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Business Insider
  • Innovation consulting is a relatively novel field, which focuses on training teams to design new business models and profit centers for companies.
  • Zurich-based Strategyzer does exactly that for some of the world's biggest firms, like Microsoft, 3M, and GE.
  • Cofounder Alex Osterwalder told Business Insider how he and Alan Smith built the company from its fairly humble roots as an iPad app to become a staple of corporate boardrooms and innovation clusters around the world.
  • This article is part of a series on growing a small business, called "From 1 to 100."

Management consulting is a $285 billion industry, in part because it often involves a lot of individualized services.

Less well-established is the field of innovation consulting, which is the practice of training teams to design new business models and profit centers for companies.

"It is, I believe, a profession that you need to learn in addition to the management profession that we've now mastered," said innovation expert, author, and startup founder Alex Osterwalder in an interview with Business Insider. "We don't yet have the equivalent of the MBA for the innovation profession."

His current company, Strategyzer, is positioning itself to be just that, and the Zurich-based business now guides the innovation solutions of some of the world's biggest firms, like Microsoft, 3M, and GE.

Feasible business model comes first, then breakthrough

But for a company that's fast becoming a staple of corporate boardrooms and innovation clusters, Strategyzer began in 2011 with fairly humble roots.

"We started with something very simple, which was an iPad app to bring our tools just to the digital world," Osterwalder said. "Our idea was always to use the iPad app as an experiment, because it's very hard to build a business on an iPad app."

With the revenues from those initial app sales, Osterwalder and cofounder Alan Smith were able to build out web apps and ramp up other products and services.

The market that Strategyzer is after is still in its formative phase, but Osterwalder likens his business to that of Netflix, which used the existing demand for DVD rentals to build a streaming video empire.

"They built a feasible business model before getting to a breakthrough business model, so we're doing the same thing," Osterwalder said. "We always wanted to say we don't want to be another consulting firm or another training firm, just like everybody else. The world has enough of those."

Unlike the conventional approach to consulting, Strategyzer's tech-enabled approach will allow it to scale in a way that simply cannot happen with more high-touch professional services.

The company does perform its own brand of on-site trainings and workshops, but the emphasis is more on facilitating virtual trainings for clients who want to reach more of their organization more efficiently.

"We're now clearly seeing the market is maturing," Osterwalder said. "Now we work with big clients like Bayer where we actually do coaching and consulting for them, but technology-enabled."

The grand vision for Strategyzer is still about five to 10 years out, Osterwalder said, but there are clear precedents that give his vision shape.

"Basically we're trying to build the SAP for strategy, meaning that business leaders and teams will design strategy and innovation," he said. "Like computer-aided design for architects, they will do the same for strategy innovation."

In the meantime, he said, "We actually need to continue to explore this and keep the company alive with more immediate revenues that could help us scale."

Less Wild West, more 'boring accounting'

And as one of the key architects of the revolutionary Lean Startup methodology, Osterwalder knows a lot about finding, testing, and growing business ideas.

"We always try to work on very broad topics. So the beginning was business models, and now it's, 'How do you actually build new growth engines by not taking crazy risks?'" he said. "Everybody thinks innovation is risky. It's actually only risky when you do it the wrong way, when you make big bold bets."

Strategyzer's key value proposition ultimately boils down to reducing the risk associated with finding your company's next big idea. Osterwalder said his methods bring a more evidence-based rigor to an area of business that has traditionally been handled with superstition and mystery.

"The early Wild West days are behind us," he said. "I can score a project based on the evidence and see if they're ready for more investment or not."

"That is where it goes from Wild West to boring innovation accounting," he added.

As Strategyzer looks to build the future of "boring innovation accounting," it continues to depend on the typical revenue generators like conferences, webinars, book sales, and licensing deals.

But Osterwalder is not planning to stick with that approach for long.

"We knew that in this phase we need to scale with a different model in order to build what we want to build in the long term, but not fall back to the traditional services, because then you get stuck," he said. "Right now we're just another consulting firm."