How to build enduring enterprises in times of crisis


What defines resilient, enduring companies? The last few months have shown the world that even the most unpredictable scenarios can be better responded to if certain elements characterize a company. In an online talk with AUC Venture Lab, renowned business minds Alex Osterwalder and Yves Pigneur speak about The Invincible Company, the title of their latest book showcasing 50 innovative business models that have been tested successfully.

Osterwalder and Pigneur believe that exploration and innovation during times of negative disruption, such as the COVID-19 crisis, are absolutely crucial for the survival and prosperity for companies of all types and sizes. What The Invincible Company brings to the field is a practical handbook on building innovative business models which can be exemplified by what Osterwalder said when introducing its concept: “Never fear experimentation. The biggest skill of innovators is to constantly innovate.”

Osterwalder and Pigneur believe that the most adventurous companies are very resilient to disruptions such as new technologies, changing markets and even to global paradigm shifts such as the COVID-19 pandemic. On the last point, an understandably difficult scenario to predict, Osterwalder said “you have to be prepared for more general disruptions” also.

“Startups and established companies are not so good at innovating the business model. They’re extremely good at product innovation. Better pricing. Better services but not business models,” he said.

The co-authors believe that resilient companies have three key characteristics. Lacking those characteristics leaves a business vulnerable to disruption. One is that they constantly reinvent themselves, even during times of success. There will come a time when a successful business model will become out of date, catching a company off guard. A resilient company never stops innovating new business models so that it is well placed when a significant change in the market happens.

Designing competitive business models is a second characteristic, meaning that a given company does not just focus on inventing new products, innovating new technologies and improving its pricing, but consistently strives to create a business model that is better than its competitors.

Thirdly, resilient companies are not entrenched in one industry. Their businesses go across many industries. Osterwalder brought up the example of Apple, whose business model includes software, hardware and content. They cannot be rigidly classified into one sector.

In an earlier book they co-authored, Osterwalder and Pigneur revealed to the world a template for designing a business model. It begins with a value proposition for the intended customers and which distribution channels they should be reached through, in addition to the nature of the continued relationship between the business and the customer. This is what Osterwalder calls the “front stage.”

Complementing this is the “backstage,” which refers to the key activities, resources and partners that will help the business deliver on that value proposition.

The last part of the model is all to do with the financial side of it. The costs of the backstage that enables the business to deliver on the value proposition, and the revenue streams from the front stage which achieve profit.

However, the strategists stressed that many mistakenly used their business model template as a checklist, as opposed to using it as a way to build resilient companies. On how to achieve the latter, a company should use the model canvas to invent a pattern.

During the first stage of coming up with an idea, which is the value proposition, a company will invent a pattern as to how its value proposition can be successful, taking the front stage, the backstage and the finances into account.

The pattern is then tested and experimented with rigorously in the field to prove its efficacy. Osterwalder and Pigneur insisted this is the only way to increase the likelihood of success. Businesses have to accept that there is no way to guarantee the success of a new idea. They can only reduce the risk of investing in an idea by constantly testing and experimenting and learning from the results. This will help businesses to make evidence-based investments into a new value proposition.

This article is based on a webinar held by the AUC Venture Lab titled : “Building Resilient Companies in Times of Crisis and Beyond,” featuring Alex Osterwalder and Yves Pigneur.

Osterwalder and Pigneur are among the world’s most soughtafter speakers on business strategies and innovation.

Osterwalder is a Swiss entrepreneur and business theorist who is well-known for his work on business modeling. Pigneur is a Belgian computer scientist and professor of Management Information Systems at the University of Lausanne, Switzerland and is considered a world-leading business strategist.

Watch below for the full talk:

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    Copyrights © 2017 The American University in Cairo School of Business • All Rights Reserved