Circular Crustaceans: Learning from a Frontrunner Failure

Happy Shrimp: Tropical shrimp farming from residual energy
The Circular Business Model of Happy Shrimp Happy Shrimp Business Model Canvas
Publ. date 12 Apr 2017
At increasing speed, the world is currently undergoing the energy transition. For businesses around the globe, this means new challenges and possibilities for innovation and transformation towards circular economy business models are emerging. So are businesses cashing in on those opportunities? Doubtful: research suggests that 84% of executives agree that innovation is important to the growth strategy of their company. Unfortunately, only 6% of executives were pleased with the innovation performance of their company. What can we learn from fail-often start-ups to help address those new possibilities for innovation?

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Happy Shrimp – Transforming Traditional Shrimp Farming

One of the businesses to first adapt to the principles of circular economy was Happy Shrimp. Created in 2006, the Happy Shrimp concept was developed to use residual heat from neighboring power stations. Heated basins allowed the company to grow tropical shrimps in the Port of Rotterdam. Taking this approach, Happy Shrimp aimed to prevent the loss of energy and incorporate circularity in its business model. Furthermore, Happy Shrimp presented itself as an alternative to traditional shrimp production, solving severe ecological problems such as mangrove destruction and water pollution that the traditional value chain brought about. To emphasize freshness and quality, Happy Shrimp decided to distribute live shrimp similar to the distribution of lobsters.

Disrupting the existing value chain

For the realization of Happy Shrimp, the company had to go through several stages. In each stage, Happy Shrimp aimed to transform the existing business model of traditional shrimp farming. By addressing the main material issues the traditional industry faces, Happy Shrimp was able to develop its own, innovative business model incorporating sustainability.

  1. From Idea to Reality. Happy Shrimp had to take 3 key actions to realize its ambitions; (1) find suppliers of the residual heat, (2) ensure support and grants from the (local) government and (3) gain start-up capital from investors. For all these actions, partnering was crucial for Happy Shrimp.
  2. Starting Up Operations. Having found the right partners, Happy Shrimp was able to commence the production of shrimps. Happy Shrimp either used Schmidt Zeevis, an exclusive fishmonger in The Netherlands, for distribution to restaurants and bars, or sold directly to customers at their farm or at events. Soon, the estimated annual revenue was about €1.25 million.
  3. Global Gambas. The initial success of Happy Shrimp soon raised the question whether the firm had possibilities to expand internationally. Although options of licensing and international expansion were evaluated, the story unfortunately did not end well for Happy Shrimp. Problems with suppliers and customers, in addition to quality issues, led to the shutdown of the company in 2009.

In the attached document the full Happy Shrimp story can be found as a summarized version of IMD Business School case (IMD-3-1903). It contains the accompanying business model canvasses and the fast rise and fall of the company is described in more detail.

Transforming towards Circular Business Models

Transformation of the industry’s existing value chain model can provide novel opportunities for innovation. As the example of Happy Shrimp shows, it can also stimulate circular thinking. Happy Shrimp changed the traditional way of farming shrimps by adding a circular twist as they used residual heat as a resource in its production process and by distributing live shrimp in a similar way as lobsters. Happy Shrimp furthermore showed that partnership should be carefully managed to increase scalability of business models.

Want to learn more?

Based on the Business Model Canvas, Finch & Beak has developed a process for the creation of business models that are focused on sustainable innovation. Key elements in our approach are business design thinking, open innovation and circular economy transformation. In case you want to make your business “Happy” and develop circular economy business models, contact Jan van der Kaaij, managing partner at +31 6 28 02 18 80 or jan@finchandbeak.com.   

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