Here's how a key architect of the Lean Startup model is using his own philosophy and experience to scale his own company that trains innovators for the worlds biggest firms like Microsoft, 3M, and GE
- Alex Osterwalder, startup founder and author, and one of the architects of the Lean Startup approach, has led four companies that made him an expert on innovation and strategy, earning the trust of the world's biggest companies.
- Startup founders sometimes seem to have an exclusive focus on raising big money and growing their teams up to a massive scale. But scale itself isn't - and shouldn't - be the ultimate aim of a startup, according to Osterwalder.
- Business Insider spoke with him about key insights on the scaling he has developed in the course of building his own businesses and helping others grow as well.
This article is part of a series on growing a small business, called "From 1 to 100."
There is no "one size fits all" in business, especially when it comes to company size. The ideal scale of a business is highly dependent on far more than a founder's ability to raise financing.
Ask innovation expert, author, and startup founder Alex Osterwalder, and he'll say that more money and people are a means to an end. The real questions are twofold: What is the real value that you're offering to the market, and do you have a business model to support that value proposition?
Walk into any startup incubator or corporate innovation group and you will likely see a copy of Osterwalder's business model canvas floating about. As one of the key architects of the revolutionary Lean Startup methodology, he knows a lot about finding, testing, and growing business ideas.
Osterwalder is a four-time entrepreneur and a widely cited innovation expert. His current company, Strategyzer, is based in Zürich, Switzerland and has been guiding the innovation solutions of some of the world's biggest firms, like Microsoft, 3M, and GE.
"Rather than throwing bodies at a problem, like any consulting firm would do, like McKinsey or Bain, we actually throw very few bodies at the problem and use technology to be able to scale it," Osterwalder said in an interview with Business Insider.
Although a tech-enabled approach to management consulting does allow Strategyzer to accomplish a lot more with fewer people, Osterwalder is now facing the challenge of scaling beyond a core team.
The Swiss startup has a Zürich-based staff of 35, along with roughly 30 distributed workers who design and lead digital workshops for businesses large and small.
But in spite of his expertise in building and testing business models, Osterwalder says there's only one way to learn the ropes of building the business in the real world. There's just no replacement for experience.
"I like to say you need three things to create a successful company when you start from scratch: a great value proposition, a great business model, and great implementation skills," he said.
For him, implementation and scaling go hand in hand, since that is where all the ideas and imagination get put to the test in the real world. In short, scaling is the ultimate test of whether your business idea can truly work in the real world.
"Smart people who can figure it out will make mistakes that smart people who've made those mistakes before won't make again," Osterwalder said.
Being clever will only get you so far, and he says that means finding people who have been through a scale-up before is essential if you want the process to go smoothly.
Osterwalder readily admits that the process has not been a smooth one for Strategyzer, with some expensive mistakes along the way.
"The good news is we have a pretty sustainable business model that can swallow all those mistakes. Most companies, they run out of money when they make the mistakes we made, but we actually started with a business model that was pretty good," he said.
But one mistake he won't let his team make is losing sight of Strategyzer's core mission.
"If we wanted to scale faster, we probably would have just become a consulting firm," he said. "But I'm not interested in scale, per se. What I'm interested in is us actually realizing a vision."
In order to achieve that vision, Osterwalder says Strategyzer will have to double the size of its current team over the next five to 10 years.
"I'm not in it just to stay small," he said. "I think I can build a company that serves at least 20 to 30% of the Fortune 2000."
Maximizing Strategyzer's reach would require a steady-state headcount around 10 times its current size, and while Osterwalder could push his team to get there in a short time, that would require taking on outside investors - something which he is not interested in doing.
For now, he says he is happy to balance the tension between having the patience to build Strategyzer in alignment with his vision, while still keeping it on track to reach the scale necessary to achieve the impact he believes it's capable of.