CREATIVE AND BUSINESS THINKING 2
Next, think about the fashion industry. I expect you are already aware of how H&M, or Hennes & Mauritz (hm.com), founded in 1947, Zara (zara.com) and Mango (mango.com) changed the industry just a decade ago by increasing ‘speed to market’ so rapidly that most competitors just could not keep up. What’s next in the fast fashion business? Yoox (yoox.com), founded in 2000, just a few weeks after the demise of boo.com, the mother of all online fashion retailers, spotted a gap in the fashion market where the norm is an abundance of product, and speed and the trends are must-dos for the market leaders. Yoox now offers stocks and unsold items of top brands from previous seasons and sells them with a significant price reduction online to their steadily increasing client base. In ten years it has grown from nothing to a $138-million turnover company with eighty employees. This is nothing, perhaps, in comparison with H&M’s $11 billion turnover, but H&M needs 78,000 people to achieve this.
The key question is: who is more flexible in the face of further change and new opportunities?
Beside that, Yoox license their online store system, which they have developed themselves, to many of their clients, from Armani to Stone Island. Theirbusiness strategy: be part of the industry’s value chain and create areal sustainable competitive advantage through technology.
Never underestimate the changes brought about by technology and connectivity.
The first commercially successful camera film, Kodachrome, the one I always bought when I was a design student, has disappeared from the market after seventy-four years. Brands like Agfa, Konica and Eastman-Kodak had to go through tough years with their photo-imaging divisions, some of which have now been relegated to history. Most photographic companies underestimated the power and especially the pace of how digital technology could change the market and consumer habits. Kodak (kodak.com), for example, went down from 145,000 employees in 1997 to just 20,000 today. The company patented the basic technologies for digital photography in 1975, but didn’t know how to take advantage of this opportunity.
They could have learnt from the Swiss watch industry. In 1968 this controlled around 90% of the global watch market. The consortium responsible assigned a couple of engineers to investigate how the watch of the future could be made. The engineers came back and presented a digital watch right in time for the annual Geneva watch exhibition. The consortium was so disappointed and angry about what, in their opinion, was a useless and cheap proposal that they sent the engineers straight back home together with the copyrights on their designs. The engineers, frustrated, decided to show their designs independently at the exhibition, Japanese companies came along to their stand and were so interested they bought the rights on the spot. The rest is history. The consequence of the Swiss watch industry turning down the digital watch? In a mere ten years this went down from 90% to around 10% of the market share. It took them decades to gain a share of the market back.