Start Up, Scale Up, Screw Up - Jurgen Appelo at FlowCon France 2019

[00:00:00] to immigration. And just at the moment I was in front of the immigration person who took my fingerprints and everything, I got the worst coughing fit of the year, basically. And the immigration person was looking at me like, mm, should I let that person into the country? Looks very suspicious. Anyways, thankfully I got in. But I'm doing, I'm doing better now. Um, yeah, so I am happy that I got here. Some people seem to have problems here in Paris with, with transport. I admit it was a bit crowded in the metro, but... At least I was unable to fall over, that was a good thing. Um, and I'm happy that I, that I arrived. A few people know me from this book, Managerial Threedo, that I wrote a couple of years ago, well, ten years ago already. That sort of made me famous, quote unquote, in the Agile world, and it describes the role of the leader in the Agile organization. I wrote this little book How to Change the World as a self-publishing experiment. You can get it for free. Just go to that URL, subscribe to my mailing list, download the book, and unsubscribe. Easy. Anyone can do that. That's simple. Yeah. Um, and then I wrote Managing for Happiness, which I am not going to talk about. I'm going to talk about other things tonight.
[00:01:32] And it starts with this picture. It's one of my favorite introductory pictures. Um, about the music industry. I am so old that I remember what happened over there off-screen. The eighties is my favorite era of, of music, disco dancing. Um, and, um, but the picture starts at the nineties when CDs became a big thing. A little bit of patriotism there, Philips. Played a big role there. Yeah, yeah, yeah, Dutch company. I'm from the Netherlands, so a little bit proud of that. And then in 1999, as you can see, something happened that caused revenues to collapse in the industry. Does anyone remember what happened in 1999?
[00:02:19] Napster happened. Yes, illegal downloads of MP3 music, uh, uh, songs. And some people say that the illegal downloads did not really have an effect on sales because those people were not buying CDs anyways. But then others say, well, what happened then at exactly that moment? What a coincidence that revenues started collapsing. Um, a little bit later, we got iTunes, legal downloads, the green part, and then Spotify, Deezer, Pandora, all those platforms. They came a bit later. And some say that they saved the industry, basically, because it's going back up again. Yay. And I use this picture as an example of the amount of change in a short amount of time in one particular industry. For decades, we only had vinyl to carry music around. And before that, there was no technology for capturing music.
[00:03:18] So, of course, this, this worries managers around the world, and not only managers, I think, that there's more and more change. You can see in a picture like this that long time ago technologies took quite a while to get adopted in, in the wider, uh, in the wider market, in, among the public. But nowadays, with tablets and smartphones and social media, it is just like, bang, before you know it, you have a new technology. Ruling everything. So, this goes faster and faster and this is a problem for, uh, for many companies. Clayton Christensen is much more famous than I am, he wrote a book called The Innovator's Dilemma. He says this happens again and again, that in any industry, you have these leaders, like in, in, in the music industry, there was Philips and and Sony Music and Warner, they made a lot of money with CDs. And they improved their products. CDs did get better over time. They call that sustaining innovation. Making an existing product better. But then you get new disruptors, startups from outside of the industry, they come up with completely new business models and they start with products that are worse quality. Like when you downloaded music from the internet, it was low bit rate and and bad quality and then you had to wait for an hour and then it was the wrong version, the Portuguese version, oh my God, you had to start all over again. But it was fun. It was instant gratification. And then these young ones, they improve faster and that we call that disruptive innovation. So how can we have both?
[00:04:58] How can we on the one hand innovate our current products and execute on them and specialize and centralize and exploit and milk the cow, basically, on that side? But on the other hand, we also want to innovate in disruptive ideas, in the newer products and services. Uh, we want to explore and decentralize and experiment and and everything. We wanted both. We want, as the British say, we want to have our cake and eat it, right? We want to be in the European Union and out of the European Union at the same time. We want it all. Yeah. It's a very British approach, I think. So, um, so how can we have a startup culture at the same time we don't want to give up on our scaleup culture because that's how we make all our money. We, we, we don't want to just replace it, we want, we want both. That is the innovator's dilemma. Where do we put our investments? Well, we have some examples of people trying this. I was part of an innovation committee once. Maybe you have seen innovation committees in companies. Yeah, yeah, yeah. I was the CIO of a company of 200 people, and there was a CTO and a marketing manager, and there was an idea box, and people submitted ideas to the idea box. And then we once per month looked at the ideas and we looked at the first idea.
[00:06:23] That didn't make any sense. Next idea.
[00:06:28] That makes a lot of sense and it cost a billion euros, so we cannot afford that. Next idea. And before you knew it, the box was empty. Oops. We had rejected all the ideas of the employees. And they were mad. You're rejecting everything. And we said, you should submit better ideas. This is all crap. So that didn't really work well. Other companies try innovation centers also suggested by Clayton Christensen. He says, if you want disruptive innovative to work, innovation to work, put it somewhere else. Otherwise, the mother organization is going to kill it. It will kill any new initiative, so put it in another city, in another country, far away as an independent business unit. That seems to work okayish.
[00:07:17] And then you can recognize them because they have colorful walls and yoga mats and Aeron chairs and it looks all very creative with lots of sticky notes and everything. But then the mother organization complains there's nothing ever coming out of that innovation center. It it cost us a ton of money, but I haven't seen an innovative product in in years.
[00:07:36] And some people try hackathons, innovation days. They work quite well. 24 hours of craziness and busyness and people coming up with ideas. But then people have told me more than once that after the hackathon, nothing happens. Nothing is, is, is the next step basically. The company is goes back to business as usual after after 24 or 48 hours. And that is also demotivating. It was just fun, but... Nothing came out of it.
[00:08:10] You probably know some of these pictures.
[00:08:14] I'm not going to explain them all, they are familiar pictures for some of you, methods and frameworks. We have a ton of them. I, I appreciate them for the toolboxes that they are, uh, they, they capture good ideas that work for some people in the world and there's nothing wrong with that. But none of these solve the innovator's dilemma.
[00:08:35] There's not a single method or framework that explains to you how to be a big business earning buckets of money with a current product and invest in young, new disruptive ideas at the same time in one organization. How do you do that? They don't explain that.
[00:08:53] So we're going to solve the innovator's dilemma this morning. Yeah, after the next 40 minutes, you will know what the answer is. I promise you, I promise you. And it starts with having a look at some disruptors we have in Europe. Because there are not only fascinating companies coming out of Silicon Valley, we can be proud of Europe as well. We have Flixbus in, in Berlin, we have TransferWise in Tallinn, we have Spotify in, in Stockholm. I've been to all those companies and talk with CIOs, Agile coaches, HR managers.
[00:09:27] Um, I heard the founding story of Airbnb in San Francisco a hundred times, I think. But did you know that Booking.com is five times bigger than Airbnb? And they're Dutch. Uh-huh, uh-huh, so there you go, right? They're based in Amsterdam.
[00:09:46] So, uh, I've been to the booking as well, of course. And they noticed that there's a common language, there there's a common language that the, that terminology that they use to describe the maturity of business ideas. And usually it starts with someone having an idea. Oops. Sound was supposed to work. We checked it. Can we do that again? Can we make sound work over there?
[00:10:16] I don't hear sound.
[00:10:19] They said sound worked. Hello.
[00:10:25] No sound. Okay, I'm going to try once more.
[00:10:33] We tested this.
[00:10:36] Yes, thank you so much. All right. iPod, a thousand songs in your pocket. Awesome. Can you keep it on so that we don't have the same ritual with the next three videos? That would be awesome. Thank you. Um, so product vision. It starts with someone having a product, a product vision. Uh, Steve Jobs in this case, had this idea of it should be possible to make MP3 players that people understand. Because there were already like 30 MP3 players and they were all far too technical for people to use. So he was successful at that. A thousand songs in your pocket. I had just 25 songs in my pocket at the time. Sony Walkman or whatever I had.
[00:11:19] Um, and, um, so a thousand songs, that's like, whoa, that's like, amazing. Uh, nowadays, uh, people have a billion songs in their pocket and my daughter is, is like, Spotify doesn't have my favorite album, Spotify sucks. Gosh. Spoiled brat. Amazing, just imagine what I had to cope with just 20 years ago. Anyways. So, um, so that's the first stage. And then the second stage is, uh, expedition. You should go out and figure out if your idea makes sense. Is your idea solving somebody's problem?
[00:11:57] This stage has been skipped by, I think, the entire cryptocurrency blockchain world out there. Lots of technical people falling in love with the technology and they started coding right away. Imagining the problems that they would solve. The only ones interested in that were cryptocurrency speculators, right? There was not an actual problem being solved for anyone. So, uh, you have to go out and and and test problem solution fit, is, is what they call it. Is your solution solving somebody's problem?
[00:12:33] Um, for example, I like talking about coffee. I'm warning you, I'm a coffee addict, so, uh, there are some coffee examples here. Suppose you want to start a new coffee bar. And you think, okay, um, I want to start my new coffee bar in a side street, somewhere in my town. I want to know what the best location is for my coffee bar, and I think the best location is in Side Street. That's an assumption. That's a risky assumption. Maybe it's the wrong street. So, I should not hire a place which is rather expensive before I know that there is enough demand for coffee, that I'm solving somebody's problem there. What I could do is I could sell coffee from a mobile coffee cart, for example. That would be a reasonable test. You can rent these cards. I've seen them. You can just get a cart, be there for a day, sell espressos and cappuccinos and then count the amount that you sell. And you can say, well, if I sell fewer than 50 coffees, I failed. Yay, I learned that this is the wrong street. I can try another street. I know, I know a cart in Brussels that did this testing, they went around Brussels and they ended up right between a metro station and a student campus. That was the perfect place they found out. For their coffee place. So they tested where's the most demand. This is a lean experiment, right? What is the simplest experiment you can do to test if someone actually wants your product?
[00:14:03] Now the next stage, you have validated problem solution fit, you know this is a good street. Now you need money to open the shop. Now you need money for decoration, buying the your own espresso machines or whatever. You need a team of baristas. You call it vision founder's fit. You might need angel investors putting money in your startup or as an internal startup, you need a budget from your CEO from the innovation board to invest in a product idea. And start iterating.
[00:14:36] You probably need a, a lean canvas, a simple, um, a tool to figure out what experiments do I need to run? For me, the lean canvas is just categories of experiments to run. You need experiments for the problem, you need experiments for the solution, you need experiments for customer segments, lots of things that you need to test in this stage. To figure out what is my business model going to be.
[00:15:02] And stage four, this is the most difficult according to some startups. Product market fit. It is a very famous term in the, in the startup scene. Can we now make a product that people actually use? Because it is very easy to get false positives in problem solution fit. Where people say, yeah, I would, I would love your product if, if you buy it, if you make it, I will buy. But then when you actually have the product, they're like, hmm, well, maybe not. I am, I'm too busy, whatever. That's super annoying. It's like you want to open a gym and everyone says, yeah, I will come to your gym, I need to exercise, I will be there for sure. And then you open your gym and nobody comes. So annoying. So annoying. Yeah, too busy picking up the kids or watching Netflix, it costs a lot of time, yeah, yeah. So, product market fit is making a product that actually works. Having a minimum viable product of the high fidelity type, that means there is actually a product that you offer to your customers. Before it was an MVP of the low fidelity type in problem solution fit, you were just faking products. Like with mockups and prototypes and 3D models or whatever or mobile coffee cart. But now you actually have a product and you're going to iterate.
[00:16:24] Now, this is, as I said, this is the most difficult stage. And we can have entire sessions about that topic, but I'm not going to do that. I'm first going to explain the life cycles. Of the maturity stages. Stage five, stabilization. Suppose you've tested the product and people are actually using it, which is a lot of work. But people are actually using it, they love it, they recommend it to their friends. Are you now able to scale it up? No. This is not the right time yet to scale it up for different reasons. One reason, if you did things well, the lean startup way, you only focused on the front-end facing part of your product, you only did the stuff that the customer sees to validate that they want to use the product. In the backend, it is a complete chaos. It is a nightmare, nothing is integrated, the architecture is wrong, you have technical debt flying through the roof, it is a disaster. Everything is everything has to be done manually, the team is going nuts because of the success of the product. Perfect. That's the perfect moment for stage five. Now you have, now you know what the product is supposed to do. You can probably throw away 90% of your code of all the experiments that failed. Now you know what the architecture needs to be. Now you know everything for a good product, you have to stabilize it.
[00:17:51] Work on your architecture, reduce technical debt, introduce quality procedures, et cetera. Another important thing is you're changing to a different audience. You had what they call early evangelists, that's innovators and early adopters in the early stages. They love you for your idea. They love your vision and they don't mind a few bugs. In fact, they like seeing bugs because it means that they are innovators, they are the first ones and they will, they will feel like it's a badge of honor if they're the first one to find a bug and they will report it to you like, yes, I was the first one who found that. But then you get to the next stage, you move to the early majority of customers. They don't want to see bugs. They just want a product that works. If they see a bug, they will not report it to you, they will report it to all their friends on Facebook, right? That's not what you want. So quality control needs to be managed. You need customer service, you need everything. One investor told me this can easily take another three years for a startup just preparing to scale up. Get everything in order. Backend systems need to be integrated with financial, procurement, and you name it. Business market fit, you can call this, is your whole business ready for the market? And you can start using the business model canvas, which is the original canvas that the Lean Canvas was is an adaptation of, actually. And the business model canvas has other boxes such as, uh, key partnerships. Of course, it makes no sense to discuss key partnerships when your product doesn't work yet. Because no partner will be interested in partnering with you if you cannot show that the product works. So this only becomes relevant from stage five and and later. Same for some of the other boxes.
[00:19:00] get everything in order. Back-end systems need to be integrated with financial, procurement and you name it. The business market fit you can call this is your whole business ready for the market. And you can start using the business model canvas which is the original canvas that the lean canvas was is an adaptation of actually. And the business model canvas has other boxes such as uh key partnerships. Of course, it makes no sense to discuss key partnerships when your product doesn't work yet. Because no partner will be interested in partnering with you if you cannot show that the product works. So this only becomes relevant from stage five. and uh and and later. Same for some of the other boxes. Now, stage six. You've done business market fit. You're ready to scale up and you're accelerating. By the way, the pictures are of my mother.
[00:19:55] She's a very proud that she's in my presentation. She spent the whole weekend going through all her photo albums to find the best picture of every life cycle stage that she could find. So this is uh this is one of her cool moments for her to be in my presentation. And you can see from the look in her eyes that as a human being, as a teenager, she discovered new possibilities that she never had before. We know that, right? From our teenage years.
[00:20:23] Everything changes. Life is suddenly much more interesting and more difficult at the same time. Same for business models, it's the same for products. Now you grow up, now you're an adult. I made the mistake of sending my team to a growth hacking course last year. In hindsight, that was stupid. Why? Because our team was in product market fit stage. Our product didn't really work well yet. And growth hacking is all about endlessly tweaking all the messages and the buttons and the colors and the fonts and the text and everything to optimize conversion rates. The premise is that you need to have something that works in principle.
[00:21:08] It just needs to be relentlessly optimized to be a thousand times more effective. But we had something that was not effective at all.
[00:21:18] So a thousand times zero is zero, right? So don't send don't use growth hacking in product market fit stage. That makes no sense. You have to wait until the product actually works. And then you can start tweaking. So practices have their place in the life cycle uh stages and I will I will get back to that in a moment.
[00:21:40] Crystallization uh finishing the life cycle stages. This is where you rule the world. You're now number one, number two, no everyone knows you. Spotify is now in stage seven. At this stage, you need to be profitable.
[00:21:53] Stage six, you can still lose a lot of money. Basically, Elon Musk is in stage six with all his companies. scaling up, losing tons of money, but investors still believe in in him as long as he can keep that belief, he's okay, right? But stage seven is you need to be profitable by this point. And that Spotify is there since early this year. Stage eight is midlife crisis for the product. dressing in colorful clothes is midlife crisis. If if uh if a product appears in 16 different colors, you know that the end is in sight, right?
[00:22:34] They ran out of ideas. What else can we do with our product? Oh, we don't have a pink version yet. We don't have a blue version either. Why not the entire rainbow? What a great idea. Okay, there we go. That's that's midlife crisis for your for your product. Stage nine is beginning of the end. It is goes down. You're probably losing money again. Because people are just walking away. It's not you're not ready to give up on the product. You support it still, but you know, okay, it will happen soon and then stage 10.
[00:23:05] Okay, that's it. Let's make it a project to end everything nicely and it is it is done. So this these are 10 life cycle stages and this is a normal pattern. This is the archetypical life cycle of any product, service or business model.
[00:40:38] So when Italians came there introduced espressos and cappuccinos, the Americans were like, oh my god, this is much too strong. So the Italians just made the cups bigger, just threw in more milk and you have the milky coffee, the cafe latte, the Milch café, the café au lait, it's all the same thing, right? The milk, it comes last. First the espresso, then the milk. And then you can make latte art. That's a potential wow moment. Teach your barista how to make latte art. That's Instagrammable. That potential wow moment. So I order a café latte, I get a latte macchiato. I said that's that's the latte macchiato, that's not a café latte. And the barista says to me, that's the same thing.
[00:41:25] Well, I tell the barista, if that's the same thing, then a barista is the same as a plumber. You always don't care about the order of the fluids, which is crucial. For anyone who loves coffee. So, lesson learned, milk with coffee is not the coffee with milk, okay? That's very, very important to understand the difference. So, where does all of this sit? Figuring out when I have my what the F moment as a coffee lover. Uh, that's sensitized and systematized testing and learning what is happening with our product. Don't just throw it over the wall and expect magic to happen. No. People will have experiences that maybe you did not expect.
[00:42:06] I have an uh self-assessment exercise with the innovation vortex. You can use it in in a retro for example, in a retrospective. Just test yourself. Do we have practices that touch upon the entire vortex? Are we actually over there? Are we, are we empathizing with our customers? Are we coming up with with ideas over there, hypotheses? Do we test what is actually happening with our product and how people experience it? Do we have stuff going on everywhere? It's good to reflect on that every now and then. And then we have expiration on this side, execution there. We have disruptive innovation is what the kids do, and sustaining innovation is what the adult business models do over there. And it moves gradually from disruptive to sustaining. And the key is, the innovation vortex always spins. It you're always design thinking, being lean and agile, etcetera, etcetera. You iterate all the time. It never stops. Only the type of iteration and increments is different here than it is over there. You might have a self-organizing team of just five people as a startup here. But you might have 500 people if you're over here just maintaining one and the same business model. And the biggest risk here is not being profitable anymore. That's the biggest risk for a company, not being profitable, because that means you move to stage nine. The biggest risk here is not profits, is making a product that nobody wants. There's an entirely different risk risk pattern. You'll need very different practices for for that.
[00:43:49] So, use the innovation vortex. gradually shift from from disruptive innovation to sustaining innovation. Last part. I told you about the innovation steering committee. One thing that I did wrong is I would try to I was trying to predict which of the ideas in the idea box would be the winning idea. It doesn't work.
[00:44:12] Doesn't work like that. Robert Cooper explains why.
[00:44:17] The first thing to remember is is it's a bit like playing poker. Uh, when you sit down at the poker table and you start betting, you don't put all your money on the table, you put maybe $2 or two euros and you get a few cards. And then you bet a little bit more money and you and you get a few more cards and and more information. In other words, new product projects, you never bet all the money at the beginning. It's a stepwise process. It's an incremental commitment. As you learn more, you bet more.
[00:44:47] This is crucial with new products, you never bet all the money in the beginning. Only an insane person would do that. Because you have no information when it is just an idea in an idea box. You have to get information. In lean startup, they call it validated learning. How do you get information with a little bit of money? And then send them away and tell them, now you go find problem solution fit. When you found it, come back. If you convince me, you get a bit more. And you get vision founders fit and next stage is product market fit. The further you get, the more, the bigger the budget. This is exactly how the startup scene works. You go back to investors and they give you the next bigger budget. If you succeeded. So, I I tried to see innovation as a pipeline where ideas go in on one hand. I tried to predict which one can come out at the end, but it doesn't work like that. It's like a funnel. It's like a Game of Thrones. Season one, lots of families are contestant contenders for the Iron Throne and then season by season, more and more families are killed off until by the very end you have just a few left. That's a very normal pattern. Here's another example. [Music playing - singing in background]
[00:46:06] It sounded like two three-year-olds who've got flu trying to sing.
[00:46:12] I love Simon Cowell's insults. So much better than anything I can come up with. But this is innovation board 3.0, basically. They do not look at at ideas in an idea box, try to predict which one is the winner. No, they say, you can all start. Just go on stage.
[00:46:30] In at accelerator and incubators, they call it demo days. Just go on stage as a startup and do your thing. What evidence do you have? Traction, retention, daily active users, just show it. And if we're not impressed, sorry, you go. Because we can only can continue with a few of you to the next stage.
[00:46:51] So that is the third key is create your own great game of business. This is just fundamental risk management. Too many ideas, only a few are actually winners. You have to create a stage by stage maturity approach to figure out what those winners are. So how how can we have a startup culture but not losing our scale-up culture at the same time? Well, forgive me for this complicated picture. I'm still working on it. I'm still working on it. But uh the uh the the the uh the key principles are all here. We have the stages 1, 2, 3, 4, that's initialization, first idea, problem solution, fit, vision founders, fit, product market, fit, business market, fit, the standard stages that all startups go through. And then here we have the gatekeepers, in for external startup, these are investors. But in a bigger corporation, that could be the innovation board. They have budgets per stage defined how much are we willing to spend on this next layer of innovative ideas? And then they have to come up with a scorecard, just like investors do. What how are we going to test them, those ideas, allowing some of them to go to the next stage? What do they have to show us on demo days, right? And the hackathon could be a perfect start. I would suggest ethnographic research actually before the hackathon, but then a hackathon would be fine. But you need more than just a hackathon. If you do not have a stage by stage program defined, why even bother organizing a hackathon? Because everything will die after that anyways, right? And important, the innovation vortex always rotates, you're always being agile and lean. And I think this is a fundamental thing that maybe we have lost where we moved from waterfall to Agile, which is a good thing. We just we did not only become iterative and incremental, we lost the stage by stage approach which makes total sense when you do risk management, right?
[00:48:59] Only in waterfall, the stages were defined incorrectly. They are stages, they had idea, business case, uh design, development, test, done. That doesn't work. Indeed. But maybe we threw away the baby with the bath water. Because we still have maturity stages of ideas. Only the definition is completely different. We iterate the hell with design, testing, development, with within each stage. But still we need to test, do you have problem solution fit? Do you have vision founders fit? Do you have product market fit? Do you have business market fit? If not, sorry, you're dead. Because we can only continue with a few of you.
[00:49:43] So, last minute, summarizing. Uh we saw these uh business uh um frameworks, agile frameworks. Lots of good ideas in there, but none of them solve the innovators dilemma. I think there's still a conversation that we need to have to figure out which parts of safe or Spotify model or less, whatever. apply where in that in that life cycle. And how can we add the game of of of of business basically, what happens after the hackathon?
[00:50:14] All of these ideas are from books such as these. There's very little that I come up with. I just collect connect the dots basically because the information is rather fragmented. There's good stuff here in Eric Reese's the the startup way. There's good stuff in Robert Cooper's uh winning at products um and the middle one, the corporate startup is also pretty good. Uh and there are other books where I found pieces of the puzzle basically, and I'm trying to complete the puzzle to figure out uh how to do how to solve the innovation dilemma. I like this metaphor.
[00:50:47] For me, a product is like a one organism, right? It starts up, it scales up and it screws up. It applies to all organisms, they all die. All products, business models die after a while. But then the species is like the is like the organization. It should consist of many of these individual organisms, right? And together, they make sure that the species evolves and can live for a very, very long time, maybe almost forever, right? And together the species work in the larger ecosystem that in business we call the the economy. So the only way not to be disrupted is to disrupt yourself like Apple does, basically constantly trying to reinvent itself with new products and services and uh go for it and make more babies. Um sorry, I mean, startups, that's a very good thing to do. Um I have uh a book the book here, the startup scaleup scrub, I I don't carry copies around, but the audience here is entitled to a 25% discount if you want. Uh just to take a pick of the uh QR code with this coupon flow 25, you get 25 discount on this uh uh on the shop. And I am interested in having this conversation with those who want to uh explore this. So if you're interested, please join me in the Shift Up program uh with this URL uh because there's a lot more to do. I'm just sharing how fair how far I am right now, but there's a ton more to explore. Like how do we define scorecards, how do we define stages after a hackathon? How do we do all this stuff? Because there are examples out there, but we're still in the middle of uh of exploration of how to solve the innovators dilemma. So thank you very much for listening and um I hope you have a wonderful rest of the Flowcon. Thank you. [Music] Whoops.
[00:52:49] [Music]
[00:52:51] Thank you again.
[00:52:52] Do we have one or two minutes?
[00:52:52] Yeah, we have time for one or two questions if you want to.
[00:52:54] Okay. We have a few minutes for questions, anyone? has a question, I saw your hand in the back. The first.
[00:53:04] Run for us, run.
[00:53:09] Well, thank you for the presentation. Uh, I will just have one question, I don't see in your presentation is how do you address the the issue of different business model in the same organization?
[00:53:22] So how do I address the issue of different business models in the same organization? Why is that an issue? Because Apple has it, for example.
[00:53:28] Yeah, in in your presentation, what I understood is that you uh basically uh fit the organization with the business model and the business stage. If you have a different business model with different business stage within one organization, you may have something that didn't fit well.
[00:53:51] Um, okay. So, for as far as I understand your question, so let's go back to the picture here.
[00:53:59] These are in principle different business models, different products and services. They these two, they're profitable, okay? They could be a very similar business model, but they could also be very different, like this could be the iPhone that's earning money on products, and this could be iTunes which is earning money through fees on on on on products being sold on that platform. Um, but they could both be in stage stage seven. Uh we have other uh business models emerging here because they have Apple Plus TV, for example, but younger, it is somewhere here, it's not even scaling up yet, I I think. Um the organization as a whole is just a legal construct. We have some stuff perhaps outside of the main business models like HR, maybe procurement, maybe other stuff that these use to be more efficient. Because the biggest risk for them is not being profitable anymore. So it makes sense to optimize and to delegate some things to the corporate uh corporate level to do it for everyone. So that is why you had to fill out an expense form when you want to go to a conference because that's rather big expense for a company to send somebody to a conference, so we have policies for that. Over here it makes no sense at all to have expense forms for startups. Startups get a budget. And from the budget they have to do everything. You want to go to a conference, figure out how to do it, no expense forms needed. Companies need to learn how to operate like that, that different rules apply to different uh uh business units. So basically the business unit can be as an individual business model. But there's still stuff outside of it managing the entire funnel. But my point is, this should be as little as possible. I think almost everything should be inside the funnel. Because then you get the idea that the organization is keeps reinventing itself, basically, reinventing organizations, famous book. You could have this if you if you just built that funnel.
[00:56:05] Okay, so the organization is designed to support multiple business models from the beginning.
[00:56:11] Yes, exactly. Yeah, with an expiring expiration date for each. That's the beauty of it. Because even if you if you create a business model here and you make a structure, like you implement safe here, you might implement Spotify model there, whatever, because structure depends on on the business model, form follows function. So you need to know what the business model is before you can prescribe a structure. But the beauty is you know that they will die at some point. Great, because everything has an expiration date that you do this way.
[00:56:46] Maybe one more question?
[00:56:47] Yeah, one last quick question.
[00:56:48] One last quick question.
[00:56:51] Over here.
[00:56:57] Hello.
[00:56:58] Hey.
[00:56:59] Sorry for my English.
[00:57:00] Sorry for my French.
[00:57:03] Uh so thanks for your presentation. Um, I think your your model is really convincing uh when uh thinking about uh a starting organization which would uh integrate uh this innovation vortex in its culture. But um where would you start uh if you wanted to have uh like uh an old-school company uh start uh using that uh and obviously being blocked by uh its many legacy.
[00:57:33] Okay, I'll try to answer this briefly as I can. So if you have an old organization that is completely outside the funnel. You should identify what are the business models that we are operating here. Probably the organization has more than one way in which it makes money. Come up with the separation there first. And figure out where they are. And for some of those, you will find that maybe they're in stage eight or stage nine. You know what? Let's just leave them be. Because they will die at some point. I don't try to change my grandparents anymore. I just love them for the fact that they got as old as they are now, right? So let's not try to change them. It's a waste of effort.
[00:58:17] Focus all your energy on the new ideas that are being suggested. And then these will die anyways. That's fine, just leave them.
[00:58:25] There's it makes sense focusing on seven and eight, those are the big money makers. But the change that you can introduce for them, changing adults is much more difficult than changing the kids. So focus your energy on the kids, help them a little bit with their midlife crisis. This is how you can exercise, this you can live a little bit longer. And forget about the senior citizens. Just love them for for where they are. Thank you.
[00:58:53] Thank you all for coming.

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