FashionX … Live on Bloomberg TV
October 6, 2021 at Bloomberg TV
Fashion is at a cross roads. Covid-19 has challenged the industry in many ways, but also accelerated many trends. No longer can manufacturers, like many in Turkey, sustain ever diminishing returns as they seek to support traditional retailers who battle in the old shopping malls and high streets of the world.
A new generation of designers and manufacturers, brands and retailers have emerged who are not just interesting start-ups, but fundamentally transforming what and how consumers buy.
Asos to Zalando are just examples of online platforms that have subverted young shoppers and now adding value in new ways, but it is new business models like Stitch Fix and Zozo that are really reshaping the industry. Fabrics are transformed too, sustainable and advanced, from Bolt Threads to DSM. Then add the rapid growth of resale and upcycling models, from Depop to DressX, and you have fundamental change in mindset, and marketspace.
The future is not like it used to be. We can no longer move forwards by doing what we’ve always done faster, cheaper or better. It’s time to think different.
I will be kicking off this year’s Istanbul Apparel Conference with my keynote live on Bloomberg TV, in which I will explore:
Part 1: FutureX …The future starts here
- Every market has been shaken up by a fast-changing world of technological disruption and rapidly shifting market economics. Covid-19 was just the accelerator of change.
- Consumers have new agendas – ethics to environment, social and shared – while businesses have new ambitions too – more purposeful, profitable and progressive.
- Now is the time to innovate, to create a better future – crisis is the moment of shake-up, when new business, new markets and new ideas take off.
Part 2: ChangeX … Defining the new codes of fashion
- Sustainability from Bolt Threads to DressX … the future of fashion is natural, simple and shared … How can less be more?
- Technology from Stitch Fix to Zozo … the future of fashion is intelligent, direct and personal … What does digital really mean for fashion?
- Ecosystems inspired by Portugal and Platforms … the future of fashion is premium and connected … How can we all create more value together?
Part 3: FashionX … Proposing a new manifesto for Turkish apparel business
- Building on a great heritage of creativity and commerce … unlocking the legacy of reputation and relationships, by focusing on how we work with customers and consumers.
- Adding more value in a digital world … unlocking the power of data and design, by embracing new markets and business models, working with existing and new partners to reach new audiences in new ways.
- Stop being the order takers, and reimagine a better future of fashion … having the courage to be our best selves, to reinvent ourselves, to create a better future together.
Interview with Peter Fisk, Milleyet Newspaper
What is your comment on the current impact of the pandemic on the business world in the world?
Now is the time to dare. Now is the time for leaders to have courage to reimagine their businesses. Now is the time to create the future of retail. Which is not just about digital technologies. Or social media. Or super speedy delivery. But fundamentally harnessing the power of the present to create a better future.
18 months of global health crisis has created a huge opportunity. Every market is being shaken up. In financial services, Visa and Paypal are more valuable than any bank. In automotive, Tesla outperforms Toyota despite selling 10 times less cars. In energy, carbon giants are displaced by Orsted and Schneider. Even in food and drink, Kweichow Moutai is twice as valuable as Coca Cola, or Unilever, or Diageo.
Of course, the pandemic has also been a difficult time, but like “wei-je” (the Chinese word for crisis) when translated means both danger and opportunity.
My new book “Business Recoded” argues that the old codes of business don’t work. The maelstrom of change, driven by disruptive technologies, by economic power shifts, by new agendas like sustainability, and by consumer attitude change, have all been accelerated by Covid-19. We now need to reimagine, reinvent, recode our businesses for a better future.
I talked to 50 business leaders across the world. I particularly focused on those companies that are shaking up markets, exploring new possibilities, and creating the future. I wanted to understand what these companies were doing, how they were changing, and what they thought were the old codes – and new codes – of business success. Many of the companies are featured in the book.
The 7 shifts emerged out of categorizing the many different changes that are happening – and started with the highest level of “why” do companies exist. The shift was from the “old” mindset of achieving market share leadership and optimising profitability to shareholders, to a “new” mindset of achieving a higher purpose has positive impact for the world, and then understanding how all stakeholders can benefit. That doesn’t necessarily mean less profit, it could actually mean more. By doing more for society, by doing more for employees and customers, companies often find that they can be more profitable and valuable over the longer term.
The other shifts then followed, from old to new mindset:
• Recode your future … from profit machine to enlightened progress
• Recode your growth … from uncertain survival to futuristic growth
• Recode your market … from marginal competition to market creating
• Recode your innovation … From technology obsession to human ingenuity
• Recode your organisation … From passive hierarchies to dynamic ecosystems
• Recode your transformation … From incremental change to sustained transformation • Recode your leadership … From good managers to extraordinary leaders
Together these 7 shifts begin to shape a better future for your business, delivered through the 49 codes. The 49 codes make up the chapters of the book, each with specific examples, and practical tools and approaches for change.
How has the pandemic affected innovation and industrial growth? In which ways have innovations been affected?
The pandemic has been has been an incredible time for innovation. Remember, 57% of Fortune 500 companies were created in a downturn, 90% of patents are filed in or just after a downturn. And many retailers describe how 10 years of transformation happened, in just a few months of lockdown.
While, on average, industrial growth has declined, and many companies have struggled to survive with reduced demand and disrupted supply chains – other companies have thrived. In fact there has been a massive shake-up in almost every market.
We all recognise how Tesla has shaken up the automotive market – from $75 billion to $750 billion in 12 months, making it twice as valuable as Toyota despite selling 10 times less cars. Not far behind, companies like Nio, the Chinese premium EV brand, is now more valuable than BMW.
In financial services, Visa is now more valuable than the world’s largest banks. Paypal, which we used to think of as a start-up is 3 times more valuable than HSBC. In energy, clean energy companies like Next Era and Orsted outperform Exxon and Shell. Even in food and drink, companies like Kweichow Moutai, the Chinese drinks brand, is more valuable than Coca Cola.
Covid-19 has had huge impact on markets. Most significantly is the shift to digital platforms in work and life, from working and learning, to shopping and entertaining. Many retailers say we have seen a decade of change in one year.
However this is not simply about developing an online platform, it is about fundamentally different business models, that embrace a wide range of technologies. Big data and AI enable consumer experiences to be more personal and predictive. Robotics and 3D printing are rapidly transforming supply chains and manufacturing. This transforms sectors like retail and finance, but also transport and mining.
A great example of this would be Rappi from Colombia – the accelerated growth of the online delivery service, which is rapidly becoming a source for everything – not just grocery or restaurant deliveries. Other “super-apps” across the world, like Grab or Jio, have shown that once they embrace a financial engine, they become essential for everything to everyone. Mercado Libre is now starting to follow this model too.
Other examples would include PingAn, China’s largest financial services company, which extended into healthcare. It’s Good Doctor business now has a billion subscribers, offering AI-based patient diagnostics, video-streamed consultations, automated prescriptions and services, linked to physical clinics and hospitals. It is now the world’s largest online healthcare platform.
Where should the companies look for growth?
Finding growth is not simply about looking for new audiences, new geographies, or seeking to develop more products and services in the same sector. Real growth comes through reimagining your markets, and your business models.
As described above, companies like PingAn or Reliance Jio have seen huge growth by looking beyond their traditional business – understanding how they can use their assets in new ways, embracing digital technologies to revolutionise how they do business, looking to adjacent sectors to solve broader customer problems.
We should also remember what is “good” growth. Just selling more, increasing revenues, increasing market shares, even profits, is not necessarily “good’ growth. In fast changing markets, companies should be looking for long-term sustainable streams of future profits, and therefore looking for value-based growth.
Selling more feels like success. But if it is not in the areas of long-term future potential, then it can even be damaging to the business – either because it ultimately becomes unprofitable growth, or because investors will recognise it as a business stuck in the past.
If we look at the really successful companies of the last 18 months, they are clearly the companies who are thinking differently – they are embracing new agendas like sustainability to fundamentally reinvent their business, they are changing business models for example to subscription focus, they are reaching out to new markets, in particular Asia.
Can you inform us about the new trends in the business world?
I have done a lot of research, in partnership with investment banks, on the future “megatrends” that are shaping business. I describe these in detail in my new book.
There are 5 megatrends, relevant to every type of business. They are the most significant pathways to the future, and a useful checklist for any business leader exploring their future strategy. How are you tapping into these seismic changes?
All five megatrends have been accelerated by Covid-19. The shift from young to old, particularly in providing healthcare. The shift from west to east, particularly in the rise of Asian businesses like Alibaba and PingAn. The shift from towns to cities, particularly in emerging markets in search of jobs and support.
However most significant have been the huge acceleration in shift to technologies – the digitalization of our lives, from education to work, from retail to entertainment. Many online retailers say they saw 10 years of change in 3 months. However this has not just been in shopping online, but also the convergence of shopping and entertainment. Look at Sea in Singapore, or Pinduoduo in China, the gamification and socialization of retail.
The other shift, towards a huge awareness of the fragility of our planet and society, has also been hugely increased by Covid-19. We have seen the impacts of extreme weather on the environment, but we have also seen the impacts of pandemic on society. Inequality of wealth, inequality of access to services. This is why we have seen such as growth in interest in companies having a greater purpose, and stakeholder capitalism.
What kind of mistakes are done by the managers? What kind of alteration has taken place in marketing?
The biggest mistake by managers today is the belief that the ways in which theuy succeeded in the past will succeed in the future … yet, increasingly, what got us here, is unlikely to take us further. For businesses, and for individual managers and leaders.
Too many businesses keep trying to use the old models of success – what made them successful in the past – and are reluctant, or afraid, to let go of these for the future. Look at companies like GE, or Ford, or Boeing. These used to be the world’s “hero” companies, but no longer, because they didn’t change.
In a world of constant, dramatic change – few businesses can rely upon stability, or “continuous improvement” (small changes to the old ways), in order to succeed.
Business leaders need a “growth mindset” (to explore, to experiment, to try new ideas, to learn from failures, to let go of the past), rather than a “fixed mindset” (to optimise, to seek perfection, to continuously seek to tweak and evolve the old ways of working).
Every aspect of business needs to embrace change – from sourcing, to production, to HR, to financial management, to sales and marketing.
Take marketing as an example. Mass-market advertising just doesn’t work today. Yet too many marketers are still obsessed about the beauty of their TV ad, or the fun creative ideas of their agencies. Yet we know that people are more different, more individual, and dont respond to mass-market communication. We also know that they dont trust organisations, but instead trust their friends and others like them. This is why socially influenced marketing, building brand communities, and peer to peer business models, are so much more successful today.
What are your opinions on E-commerce, Artificial Intelligence, Big Data, Augmented Reality, and Working Remotely during the COVID-19 Pandemic?
Every business today is a digital business. No physical business can afford not to have a website, e-commerce, or home delivery. But equally, a virtual business needs to be human, physical too. Therefore “liquid” business models which combine the best of physical and virtual experiences are winning in every sector.
The use of data becomes essential, to recognise and serve people as individuals, to customise solutions, and to manage increasingly complex supply chains and business models. AI is simply the application of data to be more predictive, automated, and to deal with data “at scale”.
Augmented reality in some ways is overhyped. Too many companies get excited by AR goggles! It’s fun, but it’s a fad. At the same time, what is important is to understand how to connect with audiences. Young people are increasingly found in virtual environments – listening to music on Spotify, or playing games like Fortnite. These become the new “social spaces” where brands – even the most physical brands like food and drink, energy and automotive, can connect with GenZ.
Working remotely is here to stay too – or “liquid working”. The point is not really where you work, but how you work. Come to the office to connect with people, for creative collaboration – or to the factory, for physical processes. But for other things, you could just as easily – maybe more effectively work from home, or a coffee shop, or a flexible meeting place.
Have you got any pieces of information about Turkish Business World? What can you say about its strong and weak points?
I have worked with Turkish companies for the last 20 years – working on strategic and innovation projects with companies like Abdi Ibrahim to Arcelik, Akbank and Garanti BBVA, Eczcasibasi and Turkcell, Ulker and Yildiz. For much of the last two decades, Turkish economic growth was a great success. In recent times, that has slowed – and we all recognise the challenges involved.
Turkey has some great companies, and great people. What really matters is to respond to a changing world – to engage with the rapidly growing markets and businesses of Asia, but also of the Middle East and Africa – to embrace the new technologies, not just in what we make but also how we work – to transform organisations, more creative, more diverse, more empowered.
I also do a lot of work in countries like KSA and Kuwait, UAE and Qatar. In these countries, managers have a very different outlook. They see themselves at the heart of global economies, connecting east and West. They jump to the future, building partnerships with leading technological and healthcare companies. They experiment with many new business models.
What would your advice be for the Turkish Business Persons?
Turkish business needs to redicover its entrpreneurship – but in global, modern, and technological ways. Imagination, partnerships, and courage are the keys.
I’m a big fan of Nazim Salur’s Getir business, for example. “Super speedy delivery” really took off in Asia first. The growth of “super-apps” like Grab in Singapore, Jio in India, and GoJek in Malaysia, shows how business can revolutionise markets incredibly quickly. Getir is doing this both in Turkey, but also across Europe where such new thinking has not yet arrived.
For the larger Turkish companies – like Koc and Sabanci – they need to move beyond the old idea of “holding” companies, and to consider how they can use their portfolios more effectively. Simply owning the local franchises to other companies is not a long-term strategy for growth.
I work with many holding company boards, and the big challenge is to move beyond “owning lots of business” to thinking much more like a private equity company – how can investments grow through innovation, how to unlock assets and capabilities in new ways, how to leverage the portfolio as a whole. Companies like Sea and PingAn are great examples. It also means, not being afraid to develop new international brands, that inspire audiences, and tell a new story about the future of the business, rather than just remembering its past.
What topics will you highlight in the Istanbul Apparel Conference that you are going to take part in?
Turkey has a great history in textile manufacturing. However the world of fashion is changing incredibly rapidly. Turkey needs to change with it.
Fashion retailers from Asos to Zalando are transforming how people buy clothes. But its not really about the lowest price. Or about mass production. It’s about being consumer-driven, engaging with brand partners, understanding context, using data to personalise both marketing and products. Yes, the old retailers like H&M and Zara are struggling, revenues decline, and margins are small.
The big challenge for Turkish companies is not to get drawn into ever-diminishing price battles. Instead they need to work with existing and new retailers in true forms of partnership. For example, by developing more sustainable ranges that meet changing priorities, by helping retailers to offer personalisation, or showcase products which are then made on-demand. Equally, there is no reason why textile makers cannot become fashion brands themselves, develop new direct channels to market, to engage with specific communities, and niche audiences.
Look at some of the most successful fashion business models of recent years – for example, Stitch Fix, developed by Katrina Lake, which is an online subscription service, where the consumer receives a monthly box of clothes and sends back what they don’t want. Using data analytics and AI to predict what each consumer would loves, means that within 3-6 months there are no returns.
Some Turkish textile businesses which I have worked with – such as Aster Textile and Sanko – are responding to these challenges. Aster, for example, has invested in more sustainable sourcing and manufacturing processes, building their creative capabilities as a design house, and reaching out to new kinds of customers. Sanko has tried to create Isko as an ingredient brand that is associated with premium fabrics, and Works alongside customer brands.
Perhaps it would be worth looking at the way in which the Portuguese textile manufacturers have worked together to transform their reputation and relationships over recent years. Their first step was to recognise that, regardless of fabric quality, seeking to compete on volüme and price was a recipe for irrelevance. They then started to transform the reputation of Portuguese by developing new fabrics, embracing new technologies, and transforming business models.
In the same way that Tesla is transforming the auto industry, Paypal in financial services, PingAn in healthcare, then the textile industry is being fundamentally shaken up too. For Turkish businesses, this means having imagination and ingeniuty, tos hake up the market on your own terms, to shape the future in your own vision.
Time for business leaders to step up, to create a new vision, with creativity, and courage.