"Exploitation pays your salary. Exploration pays your pension." — Steve Blank

In Part 3 of The Innovation Show's Strategyzer series, Alex Osterwalder returns to tackle the problem every leadership team quietly struggles with: the core business kills everything that looks different. Building on James March's exploration vs exploitation, Tushman and O'Reilly's Lead and Disrupt, and Clay Christensen's Innovator's Dilemma, Alex explains why good people with no ill intent still strangle new products, new channels and new business models — and what leaders must do about it.

In this conversation, Alex reveals:

→ Why the core business kills everything that looks different — and why nobody involved is acting in bad faith
→ The SonoSite story: why a CEO sat in a sales meeting and watched his top salesperson never take out the product customers were asking for
→ Why exploration is a top-down challenge — and why bottom-up passion isn't enough without the right governance
→ How Logitech's Bracken Darrell used "trees, plants and seeds" to proactively shift 70% of resources out of the core
→ Why Jeff Bezos was obsessed with Amazon dying while it was at the very top — and what Day One culture really protects
→ The "Rita McGrath test": what a CEO's agenda reveals about what a company actually values
→ What Alex told a bank CEO about exploration: "I don't even care what you do, as long as people think you're working on it"
→ Inside the workshop Alex is designing for a luxury hotel chain — mapping city hotels, beach resorts, island retreats, yachts and private jets on a business model portfolio
→ Why luxury hospitality's shift from lodging to experiences is an exploration problem, not an operations problem
→ Hubert Joly on Best Buy: when a turnaround must come before exploration — and why everyone else should start exploring today

00:00 Why Innovation Stalls
00:47 Sponsor Message
01:19 Explore Versus Exploit
02:46 Osterwalder Law Returns
05:52 Sales Incentives Trap
09:15 Seeds Plants Trees
12:23 Governance In Practice
15:29 Luxury Hotel Workshop
18:29 Portfolio Map Exercise
24:46 Tools And Playbooks
26:11 Wrap Up And Sponsor

Find the business model portfolio map and many more free tools at https://www.strategyzer.com — Innovation Show listeners get 20% off the paid playbook library with code INNOVATIONSHOW20.

This series is brought to you by Kyndryl, who run and reimagine the technology systems that drive advantage for the world's leading businesses. With a unique blend of AI-powered consulting built on unmatched managed-service capability, Kyndryl helps leaders harness technology for smarter decisions, faster innovation, and lasting competitive edge. Learn more about Kyndryl and the Kyndryl Institute at https://www.kyndryl.com/institute.

Subscribe to the Thursday Thought on Substack for a chance to win one of Alex Osterwalder's books, with thanks to Kyndryl: https://thethursdaythought.substack.com

About The Innovation Show: the Thinkers50-recognised podcast where square pegs find their place in a world of round holes. Hosted by Aidan McCullen, author of Undisruptable, it brings you conversations with world-class authors, scientists and practitioners on disruption, innovation, change, transformation and leadership.

Website: https://theinnovationshow.io

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LinkedIn: https://www.linkedin.com/in/aidanmccullen

Ep 663: Alex Osterwalder — Why the Core Business Kills Innovation (Explore vs Exploit, Part 3)

The Innovation Show

Ep 663: Alex Osterwalder — Why the Core Business Kills Innovation (Explore vs Exploit, Part 3)