Circular Innovation is what we do to evolve as a company
I can’t remember how many times I had to reinvent my company. I have a hunch: at least 5 times on the past 10 years. It’s a matter of survival. It’s also an indication of how the world is changing. We use circular innovation to keep up with those changes.
I have always liked to find new innovative solutions for old problems. One day I decided to offer some of those solutions to the market. Suddenly, from one day to another, my history as entrepreneur started.
Even successful companies are dying faster. They used to last around 67 years on 1920. In 2012 something around 15 years. The lifespan of a company is decreasing. Most companies don’t get the chance to celebrate a 10 years anniversary. To watch companies closing the doors before reaching 5 years got me thinking. Would my company be one of those? Is it a matter of size? Anyway, this should be something to worry about.
Our first innovation cycle
Crafters, my company, started offering consulting and training services. We were specialized on architectural theories for emergent software domains. Our customer base included small companies, big companies and government. We did that for 2 successful years until we had to grow too much to continue.
Go big or change. A company can always decide to grow or not. My capacity to sell training and consultancy were decreasing, so I faced an important decision: stay small or grow a sales department. To grow means invest money expecting a bigger return in the future. Staying small implies on embracing the death of that business model.
An entrepreneur needs to watch the signs. I was not happy with the training model and I started to pay attention to the economics. That model was fated to end badly. Decreasing sales, smaller contracts, more competitors raising everyday, customers willing to pay less for the same service. Those are bad signs. I had to do something.
You can choose to keep a small business model. I decided to explore new business models before growing. Outsourcing were a very attractive option at the time. I wanted to develop software for startups. I took all my knowledge about software management and architecture and started to offer that as an asset for startups. It worked.
An old business model can leverage a new one. I took the same expertise I was selling before and wrapped that on a whole new offer. It was my first innovation cycle as a company. At that point, I had two offers and a company able to survive for more time. I had an ambidextrous organization and didn’t even knew about it.
It is not enough to innovate once
The biggest mistake I see about innovation is conformism. Companies tend to believe that innovation happens only once and lasts forever. This is far away from the truth.
Innovation is something you should do in cycles. Every cycle triggers new levers to raise a set of business models. Those models can run in parallel, opening opportunities for experimentation and exaptation. The strongest models will survive.
Having multiple business models protects the company. It is like a shield. When something goes wrong and one business model dies, the company still stand on top of the other models. This is behind my decisions for Crafters. I understood I needed multiple business models to keep the doors open when something bad happens.
Circular Innovation is revisiting past models and generating new models. You can redefine the way you do things from a totally different perspective. One idea can be successful in several different ways and you can take advantage of it. This is exaptation.
Working with a new model doesn’t require you to abandon the old model. Both models can coexist. This is healthy and recommended by complexity theories available today. It is a very simple way to mitigate risks.
Here are some perspectives I use to focus my innovation cycles:
You can always find new ways to price your offers. I started charging by seat. After my first cycle, I started offering packages for corporate groups. I charged more for the customized attention.
Adding new services to old models is a good way to innovate. I added a day of analysis for corporate groups, attached to trainings. I delivered a report about their scenario and how to apply the new techniques on it.
Expertise can always become a service. For the outsourcing model, we included digital marketing and business orientation. We were ready to sell expertise, we just needed to offer it. The offer was a huge success and became our main selling factor.
Narrative / Mindset
At some point, there were a bunch of other companies developing software for startups. We stopped selling software development services and started selling product development services. Everything we do at Crafters is focused on product development, with a craftsmanship look.
Our mindset and narrative changed the way we do software. Small entrepreneurs are good at their business, but not very good at creating a new product users will love. We started doing that for them.
It is a free world
Circular Innovation is all about cycles that allow you to test and explore new models and new offers. You can always find new ways to innovate. You just have to look with a different perspective. Sometimes it is a matter of finding a new concept for your model. Mix some ideas and you will see this is not a hard thing to do.
We continue our innovation cycles at Crafters
After 10 years in the market, Crafters is still innovating on business models. I can’t count how many new models we tried and how many of them worked or didn’t. It is an empirical and continuous process.
Being ambidextrous implies in the ability to explore new models while operating the old models. We are now applying at least 4 different models in parallel. For the past 2 years, we ran our main business model while experimenting new models. Crafters is ambidextrous.
After several successful innovation cycles, we can replace our main model with a new one. Crafters is an example of that. Outsourcing is a small part of Crafters today. We have very exciting new models growing fast and replacing the old one. How cool is that?
What about you? What questions do you have about how to change your current business model? Does your company do anything related to circular innovation? Tell us your story.