Train the Trainer: Out of Fashion for SMEs

Out of Fashion for SMEs

New business strategies for a digital and sustainable Europe

By Connecting Cultures

Background information & inspiration

New business strategies for digital and sustainable SMEs

In the next few years, the transition to sustainable and circular models of production, consumption and trade will become mandatory for those who want to remain in the textile/ clothing/leather goods market with the imposition of a series of standards and guidelines that will make the sector grow in terms of quality and safety for the health of the planet.

According to the indications of the European Commission, ecodesign will become mandatory (2030) as will the life cycle care of textile products. Criteria and standards to safeguard the quality of textile products will become increasingly stringent as will the assessment of environmental impact. Digital will have to ally itself with green, contributing to processes that reduce material waste and encourage planned collection and recycling.

Business management for circular business models

Starting in the fall of 2022 and for the next few years, the transition to sustainable and circular models of production, consumption, and trade will become mandatory for those who want to stay in the textile/clothing/ leather goods market with the imposition of a set of standards and guidelines that will grow the sector in terms of quality and safety for the health of the planet.

There is an emerging urgency to adopt new sustainable business models both in the systemic approach in sustainable finance and in the pursuit of different priorities such as “inclusive prosperity” that aim not only at wealth maximization or short-term returns, but have the goal of developing economic, social and environmental benefits.

Focusing on the differences between an economic linear approach and a circular one the attention on social and environmental impacts of the fashion and textile companies emerges. Analysing the historical context in which the differences models has developed, it’s possible to understand the major challenges facing SMEs today to reach an

innovative approach based on impactoriented transformation.

Creating a circular economy business must interface with present challenges in terms of climate change, nexus, social inequality, urbanization, migration and population growth, the opportunities and contradictions in the use of new technologies as are presented in the World Economic Forum Global Risks Report 2022.

In this context two paradigms were born as alternative of the linear approach: the circular economy and the sharing economy.

“A circular economy is presented as an economy where the value of products, materials and resources is maintained in the economy for as long as possible, and the generation of waste minimised”. European Commission (COM-2015-0614)

The sharing economy is based on the fact that the dense urban geography creates inefficiencies but also opportunities; scale, proximity, and services could be useful to thrive; a critical mass of suppliers and consumers close enough to make platforms work.

Moving into a direction of circular business models could lead to hybrid organizational models that must make use of social impact measurement. These new corporate models could be summarized as follow:

Organizations can demonstrate their hybridity, that they have a dual soul characterized by a social mission and a business mission, and demonstrate that, through their social mission, they have an impact and thus produce change through a measurement system that assesses social impact understood as the change in a social, environmental, or economic outcome.

“This evaluation can be qualitative and quantitative, over the short, medium and long term, of the effects of the activities carried out on the target community with respect to the identified goal. Measurement can, in fact, serve several purposes: the need for communication, or reporting; manage the negotiation between two or more stakeholders (typically investors and investees); and can enhance the identity of organizations, investors, and funds, in terms of their propensity to integrate sustainability and impact into their business proposition”- Giorgia Trasciani, Post-doctoral researcher of School of Management (Politecnico di Milano), explains.

Social impact measurement is based on the demonstration of sustainability through sustainability and ESG reporting: Environmental, Social, Governance (ESG) reporting; approaches to demonstrate alignment with major social challenges and measurement of positive impacts generated, referring to the 17 sustainable development goals developed by the United Nations.

Theory of change

The Theory of Change specifically and articulately describes the sequence of activities planned to bring about social change and clearly identifies the outcomes that are intended to be achieved and how, highlighting the importance of attaining intermediate outcomes and providing the basic elements and structure for identifying evidence that can be measured. It is focused on the process, on the mapping activities through the social value chain entangled output, outcome and impact.

Future visions from the European strategy for sustainable textile sector

The European Green Deal maps out the path to make this transformation with the goal of making Europe the first climate-neutral continent by 2050. On this basis, the European Commission proposes to raise the emissions reduction target to at least 55 percent by 2030. For this reason, the European Union has given itself 6 basic environmental protection goals:

• Climate change mitigation

• Climate change adaptation

• Sustainable and protection of water and marine resources

• Transition to a circular economy

• Pollution prevention and control

• Protection and restoration of biodiversity and ecosystems.

In response to the need to change the way we produce and consume, in March 2020, the European Commission published the Action Plan for The Circular Economy for a Cleaner and More Competitive Europe.

“The plan includes standards that make products sustainable by empowering consumers, ensuring that less waste is generated, and focusing on sectors that use more resources and have a high potential for circularity, such as textiles”Mariagrazia

• Misalignment between social and environmental standards in the EU vs. elsewhere

• Strategic dependencies on raw materials (for the entire ecosystem), on chemicals ( for clothing), on intensive production in countries with low wages (for footwear)

• Value chains (especially the clothing sector) relying on sourcing and manufacturing outside the EU

• Sustainability/Circularity as competitive advantages vs. Higher prices of sustainable products

• Lack of common measuring tools and KPIs

• ‘Take, make, waste’ approach

• Lack of sustainability culture and education

• Overproduction and overconsumption

• Lack of measures and incentives dedicated to SMEs

• Costs of sustainable fibres, textiles and energy

• Insufficient R&D for sustainable materials and processes

Berardi,

CNA Milan Special Project Coordinator and Project Manager EEN

In fact, the textile sector is one of the most polluting as less than 1% of all textiles worldwide are recycled into new products.

The EU’s textile sector, composed mainly of SMEs, has begun to recover after a long period of restructuring, but 60 % by value of the EU’s clothing is produced elsewhere. With the Circular Economy Action Plan (March 2020), the goal is “to strengthen competitiveness and innovation in the sector by promoting the EU market for sustainable and circular textiles, including the market for textile reuse, combating fast fashion and promoting new business models.”- Brussels, 11.3.2020 COM(2020) 98 final.

• Lack of a system of recycling collectives to enable recycling and recovery in the European Union

• Lack of detailed information on feedstock data, bottlenecks and solution

• Ageing workforce and difficulty to attract skilled young workers

• Need for specialised (skilled) operators – especially for the green and digital transition

• Mismatch between the educational offer and the needs of the companies

• Lack of a common traceability and transparency standard

• Sector is not attractive to young workers

• Industry is slow to adapt to new technologies

• Expectation that with more green measurements and regulations, production or waste industry will grow in the EU

• Impact on sector/regions/workers – especially while facing tough global competition

• Consumer behaviour – must be willing to spend more (tax incentives and education campaigns)

• Lack of dedicated EU funding scheme for the ecosystem

• Need to boost innovation and foster uptake of new technologies –especially for green transition

• Need to directly fund companies to tackle current challenges to resilience

• Lack of incentives based on sustainability performance

• Lack of dedicated incentives to accelerate the implimentation of the waste hierarchy in textiles

The key issues on resilience, digitalisation, and sustainability emerging from the consultation process

Included in this paradigm aimed at change are extended producer responsibility schemes to ensure that producers bear the financial or operational responsibility for managing the life-cycle stage in which the product becomes a waste. Operational arrangements - to implement, organize, finance and ensure the operation of the supply chain are defined in consultation between producers, management systems and supply chain operators. In fact, producers are allowed to establish “a management system in collective or individual form,” following the model of consortia.

In addition, the EU CORPORATE SUSTAINABILITY DUE DILIGENCE DIRECTIVE will introduce mandatory due diligence for European companies to hold them accountable for human rights and environmental issues in their global supply chains. The directive will come into effect for staggered batches of companies depending on size and be fully operational in 2026.

Case studies

EVERLANE

According to the Sustainable Product Initiative, products on the market will have to meet minimum requirements in order to be sold or produced in Europe, compulsorily taking into account use of “sustainable” materials, ensuring durability of the product and its multiple use (choice of technically durable materials), reduction in the amount of waste and scrap generated during product manufacture, provision for ways in which the product can be recycled, reused and repaired and minimizing the diversity of materials used.

This is a decidedly challenging landscape for businesses especially SMEs, for which a number of initiatives are available to support research and innovation projects that are in line with the European Union’s new strategies.

PROGETTO QUID

Progetto Quid is the ethical and sustainable fashion brand of social enterprise Quid creates limitededition clothing and accessories. The project stems from the desire to respond to the problem of social marginalization by experimenting with the re-employment of women in difficulty through their employment in productive activities that respond to the logic of the market and at the same time stimulate active participation in beauty and creativity.

www.progettoquid.com

RE4CIRCULAR

Re4circular is the first artificial intelligence-based technology that automates the cataloguing of used clothing in order to evaluate each garment and direct it to the best circular destination: recycling, upcycling or reuse.

re4circular.com

Everlane is an American sustainable fashion company, based in San Francisco, that transparently makes explicit how it arrives at the retail price on the tag of each individual garment. Everlane was among the first to make transparent the costs of its production chain and the profit made on each garment.

www.everlane.com

SEP JORDAN

Sep Jordan is a luxury brand, specializing in fashion and lifestyle accessories, centred on the talent and tradition of female refugee artists reimagined in a modern key. The collections tell the stories of female artists as they regain economic and psychological autonomy.

sepjordan.it/?scr=yes

MUST HAD

MUST HAD is an Innovative Startup Benefit born in Turin in 2021 with the aim of creating a “Refashion” community composed of artisans, designers and small brands that share the philosophy of recovery and reuse in the fashion world.

Must Had provides “Refashion Brands” with a platform that allows them to grow by gaining greater visibility through an offer focused on digitization, marketing, logistics and other services. In addition to its marketplace activity, Must Had aims to become a reference point for small brands and artisans who want to embark on or continue a path focused on circularity, supporting them also with parallel activities such as the sourcing of textile scraps or the emergence of collaborations between the various players within the community.

musthad.com

A digital ecosystem focussed on circularity

Brands/corporates

Fashion brands

Non-fashion brands

Retailers

Textile/garment manufacturers

Refashion community

Fashion designers

Laboratories

Social cooperatives

Resellers

Recycling companies

Upcycling

Other circular solutions

Goals & potential shifts

Future Studies

Future Thinking exercises to:

• understand the ways in which the environment is changing

• review and align core values

• develop new ideas

• managing internal conflicts

• intercept possible changes that are not very visible.

These exercises can be divided into 4 stages: setting, documentation, visualization and action.

With this workshop, SMEs will be able to understand current problems in order to activate strategies to adequately respond to future environmental challenges, focusing on the importance of collaborative network building.

Forecast Foresight Anticipation

Forecast

The extrapolation of data, the actual forecast

Foresight

Visualisation of possible futures

Anticipation

Translation of what has been visualised into decisions and actions

Forecast and foresight are models, they only tell us what might happen

Changing one’s behaviour according to what might happen is a case of anticipatory activity. The model could also be wrong. However, anticipatory behaviour is more robust than reactive behaviour (waiting for something to happen and then responding)

Reflection exercises

MUST HAD workshop

The first exercise is based on MUST HAD workshop: 0 to 1, focus on what it means to launch a start-up in Italy. The key is to tell what we have done to highlight mistakes not to be made.

Topics are:

• Knowing the market

• Business plan and first operational steps

• Monitoring of results (the OKR method)

• Access to finance and equity management (accelerators, business angels)

• Mentorship and networking

The importance of market research

1

Start asking questions

Using initial questions you can make predictions called hypotheses. Defining your hypotheses upfront can help guide your approach to selecting subjects, researching questions, and testing designs.

2 3 4

Identify target demographics

To gather meaningful insights you need to understand your target demographic. Do you aim to cater to working parents, young athletes or pet owners? Determine the types of person who can benefit from your product.

Conduct the research

Find the quickest and easiest way to conduct the research.

Gather

insights and determine actions

Analyse the information collected, detect takeaways and define an action plan.

Objectives and key results Template for OKRs

Objective

A qualitative statement tells what you want to improve

Key Results

Quantitative, measurable outcomes shows how close you are to achievement

Objectives and Key Results (OKRs) are a framework for aligning an organisation to work together towards a common goal.

• They help to clearly articulate and communicate an organisation’s principle goals and to motivate and engage all team members

• This framework focuses everyone’s efforts on the organisation’s overarching goals. It also facilitates communication and collaboration among team members

• OKRs align with an organisation’s values, mission and vision and translates these into actions

• By providing a clear roadmap for reaching goals, OKR’s focus on not just setting goals, but following through on them

Backcasting workshop

The second exercise is based on Backcasting workshop

Backcasting is a future exercise that helps link a hypothetical, more or less desirable future to the present, reconstructing backwards the steps that will be required to get to that scenario. One can decide to explore a positive, desirable future or a negative, undesirable future. Having established the final end point, one works backward by individual stages to determine what events must occur for that desired or undesired future to be realized. Moving backward in time (through all the different stages necessary to link the future to the present) is critical to discovering the chains through which decisions and consequent actions could lead to the achievement of that particular visualized future.

Create groups of 4/5 people and map the events using the matrix STEEP to analyse every aspects in society

S – social T – technological E – ecological

E – economic

P – political Then follow the stages:

1. Imagine the scenario (positive or negative) in which SMEs will find themselves in 2035

2. Using the STEEP matrix, outline the events that occurred in 2028 and led to the situation (positive or negative) in 2035

3. Indicate the signs in the present that indicate that you are moving toward the scenario (positive or negative) that was previously outlined in 2035

4. Using the STEEP matrix, think about the actions we can already put in place today to accelerate (positive scenario) or mitigate/contrast (negative scenario) the realization of the 2035 scenario

5. State the obstacles we see today to the realization of the 2035 scenario

6. Think about the actions we can already put in place today to mitigate or undo them so that the positive scenario will be realized or so that the negative scenario will not be realized.

Backcasting

Moving backwards in time (through all the different stages required to link the future to the present) is essential to discover the chains through which decisions and consequent actions could lead to the achievement of that particular visualised future. As with any future exercise, the objective is to make decisions.

1. Begin with the end in mind

2. Move backwards from the vision to the present

3. Move step by step towards the vision

Worksheets, tools & templates

The workshop activities aim to provide SMEs with a framework for action to align with the expected changes in the European context in relation to new environmental and social challenges. The business model canvas can meet these objectives as a simple and visual tool (canvas) through which we are able to design, innovate and dialogue with respect to certain business models. It can be a useful tool for structuring the design of a social impact business model. The social enterprise business model is based on the social/environmental mission, and success is measured in terms of impact generated as well as profit. It is crucial to be able to express how business opportunities combine with social impact generation, and it is important that there is consistency and linearity of the relationship between the two. In a social enterprise neither the business nor the social side is self-sufficient, and their relationship must be managed.

Google business model canvas

In this framework, it is also useful to keep in mind that each enterprise is an element of an articulated and complex context, being embedded in the economic-financial system and generally in the social structure of a country or several countries.

It operates in close interdependence with the other components of that context.

A fundamental distinction is between:

Shareholders:

those who hold the ownership of the enterprise.

Stakeholders:

those who, in various capacities and roles, participate in the life of enterprises and are interested in their performance.

In addition, for SMEs, the European Union has made available a range of funding to support the acceleration to a sustainable business model in line with the 2030 benchmarks.

Google Business Model

Key partners

Distrubution partners

Open Handset Alliance

OEMs (for Chrome OS devices)

Key activities

R&D – Build New Products, Improve Existing Products

Manage Massive

IT Infrastructure

Key resources

Datacentres

IPs, Brand

Cost Structure

Traffic Acquisition Costs

R&D Costs (mainly personnel)

Data Centre Operations

S&M, G&A

Revenue Streams

Ad Revenues –Google Websited

Ad Revenues

– Google n/w Websites

Enterprise

Product Sales

Free

Web Search, Gmail, Google+

Targeted Ads using Adwords (DPD)

Extend Ad Campaigns using Adsense

Value propositions Relationships Channels

Display

Advertising Mgmt Services

OS and Platforms – Android, Chrome OS

Hosted Webbased Google Apps

Automation (where possible)

Dedicated Sales for Large Accounts

Customer segments

Internet Users

Advertisers, Ad Agencies

Google Network Members

Mobile Device Owners

Global Sales and Support Teams

Multi-product Sales Force

Developers

Enterprises

Horizon Europe Cascade Founding

Horizon Europe is the European Union Framework Program for Research and Innovation for the period 20212027. The program has a seven-year duration - corresponding to the EU’s long-term budget - and a total budget of 95.5 billion (in current prices), a figure that includes the 5.4 billion earmarked for the Next Generation EU recovery plan. It funds research and innovation activities-or activities supporting R&I-and does so primarily through open and competitive calls for proposals. The program is implemented directly by the European Commission (“direct management”).

Research and innovation activities funded by Horizon Europe must focus exclusively on civil applications. Participation is open to any legal entity, regardless of its place of establishment, including legal entities from third countries not associated with the program or international organizations, subject to any exceptions set out in the Work Program or the specific call for proposals.

HORIZON EUROPE: research-and-innovation.ec.europa.eu

The Cascade founding is a mechanism by which the European Commission provides grants to SMEs and startups through open calls aimed at developing particular solutions.

A concrete, and still uncommon, opportunity to fund studies, experiments and pilot actions. Financial support consists of nonrepayable grants (often in the form of vouchers) and is granted for the development of solutions resulting from larger projects, with a simplified system compared to the bureaucratic burdens typical of Horizon Europe calls.

The Cascade founding’s Eurocluster are:

• CREATHRIV-EU

• IKAT

• EPICENTER

• SUAVE

• PIMAP4Sustainability

• SILICON EUROCLUSTER

• CircInWater

• MedBAN

• METASTARS

• 1st xBUILD-EU

CASCADE FOUNDING: ec.europa.eu

CASCADE FOUNDING EUROCLUSTER: clustercollaboration.eu

Other European opportunities for SMEs are:

1. WORTH PARTNERSHIP PROJECT: worth-partnership.ec.europa.eu

2. EUIPO SME FUND 2023-2024: euipo.europa.eu

Reading list & further resources

EU Strategy environment.ec.europa.eu/strategy/ textiles-strategy_en

ReSet The Trend: Making fast fashion out of fashion environment.ec.europa.eu/topics/ circular-economy/reset-trend_en

T. Hancock and C. Bezol

Future Cone

Possible futures, preferable futures 1995

Thomas Paris, David Massé

Le management des industries créatives

Revue Française de Gestion

Lavoisier, 2021

47 (296), pp.51-63.

DOI: 10.3166/rfg.2021.00536

HAL Id: hal-03327529

D. Breznitz

Innovation in real places

Strategies for Prosperity in an Unforgiving World 2021

The dimensions of social innovation for the design and implementation of effective public policies

Fabrizio Montanari, Stefano Rodighiero, Fabio Sgaragli, Diego Teloni

www.rivistaimpresasociale.it/rivista/ articolo/le-dimensioni-dell-innovazionesociale

Measuring and managing impact to define identity

Irene Bengo

www.cottinosocialimpactcampus.org/ impact-review/misurare-e-gestirelimpatto-per-definire-la-propriaidentita/

About SDGs Impact Standard sdgimpact.undp.org/assets/About-theSDG-Impact-Standards.pdf

Quotes

The Future thinking workshop was very interesting to find tools to predict future scenarios in a complex context such as the fashion industry and to learn how to exercise creativity in another form. Must Had is a positive story of how we can start from small ideas to arrive at and develop big goals

The Back casting exercises are very useful and their strength lies , in my opinion, above all in the comparison with others and with different points of view and experiences.

I found very interesting to hypothesis a future, both positive and negative. It was an interesting and stimulating exercises to imagine a hypothetical business activity, possible problems and especially related solutions.