bit later on. So first thing here, you actually get better over time. That’s really important. You actually get 1.8 times better like it’s your 1.8 seems more likely to to achieve, you know, growth than a 30. Sometimes something founders, so I’m gonna send you the slides with the work here from this was this was one article published in knowledge at Wharton. So really interesting. And I do recommend having a look at the book, super founders because he looked at a large data set, and gives us some hints. Because for me, personally, now I’m gonna get into my journey. I learned a tonne a by reading some of this and of course, by doing things, and I’m gonna go into three main things that I want to give you from my learning journey that made a huge difference. And I’m slow. I’m Swiss, you know, it took me a lot of time, it took me a decade. And I learned on my own dime. So it’s not that I created three kind of more scalable startups, I did it on my own dime. But I’m super proud of that also, because we survived, right. And we’re, we’re a slow scaling company. So coaching is the first one was essential in my journey to become the person and leader I am. The second one is company culture, I’m going to show you how that is essential. And I did give a talk on culture a while ago, but not from the leader perspective and doer, leader Doer perspective. And at the end, I’m also going to talk about this journey of running a business and exploring the future, because we always had a bit of software, but because we didn’t distinguish clearly between, we are a scalable consultancy with productized services that run on technology. And we’re shifting towards a pure platform technology company, because we didn’t make that explicit in our, in our culture. And in our corporate structure in and our actions, we didn’t actually do as well as we could have. And we could have done it faster. So now we’re here, good time doesn’t matter, ultimately, as long as you get there. First one coaching. This, for me, is the number one thing that I see too few leaders do. So my two best hires in my entire career was number one, a personal assistant. So if you’re a leader, a founder, as fast as possible, there’s certain tasks you should not do. It’s not about not being humble. But you know, you booking your trips, and you’re managing your calendar is probably not where you’re going to create most value. So personal assistant number one, and number two, a coach a leadership and breakthrough coach who kicks your ass 24/7 is super important. And when I’m saying coaching, I’m not talking about more technical mentoring. So I was extremely fortunate to have two brilliant mentors, is where you want to draw the line, which is more technical. So with Eve, we created content around books, I really learned about making things simple and clear. And training people in a very, you know, interesting way. And with Steve Blank, I had a mentor around the technical aspects of entrepreneurship. So Steve is obviously known for you know, having started this whole lean startup movement, but he’s an experienced entrepreneur who’s done it several times. And I had, I was extremely fortunate to hear from him some of the technical aspects around, you know, percentages of ownership founding team. And so I’m not talking about that when I’m talking about coaching. I’m talking about something else, which is leadership and breakthrough coaching, helping you become a better leader, and breaking through your own barriers. And I kind of stumbled upon this, when I was longtime is almost two decades ago in Chiang Mai, in Thailand, northern Thailand. And I was the number two in a scalable, not for profit organisation called The constellation. And we were bringing knowledge management from the corporate world, to the health sector, mainly in HIV AIDS and malaria and then way beyond. And Carl Samuels who retired in Chiang Mai is a California and who built the coaching organisation scaled it, sold it and then retired in Chiang Mai. I had the opportunity to be coached by him and that’s where I tasted is like an older for that. I tasted what coaching is, I was number two then and it’s really hard to be a number two when you’re working under a visionary founder and I learned a tonne. Then when I left and went into the corporate world, I didn’t think about coaching for awhile. But then I said, Well, if I really want to grow, and I want to Widmark Saturday, I want to build a company, a software company, whatever company, I need to coach I need what I had back then in Chiangmai, so you know silly as I am, I said If I want the best on the planet, right, and I was inspired by Steve Jobs video where he says, Life is too short only work with the best. So I researched who’s the best and I figured out the number one leadership coach on the planet is Marshall Goldsmith, so arrogant, you know, as I am or naive, probably not arrogant. And I thought, how can I work with martial? And you know, Business of Software has another friend with Rita McGrath, right? He’s been talking quite a few times. She knows martial really well. So I asked Rita, who’s a good friend, hey, can you introduce me to martial I want to be coached, right? I want to just see. And you know what, funny enough. You picked up the phone, right? He picked up the call. And we talked and he said, Well, Alex, you know, I only this is Marshall coaches, the world’s biggest leaders, right? The head of the World Bank, you know, Alan Mulally turned around Ford. And he said, You know, I can’t coach you, but I’m doing this thing. I’m doing the Marshall Goldsmith. 100 actually, back then it was called Marshall Goldsmith. 15, where I’m gonna give all my knowledge away 15 people can join me and be coached as a group. So I said, and that was the first he said are you in I said, Of course I’m in. All I needed to do is fly to Arizona. And we had a workshop with Marshall and Alan Mulally, who turned around Ford from a $17 billion loss making company without government funding, you know, to become a profitable company. So wow, they got extremely lucky. So you got to be lucky. But at the end of the day, it wasn’t that that was, you know, going to going to work for me as personal coaching. So I went back to somebody I’ve known for a while, but haven’t been in touch with Shani Ospina, who became my breakthrough coach, who I would work with on an either monthly or bi weekly basis, sometimes quarterly basis, depending on the needs over the last five years. So I believe coaching is essential for anybody to become a great leader. And what I mean is, again, not just the traditional leadership coaching, oops, sorry for the typo. But that also, but then really the breakthrough aspect. So first, I’m going to show you the more traditional stuff. And I’m going to show you a video with Marshall, which is one of the lessons that I also had to learn really, really hard, really hard. And I’m sure many of you do exactly this with great intentions. But you shouldn’t if you’re trying to build a company that is well managed. So let’s listen just couple at one minute, I think to Marshall, talking about this topic of adding too much value. So thumbs up if you can hear the sound.

One of my good coaching clients retired several years ago was named JP Gornja. JP was the CEO of very large drug company GlaxoSmithKline. I asked JP, what did you learn about leadership as the CEO of this huge company, he said, I learned very hard lesson. He said my suggestions become orders. He said if they’re smart, they’re orders, if they’re stupid, their orders, if I want them to be orders, they are orders and if I don’t want them to be orders, their orders anyway.

So this really small, silly thing is something you’ll get coached to become a better leader is if you suggest what teams should do product teams, marketing teams, sales teams, you’re playing a dangerous game, because you might take away their ownership. They’re gonna listen to what you suggested without having context without understanding all the details and they become orders. With all the good intention that happens really fast. So becoming more of a coach to your own team, orchestrating the things is essential. Those are things this is one example of what coaches will push you to do to become a better leader. So for some of you, this is obvious. But for most of us, it’s not that obvious. In particular, if we look at when we’re doing it, right, so Marsha likes to say this is common sense, but not common practice. And I can guarantee you a good coach will hammer common practice into you, so that you become better leader, but when I’m talking about is really more of a breakthrough coaching. So we’re there with what I just showed you a bit more on the technical side. So becoming a better leader from a person perspective. And then we think, Well, isn’t coaching, you know, don’t I just need coaching if I’m broken, and, you know, generally we say, Okay, I have a leader here, you know, in sales and marketing, not performing very well needs coaching. I think that is a silly perspective, that’s actually wrong. So you need that. But guess what, the best people should get most of the attention. That means yourself as the CEO and founder and or founder and your leadership team that performs really well because doesn’t mean because they’re good They don’t need the coaching to become even better. And sometimes it’s becoming better actually just being also more relaxed and creating a better work life balance the right way. So I love quoting. And I learned a baton here, a philosopher who tries to make concepts simple. And I took something here, quote that he takes from relationships. So he says, We’re not pure, kind, loving beings in relationships, but actually, he goes into generally, teams etc. and institutions were deeply dangerous, and most of us are on the edge of insanity. This is not an exception. It’s just what it means to be human. All of us are just holding it together in particular CEOs, I can guarantee you and in particular, first time CEOs, we’re dangerous to be around, we have all sorts of impulses, feelings, desires, which make us great trouble to be around. And he says in this in that in the context of relationships, the only people we can think of as normal, are people we’ve just met, once we’ve meet them a little bit more, we all of a sudden realise that they’re not normal. Now, this is very extreme, right? And he likes to put it that extreme way. But if we’re honest, in particular, first time CEOs are people who haven’t been doing this for two, three decades, are we all a little broken, when it comes to these topics, you know, we’re not good listeners, we get anxious too quickly, when we want to add too much value, we neglect certain things, or we have challenges in our personal relationships that kind of swept over to work or work swept over to personal relationships, like there is no sane human being who doesn’t have some challenges. And I’ll push that a little bit. And say, we all all have ample room to grow as people and ultimately as leaders. So the question is not, Oh, we’ve been good. We’ve made it so far. Because that’s, you know, Marshall talks about, you know, what got me here won’t get what got us here won’t get you there. What could we be is the question. So it’s not because you were successful as a very aggressive leader, that was, you know, punching performance into your team, that you couldn’t be a better leader that creates a better culture. Because I can guarantee you there’s certain types of cultures that are just very toxic, they might have led you to success for a while, but they that won’t last. So everybody, everybody has something to improve to create better organisations by becoming a better leader. So the other thing I really want to emphasise is this very artificial boundary between work and home where one person right you can’t come, compartmentalise. So if you’re impatient, you’re impatient at work, you’re impatient at home, you’re impatient with your partner with your kids, if you have some, right, it’s the same thing. So what you want to work on is that underlying, you know, fundamental human being. So that sounds very fluffy. But I’ll show you it’s actually very concrete with a couple of examples. So at strategize er, we made this choice because I benefited so much not just as a professional, but as a person in my relationship with my, with my children and my partner at strategize er, everybody, everybody, not just the CEO, not just the leader, team, do you leadership team gets a $2,500 budget for coaching. And we do extend in colour growth budget, so they can apply, you know, spending on other stuff. But our desire is mostly coaching, to work on professional personal challenges, because for us, it’s okay, if somebody has relationship problems, guess what’s going to have an impact on their performance. If they solve that they’re going to be better performance. So I don’t care what people work on when they get coaching, it’s going to make a fundamental difference in terms of performance. This is a budget we protect, even in the most dire moments, we had moments where we had to cut budget, this budget was always severely protected as much as we could. Snow. That’s kind of context. Let me give you a very concrete example for myself, is going to be a little bit conceptual in the sense of how we frame it was basically just one challenge I had and by what I started to learn is by working on one issue, I become emotionally much more literate I call is emotional literacy. Actually, my coach Shani causes emotional emotional literacy, which turned me into a much better leader. So I’m going to go through this scale that she created. And I actually forced it upon her since I love concepts. I kind of took her ideas, turn it into a concept, and then put it out there. So she would be forced to actually improve it. So with her permission, we’re going to call this a better version.

But then actually, you know, is really working well for myself and those people who apply it. So we’re gonna look at the emotional literacy scale because I think quite a few CEOs and leaders I meet they think they’re terrible behaviour is actually good. And because that terrible behaviour got them to a certain point, it will get them to the next point. It’s not because you’ve been really aggressive in the way you’ve, you know, you create a performance with 10 people that that same system is going to work with 50 people or 100 people or 500 people. So the first level levels zero on the emotional literacy scale is you don’t acknowledge your emotions, right? No, no, or you say emotions don’t have anything to do in the workplace. That is the craziest thing on earth, because we’re human beings, right? So how can you show up without being a human being everybody has emotions, and emotions will impact our performance, collaboration, performance, the culture, etc. So that’s zero right? Now, first level, level one and two, is I observe my emotions, and I recognise when I’m in their grip, and I leave it I’m in their grip. I know emotions are driving me, not my cool and my thinking, etc. So I’ll give you a very concrete example. So in the relationship with my former co founder, I bought him out this year, and I’m 100%, owner of strategize er, I started to get pen sometimes, because he asked certain questions about the strategic direction that I thought we aligned on, like, we had, you know, alignment meeting, and he could come back and ask these questions. So I got tense, and I wasn’t quite sure why. But I started to realise, Tim, I’m getting tense. It wasn’t just why the heck are you asking? But I realised I was getting tense. So but that’s not very good yet because it’s still provokes, I mean, their grip, and then I might react, you know, angrily or just not patiently? Not good, right? So that next level is you accept that behaved that that emotion, you label it, okay. And you start to kind of get a little bit of grip on the emotion, it’s not the emotion that has a grip on you. So question is, then oh, do I feel like he still doesn’t trust the strategy my co founder? Or does he miss trust my judgement and my insights? So I’m starting to label the feeling okay. You said trust is I’m I’m not feeling mistrust. Am I feeling something’s wrong? They’re right. In my not just you know, what’s happening, but in my emotional state. So then the next level level six, and we’re doing jumps up to, I’m now going to explore which beliefs underlie my emotional reaction? And is it the beliefs I need to look at? Because you can’t just change your emotions like like this, but generally, it’s your beliefs that drive emotions. So what is it actually here? It’s the belief that could be right. He’s not aligned. And he’s trying to find arguments against our strategy. So all of a sudden, I start to understand, hmm, I have a belief, there are at least a doubt. So it’s not the emotion. That’s the challenge. It’s my underlying belief. And all of this kind of comes out of a coaching session, not on Oh, I’m going to make you know, motion more better on emotions. No, when you get coached, you’re working on very specific issues, like the tension with your co founder or with your management team. So you work on that, and you grade it go up in the scale, you don’t work on the scale, you work on the challenge, but ultimately, you’ll get better at the scale. So then the next one is, okay, do I have to shift my beliefs so that I can really start to choose my emotions, because it’s the beliefs that were wrong, the emotions are just an outcome of that belief. So you know, what, I need to challenge myself. And I think, you know, his intent is truly to understand what each piece of the evidence and insights actually means he’s trying to align. But he’s not fully there. So the belief, my belief, or my doubt, was wrong. So the tension comes from the fact that I don’t know either, I’m not sure. So anything that I’m you know, it reinforces the me not being sure contributes to this tension. So you work on these kinds of challenges, and you mature in your emotional literacy, and then you get to this next scale. Okay, wow. Now, I actually need to listen to my co founder carefully, and try to help him follows and this is from the past couple of years ago, since we’re now not working together anymore. Help him follow my reasoning, we will grow stronger. So do you see how at the zero level or at the two level, you’re in the grip of your emotions, you’re gonna get tense, you’re gonna get maybe angry, you’re gonna react the wrong way, you’ve solved nothing. But if you start to understand your emotion, and you start to understand the, the belief that’s driving your emotion, you can work on that belief. And all of a sudden, you see Art to become emotionally more literate. So what happened to me specifically is dozens of situations like this, that I worked on with my coach, but not to analyse, you know, psychotherapy note to get towards solutions. The coach would ask, Are you sure it’s not your underlying belief? Or what is that belief that’s driving you to react like that. And ultimately, over time, you know, you change completely, how you emotionally react to these kinds of things. So today, and I’m kind of happy, right? Because I can say, I think I became, you know, a different person. But that’s my opinion. At the end of the day, it’s when the people I work with say that, and you know, we just had an off site. Last year together, we always bring everybody from the entire world into one place. We were in Portugal and Pharrell, and you know, people who were with a team for London is, Alex, you’re not the same person, that oh, I’m happy to hear that, because I did work like a crazy person, on myself. So the coach can help you point these things out. And then as a leader, you need to work on that change. So for me, this has been huge in terms of becoming a completely different leader. So again, you’re not going to work on where are you at the emotional literacy scale, but you’re going to work on the challenges you have, with the way you react emotionally. It could also be something else than anger, it can be, you know, apathy, oh, this is not working. That’s okay. That’s a challenge as well, because as a leader, you’re supposed to act. So I’m giving you my example. I’m pretty sure all of us here have our own challenges to deal with when it comes to motion. And, you know, I have a peer group of founders, very successful, some of them, you know, working with 3000 people, you know, one of them likes to say, Oh, no emotions, I have no problem with I recognise my emotions. And then I hear Him say emotions have nothing to do in the workplace. Right? So it’s these things are, there’s a contradiction between what we believe, and what actually is the reality in the workspace. Okay. So I get excited about this as you want. I hope it was not too theoretical. Because as a leader, it’s your responsibility to work on yourself to become better. And it’s not what got you here that will get you there. It’s the next phase that matters, right? Okay, so let’s make it a little bit interactive. After all my blah, blah, I want to go into coaching Hot or Not, What do we think when it comes to coaching? So again, I’m going to switch quickly intermezzo to my mountain retreat, as Mark always likes to point out that, go here and get us all to participate? Do you believe in personal growth, breakthrough coaching for the CEO? Absolutely not indispensable on the right hand side, for the leadership team? For I’m coaching everybody, right. And that means putting the money, where your mouth is, there is a budget that you would need to put in place to have that for everybody. So we can see SEO coaching, we see good buy in there, okay, for them more leadership, the entire team, and then coaching everybody, we have some more doubts, right? And I challenge that, I would challenge that, because the more people you get to work on themselves, the better the culture, ultimately, as an organisation is gonna make a fundamental difference. And not just in conflict situations that of course, we do that because we coach conflict. It’s a budget that everybody has access to. And for me, personally, I think seeing that happen, seeing team members using it was phenomenal. I will also tell you, that you got to push people to take and use that budget. Many people won’t not because they don’t want it or need it, but they’ll say no, no, this is not urgent. But the point is that if you don’t put this into your agenda, you’re not going to use it. And, you know, we just had this conversation with with that Tendai, Vicki, you know, one of my, one of my colleagues and also great thinker, we just had this conversation, he said, I really, you know, should invest my time into this, I need to use the coaching budget, right? Because last year, he did not right, and he kind of realised at the beginning of this year, this is the moment to do. Okay, cool. Now, number two, culture. So coaching for me as an individual was essential for the team, leadership team, and then the entire team made a difference and that already influences culture, right? So the coaching part will change the culture, but I’m gonna go very specifically into three books. And I read a couple of books. I mean, there’s the no rules rule, you know, from the Netflix, CEO and an academic, but I’m going to look at Three books that represent three themes. The number one book for me is still Bob Sutton’s the no Asshole Rule. And we’re gonna listen to Bob for a second right? Because we have at strategize er a strict no asshole policy and for a while we actually had it in our job postings we said no Asshole Rule so we didn’t say if you’re an asshole don’t apply but we had no Asshole Rule and I’ll get into what I mean with that the second one and then we’re still working on this to certain extent is radical candour. So, radical candour from Kim Scott actually shows you that you might end up in the wrong place if you don’t actively work on getting people to be, you know, transparent and open in the right way. So again, that comes back to emotional state, you know, in a positive way. And the third one is a couple of ideas from principles from Ray Dalio, Ray Dalio built the biggest hedge fund in the world. I’m not sure I would want to replicate the culture of Bridgewater. But there are a couple of ideas there. The first one is idea meritocracy, that the best ideas can come from anywhere, and anybody in the company needs to be able to challenge everything. So it’s the right to be heard, not the right to decide. So you need to make a clear difference between the right to be heard and the right to decide. But leaders need to listen to every single argument and work it’s not because you have leadership in your, in your job in your in your business card that you’re a leader who leaders are leaders, because they have followers, right. And you have followers when you actually listen to every single argument. Again, comment sounds like common sense, but it’s not common practice. Okay, now let’s talk about culture. And I did talk about culture in the past talk Business of Software, Dave grey, entrepreneur and author, he likes to say if you want to understand culture, you need to map it. And you look at three things. And in that past talk, I talked about the Culture Map, that Dave, even I, you know, worked on together came from Dave grey, we made it simple, the outcome of culture is, you know, the, the behaviours that you have. So, for example, if you want people to behave collaboratively to have a collaboration culture, which is the outcome, there’s actually only one way you can work on that, which is working on the enablers, and blockers. And you, as a CEO and leader are part of creating that. So there’s kind of, I’d say, three levers. It’s the first one is you as a CEO, role model, what you do, is actually going to shape culture, that’s an informal one, the people you hire is also kind of an informal one, but you know that your hiring processes will shape the culture. And the third one is the structures you put in place. So depending on the structures you put in place, you will create or inhibit a culture. So that’s the theory. And Dave likes to call it, you know, you design and manage culture, more like a garden, not like a car. So when you want to harvest a certain culture, you need to make sure people behave that way. And you need to look at your enablers and blockers, and that’s what I’m gonna get into. That’s the only level you can work on. And that can be you and your behaviour. That’s why I put coaching as number one, I’ll show you some of the stuff that my co founder and I completely messed up in our behaviour and led the entire company to come become that kind of culture. And the second one is the people you hire, and I’m gonna go into that one first. So what I had to learn is how to implement this 00 tolerance for toxic people culture and toxic sounds very extreme like it’s a scale there’s the there’s from very explicit bad asshole to asshole behaviours that you might tolerate, because the person performs well, you know, in sales or in product, you can’t tolerate it needs to be zero. Because if you have tolerance, you’re immediately undermining your culture. So who you hire will make a difference. I’m going to zoom into Bob Sutton, let’s listen to Bob quickly talk about you won’t say absolutely, we’ll call it jerks. But you can’t tolerate these behaviours. So as soon as you do, and that can be even the feedback culture people who take feedback personally. Guess what, if you have one person who takes feedback personally and you can’t criticise their work, what’s going to happen is it’s going to undermine your entire feedback culture. You cannot have exceptions for the most important themes, some themes, you can accept many themes you can so let’s listen to Bob quickly Stanford professor. I love Bob. He’s, he’s phenom. No. And of course, he’s known a lot for the no Asshole Rule. He’s done a lot of roll ons work on scaling.

Let’s listen very briefly to Bob, any or all of us under the wrong conditions can turn into temporary assholes. You look at the evidence, crowding works pretty good, being tired. I’ve already said being around other assholes. Being in a hurry is a really reliable way to do it. Getting power, that’s a really good way to turn people into selfish jerks. So there’s lots of things that could turn us into jerks. But the people that I’m more interested in sometimes, although the temporary parts interesting as well, is, is people who are certified assholes. Those are people who are consistently jerks across times, and places are probably more difficult to deal with. So if you’ve got a friend who’s just sort of going off and having a bad day, it’s not the same thing as having the same abusive coworker, or customer boss day after day.

Okay, so super important. Of course, you know, you have you have the spectrum, we all have days where we behave like jerks, and sometimes you have more than others, right. And there’s a spectrum, where, you know, for a long time, I was impatient, because I wanted to get things right. So I would push people, but do art and do what I wanted. That’s, you know, starting to be jerky behaviour. And I’m a nice human being, I hope to think. But still, that goes towards, you know, as will territory, on the very light scale, it’s a spectrum. But you need to draw that line of what’s acceptable and what is not in your hiring processes, because it’s practically impossible for these kinds of things, to change people. So if you let them in. And this is so easy to do, because it’s much easier to look at technical performance. So you will tolerate people who have strong technical performance, at the expense of other aspects, like the culture and the team coherence feedback culture, and that ultimately, is going to have a much higher cost, because in the worst cases, people will leave because of you tolerated one person. So you really need to look at hiring and this one of the things I’m proud of is in the hiring process, we spend a lot of time doing that. And the New York Times even put us into an article, thanks to Bob Sutton also, because we have this explicit no Asshole Rule in our hiring kind of process. We got the New York Times to write about this, this made us phenomenal difference. And here’s the thing, it took me a decade to become, you know, a note tolerance CEO, it took me way too long to you know, separate paths with people who might fit in a different culture, but not ours. And it wasn’t because I didn’t know it was inaction. So this, again, is common sense, you know, you need to separate paths. But yeah, they’re still pretty essential to the company. So we’re gonna take it, you know, more time for the transition? No, no. And we all know, you know, who are leaders who have to hire people in separate paths with people, commonly known as firing, I don’t like that term, because just when there’s no fit, there’s no fit. And when there’s doubt, there’s no doubt. So go fast on separating paths with people who don’t fit your culture, and their cultures where they may fit. This is not a value judgement, just make sure that the rules of your game are clear, and you don’t compromise them. So what we do very explicitly in our hiring processes, we talk to the candidates internally, whenever we feel like certain things, you know, red flags pop up, or we have doubts. We send a message or we collect these actually in a Google sheet. And then we send that to Shawnee, who’s going to do the second last screening, because it’s her job to understand people. So guess what, she’s just way better in, you know, understanding if they are on the asshole scale, you know, they are potentially undermining our culture. And that goes to, you know, very light things, which again, as I said, people who can’t accept feedback and take it personally, or will blame others in the light scale. But for us, that’s, that’s no go. That’s No go 100%. We can’t afford that. Because we know from experience that’s going to kill the kind of culture we want. So she screens those candidates talks to them. And then we make a hiring decision together. If they pass this last barrier, we do a hiring challenge where we actually work together because at the end of the day, the best way you know to know if you want to hire somebody is when you work together with them. So we do a half day workshop. Ideally, it will be a week project or a month project. But when you’re you know taking some somebody out of an existing job, that’s not so easy. So you need to work with people to understand how they are and you need to bring professionals in who can screen so this is a big, big, big, big one for us. Now, building a true feedback culture starts with hiring But it actually goes on and here’s where I’m going to show the radical candour stuff. And we worked with a team actively on this. So what is the radical candour book about? It’s this whole idea that you’re going to look at people who pair care personally, or they’re completely, you know, rage, they’re an enraged, they say nothing, or they actually challenge directly. So on this, you have, you know, in this quadrant, you have the manipulative insincerity, not very good people who are full of rage, and there’s, they’re silent, you need to make sure you don’t hire those kinds of people or you help them, you know, move into different quadrant, then, of course, you have in some, some companies love this culture. I don’t think it’s a long term sustainable culture, culture is challenging directly with rich, obnoxious aggression. And, you know, Marshall Goldsmith talks about CEOs who say, This is what got me here. It’s because I’m so aggressive because I scream at people in meetings that they’re performing. Well, that doesn’t mean that you shouldn’t do that you actually got so far despite your shortcomings, right? So that’s the way you need to look at it. That’s why you need coaching. It’s because you have potential you got so far with your shortcomings. If you’d stopped screaming and creative collaborative culture probably go even further, right? And then you have this one and this one I’m pointing out because this was big at strategize er, ruinous empathy. So you really care about your team members, but you’re silent on things. They need to hear things that might hurt them, but they need to hear right. And then you have radical candour. Where because you care, you challenge people directly in a respectful way. Right. And there’s the saying, you know, brutal, honestly, brutal honesty, kindly delivered, I think it was Brad Feld, I don’t know who coined this right, but brutal honesty, kindly delivered. So we worked on this as a team, with very specific training sessions, Team sessions, all hands on deck, but the problem is the fish rots from the head. So guess what, because my co founder and myself, we were practising ruinous empathy, we really, you know, like each other. And we thought, you know, we held back, we held back, we do not want to hurt the other person’s feelings. But it’s actually when you care. You tell the other person or the team members the hard truth, it’s when you care. So stop framing, that’s when you have a great culture where everybody loves each other. Well, the more you love each other, the more you’re going to say the hard truths. Alex, this was really bad. Your leadership session was a disaster. Like, why did you lose your patience in that? And if people can’t say that, it’s because either they fear you or they really don’t care. So care means they’re going to give you that feedback, right? So if we look at what happened to 2021, we still had, you know, most team members that were in this ruinous empathy, guess why? Because the fish rots from the head. If your leadership team, if you as a CEO behaved that way, well, your environment is very likely to look similar. And here’s the crazy one, we asked team members calling out you know, out each other’s unproductive behaviours, rarely. So we had 68 People 68%. But here’s the thing. Everybody says in our team, like 90%, say they want feedback. But 68% will not give that hard feedback. So it’s not because people want feedback that they’re gonna give it. So all of these sessions we did, right, we did workshops, and so are not enough. And what was the big breakthrough for me is when I completely changed my behaviour, and I constantly started asking people, give me feedback, right? give me feedback, ask for it. And then others will ask for it. And then all of a sudden, when the right people challenge you in a meeting, that’s when magic happens. So the technical aspects won’t work, if you haven’t worked on hiring, and you haven’t worked on your coaching as a CEO. So big takeaway for me. And then the last one, really around the governance and the transparency to create this kind of idea, meritocracy. So here, I want to go a little bit just briefly into the system, I might confuse the hell out of you, just showing you how we’re organised because I don’t believe in the traditional hierarchy. So I’m gonna give you a little bit of a of an insight, how, you know, something else could work to create a more kind of, you know, participatory structure, but the person I want to, you know, tell us about how this common sense but not common practice can go to the extreme is Alan Mulally so I had the extreme shock because it’s unbelievable in life. Sometimes you have these, these beautiful opportunities to be part of a workshop learning from Alan Mulally directly because he was coached by Marshall Goldsmith. Alan Mulally turned around Ford when they were losing $17 billion. And he turned around for not by firing people, this is the key thing, by creating a different culture. And let me show you a video is, it’s unbelievable of what he discovered when he arrived. What he discovered when he arrived is unbelievable.

Now, when we first started this, remember, I told you that that within a couple of days, the forecast was we’re going to lose $17 billion. So I started the business plan, review, the charts are flowing 320 charts, we even have colour coded red, yellow, green, any change on the chart is in blue. So there’s lots of doesn’t change, all you’re looking for is what has changed. You want to your long explanation about what what’s going on. What you want is that everybody knows the plan. Everybody knows yours needs special attention. So the colour got got the charts going. And I spent three or four weeks of data is flowing. And all the charts are green. And I stopped I mean, I said you guys, were gonna lose $17 billion. Is there anything that’s not going well? I contact goes to the floor. Nobody says anything. I remember that culture you asked about. It wasn’t okay to bring things up. I mean, it was command and control. You know, people disappeared.

Alex Osterwalder 

Okay, when he’s saying people disappear, he’s making a joke. But actually people got fired, they would speak up, they got fired, right? So again, I mean, think of it think of this very extreme situation, a company losing $17 billion. But the culture gets the leadership team to say everything’s okay. Right, unbelievable. And then, you know, Alan, turn this around by working on the culture. He didn’t fire the leadership team, he actually worked with the exact same people and started to put things in place. So the first two I mentioned lead to this, your coaching as a CEO? So Alan Lally, right, he weren’t he he admitted he wanted needed a coach getting into this role. So he hired Marshall Goldsmith, nobody else, right. So one of the world’s best leaders hires a leadership coach. And then of course, the kind of people you bring in, in this case, which I find mind boggling. He’s working with the people he had there. So they did have a kind of good team in place, right. But now the system that you put in place, will help with that idea, meritocracy, where people will speak up, right? So culture is yes, your behaviour, yes, the people you hire, but also the system you put in place, and I just want to go into this little system that we built, is going to be a little bit maybe theoretical, he’s gonna do a whole session on this. But I want to show you that working on your organisational structure can make a difference. I just never believed in the traditional hierarchy. I’m not against hierarchies at all. And Hilson don’t believe in holacracy. That thing doesn’t work, right? You won’t find anybody who makes a lot cracy works, right? So we said, well, what if we took this idea of cells, cell structures, structured around value propositions, the products and service models that create value for customers like our platform, like the growth solution, consulting, right. So value happens in cells, and you won’t have functions like development and design, you will have a cell platform in which you have developers and designers who create value for the customer. But that’s not enough. Because the decisions that don’t happen at the cell level, they happen between different cells. So we do have some support functions that are sounds like sales and marketing. But so we create a decision forums, because traditionally, we say decisions happened in the hierarchy. But I wasn’t convinced, I think the right people need to participate for specific decisions. And they might not be at the top of the hierarchy, they might be somewhere else. So they need to be part of these decision forums. For anything that is outside of the cell. We do have cell drivers, who is our actually our our leadership team. And then you have alignment huddles which are just about information flow, and orchestration. So everything you know, gets aligned, no decisions are made there. And all of these ultra transparent, so everything here needs to be visible to everybody. Now, we’re not at the level, there’s some, you know, ultra transparent companies even in salaries. And so I don’t believe in that. And sometimes in people decisions, you just can’t make things transparent, but as transparent as humanly possible. So all the things are visible. I’ll show you how we do some of that. So let’s take this quickly. So we have cells. So every week, there’s a weekly huddle between, you know, the different cells again, the value propositions like platform growth solutions, more functional ones, like finance, sales, marketing, weekly huddle, that’s the leadership team. But ultimately, the decisions are not made in some kind of hierarchy. They’re made in the investment forum. So we have a forum where A couple of people come together to decide where the resources go. Like we are a company that you know, delivers technology enabled services and platform. So people are our most important asset or biggest investment. So we have a hiring forum, where we ask which people based on the strategy do we need to hire? And the investment forum says, we have this budget, so you can hire five people. And then the hiring forum, prioritises, who are those five people. And we track that. So that is tracked on the strategize er platform and visible to everybody. So these meetings are recorded and visible if somebody wants to watch them afterwards. And we use visual tools to make the tracking visual. And if people can’t look at these visual tools, and automatically understand they’re not good enough, right. So here we have a backlog of the pivot positions we need to hire, everybody can see that we have in budget, those that we decided, and then the entire funnel, all the way to we sent out offers everybody in the company can see how we’re performing in hiring, strategy and implementation. So whatever we do in those forums is visible. So the investment forum and the hiring forum, have visual tools that are accessible to everybody that the meetings are recorded. Obviously, there’s informed, you know, needs from the cells for new people. And then the other big, you know, investment besides people is projects, and the investment forum, invest in certain projects, and the projects are decided with that forum, but coming from the needs from the cell. So you might say, Well, this sounds pretty complicated, the traditional hierarchy is better. Well, it’s not actually complicated, but is different, right. And the difference is, the people make decisions, not based on where they are in the hierarchy. But we look at the decisions and then ask which people need to be part of that decision. So we turn it around and not put the hierarchy at the centre, we put the decisions at the centre, and then ask who needs to be part of that? Right. So we have hierarchies, some people decide on where we invest. And in other cases, they’re not leaders or decision makers, they’re just doers, right? Just in quotes, right? Then we have the growth model where, you know, a couple of people come together, so we can see how much money we’re actually earning and projecting to earn because there’s new stuff that we’re doing. And then you know, that is informed by sales and customer success and marketing. In that growth, huddle, everybody comes together, we say these are projections, this is realistic, this is not realistic. And that flows into the investment forum, all of that ultra visible. All of that also then informed by, you know, experiments we do, like we teach people to do experiments and tests. Well, guess what, we need to do that as well. And we’re only getting kind of our act together to do that extremely well, inside of our own organisation that gives them data for potential future sales. So on the other hand, okay, what’s missing here, of course, not just the bigger picture, kind of, you know, management of resource allocation, there’s the choice of the products you’re going to invest in, what’s your product portfolio. So we have, again, a forum where people come together, from customer success, from indeed the different value propositions from, you know, product management, but we come together as a forum with the right people who can decide same for pricing, the right people who can decide is not something that happens in a finance function or in a marketing function. No, it’s a forum with the right people. So all of this again, transparently, all of this with information flows in huddles where sales and customer success can say what’s working, what’s not working. And you know, the product form can talk about new products for sales and marketing and customer success. And there’s constant guidance there. So we put this in place. So we don’t have one hierarchy, which I think is very artificial. But we have hierarchies, where the decisions are made around forums, where we asked who needs to be part of allocating resources investment form, who needs to be part of the product, portfolio mix, product forum, and we’re putting this in place with as much transparency as possible. The only place where sometimes we were not transparent is when it comes to people decisions. If you say, could we use that person for this role? If you do that transparently, you know, it becomes they’re getting confused, then do I need to do this? Or do I need to do that. So the transparency is not even because we don’t want to tell them, it’s just because we only want to tell them when people need to know. So this is really where we’re going and I’m already out of out of time. So for the last section, I’m going to keep it maybe ultra short. And just talk about the principles of this and then you can go watch a video maybe online so we can get to q&a. And of course you to finishing our little

Alex Osterwalder 

competition, so going to end with this and the competition. So what we realise is we’re running a company. And we constantly want to invent new things. But what we never really did well is scale what we had and invent new stuff, we were actually always in the invent new stuff. So we never scaled anything, because we were always in the new stuff. So we realise is, we actually need to distinguish between this world here, new ideas, that we’re pretty good at starting new ideas, getting them to, you know, couple of million in revenue, but then we don’t scale anything really well. So what we started to do is distinguish the scaling world where we manage successful things, bring them to the next level, because that’s pretty, pretty hard, without compromising the invention of the new stuff, because that’s where we’re going. So on the left hand side, you have high uncertainty you experiment on the right hand side, you manage. So these two worlds are completely different, exploring new ideas, and managing what you have, you can never explore at the expense of managing what you have. And you should never just manage what you have. And forget exploration, because you might disappear as a company, and you won’t create as much customer value as you can. So I want to just do this last, finishing up with the questions to see how well you understand, explore and exploit these two worlds managing the existing inventing the future, and then I’ll tell you, I’ll give you a hint of how we do that. Is that okay, Mark? My five minutes mark.

We do need to visit a winner. So it was venture, whoever that is, who was leading. So we do need a winner for our little contest here. So we go back to menti. Here’s the QR code to get in. If it’s if you don’t have the QR code, you can go to mentee.com 4857645. Good, okay, we got everybody here for more questions. And then we’ll see who the ultimate winner is, this is now towards exploit, explore, planning, the topic of planning is essential to manage the existing, which is exploit to explore the future, explore projects, new products, new value propositions, new sales channels, are both planning is essential for so a lot of you will say both, but I’ll push back. Because if you plan exploration too much, you’re gonna say, Oh, the next two months, three months, we’re gonna, you know, hit plan, all these experiments, you’re gonna mobilise resources, where you might know after two weeks of testing, you need to kill this project. So you do need to plan experiments, but it’s a completely different planet. So I’d almost say planning is the wrong word. And I’ll show you how we manage that. Because if you use the same word, you’re gonna get the same culture. And the culture is different for exploit an explorer, that’s why we even use different words, definitely not planning an exploration, we’ll get to that. Innovation is a topic found in explore, inventing the future, exploit managing the present, or both. And of course, I like using trick questions. So the winner is not gonna be that obvious. This one is, of course, both. So definitely an exploration. But you can have because innovation is a spectrum. And innovation doesn’t mean anything is a word in exploitation. You might improve processes, you’re improving the sales process, there’s innovation there, right? You go outbound, you have ever done that, that’s innovation for you, right and finding new outbound channels. But that is a different kind of innovation requires slightly different processes, then exploring completely new products are business models. So they’re both innovation but we should have an adjective you know, like, efficiency, innovation, or transformative innovation. So in this case, it is actually both Okay, now let’s get a little bit technical and look at when you’re really an explorer when you’re really an explorer, how do you behave? How do you behave? Which statement is wrong in the whole world of exploration wrong? Good and bad ideas are indistinguishable early on experiments mean less risk of building something irrelevant that nobody wants and analysis increases success chances for new products channels, etc. Which one is wrong? Okay, great. Okay, good behaviour here. analysis will not help Do you understand if this is this is something to invest in or not? It’s only experimentation. So good and bad ideas and Rita McGrath talks about this quite a lot. They’re virtually indistinguishable what looks great in a PowerPoint presentation, which we think this is obvious customers will love it, or this channel is gonna work. It’s so obvious. It’s so convenient. You never know, you really never know. So analysis not going to change that. Okay, last one last one. Last question to become the winner. Which statement should entrepreneurs and founders and teams believe when exploring new ideas, you need to build something to start testing an idea in innovation is not possible to pick winners, large initial investments will increase your probability for high return. And for the last one, I’m only going to say, you know, FTX, better place or, or quibi. And of course, it’s not the last one. But it’s the one in in the middle. In innovation, it’s not possible to pick the winners. And I kind of lifted you onto that, because we just had it before, right? So you don’t actually need to build something to start testing, you’re better off learning what the customers care about, what are their jobs, pains and gains, and for that, you don’t need to build something. So that’s the challenge of software entrepreneurs, they like building stuff. So they build something first when they don’t yet fully understand the customer. Okay, let’s see the winner is. Okay, Andrew, Elizabeth are competing here with all the points, Andrew is the winner. Okay. Congratulations, Andrew. So either a couple of ebooks from strategize er, or three questions that I will take the time to answer personally. For whatever it’s worth, maybe it’s worth nothing. Me, but you have the chance to ask those three questions. And I’ll answer them. Now, I just want to show you how we manage these two domains is, if we look at this explorer exploit world, and we look at all of our projects at strategize, they fall into three buckets. There’s efficiency, innovation, like okay, we’re gonna do better inbound sales and marketing, sustaining innovation, new products, new channels. And there’s more transformative, right us earning money more substantially from platform, we created two different metrics. Because these two worlds are different. On the right hand side, we talk about OKRs objectives and key results. There’s a lot of research out there, right? You define the goal with objectives, and you measure the key results. But the thing is, when you’re exploring the future, this was my biggest insight. Because last year, we explored more in the future, but we used you know, the common language of execution projects, and every Exploration Project started to turn into an execution project. So we now call a different we call it aspirations and key insights. If we say we want to earn like a million or 5 million from a new product, that’s an aspiration. We don’t know yet. So you can’t plan for execution you plan for what do I need to learn to know if I can earn those 5 million or not? So we set goals in different ways in these two worlds. And we’ll send you out a link of where I talked about this because rather than me going on babbling. I think q&a would be better time investment OKRs for execution stuff where uncertainty is relatively high. And Aki has aspirations and key insights to learn what could work right, so two different sets of metrics for two different worlds. Okay, so I’m clearly overtime. So that’s why I’m going to stop here and see if you have any questions.

Mark Littlewood 

Fabulous. Thank you, Alex. Do you have a I think everybody knows where strategize it is but amazing, let’s say if you have questions you can put things into the into the chat but you can also just speak there’s the joy of being in a room with people so any..

Audience Member 

I just thank you really no particular questions. But yeah, just a great way to kick off the new year. And thinking that it’s a journey I think I ended the year beating myself up for not being all of these things and all he has not done so actually really refreshing to just that I’ve come back refreshed. Of course having had a break but Uh, yeah, just yet, doesn’t it? It’s a journey and it’s okay that it’s a journey. But yeah, thanks for that reminder. I scored definitely worse than that last set of questions. So that’s narrative development. So it’s a learning my poor scores on that final bit. Won’t give him some hard time that that either. Some questions come through so well, I’ll find out.

Mark Littlewood 

I know there’s, there’s great and some really interesting people here today, we’ve got Canada and America and Senegal and all sorts of places. And Martin, you’re over in Toronto? I think. That’s a great question.

Audience Member 

Yeah, I was just, it’s a little early here. And so my videos off because I look like hell. But my question is about how you allocate because we have to, I’ve got an explorer an exploit going on right now. And one of the challenges I have is figuring out how to allocate time and resources to exploit versus Explorer. And I wondered if you had any rules of thumb, if that’s the right way to put it? About how, excuse me how you do that? Yeah.

Alex Osterwalder 

So in our case, we first define the strategic guidance of where we want to go as a company, right? Like, what are the number one two and three goals at the organisation. And then based on that everybody knows how to prioritise right, so they know, okay, this is how I prioritise and sometimes the Explorer exit comes out on top. So that’s just giving guidance, given kind of the frame. But then, you know, deliberately putting people on to exploration projects and making that explicit is super important. I think, in particular last year, I personally confused people a little bit because I was talking about exploration, but not making Ultra explicit which resources are dedicated to exploration, because sometimes it’s a bit of a, you know, we have customer success, that is going to spend some of their time to help with the exploration. Typically, we had one project called the corporate incubator, and we were expecting customer success to reach out through their channels for existing customers dormant accounts, etc, to see if that could work. But we did not make explicit, you know, that this is a real goal and how much time they should spend on helping exploration do that. So while you can have very clearly dedicated people to that, that’s easy. And I’ve a rule of thumb, because it really depends on your strategic objectives one year, that might be 10% of the team, another year might be zero, because you’re just, you know, focusing in on scaling the company, that’s why I’m not giving you a rule of thumb, because it depends on the strategic direction. But making explicit, you know, here are our goals. This year exploration is top of the mind, there are only these two other execution, you know, objectives that are more important. And then telling every team that’s impacted. This is an approximate, you know, amount of time that you would need to spend is extremely important. Because in most companies, when you don’t get to the 100 person, or 1000, person, Mark, you’re not gonna have people who are 100% dedicated that much, right? You might have, you know, one or two coordinators that are that are 100%. But making it explicit is most important. Is there a rule of thumb? I don’t think so, I’d always have this goes back to our bigger picture thinking, as soon as your 100 people, I think you need a chief entrepreneur, somebody whose task is 100%, to focus on exploration, that’s the resource commitment I’d make. And then the CEO needs to spend if the CEO is not the chief entrepreneur, you know, 40 to 60% of their time on innovation. So as soon as your 100 people, I liked that setup, CEO 40 to 60%, and then 100% roll. And then soon as you get into more than 1000 people is absolute 100 or 1000 people, you need a dedicated team. And my minimum requirement is always, you know, one to 10% of the entire company needs to be focused on exploration. Unless you’re saying execution is the only thing that matters. In a startup, you generally hear explore one thing, everybody’s exploration in a scale up, you might make the decision, we can scale for another two years without having to explore it’s actually getting tighter and tighter. But so it’s a bit tricky to give a very general rule of thumb, but for me, as soon as you start to have an established business, it’s one to 10% of the staff is focused on exploration.

Audience Member 

I think making making the allocation explicit is probably what I was looking for, rather than the rule of thumbs up.

Alex Osterwalder 

Yeah, thanks very much was the biggest number one And the more you can have people are dedicated to it, the less they need to be schizophrenic, because running something is completely different from inventing the future. So that’s why this Yin and Yang and OKRs and aka is the other explicitness is the goals need to be explicit. Now I know I’m contributing to an aspirational thing. We’re experimenting, we’re going fast. That’s what confused our teams most is not being explicit around goals that are aspirational. So all of a sudden, the team behave like they’re building something and it became bigger than it needed to be. Whereas people who are running the business need to participate in experiments that need to be fast and small. So making those goals explicit by giving them a gift, different terminology was as important as making the resources explicit. So I’m a huge believer in explicitness that’s why I love these visual tools. Right.

Mark Littlewood 

Great. So Daniela, gonna take your question Sdic, you’ve got your hand up. So we’ll come to you next. Daniela, you’re on mute?

Audience Member 

Yes, I Alex. So, hello, my, my question is related to how to find the right co founder and the first four. Yeah, five hiring in a new established startup.

Mark Littlewood 

Yeah. So easy, right, Alex? It was so so so simple and successful for you.

Alex Osterwalder 

I would refer actually to you, Mark, because, you know, you you’ve had people talking about this topic. I, you know, in our case, I think we were a great team with Alan, and, you know, we had a third co founder that didn’t really work out for me, I think you need to be compatible on the skills, you know, kind of side and on the culture side. Number one is culture. And we had that with Alan, on the skill side, we were actually both creators. And that was what was really missing in our company is, you know, a real manager leader. So I’d always go and see, you know, besides the kind of skills, you know, fit, do you have that person who can, you know, for the for the relevant phase, start helping drive right at the beginning, from zero to maybe a million in revenue, it’s a different kind of management than from one to 5 million. So the CO founding team, you need to kind of fit the zero to 1 million, 1 million to 10 million 10 million beyond. But I’m the wrong person, because I’m a data point of one, right? In this particular case, I think Mark will have much better references to talks even right. Now, because there’s a lot of there’s a huge body of work, and I’m the last person to have a data point of one.

Mark Littlewood 

Certainly something that we can pick up in the session later on. I think it’s quite a common thing. I mean, I would say that going off and saying, oh, I need a co founder is generally a really bad way of doing things or bringing people in two, three years after the company has started and calling them co founders because they’re not. So that’s, that’s a that’s a board but yeah, there’s pretty some pretty complicated things there. So s SD esta Mara,

Alex Osterwalder 

Mark, Mark is one thing before we go to SDA. One thing is the mistake I made though Steve Blank kind of made a conscious about it was more maybe related to the first of the three co founders, this co founders are people, you know, whose skills and competencies you can’t buy off the market, right? There’s not they’re not readily available. co founders are people who are extremely unique and they bring something in you can’t buy, right. So I’d be very careful to say Oh, um, you know, I’m going to make this person a co founder, because I can’t pay them yet. Because you’re going to hire somebody as co founder, who you probably should have bought at a cheaper rate from the market, right? Because you’re going to end up and I’ll tell you this, if you start to buy back shares, that can get pretty expensive really quickly. So and this is something you know, you don’t learn the first time and if you’re like me, and you don’t listen to the you have one of the greatest mentors on the planet with the puck you don’t listen carefully enough, don’t implement it, you’re gonna end up buying an expensive price, right? And for some of these decisions, they cost me a lot so co founders are people you can’t buy off the market. They’re very unique, and they need to be passionate about being part of this project, and they’re very few You have them who bring that mix of skills and competence and human being into the mix. That’s that for me, that’s if I started something else. That’s how I would look for a co founder.

Mark Littlewood 

And share that share that talk from little while ago about someone that started off with a company that had four co founders. And second time around, he was one founder. And below with that, I mean, there’s some really interesting stuff there. But one thing that he said is if you are the founder, or if you’ve got four co founders, you can earn a maximum of 20% of the company if you’re sharing equity across everything. So your personal outcomes may be very different if you’re single one, but I mean, always depends with these things.

Alex Osterwalder 

And the data from from the ollie from the super founder book is very clear. And again, we don’t need data. This means that the exceptions don’t matter. Right. But if you follow the data, it is true that the most common you know, if you took the billion dollar companies, valuations is generally two co founders. But then Alibaba was 10. Right? So you have everything. I think really thinking hard about that right? Fit is crucial, because there’s tonnes of stories right? Have co founders go workout? Stay?

Thanks, Mark. And I’m particularly curious and you said you’re going to share the link about the aka eyes and the OKRs. So we need to give feedback next week straight session, one of our businesses, we focus on the four explore areas, we’re going to track it on Okay, ours, and I have no clue what we’re going to do next week. Can you can you give me maybe at the example of what you didn’t strategize last year, just maybe give me an example of a API that’s out since I have your email, I’ll send you that.

And we didn’t actually have it last year, we introduced it this year to solve a problem we had last year, right. So generally, you know, we always make tools and concepts for things we see in the market that struggle, this is when we need it for ourselves, right? Because our team with all the best intentions, like we know how to test. But guess what, because we didn’t make it explicit. All the Explorer kind of goals, almost, you know, almost started become explained. And what happened even worse, we have a great CFO, but all of a sudden, you know, products, like our corporate incubator, on our platform, which was an exploration showed up in the financial projections and, you know, people and so what we’re doing now is even down to the financial projections say, Aki is aspirations. They’re explicit, like, we’ll say it’s five or 1000s, five, millions, whatever, but they’re aspirational. And the more evidence we have for that aspiration to be likely to work, the more we start to take that number into, into our financial planning, why? Because we want to grow as aggressively as possible, but without being, you know, incompetent, or just kind of reckless. So, so the way you frame those things, and you manage your cash are directly related. So I’ll send you that stuff. Yeah. Thanks.

Mark Littlewood 

That’s amazing. Maybe one final question if anyone has something to finish.

Mark Littlewood 

it Michael make up something different? Like yes, Mike?

Audience Member 

I think this is my question is related to what Alex just explained. So how is the relationship between explore and exploit goals? And how can we include this into planning because you said planning is not really the right word for explore projects, or explore goals. And so what I understood from my past experience that in ecosystem ecosystems, it’s going to be more and more explore goals, because you have very fluid boundaries of industries, etc. So the question is, how can you really kind of do a planning as a corporate in such an environment of exploring, of increasing increasingly exploration?

Alex Osterwalder 

Yeah, so just, you know, to be very fast on exploit explores a continuum. But what’s important is to make them explicit, right? So typically, at strategize er, we had, you know, good, good success was marketing and a lot of inbound because of our books, right. So Google is our biggest friend, people come to us. Now we’re really working on outbound sales. So but for products we have that we know work. So it’s right in between. It’s not exploit it’s not explored, because we’re actually exploring which channels will work, which customer segments, you know, can we address which ICP. So in that case, we’re right in between, but we’re gonna say, figuring out the right marketing channels, and getting money from outbound is an exploration even though the product is not an exploration. So it’s right in between, but we need to label it. And Aki, because we don’t know, just because we decided we’re going to do outbound that outbound is going to work, maybe you know, there are no other clients on the planet than those that are coming to us. I don’t think so. But so you need to just make that explicit, because even in exploit, you have exploratory things, right. So it’s super important that everywhere you ask, are we in the certain world? Are we in the uncertain world, and when you’re in the uncertain world, which could be a new channel, which could be an entirely new business model, they’re both uncertain, they’re not as uncertain. So you will run less experiments, you go faster, but as long as you make those things explicit, you can manage them. And that is the key. And I don’t think I answered your question. But I remembered.

Alex Osterwalder

Dr. Alexander (Alex) Osterwalder, founder & CEO of Strategyzer, is one of the world’s most influential strategy and innovation experts. A leading author, entrepreneur, and in-demand speaker, his work has changed the way established companies do business and how new ventures get started.

Ranked no. 4 of the top 50 management thinkers worldwide and a visiting professor at IMD, Osterwalder is known for simplifying the strategy development process and turning complex concepts into digestible visual models. Together with Yves Pigneur, he invented the Business Model Canvas, Value Proposition Canvas, and Business Portfolio Map – practical tools that are trusted by millions of business practitioners from leading global companies, including Microsoft, Coca-Cola, Nestlé, Mastercard, Sony, Fujitsu, 3M, Intel, Roche, Colgate-Palmolive, and many more.

Strategyzer is an innovation powerhouse, providing online courses, applications, and technology-enabled services to help organizations effectively and systematically manage strategy, growth, and transformation.

Osterwalder’s books include the international bestseller «Business Model Generation», «Value Proposition Design», «Testing Business Ideas», «The Invincible Company,» and «High-Impact Tools for Teams».

He holds the Strategy Award from Thinkers50 and the European Union’s inaugural Innovation Luminary Award. In 2019, Osterwalder chaired the prestigious Drucker Forum, the premiere annual business management conference. A frequent and popular keynote speaker, Osterwalder travels the world discussing his ideas and strategies at Fortune 500 companies, premiere innovation conferences, and leading universities.

He holds a doctorate from HEC Lausanne/Switzerland and is a founding member of The Constellation, a global not-for-profit organization connecting local responses to global issues around the world.

More by Alex.

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