Case Study #1: CRCLR
One of the key questions I presented in the last post The Ecology of Innovation is how we can close the gap between the inspirational vision of the original idea for a new product, service or company and its actual implementation. In the last post I gave the example of betterplace, which underwent a certain regression during its implementation phase as it was adjusted to the needs of its various users and had to comply with existing regulations.
In this first case study by Future Sensor, I apply the questions raised in the last post to another Berlin-based company, the Circular House (CRCLR). How do the founders translate a vision which they see and feel before their mind’s eye so it can be implemented in the material world? Because inner and outer structures evolve together, they need to be coherent to create a thriving and healthy system. As such, we can’t rely on established, pre-formed ways to manifest our new and original ideas. We need to design new structures, processes and business models which correlate with our vision. Thus the people who implement innovations that are really new (and not only a re-combination of existing elements) need to be as innovative — across a whole range of areas — in the implementation phase as they are during ideation.
CRCLR is a circular economy hub in the booming district of Berlin Neukölln. Entering the 2000m2 former brewery building — with its raw walls, pipes leading along the ceiling, and large windows — you immediately get a vibe of a place full of possibilities. Two upcycled hexagonal greenhouses serve as meeting rooms, and in the distance stands a huge, transparent, inflatable bubble, reminiscent of an Olafur Eliasson installation, for hosting group events. The bubble is beautiful, but more importantly, it can be heated, unlike the rest of the hall. That’s why during winter months, employees in CRCLR run around in anoraks.
I am meeting Alice Grindhammer, one of CRCLR’s founders. Alice is 34 years old and radiates high energy and joy. Unlike an earlier generation of environmentalists, who focused on the perils and doom of capitalism, Alice belongs to a new generation motivated by the potential of positive change. In this she is aligned with the broader movement of connected capitalism, conscious capitalisms or doughnut economics. Her mission: to create a company devoted to experimenting with and applying circular economy principles in the construction industry. The circular model ensures that materials are managed in closed loops. Products are designed and built so that after consumption they can be reused or repurposed.
What was the initial impulse for CRCLR?
Alice and I sit down in one of the greenhouses turned conference rooms to discuss the genesis of her company. Already as a teenager, Alice believed in business as a force for good. “That’s why I studied finance. I really wanted to understand how we can create an economy which serves nature and humans.” Her first job, as a trainee for a large German waste management company, was a bit of an accident. “My mom thought it was hilarious that I would want to work in waste and on my next birthday she hid all presents in different trash bins around the house.” The next four and a half years were formative for Alice. Travelling extensively in the Middle East and Afghanistan, she became aware of the huge problem posed by waste for the environment and health of populations. She saw how the most vulnerable populations in the poorest countries were suffering from a global waste regime, which dumps toxic waste where it is most profitable and least seen. In Jordan, Alice came across pharmaceutical waste from companies producing for the European market. In Afghanistan, she had to contend with hazardous waste left over from the occupation.
But she also felt a new momentum. In Kabul, Alice’s company advised the government about transitioning to a Green economy. She sensed it was time to start her own company — one which not only cleaned up after others, but instead provided holistic solutions regarding the whole production and waste cycle. “Working in the corporate world was a bit like doing karate, constantly looking for strategic openings and leverage points. There came a point when I realize, I didn’t want to fight against something, but rather collaborate with someone.”
In 2014, she quit her job. While exploring the Berlin innovation scene, Alice came across the idea to start a hub for circular economy principles. At the time — and probably still today — most people saw no profitable business models for circular processes. Alice wanted to prove them wrong. Together with an early collaborateur, she found a brewery building in Berlin which was for sale and ideally suited for their vision to construct a large real-estate project using circular economy principles. As the construction sector in Germany is responsible for over 50% of waste in Germany, most of which is not recycled, this seemed an impactful task.
Equipped with some seed investment, they were finalizing the negotiations, when a real estate speculator outbid them. Alice was told she had five days to come up with an extra one Million Euro.
Translating new impulses into the material world
In my experience, many exciting new social or environmental impact ideas shrink when it comes to getting funding. As the mainstream funders are rarely on the same inspirational plane/level as the innovators, projects are “trimmed” and watered-down to fulfil the (profitability) expectations of funders. With CRCLR this was different. Being confronted with the task of raising another million in no time, a miracle happened: the very next day, Alice was introduced to Christoph Langscheid, CEO of the Swiss Edith Maryon Foundation. Grounded in the anthroposophical tradition of Rudolf Steiner, the foundation removes real-estate from the speculation bubble and instead makes houses and land available for long-term usage by purpose-driven initiatives. After one meeting and without the conventional due diligence, Langscheid offered to buy the brewery building, granting Alice and her co-founders a leasehold for 99 years. The fact that the values of the initial impulse were closely aligned with the values of the initial funder, seems to have created a solid base for CRCLR, which many other impact-driven businesses are not so fortunate to possess. (It is hard to explain this fortunate coincidence — the perfectly timed meeting of someone searching for money with a funder willing to invest — in a rational way. There is no way I can explain this “accident”, but just observe that it happened. A more daring explanation might involve Alice creating a very strong magnetism in her project, whose transmission easily attracted like-minded people being active in a similar frequency of inspiration.)
Together with co-founders Simon Lee and another partner (who later dropped out for personal reasons), Alice started to elaborate the vision for the building and the company. Starting this winter (of 2018), the ground floor will be converted into a large co-working area, while the below-ground area will host workshops and production spaces. 50 tenants can be accommodated in flats on the first floor, creating a co-living community. The whole construction process will be a real-life experiment in circular building. Working together with a well-known Berlin architecture company, the team hopes that the creation of the space will serve as a model for future projects and that the specific processes they develop can be scaled. Ideally a stream of new companies will result, each focussing on new zero-waste principles, thus creating alternative suppliers in the construction industry.
Fine-tuning the concept has turned out to be a journey full of iterations. Zooming in on these iterations and the many compromises necessary, can help us understand better how founders can sustain their original vision despite the many challenges of actually building a business.
In the beginning all Alice and her co-founders wanted was to create a value-driven sustainability business. What exactly that would mean, they didn’t know. When the team moved into the new building filled to the roof with rubble and waste, they tried to recycle everything. But very quickly they realized that this would take forever. Now they have developed an approach which Alice calls “pragmatic revolutionary” — looking for the most radical ideas they can afford. Thus when CRCLR needed desks, they could have studied the subject for months, coming up with the most sustainable solution. Instead they researched suitable options for a few hours, bought the materials and constructed the desks the very next day themselves.
In order to fund their current costs, CRCLR has devised a number of revenue streams. The large hall is rented out for events, ranging from the annual Open Circular Economy Days, a global gathering devoted to sustainability know-how, to conventional for-profit companies who are looking to plug into the hipster vibe Berlin has become so well known for. Other income comes from the co-working space, in which mission-aligned initiatives can rent a desk. Consulting constitutes a third revenue stream. When I met Alice, CRCLR had just won a public tender from the district of Neukölln to advise the local gastronomy sector on circular waste management. CRCLR also helps traditional corporations who want to transform their value chains and develop new, more sustainable practices and business models.
Alice, Simon and their COO and co-founder Laurence are constantly trying to find a balance between their mission and their financial needs. If a project or client is aligned with their purpose, but not strong financially, they are willing to forgo profit. This is reflected, for example, in an elaborately differentiated pricing model for renting out the hall. Established companies using the space for a conventional event pay much more then if they organise a gathering devoted to circular practices, while at the other end of the scale non-profits working on systemic topics pay the least. The pricing model therefore not only aims at the economic profitability of CRCLR itself, but also reflects its mission to familiarise as many individuals and companies as possible with circular economy thinking.
Instead of operating from a position of scarcity and mistrust of money, like many environmental organisations and non-profits, Alice wants to challenge the prevailing culture of self-exploitation. “I am a fan of money, it’s just energy and can enable lots of great things, if that’s how we use it”, she says, “to be successful, sustainability has to be profitable”.
How integral is CRCLR?
Over time, CRCLR developed a much more systemic approach. Thus the initial rather vague notion of “creating a good sustainability company” has evolved into one which sees itself much more as a platform. The house functions as an open space where CRCLR, the co-workers, as well as individuals and organizations coming from the outside can experiment and learn from each other. Thus they have forged trusted relations both with a nursing home across the street, as well as local youth gangs.
The way CRCLR is dealing with the inherent tension of the innovation process, whereby a “high” impulse needs to be translated into a material practice, is especially interesting. Alice, Simon and Laurence pragmatically adopt established processes and structures. Thus in the beginning the founders created a very binary, rigid and bureaucratic organisational structure. Alice was the main manager and all team members reported to her. But she realized that she wasn’t particularly good at managing people. “That was like ‘Shit!’ I always thought of myself to be a good manager’ until I realized, I wasn’t”. Today her colleague Laurance does the job and excels at it. In a similar way, CRCLR leading team shifted from a very frontal, teaching-style interaction with their colleagues, to a much more interactive style. In team meetings, they engage their employees by asking them questions and taking the discussion from there.
“In other areas, we started with a very ‘green’ egalitarian approach and with time moved to a much more ‘yellow’, systemic perspective”, says Alice, picking up the spiral dynamic terms I presented to her earlier in our meeting. “I personally can also be very ‘red’, having my will and trying to make things happen accordingly. At the beginning we also had many strictly ‘blue’ and ‘orange’ elements, as we believed strong structures were necessary to get things done.”
The team is currently in a process of critical self-reflection which structures and which degree of freedoms and controls are best suited to advance their mission.
Possibly the biggest shift in CRCLR’s approach has come in the area of hiring and employee development. ”In the beginning, we took everyone who wanted to work for us. We were so happy that people felt drawn to the vision and didn’t really do any formal recruiting.” Their mission attracted many good-natured and well-intended people. But some didn’t really fit and Alice came to realize that they needed people with a particular set of competencies and attitudes.
“We are no hippie-circle”, she tells me. “People must be able to take multiple perspectives, talk to the CEO of a large company, just as well as to journalists and our Turkish neighbours”. She herself is masterful at engaging highly diverse groups of people, connecting easily and readily asking for feedback and help. They also need people willing to take on a lot of responsibility, instead of picking and choosing those tasks most appealing to them. Meeting various team members, I get the impression that they all very much want something from life. They seem to say: I don’t exactly know where I am going, but let’s explore and go for it. People who thrive under these conditions seem to be less dependent on fixed structures and processes in the outside world for orientation, motivation and validation. Instead they are able to draw security, stability and inspiration from within themselves.
When asked how she deals with financial pressure, Alice describes Simon’s, Laurence’s and her attitude to fundraising as “playful and sporty”. At the same time she acknowledges that they are still searching for the right models and people to fund their and others new economic practices.
For projects to stay true to their original vision while actually building a business, instead of back-sliding to a lower level of inspiration, it is not a question of holding on more tightly to the original position and making as few changes as possible. Instead it seems important to adapt and change in line with the original vision. This requires a high level of reflection in the course of iteration. It requires questions such as: Where and when do we make a compromise? What is causing us to make this change? And how do we do so without relinquishing our overall integrity and inspiration frequency?
Inner development and wellbeing
Being surrounded by friends and wife Jessica Gedamu who are all interested in personal development has helped Alice to formulate a theory of change which understands that outer social change correlates with inner work. In discussions with her friend Aaron Pereira, founder of the Wellbeing Project (which will be another case study of Future Sensor), she broadened the vision for CRCLR to “creating a better way to work and live together”. If CRCLR wanted to create systemic economic change, it also had to foster a shift in mindset and attitude of its team members and collaborators. This shift is associated with the capacity for increased self-awareness and meta-reflection, It demands new and improved communication skills — open, straight, caring, yet also able to face differences and conflict.
In order to learn and cultivate these skills, Alice invited meditation and yoga teachers, coaches and mentors into the project. This support enables a continuous meta-reflection and helps the team to see when processes get stale and fixed instead of changing dynamically. This is one of the big challenges for established teams: people do things as they have always done them, without acknowledging that both people and their environments are changing. To counter this tendency, CRCLR has created many “containers”, as Alice calls them, which support self- and meta-reflection. These include standups, team meetings and annual reflection sessions which give a lot of room for feedback and lead to structural changes. Thus the last annual review fed back into a new organisation chart iteration. Important feedback also comes from the board of mentors CRCLR has created, with highly engaged individuals from various realms of the economy.
Talking to Alice, it becomes apparent that she has a lot of inner freedom. She is guided by a strong sense of purpose, which doesn’t take the shape of a rigid ideology. In a field where many people stabilize their own sense of security by talking negatively about other, similar initiatives following a slightly different path, Alice stays positive. She and her co-founders Simon and Laurence seem to understand that everything is moving and that they need to develop the practices and structures which match their vision. Instead of seeing “problems” and “failures”, they understand that they are in an ongoing learning process. That they are creating something new, to which there is no prefabricated answer. They are aware that everything they do is a temporary next step. Or as Alice says: “We need people who do what is needed today, while searching how things can be done differently and better in the future.”
On a more cautious note, it is important to remember that CRCLR is still a very young company. The next phase of the company will be crucial and it will be interesting to see how the team manages the actual building phase, as well as the creation of a flourishing circular economy hub full with profitable spin offs.
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A shorter version of this article first appeared on TwentyThirty as The most radical idea we can afford.