innovation in business

How We Turned Our Biggest Setback Into an Innovation Opportunity

innovation in business

A story about innovating your business to stay ahead of the market, written for EO by Floyd DePalma, CEO of UX agency DePalma Studios.

It was the beginning of 2018, and my agency had just lost two of our biggest accounts.

These are the fears that keep you up at night, the ones you hope never happen. They’re also the moments that cause you to panic and cloud your judgment.

In the aftermath of losing two cornerstone clients, we had a choice. We could decide the situation was bad luck, and that we just needed to work harder. That meant doubling down on the processes and philosophies we’d been following for years.

Or I could use this moment to reevaluate our business model, examine the flaws that lead to this situation in the first place, and look for opportunities to evolve.

I choose the latter. Here’s how I did it, and what happened.

Innovating Our Business Model

Sooner or later, every business needs to substantially innovate their business model to keep pace with the market.

It’s the job of the CEO to always be looking into the future and to be incrementally adjusting the business model to align with the changing landscape.

You can continue to grow for several years by making small tweaks to your model, but eventually the market will outpace the incremental changes you’re making. At that point, you’re left with an innovation gap, and you’ll have two choices: fundamentally transform your business or fail.

If you have the foresight, you get to choose when this moment arrives. More often, the market chooses for you.

Unfortunately, we were in the latter group. When our two largest clients who had been with us for years churned, it was a signal that we needed to change how the agency did business. It became apparent we were no longer adequately meeting the expectations of our market.

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Thankfully, there was already a plan in motion. Six months earlier, we brought on a new vice president of marketing to improve our client acquisition and make us less dependent on a few clients.

But the more we dug into the market strategy, the more we realized we needed to do more than change how we marketed our services. We needed to rebuild how we delivered value.

After some rigorous planning, we knew what moves we wanted to make, but we weren’t ready to press the launch button for another few months. However, losing our two biggest accounts had created a very real sense of urgency.

So we launched our new model months ahead of schedule.

New People, New Processes, New Clients

So what did we do, exactly?

We let go of the majority of the full time employees (FTEs) who had been working at the company the previous year. Next, we brought in new leadership.

I knew I couldn’t do it alone. If I wanted to revolutionize how the business worked, I needed people who were true subject matter experts in user experience (UX) design and front-end development.

This is a key principle from Jim Collin’s book, Good to Great. His research found that having the right people on your team is more important than having the right plan in place. So we did some hiring at key leadership positions throughout the company.

With the right people in place, we put our process under the microscope.

Our sales process, our project estimation process, our design and development process were all carefully deconstructed and rebuilt using the expertise of our new leaders and the all the experience we’d learned working with, and then losing, two big clients.

Once the new processes were in place, we documented everything, so we could make continuous improvements and scale once the business model began to work. (Before, we didn’t have anything documented. Everything was ad hoc.)

Then, we started replacing some of the full-time staff. But this time, we were more judicious with our recruitment.

We knew our competitive advantage was our talent for UX design. More business leaders were waking up to the ROI of good UX, so we only brought on specialists in that area.

Then we rebuilt our entire UX design process to follow a flexible, yet reliable, series of steps that delivered a user-validated, modern application to clients. Instead of improvising every time a new project came through, we had a repeatable, scalable system in place to deliver our services.

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Finally, we invested in digital marketing channels and introduced our new value proposition of human-centered design and development to the market.

And the Results?

After one year of operating with our new model, we saw:

  • A double-digit increase in client acquisition—the most in our history
  • A substantial increase in client retention and new projects from client referrals
  • A decrease in operating costs

Now, the agency is thriving, and we’re poised to double our headcount in the next 12 months. But I can trace it all back to that one moment in January 2018.

I had a choice between giving in to panic or looking directly at the problem, picking it apart, and using what I learned to innovate.

It’s tempting to stick your head in the sand and stick with what you know. But by really examining the problem, and consequently restructuring how the company works, we were able to innovate and keep pace with the demands of our market.

Floyd DePalma is the founder and CEO of DePalma Studios, a UX agency that builds applications people love to use. He is also an EO Nashville member. 

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