For the second talk of the day I’m super proud to welcome Ramatoulaye Diallo. I met Rama last year
in iallo. I met Rama last year in Dakar senegal and during a workshop and when she came in the room
I was immediately impressed by her presence and her natural charisma She is one of these kind of
leaders. I already knew that she was the driving force of innovation in Africa but when I received
her bio while preparing the conference I realized exactly who she is. so Ramatoulaye A. Diallo is
the CEO of Orange money in Senegal and she’s the director of a mobile financial services of the
sonatel cluster across five countries her mission is to create services communities and products
that are used daily by millions of people in africa her career started on Wall street in the
traditional banking industry and later Rama has been a driving force and promoting inclusion
economic growth and entrepreneurship in Nigeria South Africa and of course Senegal, so from Dakar
Senegal make some noise for Rama Diallo!

Hi everyone – welcome thank you, Hi Steph very good to see you good to see everyone thank you all
right are we are we good with the sound and everything? – it’s it’s all good the crowd is yours.

– Excellent all right, So let me start this is a swiss event so we can’t afford to have any issues
with time we would not be on brand if we did that so um I’m extremely pleased to be here today thank
you staff for inviting me it’s a pleasure to share what my team and I do um in senegal and um also
you know talk a little bit about Orange money across the continent um but before that um you know i
will uh just let you know that I plan to kind of talk across a few slides um and um very quickly and
get to the point where we can actually engage and have a conversation and answer questions and and I
hope that some of you in the audience might even be able to share some some insights as far as um
designing and creating products for large numbers of people more specifically also for for the
african continent so I’m going to go ahead and share my presentation and slide through it quickly
let me know if there’s any issue but I’m just going to power through it otherwise um so steph let me
know if everything is good excellent so um so I want to talk about consumer driven innovation and
designing for impact impact for me I define as really touching the lives of people in a way that is
meaningful so answering real problems solving real issues or unearthing real opportunities and
making their lives easier um essentially as far as I’m concerned as much as possible across the
continent and obviously across the world every time possible so there are three um um the three sort
of parts of this presentation and it’s all about journeys that’s really the theme that’s inspired me
today we talk a lot about customer journeys and use cases as far as I’m concerned every use case is
a story and that’s where you know every product or every innovation really comes from you know you
um it’s 11 p.m you don’t have electricity you need to buy prepaid electricity which is a thing for
those of you who live in places that that get bills um we do have bills but prepaid electricity
prepaid phone credit is a very real thing across the continent we can talk a little bit more about
that so i’ll very briefly touch on my own journey because I think it’s relevant um to me being able
to talk about these issues to you um and by way of introduction we’ll focus on the mobile money
journey and then talk about obviously what is in my view hard to avoid which is where where to from
here given the incredible sort of change of direction or interruption we’ve had this year with covet
depending on how you look at it so for my personal journey just in in three short steps my formative
years were spent here in senegal where I was born and raised and I’m from senegal so i’ve kind of
come full circle speaking of journeys in coming back here about two and a half years ago to run
mobile money for ohange so having grown up in this environment culturally in every way possible I
went to the united states to finish essentially secondary school do my first second degrees and my
first job on wall street as well as in private equity so very much sort of fell in the bucket of
finance really early on but always with an eye on emerging markets so I was doing mna for mergers
and acquisitions for um financial services banks insurance companies in latin america then second
part of my early career um investing really around 2000 in what turned out to be really a lot the
beginning of the mobile uh revolution and you know some of the the older technologies so post
business school uh which uh was in 2004 I came back to the continent and very quickly that’s sort of
the last 15 years where i’ve worked in nigeria in south africa and then back to senegal and I can
really just summarize that as working on what I call useful technology tech for development tech
that actually cares um sovereignty for women that’s something that’s very important to me not just
for women as women but as consumers as decision makers a very important part of of this journey and
finance for growth so that’s these are the things that I’m interested in that I’m working on in
amplifying impact and in my current role I hope that that’s what I’m doing every day so um on to the
mobile money story as with all good genesis stories um so mobile money is a big sort of african
success story for for those of you who know this very well um just bear with me bear with the
redundant I thought it would be um interesting to just go back to beginnings and talk in more
slightly basic terms about what we do without assuming that everybody in the audience knows about
what mobile money even is because I think if you are in the first world um sort of all the time very
well banked with a bank account some of these things are not intuitive so we’ll come to that so
essentially from what I know this story started in the philippines as sort of a technology but
really vodafone brought it to kenya because they essentially noticed that their customers started
sending credit and having that credit being transformed into cash this is sort of the short part of
the story so clearly customers were already going ahead and trying to solve some of the some of the
problems they were having and what was the problem was basically getting cash from point a to point
b across our countries so that was you know 2007 in kenya since then mobile money in sub-saharan
africa these are the gsma end of 2009 numbers um so globally you know you can see that um you know
we were over a billion accounts and almost half of those were across the continent so when gsma
published this report they said that 2020 was going to be the year where we would be over the half
billion accounts in africa I’m pretty certain by now we have crossed that given the acceleration
really in digitization that we have seen with covet and we can come back to that so my point is we
are well over half a billion and and more than half of the mobile money activity across the world is
taking place on the african continent so specifically coming to ohange money we are now in 18
countries morocco being the latest at launch in january we’ve crossed 50 million customers and cross
20 million active users and these are the the users in the Orange sphere so empeza is well over you
know 30 i think 40 million customers um mtn is the other big player alongside empeza and orage in in
this field across the continent so all of that to say that even when you put all of them together we
are still probably under 200 million if I’m not mistaken you know maybe 250 million people so that
is still a relatively small percentage of the kind of of the of the population on this continent so
to me as much as this was launched in 2007 in kenya launched in cote d’ivoire for Orange money
specifically across the Orange footprint um in 2009 it’s still extremely young we’re at the
beginning of this story there are still far more pages to write than there are pages that have been
written in this story so what is it exactly I thought actually we should talk about this because i
many times realize um when people actually come here and use it they’re always a bit surprised or
they really realize they didn’t actually know what what it means to have your wallet inside your
phone um so essentially the most basic transactions are getting money into your phone essentially
and getting it out if you need it for for for cash transaction purposes and in order to make that
happen we have the most important part of the business as far as I’m concerned especially if you’re
starting and that’s the distribution network i mean so Orange has over 150 000 I mean it could be a
tiny kiosk on the corner of the street you know down my street there’s one actually more than one um
where you go give cash and it reflects pretty much automatically um in your account on your phone
and what do you do with it once the money is in your phone transfers are very big continue to be big
so intra-country inter-regional and international transfers of money going from point a to point b
are still the very heart of what we do that is the biggest need and remittances fall into that
people can pay bills and people can also make payments at merchants but the merchant payments aspect
of the business is one where we still have a long way to go as I always say cash is our biggest
competitor it’s not the other ones the other people in the market cash continues to be our biggest
biggest challenge on a day-to-day basis which is something important to keep in mind when we’re
talking about designing products and solutions that’s who we are up against in terms of being being
being reliable being quick uh maybe not as secure but easily you know sort of value easily uh it so
um just a few key points this is not exhaustive and we can talk a little bit more about why it’s
been an african success story i believe it’s because it was actually something that picked up on the
what the customer was already trying to do which is money from point a to point b and prior to that
they were going to motor parks and giving it to people and say go can you get to the village can you
give it to my mom or however they were getting money across they were very informal networks and
obviously the likes of western union were also here for more formal transfers so we’re solving a
problem addressing a very very basic need a very basic um sort of use case in a world where banks
were not able or willing to invest in in getting to the majority of the population as I said it was
very much driven by what the customer needed it spoke the customer’s language actually speaking of
the customer’s language interestingly enough when Orange money started the the ads were very techy
so to speak you know trying to explain what this means and with robots and and it wasn’t it wasn’t
moving um it wasn’t speaking to the customers until um there was really a change in the
communication strategy to be a lot more playful with a lot more humor with ambassadors that were
very relatable to the customer and with a very step-by-step approach so short humorous kits that
could really show people in real life situations showing people how does this thing actually work
and and actually going through some part or all all of the customer journey in a very humoristic way
and that’s where we broke um the communication barrier in terms of being able to then communicate
with the with the customer and that the customer driven design is also very much reflected I mean
steph talked about him meeting me and my team um when he came to iallo. I met Rama last year in
Dakar and he actually specifically came to work with us and and to work with also digital I think
some of my colleagues are are on this um are connected and they basically you know do an amazing job
working with the business teams with uh with the customer uh actually across the whole chain frankly
they work with everybody and does from design to actually implementing some of these products so
steph had come to really kind of help us on on one of the issues we we had a lot of um one of the
issues that was really key for us that we’re very close to coming to some conclusions about and and
the last point is very important today and it will continue to be extremely important and I think it
means above and beyond what it says on the slide you know so so inclusive design yes that it
cultivates proximity through the through our distribution network so very just next door to most of
our customers but also in the customer’s pocket right via the phone but I think inclusivity here is
also very important in the greater scheme of things because wherever you are sitting today you know
whatever you’re working on i dare say that you know if it’s something that’s going to last in time
it will eventually be used by or appropriated by people on this continent and given sort of the
trajectory of population growth I mean we are on track to add a billion people in 30 years so we’re
going to have at least a billion people I i believe the the projection is that half of the
population 30 is going to be under the age of 25 we actually have an incredibly young population as
it is so um overall you know and they we’ve seen it we’ve seen it with clovid they are very hungry
for um for for all things technology they’re very hungry to be a part of this global culture so
whatever you’re doing I dare say that they will have to be kept in mind so you know coming to covet
I i have this theory and feel free to challenge me later on i’ve been saying I’m a big cinephile so
i always say that every single movie is about one of two things either somebody goes on a journey or
a stranger comes to town so this particular kobe movie is definitely a stranger came to town this
year and came to town for all of us so um we are still living through it so some of the things that
i’ve put down are again this is not exhaustive um in terms of the impacts or you know how it’s
changing the world around us both in our business and and outside our business with our customers so
the very first thing is this you know sort of accelerated demand for governments ngos you name it
it’s like everybody woke up and it’s like we have to pay uh we we need to use cash’s payments we
need to pay salaries via Orange money we need this we need that and just an influx of demand some
customers that we’ve been chasing some merchants we’ve been chasing all of a sudden wake up and turn
to us and say why aren’t you moving fast enough um and you know obviously we don’t tell them well
we’ve been chasing you for two three years we take the business and try to make them happy so the
second thing that’s really interesting that’s happened is that the central banks who the regulator
being a very important part of our business relaxed some identification requirements and
identification is actually one of the heaviest hardest things to do on this continent for many
different reasons sort of outside the scope of this presentation but so they relaxed some of the
rules for about two three months because they really wanted to encourage as many people as possible
to sign up for mobile money use cash less contact less payments um and and also help in in in
stopping movement because we were either in a state of emergency depending on which country you’re
talking about or a lockdown of some nature of varying degrees of severity so when we when those
rules were relaxed we saw in the sign ups interestingly enough um just parity parity happened
naturally in the number of clients came to us so that really for us was such an interesting sort of
tiny bit of gold mine that we are hoping to continue to to understand better so that we can get to
parity in our global population where it’s clear that we have more male customers than than female
customers so this is these are some of the nuggets that have come out so far and then for the future
for us again this is not exhaustive but um you know I talked about identification for example I
personally think that you know ethical use of ai is going to be at the heart of what’s going to help
us crack this the good old-fashioned ways are filling forms bring your id let’s scan it um or even
you know let’s bring all that that entire process into a digital world is going to have to be a lot
more fluid again we are facing cash as a as a as a barrier as a competitor sorry um so we need to
get to being a lot more fluid make it as easy as possible for our customers to sign up or to
transact with us as much as possible um I think the next wave as I was saying earlier that mobile
money is so young the next wave is diversified product offering so we’re seeing now the rise of
credit but if you think about money in its very sort of old definition in terms of you know you earn
it or receive it somehow you spend it you invest it you give it um across that whole spectrum I
think we’re gonna have to digitize um in many in in different ways and at different speeds that
whole spectrum and obviously add insurance products etc etc so we have started that process but
there’s still a lot more to do um and I also believe that um that’s not going to be something that
the telcos um the likes of us in in mobile money within the telcos are going to be able to just do
on our own I think we’re going to have to rely a lot on partnerships which is why the ecosystem is
so incredibly important why why entrepreneurship is going to be a a key part of what’s going to
ultimately take mobile money you know from the half billion we’re crossing this year into the
billion and more users and really fluidify the customer journeys and obviously you know inclusion is
is at the heart I talked about it earlier in terms of being included in this in global design you
know thinking of africa and african africans as being um you know worthy customers that we that need
to be listened to and and incorporated and who also will be actors whether it’s african
entrepreneurs or people like myself who are in this ecosystem not only as participants but also as a
as a customer I’m a an Orange money customer um and I also you know as a mother care about where
this this world is going what are we what are we creating what are we what are we doing that’s going
to be um bequeathable to our children um if I’m not mistaken I think one of the speakers here
yesterday was talking about social design and and revolutionary design and really at the planetary
level and really taking our ambitions um global but you know in a very very inclusive way so to me
this is critical there’s no such thing as you know creating products just for for a particular part
of the world ultimately I think we’re going to have to answer um the the need the call of the
customer on this part so I’m going to end on uh one of my favorite poems and I’m going to claim
kavafi as african even though he is of greek origin but he spent most of his years in alexandria
egypt and did his best work there so I am going to um just appropriate him for this for this knee
for this for the needs of this session and just uh read the few bars you have in front of you of his
poem which I think is beautiful and illustrates where we’ve been but as i’ve said you know um the
journey ahead the pages to write are so much more exciting what is to come is definitely far more
luminous that what we’ve already gone through as exciting as that has been so steph I’m going to
stop here and i hope i was timely and stop the sharing and we can um perfect thank you so much Rama
if i mean yeah we I mean you could talk for the the whole the whole day about uh all of this this is
amazing uh I have a i have a question uh if you said that um your enemy is the cash is cash money
how did you welcome the kobe the kobe 19. i don’t know if welcome is the word [Laughter] i don’t
think anybody welcomed covet i think we all woke up and and it was like that that person who came
and didn’t call in advance and you know just rang your bell at 4 a.m and so you answered the door
and you had no choice but to let them in so um you know in the same it’s been the same shock it’s
been for everybody to be to be quite honest um both in in our individual lives but also across the
business um very disruptive clearly um you know sort of pushed everybody into who was able to into
working from home um but across the continent we have very informal economies and people with
activities that are very day-to-day so who literally couldn’t afford to sit home and work from home
like some of us so I think kovit was a huge both economic and sort of health shock as we know we
have a lot of issues with basic health care and our health systems it’s interesting I actually was
listening to the president of the world bank a couple of uh weeks ago talking about their response
uh to covet and he described it as three steps so one is saving lives secondly saving livelihoods as
much as possible and then third he called it protecting the future I actually really like that
expression because as far as he was concerned protecting the future was about education and basic
health care so when you come back to that framework you know saving livelihoods we found ourselves
as a continent and in many countries i think having to actually I think this applies to everybody
having to kind of find the right response between the economy and people’s health and and where do
you put um what’s the perfect approach or what’s the perfect mix temperature of this particular mix
of water and and I dare say I think we’re still continuing to try to figure it out because in
senegal in particular um it is um you know we still have more cases and we haven’t we’re not at that
point where we’re on the downward side where we can say we’re reopening the economy we’ve actually
had to reopen and as I said we have a lot of informal sector activity and um we we just can’t
prevent those people from earning their livelihoods so now we have to figure it out moving forward
great thank you so much next question is for hassan hi hi everyone thanks uh rama for your talk very
insightful and very inspiring so a quick introduction actually I’m based here in hong kong but I’m
originally from tunisia and I’m african so I know innovation i know innovation in africa is really
tough so my question to you rama is how your government in senegal is supporting you in your journey
of innovation um yeah that’s actually a great question and i um you know it’s interesting you’re
talking about the government I think when it comes to innovation or tech you know african countries
the more powerful actor is more is a regulator unless you’re thinking about government in a larger
sense including the regulator so in financial services specifically i mean the central bank is you
know second to god basically it’s it’s amazing the powers that they have it’s also understandable
because their job is to really keep the whole system the economy stable so stability is extremely
important to them so that’s why you know regulating all the actors is actually critical to them so
how are they so working with them i personally think is far more um we’ll have does have and will
continue to have far more of an impact on innovation and on what we can do and what others can do in
this sector i think that they have shown certainly a um a willingness to move with the times but
clearly technology just moves faster than everybody central banks included so we have to work with
them um we have to work with them and engage them and and and and communicate a lot with them in my
experience it’s really been about building relationships it’s been about explaining our goals and
what we’re trying to do and how it will answer the two questions they’re most interested in is how
do we grow financial inclusion and how do we keep the system stable um because obviously we’ve seen
what happens when financial crises hit um it’s not isolated it takes down entire countries or entire
systems there I say so they take their sort of policing role very seriously and frankly you know a
few years ago I think I i would have seen their role differently and as being too rigid but i do
understand now really um being here working on what I’m working on the importance of the role they
play so i would say to come to just answer your question very quickly that regulators have far more
of a role um to play in in in our part of the world um some of them are far more ahead than others
but we can’t afford to leave them behind so we’re gonna have to continue to work with them great
thank you so much uh next question is for sharon I’m trying to make it uh sound like dutch it sounds
very sexy as well i see a lot of questions and remarks about inclusive design so I think you’re
touching upon on a passionate topic with many people over here so I don’t want to repeat all the
questions but my question was more like that’s a really strong ambition to be fully inclusive in
design and where do you see currently the biggest challenge or gap that we need to bridge in order
to at least reach some levels of full inclusive inclusivity um it’s twofold I think the first thing
is just listening I mean it is such an underrated skill listening to the customer on the ground we
still we I live here we are here we are our own customers and I still think we need we can do more
in terms of listening to our customers observing our customer and and using doing that literally and
also listening better to the data that we’re getting from our customer what is it telling us what
story is it telling us where is the need where the pain points um even beyond the pain points that
they actually open their mouths and tell us about all the time whether it’s on social media or
directly so I think really that is at the heart uh it’s the starting point of of being able to be
you know a lot more inclusive in design um the second part uh that i also feel very passionate about
is you know which is why I was actually very excited as well when steph invited me to come and speak
and and just be a part of I today is that you know there has to be more of a bridge more people on
all sides uh whether in africa africans african living africa or africans living you know in in
somewhere else in the world and working like hassan for example tunisian who is working in in hong
kong if I remember hong kong or singapore but my point is we need to mix more we need to bring our
thoughts and our experiences to the tables where capital is being allocated because ultimately you
know the check determines what we innovate about and obviously where even decisions are made around
well what what problem are we gonna solve you know if you are a bunch of men around the table or a
bunch of um just you know african women around the table the problems that you’re going to talk
about or the opportunities you’re going to see are going to be different so how about we mix it up
so we are somebody to put more women in boardrooms not just boardrooms yes boardrooms but any table
any room let’s build the tables that are not built yet and invite other people to those tables it’s
so incredibly critical i always say we need more mosquito zapping apps fewer dog walking apps
nothing against you know dog owners and dog walkers but you know we have more mosquito issues around
the continent so you know this is you know thank you for the question you can see I’m just going on
and on but my point is this is actually so incredibly critical to what we’re going to build for the
future thank you do you want to ask yours yeah sure um I’m I come from middle east and I feel like
uh type of challenges that uh being people in medialis are facing sort of similar with uh with
people from african uh countries lack of resources uh water shortage uh just to name a few and um
you know from my own experiences I see a lot of young entrepreneurs passionate entrepreneurs wanting
to make a change and sort of like sometimes sometimes most often are being blocked by regulations by
lack of resources so um and and i’ve been really fascinated by this whole mobile payment system
which makes it really fast to transfer money from a to b with the with the ease of few you know uh
clicks so I I’m wondering if you have ideas or have plans to sort of like merge this wall towards
like a mobilized uh system for money transfer with the passion of uh african entrepreneurs who try
to solve problems are there ideas of finances ideas that’s come through uh the channels of social
media or any other channels that you are connected to these young entrepreneurs yeah I mean um thank
you thank you for your sort of comment slash question I mean the common part is incredibly relevant
um yes so essentially what I started even talking a little bit about what you’re describing which is
uh so you’ve got sort of the the bigger institutions in which bucket I would even put Orange or the
large fund managers etc etc and then you’ve got this world of entrepreneurs who see opportunities
who see problems they’re trying to solve so in some ways yes there are certain things for example
you know i’ll talk about iran because that’s what I know best there’s Orange digital ventures which
is an investment fund um that actually within the family of that fund even has an africa um sort of
dedicated pool of money that is there really to invest as the name you know indicates in businesses
across the continent not just in the countries where Orange is present um that address um some of
the relevant issues that you talked about just now so that’s one there are a lot of um you know sort
of there is Orange fab you know that’s all about finding smaller entrepreneurs um across the the
footprints and and giving them you know some mentoring some money um you know there are Orange
digital centers that are that have opened in a couple of different countries tunisia being one of
them hassan senegal being another one and the goal is to spread them everywhere and there are sort
of these homes of tech and innovation across the footprint so there are all these there’s a lot of
activity and not just by Orange by the way there are other institutions doing similar things trying
to put money trying to put mentorship trying to create and build and support the ecosystem but you
know clearly there’s still a lot more to do um and you know there’s certain governments that get it
more than others I think rwanda comes to mind off the top of my head where they are trying to
attract entrepreneurs by creating you know the infrastructure and the ecosystem both in terms of
talent and money that would attract them to come in and build or come and create and come and
innovate in rwanda with the idea that you know if they are able to create something um useful it can
then scale and and go to other countries so to your question it has started it is here it is
happening but clearly there’s still room for a whole lot more to be done for a whole lot more to be
done from a funding perspective from a um an idea perspective um and I do firmly believe that the
large institutions the big telcos are now going to be the only ones to solve all the problems so
this ecosystem is actually vital um ultimately for the customer and the quality products and
services that we’re going to be able to to give them will not just come from the brains within the
big institutions um it will actually be from the larger ecosystem so keep at it if you’re if you’re
one of them the herat next question matthias you want to ask yours matthias yeah sorry I was just
trying to admit yeah uh I’m just trying to ask you so how do you address inclusivity without being
exclusive so some people say that when you try to solve the problems of everyone you end up solving
no one’s problem so how do you get away of that and um towards your end goal without being exclusive
that’s a great question um and I see the wisdom in it I’m not sure yeah jerome said good question
great question even I’m not sure the I have the answer but i can certainly tell you um you know
extemporaneously what comes to mind i think you’re very right there is always the point at which you
know you we talk about focus right whether it’s you know I talk about it with my teams we talk to
entrepreneurs about that we’ll solve this you know tiny problem but I think perhaps what is useful
is that as you’re solving the problem at least try to solve a problem that you can see um being
helpful or ultimately being solvable for a large number of people so it can be a very narrow problem
um very specific problem but it could be a a this narrow and specific but widely shared problem so
that’s kind of how I how I see it but yeah you make a very good point because the point isn’t to
design something just sort of vanilla and passpartout um I think you know you you but it’s about
doing something specific but hopefully that can be useful for a larger number and and another way of
looking at it is when you’re choosing what to solve for is to look at something that is painful
that’s what I was saying mosquito zapping versus you know double me maybe that’s a bad example there
are a lot of dog owners and dogs but my point is maybe choosing a problem though specific but that
is widely shared all right thank you great syria thank you thank you for the talk um you started
actually with the story about the fact that um everything started in philippines before africa and
and customers were trying actually to solve the problem by themselves is that not like a good
typical point for all innovators uh present today just to like stop being in a room and trying to
think about what should be the next innovation but get out on the field and and have a look about
what customers are trying to solve even if it’s in another country because it gives you really a
clear indication of of what they need absolutely so this was back to my point about listening um but
you know if we’re going to bring all the senses in it’s about you know opening our eyes as well what
are your customers doing with you know is or is there something they’re doing that you may even
think of as a as a problem i’ll give you a concrete example that’s very live actually so you know in
on the streets in the cars you either you know these guys who sell stuff on the street so let’s say
you go to the fruit seller and you ask him to you know you buy some fruits and I would say 9.5 times
out of 10. if you tell them can I pair you with Orange money they will say yes but it’s interesting
they’ll ask you to do a transfer so you transfer the money and with the fees um for you know what
you would pay eventually to get the money in cash so he will ask you to include that for when at the
end of the day he wants his cash back for whatever he does so but we actually have a specific
product called merchant payments that addresses that but clearly if your merchant you know a bit
model a little bit copied at least until now on credit cards there’s a fee so there’s a cut there’s
a tiny cut well i think it’s tiny but clearly not tiny enough um that you know comes off the top so
the guy on the corner that cut he cares about it that much I know otherwise he would not be trying
to like circumvent it so for us you know I i tell my teams this is something we need to think about
do something about and think about if we’re really going to um scale and democratize merchant
payments beyond supermarkets to literally the guy on the street being willing to accept money as a
payment at least in the formal merchant payments because he’s accepting it just in a different way
so my point is this is a live example of our of of a customer in this case the merchant doing
something that he’s not kind of supposed to be doing but I think it’s telling us something about our
product and it’s pricing and and and that there’s still things for us to do yeah I try to explain
very quickly you know I i hope you know you understood sort of the difference between those two
things keep the eyes open I think that’s exactly keep the eyes and the ears open yeah thank you
thank you so much for the talk too you you’re welcome i I would like you guys to uh big a big round
of applause for Rama Diallo.  That was
amazing thank you so much for sharing will you be part of the networking sessions sorry will you
stay for networking tonight um it’s at 6pm I may not be able to well it’s at 6pm for me so I may not
be able to saturday so friday afternoon okay so and I totally have some family engagements I’m so
sorry but you know feel free to share um while I’m on social media or email or if you have more
questions that come up you know send them to me and you know I can find a way to get back to people
and keep the conversation going this was this was a lot of fun stuff thank you so much exactly where
can we find you online on twitter so on twitter I’m at tilly bo gold t-i-l-i-b-o and gold my gold um
same saying on on instagram tilibogold.rd on instagram um and uh as myself I guess well I’m not a
diallo on um on linkedin as well so feel free to to say hi and ask questions um and let’s let’s keep
in touch great thank you so much bye thank you great and we’re gonna have a break of 15 minutes uh
go drink something fresh beer or whatever and yeah we meet in 15 minutes for the talk of Jonas Vonlanthen about agile and Holacracy stay tuned [Music]

ITODAY SUMMIT 2020 THE INVINCIBLE COMPANY

STEPH CRUCHON : For the last talk of itoday we are so happy to welcome two of the most inspiring business thinkers in the world. And like chocolate or mountains they are our national pride of Switzerland.

Professor Yves Pigneur and doctor Alex Osterwalder are considered mastermind
among business strategists, their tools have been used by numerous companies, such as P&G, Amazon, Google, Bosch, Tesla… They are true legends in entrepreneurship. Just a number- more than a hundred thousand of people follow them on twitter, they are ranked number four of the Thinkers50 and this is the oscars of management.

Together, 15 years ago they’ve created the business model canvas that you all
know. This canvas! And they wrote this book- Business model generation which sold more than 1.5 millions of copies in 30 languages. Again, for business book it is one of the most influential book in business and every young entrepreneur, a startup, or even designers has to read it!

They are also creators of the value proposition canvas and this book is
amazing. Flip the book it’s even more amazing and in april this year, during
Covid19 lockdown they have published their new book. The invincible company
which is amazing and also beautiful and I’m a designer, so I can recognize beauty!

Im so proud and happy to welcome on this conference Alex Osterwalder and Yves Pigneur- the Invincible Company. Big round of applause please!

YVES PIGNEUR: We are very happy with Alex to be here online with you today.
I will try to share with you some thoughts that we had on this idea of the Invincible company.

We could have called also maybe called it the Resilient company. I will explain that a little bit later. As Stéph just told you, we started to work together more than 20
years ago now and trying to create some visual tools, corresponding to some business concept. And we created the business model canvas, the first tool that we published 10 years ago now. Inside this book Business model generation to map out your business model then we came with the value proposition canvas and helping people to design and test your value proposition.

Last year David J. Bland with Alex wrote this book Testing business ideas was to
provide the readers with some techniques for testing and de-risking business
ideas. We will come back on this issue a little bit later.

This year we came with the Invincible company to help people to manage their portfolio and create an innovation culture.

What’s an invincible company for us? Three characteristics: invincible companies
constantly or at least regularly reinvent themselves, second they are able to compete on superior business model, and not only on product or technology. And finally they’re able to transform industry boundaries to go away of their traditional
sector of activity. 

We think that those three characteristics is also good for what we could call the resilient company, which is especially of actuality in during this last six months.
Everything started three years ago in fact in this small village in Lausanne and we sketched some ideas on this idea of business model portfolio.I will just briefly explain this concept and then we will deal with the topic for today. 

In our mind we have this explore exploit continuum. If you’re a startup, you have an idea and you try, you search the right business model. Okay and it’s a design and a testing activity with a lot of back and forth iteration.

If you are able to find it you can launch, and you can grow or sustain, or survive for an existing company. And this is a quite messy process. But if you are an existing company this one is for you. Mainly you execute your existing business model, but it also means that maybe you have to deal also with this exploration activity.

Playing the game of the startups just for replacing some declining business model or coming with new activity that you could like. A new business model that you
could create. We mean that companies need maybe to be ambidextrous and based
on this idea. We wanted to have a visualization of those business models so we came with two blocks here: one with the different business model that you are searching. So you try to invent, to design, to test. We call that the explorer portfolio

In a second portfolio where you can visualize, analyze assets the existing business
model that you would like maybe to improve or sometimes to kill it. We will see that in a few moments. A very quick example even if it’s not the main topic for today. As I will explain, this ideal portfolio is the following one and we will try to illustrate it
with the logitech portfolio.

So here you have what we call the return, so it means that you have the most
contributing business model on the top and the less contributing at the bottom.
In this case productivity means a mouse, keyboards and so on. It is the highest contributing business model for logitech and smart home is a very small one, but
we can also use this axis for trying to evaluate the risk of those business models, the disruption risk.

And so you could consider that gaming and video is very well protected. Again there’s disruption risk, but maybe smart home could be at risk. So the idea
for the business model here on the left-hand side is to improve mean pushing that on the right hand side, on the top. But there are some other action that you
can take on a portfolio.

Another action is diverse. Logitech has decided to diverse last year. Lifesize which is video conferencing special systems. Another action that you well know for the executing or exploitation portfolio is to acquire the existing company. In that case
they have acquired two years ago Saitek and Astro for reinforcing the gaming business model. And last or two years ago, they have acquired Jaybird and Blue speakers and earsets to reinforce the music.

Last year they have invested in Streamlabs and it seemed that this year they will
Acquire Streamlabs putting that inside their portfolio. Here is a short video by the CEO of Logitec Bracken Darrell. It will give us a very nice metaphor or analogy
-VIDEO- BRACKEN DARRELL – CEO LOGITECH: Its called trees plants and seeds. And trees plants and seeds was the really really overly simplistic analogy that virtually any company that’s been around for more than 10 years is doing.

Whether they talk to people in public about it or not, but this was mainly for us internally. So the tree was the big old tree which was on its way to its deathbed in my view it’s going to fall over and turn into lumber. This was the pc peripherals business. The plants could be new businesses and the seeds would be things we try to create that might be do businesses one day. It’s really that simple.

YVES PIGNEUR: So they took 75 percent of the resources out of the plant business of the traditional business. They re-allocated 75% of resources from old business to new growth opportunities.

Okay on the top here, on the top right and to push that in the explore portfolio.
We will see that a little bit later. Just an amazing fact Bracken Darrell spends between 40 and 60% of his time on innovation. So i have a question for you
and Steph will launch a poll how much time does your CEO personally spend on business model every week, last week for example.

And if you are the CEO of your company how much time would you spend on business innovation exploration of business model. So now you add the poll you can vote 15 seconds and i will show the results.

So how much time you’ll see you personally spend on innovation every week? Okay vote vote vote! Steph you can stop, okay so here less than 10 for 50
between 10 and 25. Let me continue. So the question was this one. We asked this question to all the masterclass we had with Alex and last year he launched a poll on twitter. And the result was roughly similar to what you have presented here. So
70 % spend less than 10% of their time on innovation every week and only seven percent spend more than 50% such as Bracken.

So the question- is it possible to have ambidextrous CEO, not sure. And this poll last year has been confirmed. Alex launched a poll with a question – do you agree that the leaders in your company have no clue how to manage innovation? And the
result was spectacular! 40 percent agree or strongly agree that leaders in their company have no clue about how to manage.
There’s a reason why we came with a suggestion that i will not comment too
much today. It is fine to address and to manage the present of the company, the execution, portfolio, and maybe we need to have a chief entrepreneur or chief corporate entrepreneur with the same power to address the future of the company the exploration.

So the tool we developed inside this book is first the portfolio manager. The portfolio map I presented very rapidly. We came also with some design techniques that we call design patterns or business model patterns. I will come back to this a little bit
later. Also we wanted to address or to create an innovation culture inside your company and we used a tool we developed a long time ago with Dave Gray
called the culture map.

Today we will focus mainly on business model patterns. What does it mean? It means the agenda for today.

Alex will present you the business model design and business model testing
a couple of ideas that we had on this topic then he continue and he will show you and illustrate some invention patterns with some exercise that you will do and finally at the end, I will come on this idea of shift pattern to help people transform existing
business model. I will just stop sharing here and Alex will continue.

ALEX OSTERWALDER: So as you’ve seen with the intro by Yves you know it takes more than just few “tools and processes” to actually get innovation right. But nevertheless we believe that innovation is in this whole professionalization phase, where we can improve the way we work. And you know, this conference you have seen quite a bit of that already, but at the same time you know besides the bottom up we need the top down. If leaders don’t create the conditions for success, nothing will happen.

So let’s look at the process now that Yves started to talk about. This idea of inventing new business model and value propositions or improving. There are actually two phases to this, or two cycles. If you want and you go through them all the time. Okay so the first phase is business design, which has ideation business prototyping assessment, where you think about how you create value for customers
and how you create value for your business. We’ll zoom into that a little bit today.

Steph showed the book one of the books that we wrote testing business ideas or
Yves mentioned that one this whole idea of hypothesizing, what needs to be true for ideas to work and then experiment, but that’s not the core topic for today actually.

What we will show today is the potential you have here with business model design. So how can you compete beyond just “products and services”. That’s what we’re going to look at a little bit today and we’re going to see how to better decide.

So two tools we’ll just look at one today and we’ll look at the patterns there
the business model canvas. I’ll do a quick repetition for those of you who
don’t know it. This is all about making explicit how you create deliver and capture value, but then there’s the second tool which is the value proposition canvas
which makes explicit how you create value for customers.

I want you to keep this in mind that even with the best product or service you can actually still fail, if you don’t have the right business model. Think of Nespresso, an example we use a lot, with the same product Nespresso machines and the pods they almost went bankrupt. They had to find a better business model, so if you’re just focusing on products and services you’re not doing your job right.

Product services and price is part of your job, but the rest of the job is to figure out
the right business model. If you don’t do that well, you’re not doing the best you can. So let me just quickly do a repetition for those of you who haven’t seen the
business model canvas yet.

It has nine building blocks. First one is how do you create value for your customers so value proposition, customer segments and then you need to ask what do i need to have and what do I need to do to create value. So key resources what you need to have – factories, brand, etc.. Key activities is what you do and the partners is who you work together with once you’ve figured that out.

That gives you the cost structure. This is what we call the backstage, everything you need to kind of do behind the curtain to get your business going. Then we have the front stage- how do you reach customers with the channels, and what kind of relationship do you establish once you’re working with customers. And then how do you capture value from that. Nine building blocks so we’re not going to go deeper into this, because we actually want to go in a more sophisticated way into business model patterns.

But let me do a little quick exercise with you to see how good you actually are with the business model canvas. So we’re going to use the Ted conference as an example. One of our friend Bruno Giussani, he’s helping here with the Ted conference and he’s talking about the conference. We’ll see also about the shift from conference to video, but we want to focus on the very first business model
which was a conference model.

We want you since it’s the end of the day and you need to do some work so you
stay fully energized. And we can see you on the screen, so if you’re not working
we’re going to stop right here, right now!

So I want to see everybody working and in addition if you’re not working it means you don’t care about business models. You don’t care about your company or your work. So let me give you the Ted conference building blocks for the conference
business okay only the conference business and you’re gonna have to map it
out.

So value proposition ted conferences at the beginning it was only for invited people, invite only influencers. I’m going to give you the building blocks here so we have on the left side all of the building blocks of the ted conference.

You have numbers here so you need to put the right letter with the right number to
figure out which building block goes into which number. All I want you to do is write down on a piece of paper the correct sequence of letters which one goes with one which one, goes with two, which one goes with three. Once you have finished you type it into the chat window.

So we’re gonna give you two minutes to do this exercise, let’s see who gets it right
first. Let’s get started. Anybody who’s not working doesn’t give a damn about their business model and will most likely fail in the future, so you better get working.

Let’s see who gets it right first. When you have the full sequence you can type it into the chat window but only when you have the full sequence, and then we’ll see who gets it right. The first person who gets it right will be called master of the workshop today!

I can see people working that’s great. Yves, Marcus, Alex everybody working that’s
great! Don’t worry if you’re not done yet we still have 40 seconds no time pressure.
The only thing that’s missing is a little bit of background music, right? I won’t start singing because otherwise everybody will log out, turn off the sound.

Ithink that’s good we got quite a few answers here, five seconds left the correct answer was as many of you got right, this was an easy exercise d-f-a-c-e-b. We’ll have a more complicated exercise afterwards. We started simple.

Let’s look at this of course d-f-a-c-e-b was right. So conference fees is the revenue stream, the channel it was at the beginning, personal invitations you couldn’t just
go even if you paid you had to get invited to the ted conference. So it was a very privileged relationship, you had to be part of the network, and then of course in the key resources, you know we could have put a couple of things, we kept it simple. You have staff, and curators in the key activities, we had the staging of the conferences, and that leads to the conference logistics talks, and as key partners we put ted’s speakers.

Now first thing granularity we could have been a lot more granular but we wanted
to keep it relatively straightforward here. What we could add to this, of course, is
the second part of the business models. When they started out, they needed sponsors. What’s the value proposition to sponsors? Visibility and the revenue stream is sponsoring.

A lot of people use the business model canvas now around the world, literally
millions, to map out their business model. But when you start out with a new idea or you improve an idea, you need to make sure that your vision is not a hallucination.
So what looks great on paper or in a business plan might actually not work.

So you don’t actually know at the beginning the difference between a good idea or a bad idea, you don’t know. So here i’m quoting Steve Blank the inventor of the
whole lean startup movement with customer development. The question to you is very quickly we’ll do a poll here- how many business ideas do you think you need to invest in? So invest in not just ideas but projects to create a mega success. How many projects would you need to invest in small amounts of money to create and really really big success.

So think you’re at Logitech or at Nestle. Do you invest in what? Ten projects?
Twenty five? Fifty? Hundred? Two hundred fifty? Or a thousand?

Let’s take the the yardstick of a hundred thousand swiss francs or dollars you’d have to invest. A hundred thousand swiss francs – how many projects would you invest in? So let’s please vote! Let’s see what comes out of this, and those of you who know the answer it’s kind of easy, you might have been at some of our talks.

Do we have enough votes then we can switch to the results? Okay so most of you say a hundred projects, but the correct answer is actually 250. Let me show you why. If you look at early stage venture capital, the investment of small amounts of
money in projects early on. You can actually see that six out of ten projects they lose money, they’re failures. Three out of ten they make some money, only four
out of a thousand become big successes.

That is the law of venture capital that very few investments actually make up for the
entire return. What does that mean if we go map it back to the numbers. We have 250 projects: 162 fail, 87 some success, only one out of 250 is a big success. It means you can’t pick the winner so in innovation many of you will fail and that’s okay.

The challenge is of course kill those projects early and throw them away. So if you’re in a smaller company, obviously it’s not 250 projects it’s maybe 10, but you can’t pick the winner in innovation in growth innovation, in efficiency innovation making better processes for your amazon warehouse, of course, you can pick the winner. But for new business models new value propositions you can’t.

The good news is well failure can be the beginning of something beautiful, so
we can improve the process, and of course we need to kill the projects
that are not successful. And this is an art that we won’t go into deep here, but you need to be able to kill projects.

Very briefly before we go into business model patterns, very quickly on this idea of
testing and decreasing the risk of innovation. This is now a profession, we can even
measure the reduction of risk and uncertainty. It’s not just this fuzzy lean startup
concept we can actually start to take these big ideas and break them down into smaller pieces that you can test. And here’s a mistake that many of you are making.

You probably think if you’re an engineer, put your hand up let me see, put your hands up if you’re an engineer. Any engineers in the room? Okay what do engineers traditionally do? They build stuff, so they build stuff to test things. But
you don’t need to build stuff to test things.

What you need to, actually, ask is what needs to be true for this idea to work and you will have a ton of hypothesis, the hypothesis that the customer has this problem, a hypothesis that they have the budget, a hypothesis that they will pay for it, and a hypothesis that your value proposition creates value.

These are the things you need to test. And for that reason we said ok, we will write a book about the topic and one of the big things is here you want to admit that when you start out, you actually have no clue, if your idea is going to work. So the
risk of failure is big. What do you do when the risk of failure is big? You don’t build
something you test with the cheapest possible ways of doing things, for example, a customer discovery interview before building something right. Even before building whatever, like a landing page.

Now we saw that not that many people were good at this process, so before execution they did testing, but what they didn’t really do well is a systematic approach with a whole variety of experiments. So we wrote this book with 44 experiments, a library of 44 experiments so you can actually do these two phases
of testing which we take from Steve Blank’s work customer discovery.

When you don’t know yet what’s going to work so you do very cheap and quick tests like interviews, like card sort, like speed boat i won’t go into details here and only afterwards do customer validation. Where you actually build stuff, so building is not the first thing you do because it’s a waste of time, energy, and money.

Too many people start too quickly with building this. It is actually the biggest and most expensive mistake we see in many many companies. Then people say
Alex but you know we actually need to spend a million dollars on a prototype and I say well that’s a reason, more to do good customer discovery before you build anything. So testing again is not the topic here, but I just want to show you the things you need to ask yourself in an experiment, customer interview, simple
experiment. You can actually start to understand the cost of an experiment, so customer interviews are cheap, set up time is fast, run time is fast, but the problem is the evidence, strength is relatively low. What people say and what they do is not the same thing.

The topic of today which we really think we can help you with a breakthrough and
the rest you can go and buy our books and have a look at it. So what you’ve already addressed with this idea of business model patterns that you can actually create better business models to out-compete others.

Let me repeat myself- it’s not enough anymore to compete on great products, great services, at great price. Nobody wants to buy a crappy product right who have ever wanted to go buy a crappy product? Nobody anymore. You can even check online
what’s good what’s bad, so today having a great product is just a matter of survival,
a matter of staying ahead is beinge xtremely good at business design, beyond product design. Okay so you need to add it of course product design is core, but it’s
not enough to succeed anymore. So Roger Martin who actually pushed this idea of business design, used to be number one business thinker of the world. I think he’s number two now. So he likes to say- you need to become designers as business people, or designers need to become business people, right? So what do we mean with this?

Let’s take this idea that comes from design. We took it from architecture, from this whole idea of oarchitecture prototypes and patterns in business. These are repeatable configurations of the business model building blocks to strengthen your idea so two types of patterns. One in event and one in improve.

Here we’re trying to create new business models around a new idea, and here we’re trying to, many of you work in existing companies, improve existing business models. We call this shift patterns. Let me go into the first one.

What do we mean with this here, we mean the improvement of an idea, by applying
a business model pattern something that will make your business model around your technology, around your product, around your service stronger and better. And we created an entire library of patterns. We have some that are in the front stage more customer related, we have some that are more on the backstage more infrastructure related, activities resources and we have some patterns that are
related to profit formula.

How to make more money and spend less. Now let me make it concrete this is a little bit conceptual. Let’s go to the concrete stuff. Type into the chat window what these three business models have in common: amazon web services, dyson or waze. Amazon web services you know what that is dyson you know with the home appliances they start with vacuum cleaners and waze the navigation app.

What do their business models have in common? Quickly type it type into the
chat window what do they have in common. Not so easy, right? They have a
part of their pattern in common. They have a similar pattern. Let’s see if anybody figures it out. I’ll just give you 20 seconds, disruption could be. It’s not what we’re looking for. On demand subscription? I didn’t see a dyson
subscription yet, freemium? What they have in common- is all three in a different way created a resource castle, they created resources that are very difficult to
copy.

Let me take the simplest one. We’ll look at Dyson, most straightforward other twos have actually a similar principle. So here’s what we call a pattern, where we have three building blocks hard to copy resource. The first billing block we need to invest money into that resource and that will allow us to come up with a value proposition that is protected, because the resource is protected. That’s the pattern.

Let’s look at an example here, Dyson it’s the most straightforward. It’s a very simple pattern. If you want because we’re talking about patents so now another thing here it’s just quick side remark dyson is a company that understands failure and success
extremely well. They know they need to try out a lot until they succeed but what’s
powerful actually is not just the product, but the pattern behind this.

So what they understood is, if they come up with great intellectual property, and patents that protect their devices, guess what? They can start to create premium
consumer appliances like these vacuum cleaners that they will be able to send
sell to a high-end market at a premium price. That’s what they do. What is part of this pattern? Here’s where we go beyond the product is in terms of key resources.
They need two key activities: they need to spend a ton of money into R&D actually six times more, six times more than any of their competitors, which leads to a higher R&D cost.

But they make that bet, because they know this pattern will keep them ahead. Now you’ll say, well it’s trivial, but they were the only ones to do it in household home appliances. Okay pretty powerful, so what did that lead to to an immensive kind of
scaling of home appliances. They sold over 100 million machines until 2017.

So now let’s look at what you need to do, you need to work because i talked
too long, so front stage disruption we’re going to look at channel kings. So here we’re talking about a business that radically changed. How to reach and acquire a large number of customers. The pattern here is very simple, a value proposition that you’re selling to a customer segment, but you’re going to disrupt the intermediaries and you’re going to sell through an innovative direct channel. So direct to consumer.

If you want and the examples here that you might know, dollar shave club, tupperware, nespresso. We’re going to zoom into the dollar shave club. We’re going to look at that pattern. Now let me give you a little bit more help with this pattern. So the secondary aspect of a disintermediator, so you can understand how it works.

The first one is here that we have a direct relationship with the customer and we capture the full revenue because there’s no more intermediary, no more retailer that takes some money. But of course for that to work we need to do something in the backstage. We need to replace this direct access what the retailers used to give us, by innovative marketing and selling with an incredibly powerful own brand.

This of course means a lot more money spent on acquisition, because now you need to reach the customer you don’t have the retailer anymore. Let me give you an example you might have heard of dollar shave club. So this is the example we’re going to use maybe a little bit more attractive for the men than for the women. I see a couple of you don’t need one, you’re very bearded there.
– VIDEO-

So the point here is why do we use this example, actually if you want inferior technology the razors are probably not as sophisticated. Now task for you. You got two minutes to map out the business model of dollar shave club and you’re going to use the pattern. So you’re only going to map out the aspects of the pattern. So we’re going to give you the affordable men’s shaving products, selling it to the mass market and the rest of the building blocks we’re going to give you based on
the pattern and the little video that you have seen.

Who got it right? So online store and viral videos is the channel. They needed to replace the access to retailers through a direct channel that is a direct relationship. That’s the type of relationship they established. Customized subscriptions is of course the revenue stream. Innovative marketing is the key activity. Innovative marketing means what creating viral videos again and again and again. The brand as a key resource and we added one more the e-commerce.

Around your products you need to think of these business model patterns in this case, this pattern actually led to a 69 retention rate which was incredibly high in this particular domain. So very powerful business model now in these patterns we actually have sub patterns. Here you’ve seen one of the two and we add for every one of these trigger questions so you can come up with better business models.

What’s really important here is when you’re working on a product or service, and the related business model, you can ask yourself an access assessment question,
meaning is this a very good does it score well on this pattern or does it score not so well. And you can do that across all of these patterns so you can start to assess the design of your business model, not just the product or service.

Let me repeat- the successes in the business model so you can start to assess the design which doesn’t mean you shouldn’t test it because the design can be great but customers can still hate it and here is where i’m gonna hand over to Yves. I think I took a little bit of time.

YVES PIGNEUR: We’ll try to finish in a few moments. The idea was to deal with this idea of shift pattern. Trying to transform an existing business model, why?
because the idea is to adopt a strategy to be ready to change regularly your business model, to adapt to your environment, or to grow.

So the idea compared with the diagram we use at the beginning, the idea is to
deal with this idea of improving existing business model, so in a shift pattern we have an existing business model, and we try to apply this pattern for creating
a new business model. And in the same way, as we have done it for the inventing pattern we came with a library, where the the pattern is mainly based on an epicentre, a block inside of the business model canvas, value proposition. Shift is from product to service, from low tech to high-tech, sometimes is the reverse from high-tech to low tech. Think for example nintendo wii, we had also some front stage
driven shift from niche to mass market from b to b, to b to c, or from b to c, to b to b.

We had also some backstage driven shift based on the resources, on the activity, the partnership, that you could have. And finally some profit formula driven shift that i will not explore today and i will mainly focus on one of the front stage driven shift.

A radical shift, a transformation of your business model, of who is targeted and all products and services could be delivered. I will focus on what we call from niche market to mass market. It means that we have a niche value proposition for a niche
market, small market. High price high revenue and we could switch towards a mass market with maybe a low price but higher volume revenue. And maybe using a different channel and using some different backstage, such as different activities or different resources. You need to acquire to be able to adopt this mass market, and for each of those pattern shift we have also we had for the invent pattern some
strategic reflection or trigger questions.

If you want it will be our last exercise for today. We will try to illustrate when Ted
decided to shift from niche conference to streaming video for all in 2006. And I’m sure that you have watched those, some of those ted talks and i will ask you how they changed their existing business model to adapt it to video streaming.

You remember with Alex you briefly maped out the existing business model the conferences. I will give you the different blocks here ted talk talks production and so
on and the same question we had so far. So the idea is to write on the full sequence of the seven letters matching the numbers. You have two minutes so
let’s go. As soon as you have the seven letters, you can type it in the chat window.
I think it’s time to wake up, it will be the last one so we will finish in two minutes.

You will see the solution the ted talks is what you offer it’s your value proposition,
global audience you are member of this audience large audience worldwide and then they had to adopt a new channel for reaching this one because you can
watch those videos and titles on the ted.com. Then revenue that’s keep that in mind
it’s free streaming sometimes it’s free okay you know google is free, but somebody else maybe could pay something.

But why they came with a new business model so sophisticated but with a free streaming. Ted talks production. Because they had two come to create a new activity that they never done before for the conferences. And the mass marketing and not the niche marketing with invited only influencers and finally there to over develop and to adopt a key resources, huge infrastruction with collaborations with YouTube and etc.

So what we can see here, they have in fact adopted a pattern from niche to mass market for creating this one, with you can see the Ted talks, the global audience, the streaming. Keeping the two_ gray is the conference, yellow is the new one.
They were quite successful three thousand Ted talks online, more than 50 billion views, two years ago or one and a half years ago. But we still need to explain this one: why they kept this for free and they build this sophisticated business model?

What you can observe with this audience, they had here it means that it’s possible to consider this audience as a resource, so means that those people could be
interested and ready to pay more. And it’s very visible now: you have to pay twenty five thousand and two hundred and fifty thousand if you want to be member for five
years. So a huge amount of money and with this one they were able to increase their total annual revenue reaching something like 70 million.

So what we have done today: i briefly explained the tool very quickly we focus on those two kinds of patterns. Invent pattern shift patterns and we didn’t cover this one. Just before ending you know we have seen, especially during this crisis, a lot of prediction and we know prediction is very difficult especially if it’s about the future.

We have seen a lot of them! A lot of business will be the same as before,
business will never be the same. So a lot of predictions. But do not forget when we have predictions, it’s stays prediction.

Remi: Well if Alex it’s an honor to talk to you. Thank you for all your work this
last decade. That’s probably your work which led me to my current work and what i’m doing all day long. So thank you very much. This final book is great uh it’s finally linking all you’ve been talking for more than 10 years now. About how companies operate in order to create generate and capture value and how we deliver before all value and how we can validate idea and go from diminishing systematically the risk.
And now i will say there’s a next stage which is we know i know and you probably know as well for operating with big corporations that are using traditional and conventional finance piloting tools and ways to measure the efficient value and current margin and low term profits. How could we do in order for the chief of the one with the powers to integrate this notion of innovation evaluation and
innovation value description even if the product is not here yet? To better integrate it in order to make it less an experiment and more a day-to-day current activity, integrated little by little into the group philosophy.

ALEX OSTERWALDER: I’ll share an anecdote. So i mean you’ve seen the numbers we asked the question right. You know how many CEO you know how much time they spend on innovation and it’s still too little. But what’s encouraging is it’s changing and you know we try to make that happen. So before Covid19, before the lockdown I was with one of the biggest financial institutions in europe, with the CEO
and his leadership team and i talked about the ratio right 250 to one. To show you can’t pick the winner and then you know gave the solution that kind of that you need to start to manage your portfolio and that you can measure it .

So if we try to keep it in very simple worlds words, there’s two worlds exploit and explore and in explore the ratio is different, the culture is different ,and we show that we don’t try to make it complicated, we don’t try to sell consulting. So you know, you need us to do this and that so it is encouraging. Because you know the guy walked out of the meeting and he said oh wow we really need more portfolio management
and i have a couple of stories like this to share.

It’s just that right now they until now they didn’t always really know how to do it.
Some did like Bracken Daryl as an example, many of them didn’t, because they grew up in a different world. The world where the disruption was not as big. However with Covid19 we all got disrupted. With all the negative side effects
the probably positive thing is that it has really shaken everybody to the core, because they realized how the system is very fragile and that’s why Yves also
mentioned we could have called our book the resilient organization. Because
companies that do this are actually, you know many of them, thriving today because they’re ready for uncertainty with exceptions if you’re in the travel industry. Pretty tough. But if you take Airbnb they are actually getting through this pretty well.

Of course they had to manage the core, they had to let go unfortunately people, but they are very at ease with this kind of system. So things are going to change very rapidly and i’m actually pretty positive even if the numbers still look pretty bad.

Yves, maybe we could add something as you mentioned for the exploit portfolio

YVES PIGNEUR: we have all the numbers, kpis and for the regular business as you know for the exploration as Alex mentioned. The culture is different means also the measures the metrics have to be different. So that’s the reason why we developed a kind of innovation metric system in which we are much less focused on customer satisfaction and finance, but much more on the expected return and the risk or uncertainty. So the idea is to measure or you have reduced the risk for the different business model in your explore portfolio and so based on this one we can plot the different pieces using the risk uncertainty the expected return, the learning velocity for the different projects.

You have the cost of the different hypothesis the different experience you manage.
And this kind of innovation metrics we didn’t mention that today, but we have developed a kind of conceptual framework for helping people to define those metrics to measure the different business model inside their exploit portfolio and

ALEX OSTERWALDER: just one thing add. So why did we come up with metrics?
Because you know i think the innovation community, maybe in general the business community, the innovators they’d use buzzwords that CEO couldn’t care less. About a lean startup, sprint.. This sprint that like CEO like their head explodes when they
hear that and they say look, I’m just gonna do another merchant acquisition. So bad swiss humor… But you know, it does turn out we we should learn how to speak the language of leaders, which is why we came up with a business portfolio map and we need to use the word risk and uncertainty and return. If we don’t use that there’s no chance innovation is ever going to make it into the strategy of companies.

I think we need to take ourselves by our own hair, and you know say that we do
need to change instead of blaming the leaders. How do we help leaders okay so
it’s too easy to say it’s their fault, no it’s not- it’s our fault just as much, because if we can’t make it happen it’s our fault. Let’s stop blaming others and try to help and create this into a real partnership. So i’m being provocative deliberately because i think we’re part of the problem just as much as we are part of the solution.
JAN: Such an interesting topic! Just to jump on what you just said Alex and what Yves said at the beginning, you were talking about a CEO that of some kind of a
chief position that was leading the innovation side and that would kind of produce the future business that would then cannibalize with the existing portfolio. But you say it could be two person. But every case is where you said it’s a success most of the time it’s a single person that is able to I would say couldn’t balance you know
the pressure from the existing business, having politics, existing portfolio, jobs at stakes, economies at stakes, and having someone that comes in with new ideas and pushing.

I see that to a be as a single person job because you know being in bin districts you can in a certain way prioritize, but do you see really a possibility where you could have the two position coexisting together and working together hand-hand with their own pressure and their own business priorities?

YVES PIGNEUR: it’s clear but i think it’s what we wanted to express. You could have one people doing both and you have seen Bracken Daryll were spending maybe 50 of his time on the innovation. So you could have what we have seen is very few companies have this kind of one people doing both. So it was a suggestion to say maybe we could consider to have two different persons and we have seen some company having implemented this kind of thing. We have one good example you know Ming An which is an insurance company, they have two different ceos and what they call co-ceo. One for the exploitation and one for exploration.

So i think maybe five three years ago when we suggested that they said- oh Alex and Yves you are crazy, it’s impossible to have two people doing this kind of job.
And I know in the last couple of years we have seen some companies legal
or here in switzerland maybe uh some company that we have Laurastar, where we have co-ceos co-directions. It’s clear when you have two people you need to have some balancing mechanism, we have what we call also the chief ambassador to be able to manage this diplomacy between the two different people. So i think it’s possible to come with some different mechanisms to be able to take the best of the two people. One in charge of the future, one – in charge of the present.

ALEX OSTERWALDER: yeah I would almost not frame it in terms of people, but in terms of the problem. So the problem is actually that innovation doesn’t have enough power. The solution means we need to give innovation power that is either the ceo himself or herself, or somebody at the same level. And as you’ve said there are starting we are starting to see examples where the co-ceo is a great example,
where that happens so i don’t care if it’s the ceo or if it’s the chief entrepreneur. The power needs to be at the very top and i wouldn’t even blame leadership, the people i blame are the boards of companies, the board of nestle, the board of whatever.

They are not doing their job holding the companies responsible to actually you know give innovation power now. This is going to happen, I hope there’s not that many victims in the process because companies that don’t start to do this, they will start to disappear. The pharmaceutical industry and the banking industry is going to be a big victim of change, and hopefully some of the swiss companies to be a little bit nationalistic, since you know other countries are I hope they can survive but you know that is a question of the boards holding the leaders responsible for thinking
long term and not just in terms of words but in terms of actions. There’s a lot of talk
there’s not enough let me put it this way there’s not enough informed action. There’s a lot of money but there’s not a lot of informed action yet.

What if i don’t want to grow 10-50 times, what if i just want a business model that works for my SMB has its current size. Do I need to care about exploration at all?

So i think it’s a great question in the sense that you know, you don’t have to grow if you don’t want to. If you think you can actually survive without growing, you know be my guest i think that’s super important. The problem is when you think you have a stable business model and you realize you’re getting disrupted. So sometimes it’s not even about growth, it’s just about survival. I know a couple of ceos of small and medium-sized companies, they say innovation is a matter of survival for them, not a question of growth. So just to stay alive you actually need to innovate now if you want to grow or not that needs to be a decision. But you know, you do need to innovate just to stay alive. It’s getting harder and harder to stay alive with the same business model for longer than three years.

Even I like to say small business expire like a yogurt in the fridge. You don’t want to consume an expired yogurt not very good.