Fostering Innovation Part II: Fashion(able)?
This is a repost of my old writing from 11.02.2017. This was my outlet to pour out my frustration with how big corporates are dealing with innovation and me trying to fight it (as it later appeared to some extent succesfully). This a second part of my post, you can read Part I here.
In the last Part I was talking about how companies in various industries have found a few ways to forego innovating from within by simply acquiring innovation from outside (M&A), signing strategic partnerships or outsourcing it to consulting companies. These in turn, have mostly short-term incentives in my opinion, whereas true innovation requires a long-term vision and commitment.
Fashion industry feels just the same amount of potential threat from tech companies or just from the smaller and more innovative peers (my favorite blockchain applications, wearable technology, smart materials, augmented clothing, etc.) however the ways to protect themselves like the rest of the companies either by R&D or by M&A are just not there yet. This leaves fashion companies unarmed in the face of upcoming danger from tech industry. Let us first discuss R&D. I am aware of only one fashion company investing thoroughly in R&D right now — Adidas (up to 140 million in 2015). Thanks to their new boost shoe sole technology, developed by one crazy physicist in Herzogenaurach lab, they have managed to overtake Nike in sneaker resell market volumes (a reliable metric to assess brand value and desirability of a sportswear brand) — something deemed impossible even 2 years back. Also worth noting is their new 3D-printed soles which will soon make into mass-market. Smart marketing has definitely played a role in it, with Kanye West and Pharrell Williams contributing a lot, but the importance of the actual innovation in their recent success is hard to overestimate.
So we have established that just like the rest of the industries fashion is not very much keen on R&D apart from few exceptions, even though it has proven to be successful in both generating tangible profits, as well as increasing an intangible brand equity. So what about M&A in fashion then, can we compensate for the lack of innovation coming from R&D by simply acquiring it? There have been indeed quite some mergers and acquisitions in fashion, but none of them had to do with acquiring a new production technology, or a start-up. They were all vertical and here it is more about trademarks and distribution networks. Quoting the classic, “Terrible mergers, huge costs, no innovation. Sad.”
So with R&D and M&A not being an option for the majority of fashion companies, the last opportunity left is a strategic partnership with tech. One of the most media covered examples were the Rebecca Minkoff stores with fitting rooms equipped with smart mirrors and the most recent partnership of H&M with Google to deliver a customized dress. I am not a big fan of the idea of a dress showing your mood or today’s movements, but customizing your dress’s color palette and ornaments, turning it from business wear into casual one on the go is definitely something I would like to see in future done by someone. However regardless of this particular idea’s business sense, the move from both Google and H&M signifies the direction both tech companies and traditional fashion brands are likely to move in the near future.
Fashion companies should recognize that the technology is as much of a threat to fashion industry as it is for any other. However, any threat can also be an opportunity to embrace the change. In my opinion, since the first careful steps of tech companies into the fashion world have just started, in the next few years emerging tech presents more of an opportunity rather than an existential threat. Having said that though, the urgency to innovate does not go away, but quite the opposite. Since tech companies are going to enter fashion industry at some point, there are two ways to prepare for that, either by making them your friends (H&M and Google) or by implementing new tech before anyone else does. Since first-movers are the ones claiming all the benefits in most cases, it is extremely important for fashion companies to act on innovative ideas ASAP and foster innovative and entrepreneurial thinking inside the company by empowering the right people.
In the next part I will try to break down what does fashion mean from more of an analytical view, how do we perceive and experience it, how can tech help as at each stage to revive fashion, as well explain why I think Augmented Reality among others is going to be fashion 2.0. Stay tuned for more!
