Business model dynamics for TCBL

Business Model Dynamics enabled by TCBL

Michele Osella, Elisa Pautasso Istituto Superiore Mario Boella

TCBL 646133 - PRIMER RELEASED AS ANNEX TO D4.2 (TASK 4.2) 14​th​ June 2017

646133 - TCBL Textile & Clothing Business Labs

Table of Contents 1.

The notion of business model dynamics in TCBL

​2

2.

TCBL innovation dimensions

​3

3.

TCBL business model patterns

​5

3.1.

Business model archetypes running in the T&C sector

​5

3.2.

Business model archetypes enabled by TCBL project

​8

4.

TCBL business model innovation framework

​13

5.

Business model dynamics in TCBL Business Cases

​16

Appendix

​21

1

646133 - TCBL Textile & Clothing Business Labs

1. THE NOTION TCBL

OF BUSINESS MODEL DYNAMICS IN

TCBL – as EU-funded project and global movement with responsible innovation in its DNA – is ultimately meant to unleash transformative forces in the European T&C sector, which is experiencing a post-crisis stagnation that goes hand-in-hand with an ingrained price-based competition often resulting into delocalization practices and ‘race to the bottom’ problems.

To materialize the TCBL vision, the project has been working since its inception on the establishment of an integrated business ecosystem that brings together an unprecedented community of innovators and market operators firmly committed to make the industry more sustainable, fair and competitive.

According to the project roadmap, a similar journey passes through the experimentation of innovative business models facilitated by the EU-wide network of TCBL Business Labs.

Stakeholders involved in such a process – Business Labs, liaised T&C companies involved in Business Pilots, TCBL partners acting as facilitators, external advisors – are thus facing a pressing need for knowledge, tools and supporting measures able to lower entry barriers to business model innovation in the T&C realm, especially when it comes to SMEs, startups, and artisan companies.

Acknowledging this, the present primer – released as annex to D4.2 – capitalizes on the first two years of applied research on business model dynamics conducted within the scope of T4.2 in order to provide – in a concise manner – a ‘compass’ that orients business model journeys of companies involved in TCBL Business Pilots.

Along these lines, the goal of the present document is three-pronged: ● ● ●

Set a common view of the new business possibilities ushered-in by TCBL innovation.

Codify a library of ‘bite-sized’ replicable models that TCBL ecosystem can support.

Formulate actionable insights on how to handle the business model transition from a current state (AS-IS) to a target one (TO-BE) in the quest for viability and scalability.

Concluding these introductory comments, the present document is structured into six chapters. Chapter 2 depicts the axes along which TCBL innovation takes place. Chapter 3 identifies common patterns of business model innovation and distills the library of business model archetypes promoted by TCBL community. Chapter 4 describes TCBL business model innovation framework and provides a bird’s-eye-view of its pillars. Chapter 5 shines a spotlight on TCBL Business Cases while highlighting their alignment with business model archetypes previously formalized. Finally, the Appendix contains information about selected companies already implementing business model schematized.

2

646133 - TCBL Textile & Clothing Business Labs

2. TCBL INNOVATION DIMENSIONS Taking a helicopter view, innovation powered by TCBL is framed around three macro dimensions, which could be defined by making reference to the requirements in terms of impact set by the H2020 call in which TCBL project was funded: ● ● ●

sustainability openness data.

At least one of them - sometimes a combination of the three - lies at the core of innovation itineraries that TCBL ecosystem offers to the various Business Pilots, including the six Business Cases recently launched in 2017 to kick-start on-the-ground innovation activities with a cohort of Associate companies acting as TCBL ‘early adopters’.

Each of the dimension is hierarchically split into multiple sub-dimensions that allow to single out in a fine-grained manner the very focus of an innovative endeavor powered by TCBL (Figure 1).

Figure 1. TCBL innovation dimensions

The first dimension is ​sustainability​, which lies at the core of TBCL values. In view of the ‘triple sustainability’ tenet, TCBL innovation considers as guiding light sustainability ​lato sensu​, encompassing multiple nuances (selected as sub-dimensions), namely environment protection, social inclusion and economic viability. The first one calls for innovative techniques 3

646133 - TCBL Textile & Clothing Business Labs and solutions - such as, for instance, the reuse of waste materials and the adoption of natural raw materials generating no impacts on the environment - that intend to reduce pollution and depletion of natural resources. The second sub-dimension has to do with purpose-driven ventures combining both a social and a business mission: this results in solutions that generate impacts for society at large while taking into account workers' conditions, avoiding child and underpaid labor, creating opportunities for unemployed and vulnerable categories, and investing with a long-term vision on labor in developing countries. Finally, the third sub-dimension comprehends business endeavors aimed to support small and micro enterprises that, due to financial resource constraints, often struggle to remain in the black and to undertake the investments needed to manage and evolve in-house operations. In light of this three-pronged nature, the sustainability dimension is represented by means of three intertwined categories aligned with the the renowned ‘triple bottom line’1.

The second dimension pertains to ​openness​, seen by TCBL as key enabling factor for technology/knowledge acquisition (e.g., open innovation and crowdsourcing), resource optimization at operational level (e.g., outsourcing of part of the production to companies experiencing intermittent overcapacities), and increase of value perceived by customers thanks to their active participation (e.g., user co-creation). Openness could thus result into a user-centric approach based on customer empowerment in the processes of designing, making and personalizing clothes but, at the same time, openness could also occur in the form of collaboration among enterprises, which may share resources and competencies - or even team up for undertaking complex investments - in order to better respond to nascent business opportunities and market needs. To capture this ​continuum of opportunities situated all along the value creation process, openness sub-dimensions are associated to prominent steps of the supply chain in which the boundaries of a company may become porous to welcome contributions from the outside: design, prototyping (engineering), testing, production, personalization, and promotion.

The third dimension concerns the role of ​data ​- increasingly recognized as a key input, almost on a par with capital and labor, in modern knowledge-based economies - ​within the T&C sector. Taking stock of the various data sources that can influence the decision/production process at different stages, sub-dimensions have been structured as follows: 1. User needs data - Customers’ data implicitly collected for recommending the right product they might be interested in.

2. User profile data - Data explicitly gathered from customers with their consent - through manual input or specific technologies (e.g., 3D scanners) - with the purpose of performing better service delivery.

3. Product data - Information about customers’ needs, wants, and opinions gathered from distributed inputs (e.g., communities, forums, social media) to define product specs accordingly.

4. Supply chain data - Data collected along the process of moving a product from supplier to customers with the intent to monitor and enhance performance (e.g., lower stock levels, improved delivery time, cost abatement).

5. Market data - Data resulting from market sensing meant to capture the current vogue as well as new disruptive trends.

6. Archive data - Historical T&C information and artifacts (e.g., stage costumes, old fabrics, photographic repertoires) stored in sectoral archives and accessible as source of inspiration for the design of contemporary collections.

1

Elkington, J. (1997). Cannibals with forks: the triple bottom line of 21st-century business. Oxford: Capstone.

4

646133 - TCBL Textile & Clothing Business Labs

3. TCBL BUSINESS MODEL PATTERNS Building on previous considerations, this chapter outlines a handy library of business model patterns that reflect the peculiar traits of TCBL innovation dimensions.

Such archetypes have been formulated as possible TO-BE reference scenarios for TCBL Business Pilots as they aim to capture innovative patterns of value generation as reusable descriptions, exactly as it happens with libraries in software engineering, where a program library is a collection of (usually) precompiled, reusable programming routines that a programmer can ‘call’ when writing the code so that s/he does not have to write such a code.

In the same vein, TCBL Associate companies willing to test the water of a new wave of T&C business opportunities, instead of consuming energies in order to design from scratch complex business models, can consult the TCBL business model library​: this allows T&C businesses to choose some of the patterns as sources of inspiration and to pick one or more of them to mould the business transition on top of the pre-defined archetypes. At the same time, TCBL business model library can be seen as ​à la carte menu encompassing the business model destinations on which TCBL Associates can obtain support through the services offered by TCBL Business Labs. On the whole, these replicable models that TCBL ecosystem can facilitate give an exemplification of how the three innovation dimensions depicted in chapter 2 (i.e., sustainability, openness, data) might take shape. Every archetype, in fact, is an instance of a class associated to a specific innovation dimension.

Following the approach adopted by TCBL project, the archetype analysis is carried out in two subsequent steps: 1. Identification of an initial list of business model archetypes currently running in the T&C sector.

2. Evaluation and revision of the initial list through a. addition of new business models particularly promising for the T&C sector which so far have been developed only in other industries; b. tweak/pivot of existing business models in the quest for a better alignment with TCBL values and principles.

3.1 Business model archetypes running in the T&C sector This section illustrates - without any claim of being exhaustive - a cohort of business model archetypes already in place in the T&C sector making reference to the innovation dimensions previously delineated (i.e., sustainability in Table 1, openness in Table 2, and data in Table 3).

The three tables describe the characteristics of business model archetypes according to a common format, which is structured as follows: 1. The name of the archetype.

2. A brief description of the archetype highlighting its most relevant features.

3. A short-list of companies operating in the T&C sector adopting the described business model (the Appendix contains links to companies’ websites while a comprehensive tabular repository of business champions selected for TCBL Knowledge Spaces is available as annex to D2.4).

4. The degree of alignment between the archetype and the requirements set by the H2020 call in which TCBL project was funded (**** = full alignment; *** = strong alignment; ** = partial alignment; * = weak alignment).

5. The target market that companies associated to the archetype are serving, namely business to business (B2B) and/or business to customer (B2C).

5

646133 - TCBL Textile & Clothing Business Labs

Short description

Examples in the T&C industry

Alignment with the call

Absolute green

Focus on environmentalism at supply chain level, fostering the usage of green inputs (e.g., renewable energy, eco-friendly and organic materials) and sustainable processes (e.g., traceability, certification).

Reform Studio, Blond & Bieber, Lunitien, Bonobo Emmaus, Veja, Samatoa, Re-Bello, TED, Rothy’s, Saint Basics, Tentree

****

B2B, B2C

From waste to value

‘Circular’ reuse of textile products and materials through reverse logistics that moves goods from their typical final destination for the purpose of capturing untapped value through restorative and regenerative practices (e.g., upcycling, downcycling).

****

B2B, B2C

Eataly of sustainable fashion

Establishment of an on-line or off-line marketplace offering conscious consumers a one-stop-shopping access to diversified purpose-driven T&C brands.

Not Just a Label, Sakina M’Sa - Front de Mode, The Fair Shop

****

B2C

Social responsibility as flagship

High commitment to address relegation of groups that are frequently situated on the fringe of society (e.g., unemployed, inmates, former drug addicts, migrants, refugees).

Made in carcere, Sakina M’Sa, SEP Jordan, Indego Africa, My beach Side, Afriek, Studio JUX

****

B2B, B2C

Second life

Establishment of an on-line or off-line marketplace enabling the exchange of T&C goods that are not new, either transferred hand-me-down or sold for a fraction of their original value.

SwapStyle, thredUP, Rehash, Rebelle, Treadesy

***

B2C

Closet sharing

Setup of a private or community-powered infinite wardrobe thanks to which individuals no longer need to acquire ownership of a product as they can access it through a service model solely for the time needed.

Rent the Runway, The MS. Collection, Gwynnie Bee, Filippa K, Vigga

**

B2C

Transformable clothing

Supply of multi-purpose garments that allow consumers to wear various styles, depending on daily individual needs and penchants, while using and paying just one product.

Lemuria, Degrees, Gabs

**

B2C

Name of the archetype

Re Verso, Progetto Quid, Recover, MUD Jeans, The Renewal Workshop, Orange Fiber, Ecoalf

180 ADIFF,

Market

Table 1. Business model archetypes running in the T&C sector (sustainability-driven)

6

646133 - TCBL Textile & Clothing Business Labs Name of the archetype

Short description

Examples in the T&C industry

Alignment with the call

Threadless, Nervous System, Betabrand

****

B2B, B2C

Market

Crowd design

Exploitation of the crowdsourcing paradigm with the aim of collecting awesome ideas for apparel design to be turned into real products.

Extended workshop

Supply of production-related service packages (e.g., pattern making, sample making, usage of production facilities, body scanner services, co-working spaces, match-making) putting SMEs or independent designers in condition to locally access resources and capabilities not available in-house.

Portland Garment Factory, COsewn, Out of X, Make Works, Le Souk

***

B2B

Do It Yourself

Publication of digital clothing models made available by independent designers for proximity production performed directly by customers through 3D printers, either at home or in next-door digital fabrication workshops (‘fab lab’).

MarvelousDesigner (MD store)

***

B2C

Make to assemble

Supply of a wealth of product components that could be combined quickly and easily in multifarious manners, thus allowing each customer to personalize his/her own finished good.

Obag, Numeroventidue, Jackyceline

**

B2C

Crowd promotion

Crowdsourcing-based collection and sharing of fashion outfit ideas generated by users, which result into product discovery and actual purchase recommendation.

Project September, Chicisimo

**

B2C

Table 2. Business model archetypes running in the T&C sector (openness-driven)

7

646133 - TCBL Textile & Clothing Business Labs Name of the archetype

Short description

Examples in the T&C industry

Alignment with the call

Digital makeover

Purposeful digital reuse of materials of enduring value (e.g., fabric archives, book samples, photographic repertoires) to stimulate the design of fascinating, iconic collections that excite customers through an eccentric and timeless vibe.

John Lewis, Zandra Rhodes

****

B2C

Mass customization

Combination of the flexibility and personalization of bespoke fashion with the low unit costs associated with mass production, resulting in a game-changing model that places customer’s uniqueness at the heart.

Lanieri, FitMeSo, J. Hilburn, Mon Purse, Indochino, ​Bivolino

***

B2C

Predictive offering

Combination of art (i.e., on-trend clothes) and science (i.e., algorithm deciphering personal styles and tastes) aimed to surprise and delight customers through a recommendation engine while saving their precious time.

Stitch Fix, Trunk Club, Trumaker

**

B2C

Fast fashion

Streamlining of the supply chain to rapidly align product assortment with seasonal trends, thus stocking very little and updating collections often.

Zara, H&M

*

B2C

Market

Table 3. Business model archetypes running in the T&C sector (data-driven)

3.2 Business model archetypes enabled by TCBL project After the recognition of existing business models implemented in the T&C sector, the analysis focuses on a generative phase resulting in the identification of new categories characterized by high alignment with TCBL values. This happens through two types of action: (1) the definition of new business models - currently missing in the T&C realm - which can be fruitfully applied in the sector reasoning by analogy or by combination, and (2) the renovation of existing business models in order to better fit with the project ambitions.

Regarding the former circumstance, it goes without saying that TCBL project aims to run Business Pilots not only taking inspiration from existing and successful cases but also it aspires to galvanize a new guard of business models not yet taking root in the T&C sector.

One remarkable example in this vein can be the case of the ‘​polycentric development​’. It 8

646133 - TCBL Textile & Clothing Business Labs consists in the orchestration of a two-sided market connecting a co-creative community of designers with a widespread network of micro-factories working on a proximity-basis: in short, it can be described - reasoning by analogy - as a transference of the Local Motors2 business model to the T&C sector. Local Motors combines a boundaryless community of innovators dealing with design and engineering of motor vehicles with a network of micro-factories taking care of low-volume production and maintenance. As a matter of fact, users can be designers, engineers, makers and consumers at the same time, hence playing a decisional role in every stage of the supply chain.

Reasoning by combination, a similar model can be seen as the fusion of two existing archetypes already portrayed, namely crowd design and Do It Yourself (DIY). Whilst the former business model opens up the upstream portion of the innovation funnel to unlock the outside-in percolation of brilliant ideas for apparel design, the latter one introduces decentralized manufacturing based on local production communities. It is worth highlighting that polycentric development is one of the models that perfectly embody TCBL values and principles, being framed around user inclusion into demand-driven processes and living labs, valorization of decentralized manufacturing capacity, and open innovation taking advantage of collective intelligence.

When it comes to the renovation of existing business models, such a process is meant to guarantee a better alignment with the values lying at the core of TCBL project. Amid the plethora of business models previously identified, the most critical category is ‘fast fashion’ (alignment with the work programme = weak). This model is frequently deemed as unsustainable due the resulting hyper-consumerism driven by its high-speed, high-volume production logic: the continuous launch of new clothing lines, especially low-priced ones, encourages people to impulsively purchase clothes they do not need, thus creating a lot of waste with most going to landfill due to the persistent ‘produce, use, throw away’ linear model.

Even if several fast fashion companies have recently shown commitment to sustainability3, there are still plenty of controversial elements that deviate this business model from the ambitions of the project. Examples in this vein regard the opacity of the supply chain that is too often seen as a ‘black box’, the scarce engagement with environmental matters and circular economy practices (e.g., massive use of chemicals, emission of significant amounts of greenhouse gases), and the production model ignoring empowerment of local economies (e.g., huge delocalization with clothing-factory workers being underpaid and exposed to unsafe workplace conditions).

Taking stock of these detrimental impacts, TCBL is making the effort to extract some positive aspects of the ‘fast fashion’ model with the aim to incorporate them into a new archetype that can be renamed with the moniker of ‘​fast fashion with a twist​’. In a nutshell, this new archetype leverages smart data usage, lean warehouse management and careful attention to ongoing fashion trends. At the same time, it embraces a number of measures (e.g., promotion of reuse, remix and recycle practices, adoption of clean fibers, consumer education on clothing-care practices with a smaller environmental toll, higher labor standards monitored through supply chain transparency) that re-adapt the traditional fast fashion according to social and environmental issues, in line with McKinsey’s vision4.

‘Fast fashion with a twist’ is not an ideal model theorized by TCBL but rather a reality already 2

3 4

​https://localmotors.com/ ​http://sustainability.hm.com/en/sustainability/about/about/our-vision-and-strategy.html

http://www.mckinsey.com/business-functions/sustainability-and-resource-productivity/our-insights/style-th ats-sustainable-a-new-fast-fashion-formula

9

646133 - TCBL Textile & Clothing Business Labs under experimentation. Looking at the TCBL new labs, Fab Textiles5 at Fab Lab Barcelona has launched a new program on ‘super fast fashion’, which is exploring new possibilities offered by digital technologies, distributed manufacturing infrastructures and knowledge networks to thwart negative consequence of ingrained ‘fast fashion’ practices. TCBL Associate enterprises are particularly active in this direction as well. Among the others, SOFFA6 is a cooperative of fashion designers that provides work integration to trafficked survivors and refugees while producing only from natural, man-made or recycled biodegradable materials. In tune with the principle of the Fashion Revolution7 - a global movement calling for greater transparency in the fashion industry - SOFFA builds on the motto ‘fast fashion comes at a cost’: to ‘break the chain’ in the fashion industry, SOFFA crafted an holistic model - intended to make more sustainable working, textiling, producing and training - targeting ethical consumers with a superb design and an eye on the latest tendencies.

The two additional archetypes are summarized in Table 4.

Name of the archetype

Short description

Innovation dimension

Alignment with the call

Polycentric development

Orchestration of a two-sided market connecting a co-creative community of designers with a widespread network of micro-factories working on a proximity-basis.

Openness

****

B2B, B2C

Fast fashion with a twist

Revision of the fast fashion model according to social and environmental priorities.

Data

****

B2C

Market

Table 4. Additional business model archetypes

At this juncture, the initial collection of business model archetypes displayed in Table 1, Table 2, and Table 3 can be updated in view of the findings contained in Table 4. As result of this step of analysis, a revised portfolio of TCBL business model patterns is presented, namely the TCBL business models library (Figure 2). A selection of these archetypes - encompassing specific business models characterized by sustainability orientation and customer centricity in view of the target audience - is included in the Stop&Read on sustainable fashion8 released as annex to D2.4.

Such a library recalls the matching between identified archetypes and the three TCBL innovation dimensions. Most of TCBL archetypes (seven) are driven by sustainability principles, six of them are motivated by openness and four of them hinge on data. On the whole, the hegemony of sustainability and openness dimensions corroborates TCBL values and principles.

5

​https://fabtextiles.org/ ​http://soffa.gr/ 7 ​http://fashionrevolution.org/ 8 ​http://bit.ly/TCBL17 6

10

646133 - TCBL Textile & Clothing Business Labs

Figure 2. TCBL business model library

Finally, it is worth exploring the characteristics of each business model archetype according to the sub-categories of each innovation dimension (Table 5).

A similar mapping is meant to help companies involved in TCBL Business Pilots to single out the kind of support to be asked to TCBL Business Labs. Once companies identify their final destination of their business model transition (i.e., a target business model archetype taken from the library, or a combination of them), they are eager to understand which innovation trends enabled by TCBL are instrumental to reach the expected goal. For example, an Associate enterprise willing to shape its Business Pilot around the ‘absolute green’ notion can take advantage of a composite bundle of business services focused specifically on environmental sustainability, which are offered by the network of TCBL Business Lab. Should it be the case, the support provided by TCBL ecosystem can encompass - ​inter alia - access to biodegradable materials, experimentation with natural fiber processing techniques, advisory on product traceability, training on environmental subjects, etc.

11

646133 - TCBL Textile & Clothing Business Labs

Table 5. Mapping between TCBL business model library and sub-dimensions of TCBL innovation

12

646133 - TCBL Textile & Clothing Business Labs

4. TCBL BUSINESS MODEL INNOVATION FRAMEWORK Once defined the TO-BE destination of a possible business model journey, a T&C company may struggle to come to grips with a way to get there. To cope with this hurdle, TCBL has coined the business model innovation (BMI) framework (Figure 3), a composite toolkit that allows to analytically model the transition from a current state (AS-IS) to a target one (TO-BE) as part of a TCBL Business Pilot.

Figure 3. TCBL BMI framework

In an attempt to unpack a business model transition enabled by TCBL, the business model innovation framework relies on five pillars, structured as follows : 1. Exogenous drivers - They represent external opportunities to be caught as well as threats to be thwarted - either industry-specific or cross-industry - which can trigger a business model transition.

2. Endogenous drivers - They identify internal core resources that a business may harness as sources of competitive advantage such as, for instance, the ones that are deemed valuable, rare, inimitable and non-substitutable according to the VRIN9 analysis.

3. Innovation levers - They are the business model building block - such as, for instance, the ones that are part of the Business Model Canvas10 - on which a company can intervene in order to operationalize a business model transformation.

4. Innovation paths - They categorize the macro dimensions of innovation (i.e., sustainability, openness, data) around which the business model transition is framed 9

Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120.

10 Osterwalder, A., & Pigneur, Y. (2010). Business Model Generation. Hoboken: John Wiley & Sons.

13

646133 - TCBL Textile & Clothing Business Labs (chapter 3).

5. Archetypes - They codify the TO-BE destinations of a business model transition making reference to the TCBL business model library (chapter 2).

Whilst the visual metaphor of Figure 3 helps to devise a tentative workflow for undertaking a business model transition powered by TCBL, an additional step ahead consists in outlining a process view that clarifies a precise sequence of analysis along the various stages of the decision and implementation cycle (Figure 4). Although the linear vision tends to simplify the process, which cannot eschew feedback loops among stages and resulting iterations, it can represent a ​modus operandi of easy applicability for every company. In this process view, each stage is associated to a function and a recommended tool, either taken from the relevant literature or coined by TCBL as answer to needs exhibited by Associate companies.

Figure 4. TCBL BMI framework in practice

The business model innovation framework as a whole is meant to put a T&C company in condition to roll-out and validate an innovative business model in a real market setting (‘transition stages’ box on the right-hand side). To achieve this objective, a number of stages has to be dealt with.

Initially, the company recognizes external factors (exogenous drivers) that call for a competitive reaction or, alternatively, stimulate a proactive move. Then, the company assesses its core strengths - based on either tangible or intangible assets - that put the business in a superior position into the competitive landscape (endogenous drivers).

Having recognized the resources on which to capitalize, the company can then define its target business model destination (archetypes) and, as a consequence, can request a specific support to be provided by TCBL ecosystem in light of its core competencies in sustainability-driven, openness-driven and data-driven innovation (innovation paths).

Given that archetypes are agnostic to the departure of the journey, to move closer to the target destination the company has necessarily to define very precise changes to be applied to the AS-IS business model architecture (innovation levers). In doing this crucial action, the company has to factor-in resources, partnerships and activities that could be offered by TCBL 14

646133 - TCBL Textile & Clothing Business Labs ecosystem through its widespread network of Business Labs.

Once this comprehensive design phase is completed, it is time to actually implement the business model transition (transition stages). Apropos of this, it goes without saying that TCBL intends to support this go-to-market stint as well. An overview of the extended process is outlined in Figure 5, which delineates four macro stages (i.e., design, prototyping, start-up, scale-up) in the process of business model execution and validation.

Figure 5. Business model execution and validation

In more details, Figure 5 describes the path that a business venture undertakes in the pursuit of business viability and scalability.

During the ​design ​phase, ​the business model concept is formalized and the TCBL business model innovation framework is extensively used to set the direction. In the subsequent prototyping ​phase, companies involved in Business Pilots need to understand whether their TCBL-enabled offering matches what target customers actually want: the ‘problem-solution fit’ is the outcome of this phase, which is based on testing a Minimum Viable Product (MVP) equipped with basics features sufficient to satisfy early customers - with a panel of real prospects. Once the company has ascertained its capacity to generate value, it has to evaluate the possibility to appropriate a slice of the value generated: this ​start-up ​phase ​leads to ‘product-market fit’ validation, obtained once the TCBL-enabled products/services have debuted on the market and have gained a sufficient market traction. Finally, being the company willing to ​scale-up​, an additional phase gauges the business viability of TCBL-enabled products/services over time. In quantitative terms, such a validation can resort to KPIs such as Net Present Value (NPV), PayBack Period (PBP), and Return on the Investment (ROI).

It is uncontroversial that companies often go through many iterations before they find a sufficiently large and lucrative set of customers that resonate with their product, either inside or outside the boundaries of TCBL ecosystem. This evidence calls for mechanisms allowing to continuously incorporate market feedback and outcomes of hypotheses tested into the business development process visualized in Figure 5. As a result, ‘lean startup’11 and 11

Ries, E. (2011). The lean startup: How today's entrepreneurs use continuous innovation to create radically successful businesses. New York: Random House LLC.

15

646133 - TCBL Textile & Clothing Business Labs ‘customer development’12 principles are endorsed by TCBL movement to favor hypothesis-driven experimentation as part of an iterative development based on multiple tweaks and pivots.

As the reader may surmise, TCBL ecosystem supports each of afore-mentioned phases by means of services offered by the network of Business Labs. While some service categories are explicitly mentioned in Figure 5, for the sake of brevity the present primer does not delve into the service packaging topic at lab level. To this end, the reader is redirected to materials released as attachment of D3.2.

5. BUSINESS CASES

MODEL DYNAMICS IN

TCBL BUSINESS

According to TCBL DoA, one of the objectives of the project is to ​“carry out pilot projects (T&C Business Pilots) defining transition paths for T&C industries and related players towards the incorporation of new business models into business practices”​. To accelerate impact materialization in this direction, during the second year of the project the Consortium decided to zoom in on promising and on-the-ground cases whose Associate companies are considered in the guise of TCBL ‘early adopters’. Such opportunities - known as ‘Business Cases’ in the project jargon - are aimed to generate immediate evidence of the tangible effects that TCBL project can unleash on T&C business ventures.

The six Business Cases launched in spring 2017 are: 1. Natural Cotton13 - It is aimed to promote sustainable and eco-friendly choices along the cotton value chain by privileging the use of natural materials. It takes advantage of TCBL for exploiting R&D results and technical innovations that have what it takes to transform raw materials using less resources, especially water and energy.

Companies involved see a clear market avenue for producing better quality final products with a market value highly recognized by consumers, which is coupled with a better remuneration of those involved in the production process.

2. Short Runs14 - It is an example par excellence of sustainable downscaling, which is based on the principle that short run production allows for local sourcing closer to market needs. The Business Case includes: (1) textile manufacturers willing to produce short run capacity during down time, or wish to broaden their offer or have leftover fabric to sell; (2) garment manufacturers who range from the at home sewer to the small Cut, Make & Trim (CMT) unit; (3) designers who want to design and sell small lots, potentially by grouping together to increase buying power. TCBL contribution pertains primarily to match-making mechanisms and quality assurance.

3. Eco-Friendly Production15 - It aspires to establish an ecosystem covering the entire supply chain based on sustainability principles, spanning the gamut from the fiber to the final customer. The Business Case promotes awareness about transparency and sustainability issues affecting the manufacturing of quality products. The enabling role played by TCBL consists in facilitating the creation of a local consortium that fosters life-cycle thinking and explores different technologies for the abatement of chemicals ​https://hbr.org/2013/05/why-the-lean-start-up-changes-everything ​http://tcbl.eu/natural-cotton 14 ​http://tcbl.eu/short-runs 15 ​http://tcbl.eu/eco-production 12 13

16

646133 - TCBL Textile & Clothing Business Labs in the production cycle.

4. Bio Shades16 - It explores the possibility of replacing traditional chemical dyes with dyes produced by bacteria, all this without jeopardizing the capacity of the T&C industry to satisfy the color demand that designers, industry and consumers create.

TCBL support is two-fold: one the one hand, TCBL ecosystem facilitates creative experimentation and, on the other side, it works on scalability and impact of the natural dyes adoption.

5. Digital Heritage17 - It is aimed at valorizing the wealth of untapped knowledge contained in historical T&C archives, which is turned into genuine source of inspiration for the design of contemporary collections presenting reminiscences of styles from earlier times. TCBL contribution pertains to archive management (e.g., storage, cataloguing, digitization, publication) and marketing support (e.g., territorial branding, storytelling training).

6. Independents18 - It is meant to establish networking mechanisms among small workshops that stand out from the mainstream fashion system. Such workshops carry out more or less each of the steps in clothing manufacturing (e.g., design, pattern making, prototyping, finding raw materials, manufacturing, promotion) but, due to the paucity of resources available, they position appears fragile. TCBL ecosystem catalyzes the establishment of horizontal P2P arrangements by offering experimental laboratories and knowledge spaces, access to sharing platforms and e-commerce facilities, provision of innovative yet affordable working tools.

Table 6 visualizes a mapping between TCBL Business Cases described above and the TCBL business model library. The resulting matrix brings to the fore a prevalence of sustainability-driven endeavors (i.e., Natural Cotton, Eco-Friendly Production, and Bio Shades, which are associated to the ‘absolute green’ archetype), followed by openness-driven ones (i.e., Short Runs and Independents, which are implementing ‘extended workshop’ business model) and data-driven ones (i.e., Digital Makeover, which deals with ‘digital heritage’).

16

​http://tcbl.eu/bioshades ​http://tcbl.eu/digital-heritage 18 ​http://tcbl.eu/independents 17

17

646133 - TCBL Textile & Clothing Business Labs

Table 6. Matching between TCBL business model library and Business Cases

It is key to observe that, at this juncture, the above matrix captures only the first wave of Associate enterprises testing business model transitions enabled by TCBL. In coming months, in fact, the experimentation playground will progressively expand thanks to the initiation of new Business Pilots. As a result, new columns will make their appearance and more rows will have (at least) a correspondence with running pilots.

Shining a spotlight on current Business Cases, Table 7 briefly examines their economics making reference to the types of companies that fit best with each business model journey and the prominent advantages sought for by T&C businesses.

18

646133 - TCBL Textile & Clothing Business Labs Business Case

Target companies

Main benefits ●

●

Natural Cotton

Short Run

●

Companies situated along the cotton value chain, especially the ones operating on a proximity-basis in local textile districts T&C companies dealing with other materials (e.g., wool, silk) which are willing to replicate the scheme in their respective value chains

Two-sided market connecting two main types of businesses: ● Textile/garment manufacturers experiencing intermittent or structural overcapacities (supply-side) ● Couturiers​ and fashion houses working on low volumes or bespoke orders (demand-side)

● ● ● ●

● ● ● ● ● ● ●

● Eco-Friendly Production

Companies interested in joining forces with local partners to forge an ecosystem specialized in green textile

●

● ●

●

● Bio Shades

New guard of companies that combine care about the environment with clear penchant for experimentation

● ●

●

● Digital Heritage

● ●

Digital artists Fashion designers

●

Genuine product quality made visible to the eyes of customers Certification and traceability turned into competitive advantage for conquering conscious consumers Higher capacity to appropriate value Reinforcement of the local economy Exploitation of the accumulated knowledge residing in local textile districts Abatement of logistics costs thanks to local sourcing Reduction in minimum order quantities Access to production facilities through servitization schemes that minimize CAPEX (demand-side) Aggregation of demand to exert higher bargaining power (demand-side) Smart monetization of down time (supply-side) Market recognition of product quality Certification and traceability turned into competitive advantage for conquering conscious consumers Possibility to internalize innovative R&D results related to various textile processes (e.g., design, sampling, finishing, dyeing, drying) Abatement of logistics costs thanks to local sourcing Efficiency in production management resulting from systematic waste minimization Recourse to non-chemical dyeing solutions turned into competitive advantage for conquering conscious consumers Industry leadership recognition OPEX savings ascribed to the replacement of chemicals and traditional dyeing procedures with less harmful (and expensive) ones Possibility to internalize innovative R&D results related to bacteria-produced pigments Access to an unprecedented source of inspiration for designing evocative collections Possibility to reach an affluent and educated market characterized by considerable willingness to pay

19

646133 - TCBL Textile & Clothing Business Labs ● ● ●

●

● ● ● Independents

●

Small workshops Independent designers, especially tech-savvy ones Talented young people from fashion schools who want to embark on an autonomous journey

●

●

●

Simplification of IPR provisions thanks to openness orientation Possibility to internalize innovative R&D results related to digital innovation Establishment of digital workflows that can be reused as such for many different materials, thus resulting in economies of scope Affordability of equipment and facilities thanks to the leap from resource ownership to resource access Horizontalization of collaboration by means of sharing economy practices managed in absence of monetary transactions Introduction of new marketing channels made available by third parties (e.g., e-commerce portals, participation in trading fairs) More time devoted to creation rather than peripheral activities that can be outsourced to other trusted independents Reinforcement of niche positioning characterized by unique garments or small series not necessarily dictated by business trends

Table 7. Business Cases: target companies and main benefits sought for

Looking ahead, the years to come will witness an intensive work on codifying, comprehending, boosting and measuring the impacts of business model transitions as part of TCBL Business Pilots.

While the mission of these Business Cases has been to plant seeds, the thriving TCBL ecosystem will be the right setting to foster their serendipitous evolution into shared prosperity for the T&C sector at large.

20

646133 - TCBL Textile & Clothing Business Labs

APPENDIX TABLE 1, TABLE 2, TABLE 3 COMPANIES WEBSITES

Company name

Link

Business model archetype

Reform Studio

http://reformstudio.net/

Absolute green

Blond & Bieber

http://www.blondandbieber.com/

Absolute green

Lunitien

https://officinadelcolorenaturale.com/

Absolute green

Bonobo Emmaus

https://www.bonoboplanet.com/

Absolute green

Veja

http://www.veja-store.com/en/

Absolute green

Samatoa

http://samatoa.lotus-flower-fabric.com/

Absolute green

Re-Bello

https://www.re-bello.com/

Absolute green

TED

http://www.tedresearch.net/

Absolute green

Rothy’s

https://rothys.com/

Absolute green

Saint Basics

https://www.saintbasics.com​/

Absolute green

Tentree

http://www.tentree.com/

Absolute green

Re Verso

http://www.re-verso.com/

From waste to value

Progetto Quid

http://progettoquid.it/

From waste to value

Recover

https://recoverbrands.com/

From waste to value

MUD Jeans

http://www.mudjeans.eu/

From waste to value

The Renewal Workshop

https://renewalworkshop.com/

From waste to value

Orange Fiber

http://orangefiber.it/

From waste to value

Ecoalf

https://ecoalf.com/

From waste to value

Not Just a Label

https://www.notjustalabel.com/

Eataly of sustainable fashion

Sakina M’Sa - Front de Mode

http://www.sakinamsa.com/concept-store/

Eataly of sustainable fashion

The Fair Shop

http://thefairshop.co.uk/

Eataly of sustainable fashion

21

646133 - TCBL Textile & Clothing Business Labs Made in carcere

http://www.madeincarcere.it/

Social responsibility as flagship

Sakina M’Sa

http://www.sakinamsa.com/

Social responsibility as flagship

SEP Jordan

https://sepjordan.com/

Social responsibility as flagship

Indego Africa

https://indegoafrica.org/

Social responsibility as flagship

My beach Side

https://www.mybeachyside.com/

Social responsibility as flagship

Afriek

http://afriek.com/

Social responsibility as flagship

Studio JUX

http://studiojux.com/

Social responsibility as flagship

SwapStyle

http://www.swapstyle.com/

Second life

thredUP

https://www.thredup.com/

Second life

Rehash

https://www.rehashclothes.com/

Second life

Rebelle

https://www.rebelle.com/

Second life

Treadesy

https://www.tradesy.com/

Second life

Rent the Runway

https://www.renttherunway.com/

Closet sharing

The MS. Collection

https://www.themscollection.com/

Closet sharing

Gwynnie Bee

https://closet.gwynniebee.com/

Closet sharing

Filippa K

https://www.filippa-k.com/

Closet sharing

Vigga

https://vigga.us/in-english/

Closet sharing

Lemuria

http://lemuriastyle.com/

Transformable clothing

180 Degrees

https://www.transformableclothing.com/

Transformable clothing

ADIFF

http://www.adiff.com/

Transformable clothing

Gabs

http://www.gabs.it/

Transformable clothing

Table 8. Sustainability-driven business model archetypes (Table 1): companies websites

22

646133 - TCBL Textile & Clothing Business Labs Company name

Link

Business model archetype

Threadless

https://www.threadless.com/

Crowd design

Nervous System

http://n-e-r-v-o-u-s.com/

Crowd design

Betabrand

https://www.betabrand.com/

Crowd design

Obag

https://www.obag.it/

Make to assemble

Numeroventidue

http://www.numeroventidue.it/

Make to assemble

Jackyceline

http://www.jandc.eu/

Make to assemble

Portland Garment Factory

http://www.portlandgarmentfactory.com/

Extended workshop

COsewn

http://cosewn.com/

Extended workshop

Out of X

http://www.outofx.com/

Extended workshop

Make Works

https://make.works/

Extended workshop

Le Souk

http://www.lesouk.co/

Extended workshop

MarvelousDesigner (MD store)

https://www.marvelousdesigner.com/store/#2

Do It Yourself

Project September

https://projectseptember.com/

Crowd promotion

Chicismo

https://chicisimo.com/

Crowd promotion

Table 9. Openness-driven business model archetypes (Table 2): companies websites

23

646133 - TCBL Textile & Clothing Business Labs

Company name

Link

Business model archetype

John Lewis

https://www.johnlewis.com/

Digital makeover

Zandra Rhodes

http://www.zandrarhodes.com/home

Digital makeover

Lanieri

https://www.lanieri.com/

Mass customization

FitMeSo

https://www.fitmesoboutique.com/

Mass customization

J. Hilburn

https://jhilburn.com/

Mass customization

Mon Purse

http://eu.monpurse.com/

Mass customization

Indochino

https://www.indochino.com/

Mass customization

Bivolino

http://www.bivolino.com/

Mass customization

Stitch Fix

https://www.stitchfix.com/

Predictive offering

Trunk Club

https://www.trunkclub.com/

Predictive offering

Trumaker

https://www.trumaker.com/

Predictive offering

Zara

https://www.zara.com/

Fast fashion

H&M

http://www.hm.com/

Fast fashion

Table 10. Data-driven business model archetypes (Table 3): companies websites

24