Episode 1 on Sirius XM Channel 111: Alexander Osterwalder and Oren Jacob

The focus of our first segment was on Alexander Osterwalder's Business Model Canvas -- how and why he created it and how startups and large companies are using it to search for repeatable, scalable business models.


Alexander Osterwalder co-founded Strategyzer, a software company specializing in tools and content for strategic management and innovation. He is also author of the international best-seller Business Model Generation, and inventor of the management tool, the Business Model Canvas, used by companies like Coca Cola, GE, and LEGO to design, test, build and manage their business models.

Listen to my entire chat with Alexander here:

Click the links below to hear Alexander discuss.

What's the Business Model Canvas?
"It's basically a visual template that allows you to create a shared language and it gets your idea out of your head onto the poster or a piece of paper to make it crystal-clear. ... You capture the idea, you tell the story very quickly on one piece of paper. Then the Lean Startup comes in ... you take this one piece of paper and then immediately go test it out. You start rough, you test quickly and you refine only when you have more evidence from the market that your idea could work."

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Why Understand Customers?
"We think we need to come up with some kind of prototype first, but first we need to select which customers we're going to address and we need to deeply understand them. ... You don't want to work for just any kind of customers, but customers that have a budget, that are willing to buy from you. Because at the end of the day a business model only survives if it can be profitable."

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Why Test Your Idea?
"You really need to understand first what customers actually want. Because customers don't care about your idea. ... We tend to fall in love with our ideas, but you need to test your ideas. Do your customers want your value proposition? Do the channels you imagine to reach these customers actually want to work with you? The partners you might need to co-create a product -- they might not want to work with you. You need to figure out all these things and you need to get hit by reality very quickly -- do a reality check -- if your idea could really be turned into a business."

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Why Do Big Companies Use the Business Model Canvas?
"They really want to have a shared language across the company to better describe how they're creating value for their business and how they're creating value for their customers."

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What Are the Surprises When You Work With Big Companies?
"Leadership buy-in is actually not a big issue. Leaders do buy into this and they do want to change the way companies work. The biggest struggle is actually to get the buy-in of middle management -- of the people who do the operational work, have huge to do lists, have daily tasks -- to get them to adopt a new innovation mindset. ... The other thing that still is a surprise to me is that large companies still write business plans for innovation projects. So business plans make a lot of sense in execution, but that they still do this for innovation projects. That blows my mind because ... managers who have to do these business plans don't believe in them. They all know they're made up. But large companies continue to ask for business plans."

To hear the clip, click here
In our second segment, we'll talk with Oren Jacob, former CTO of Pixar, now co-founder and CEO of ToyTalk. Oren talks about what it was like to leave Pixar, where he worked for more than 20 years, to launch a new business.


He offers a candid look at the trials of being a startup founder, including what happens when your product doesn't work as you thought it would.

Listen to my entire chat with Oren here

Click the links below to hear Oren discuss

Advice for Changing Career Course
"If I was not in a position where I could spend a couple of months not working ... probably the right thing to do was to spend some evenings with a partner of mine to think about what to work on next and try to dabble in some places until something had enough customer validation that I got excited about it. ... (however) At some point you kind of just got to quit."

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Where Did the Idea for ToyTalk Come From?
"ToyTalk came about when my daughter, Toby, was 7 at the time. She was on a Skype call with Grandma using an iPhone 2 or 3. ... We got off the Skype call with Grandma. We're in the playroom in my house and Toby holds the phone, looks me, then looks at all the pile of the toys on the shelf and looks at me again and asks, 'Daddy can I use this to talk to those?' "

To hear the clip, click here

What Was Value Proposition Design?
"Finding what they were looking for their customers and their products and what made sense to them was very important."

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What Happens When the Product Doesn't Work?
"In a closed acoustic environment... it's a brilliant idea. It works perfectly well. ... (however) We ended up in several people houses with our talking teddy bear chatting with Oprah on TV -- which is funny, but not a product -- and we were unable to control the product experience at all. So our product actually broke in testing. ... We were actually within four weeks of legitimately launching and we had to actually bury it in a board meeting several weeks before launch. ... It was a very difficult day."

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How Do You Handle a Pivot?
"We met with the company the next morning at 10 am and said, 'Well, we're not bringing this to market.' At the time, as is often the case, the folks you're working with are sometimes a little bit ahead of where the CEO is and they're kind like, "Whew that wasn't going to work anyway.' ... You know it's the right choice when people nod their head and say 'Yeah, was a great college try but it needs more time or go somewhere else.' ... By Friday of that week, we had a new idea to head out the door."

To hear the clip, click here

Steve Blank's blog: www.steveblank.com