Many organizations struggle with the tension between delivering immediate results and building the future. This challenge intensifies when innovation moves into decentralized business units.
Alex Osterwalder, CEO of Strategyzer, argues this reflects a fundamental misunderstanding of how to manage uncertainty.
The solution requires evidence-based resource allocation, based on a rigorous distinction between "exploit" and "explore”. The approach examines systems for de-risking ideas, creating balanced portfolios, and securing leadership buy-in through results.
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The Failure of Standalone Innovation Teams
Why handovers kill even the best-validated ideas
Alex is blunt about one of the most common corporate setups: isolated innovation units tasked with coming up with ideas, testing them, and then “handing them over” to the core business.
“Standalone innovation teams that test and de-risk ideas don’t work. These handovers do not work.”
He recalls a phrase he once heard that still captures the problem perfectly:
“This is the innovation department—the home for homeless ideas.”
The issue isn’t creativity or effort. It’s ownership. Ideas developed outside the core are exposed to what Alex calls corporate antibodies—the immune response organizations have against anything that looks unfamiliar, inconvenient, or slightly off the margin model.
Even small deviations can trigger rejection. A product that takes longer to explain. A service that doesn’t fit the sales incentive structure. A margin profile that looks different on a spreadsheet.
“Corporate antibodies are extremely strong against anything that looks different. And it doesn’t even need to be a radical business model.”
Without buy-in from the business units that actually run—and fund—the company, innovation remains structurally homeless
The Ecosystem Approach to Innovation Structure
Create the ecosystem top-down, execute bottom-up
The answer, however, isn’t to swing to the opposite extreme and declare that innovation lives everywhere. Because if it lives everywhere, it effectively lives nowhere.
Alex draws a sharper distinction.
“Anybody can be an innovator. Not everybody should be an innovator. But everybody should be able to try.”
Ideas should emerge bottom-up, from teams across the organization who are closest to customers, operations, and friction points. But the system that governs innovation must be top-down.
Central leadership plays a critical role—not in picking ideas, but in creating the conditions for learning:
Clear processes
Explicit decision rules
And, crucially, a fast, evidence-based way to kill (or “retire”) ideas
Central is not there to pick ideas. It’s not there to de-risk ideas. It’s there to create the ecosystem for this to happen. So whilst the work needs to be decentralized, the governance, culture, and rules for decision-making must be centralized.
Without this, organizations don’t end up with a funnel—they end up with a backlog of zombie initiatives that survive only because no one knows how to stop them.
Evidence-Based Resource Allocation
Fund the search for evidence
To shift the culture, it’s critical introduce evidence-based resource allocation. You only give money to projects that can prove desirability and willingness to pay.
Spreadsheets in the early stages are, as Alex notes, "a fantasy made explicit." They’re not useless—but they’re dangerous when treated as truth rather than hypothesis.
Instead of asking teams for five-year forecasts, Alex encourages leaders to fund the search for, and demand, evidence:
Evidence that customers experience the problem
Evidence that they value the solution
Evidence that they are willing to pay
Evidence doesn’t need to be perfect—but it does need to get stronger over time. From customer conversations, to prototypes, to co-creation workshops, to letters of intent.
Light Evidence: Talking to five customers or showing a storyboard. This is a good start.
Stronger Evidence: Co-creation workshops where customers invest time. Alex explains the value: "They fly in, so there's skin in the game. It's more than them just saying we're willing to buy this. They actually come and invest time."
Strongest Evidence: Financial commitment, such as a signed memorandum of understanding or a pre-order.
Leaders want to "grill" teams. The goal is to give them the tools to grill teams based on evidence. If a team wants $500,000 for a prototype, they must show evidence of customer willingness to pay.
When decision-making shifts from opinion to evidence, innovation stops being a political debate and starts becoming a disciplined investment process.
Exploit vs. Explore: The Ambidextrous Organization
Toggle between execution mode and exploration mode
The fundamental framework for understanding this shift is the distinction between Exploit and Explore.
Exploit (Managing the Existing Business):
Context: Uncertainty is low. You know the customer, the value proposition, and the supply chain.
Investment Logic: You make big bets based on analysis. You can calculate return on investment (ROI) per project because you can predict the outcome.
Focus: Efficiency, on time, on budget.
Explore (Innovation and Growth):
Context: Uncertainty is high. You do not know if it is going to work.
Investment Logic: You cannot calculate “Return on Project”. Instead, you must calculate “Return on Portfolio”.
Focus: Speed of learning, risk reduction, killing ideas that lack evidence.
The same leader needs to toggle between these two modes. One minute they are talking to a sales team in "execution mode" (Exploit), and five minutes later they are talking to a product team in "exploration mode" (Explore). The questions must change depending on the context. In Explore, the questions are "What did we learn?" and "Should we kill the idea?".
Return on Portfolio and Metered Funding
Diversify risk and let evidence select winners
In the Explore domain, you cannot pick the winner upfront. In uncertain environments, success comes from diversification, not precision. Alex explains the math: "If you invest in 10 ideas, you might get one winner. If you invest in 100, you might get a 'mega winner.'"
When you give engineers and scientists a lot of money upfront, they spend it building things. To avoid this waste, you use metered funding. You invest in many small bets (diversifying risk) and force them to prove themselves over a series of sprints:
You invest in a portfolio of ideas.
You kill (or retire) ideas that show no evidence.
The winning ideas emerge from the process.
You make fast follow-up investments only in those that show traction.
This is "Return on Portfolio." It mirrors the venture capital model and it is about better resource allocation. You spread the bets and let the evidence decide.
“Most organizations don’t kill ideas because they’re bad. They keep them alive because they invested once and don’t know how to stop.”
Evidence-based funding solves this by making continuation conditional. Teams don’t get killed—projects simply stop receiving money when learning stalls.
“It’s not about more money. It’s about better resource allocation.”
This shift alone dramatically changes how leaders perceive innovation risk.
The Scaling Gap
Invest when it counts: during scale-up
Companies face two major hurdles. First, they struggle to de-risk at the beginning. Once they master that, the second hurdle is scaling.
Very few companies are good at investing in the scaling phase. In the startup world, you don't stop investing while scaling. Alex notes: "If you do, you die of hunger." Even with paying customers, a startup needs capital to grow fast.
Corporations often fail to create the ecosystem that invests when it counts—during scale-up. This is where corporate antibodies are deadliest. Innovation leaders must protect proven ideas and continue investing to turn them into multi-billion dollar businesses.
The Role of the Growth Leader
Build alliances and deliver quick wins
The title "Chief Innovation Officer" can be, as Alex puts it, a "suicidal job title" in today’s climate. A more accurate framing today is "Strategy and Growth Leader."
To succeed, innovation leaders must:
Adapt to the Strategy: If the organization wants efficiency innovation, you pivot to that. If they want business model innovation, you go there. You must be part of the strategy. Innovation leaders don’t survive by acting like rebels. Alex warns: "Historically, we kill pirates."
Create Alliances: The biggest job is politics. It is creating alliances with leaders across the business. Alex notes "Look at the people you work with, and understand what they're trying to achieve. So down to the individual." Treat internal stakeholders with the same customer profile thinking—understand their personal goals and show how you create value for them.
Get Quick Wins: You cannot convince anyone with words. You convince them with results. Start small, take a "broken project" that nobody believes in, and turn it around using evidence-based methods. Once leaders see the results of an evidence-based presentation, the mindset shifts.
Building credibility through results
Innovation isn’t about convincing executives with slides. It’s about demonstrating, repeatedly, that disciplined exploration can produce results the core business cannot achieve on its own.
And that starts—not with vision—but with evidence.
Senior leaders intuitively know growth and innovation differ from running the core business, yet they lack the language and systems to manage both simultaneously. Making it simple—explaining uncertainty, investment logic, evidence requirements—creates the foundation for cultural shift.
