TCBL BUSINESS MODEL MAGNETS
Co-funded by Horizon 2020
TCBL 646133 – HANDBOOK RELEASED AS ANNEX I TO D4.4 30 June 2019
TABLE OF CONTENTS 1
INTRODUCTION ................................................................................................................. 5
2
BUSINESS MODEL STUDIES IN TCBL ............................................................................ 6
3
DEFINING BUSINESS MODEL MAGNETS .................................................................... 11
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BUSINESS MODEL MAGNETS IN ACTION ................................................................... 13 SHORT-RUN PRODUCTION ....................................................................................................... 13 Challenge for the T&C Industry ......................................................................................... 13 Business Rationale............................................................................................................ 13 Value Network ................................................................................................................... 14 TCBL Building Blocks ........................................................................................................ 14 TCBL Champions .............................................................................................................. 14 LOCAL CMT HUBS................................................................................................................... 15 Challenge for the T&C Industry ......................................................................................... 15 Business Rationale............................................................................................................ 15 Value Network ................................................................................................................... 16 TCBL Building Blocks ........................................................................................................ 16 TCBL Champions .............................................................................................................. 16 DESIGN CO-WORKINGS ........................................................................................................... 17 Challenge for the T&C Industry ......................................................................................... 17 Business Rationale............................................................................................................ 18 Value Network ................................................................................................................... 18 TCBL Building Blocks ........................................................................................................ 19 TCBL Champions .............................................................................................................. 19 CIRCULAR MATERIALS ............................................................................................................. 20 Challenge for the T&C Industry ......................................................................................... 20 Business Rationale............................................................................................................ 21 Value Network ................................................................................................................... 21 TCBL Building Blocks ........................................................................................................ 22 TCBL Champions .............................................................................................................. 22 RETAIL EXPERIENCE ................................................................................................................ 23 Challenge for the T&C Industry ......................................................................................... 23 Business Rationale............................................................................................................ 23 Value Network ................................................................................................................... 24 TCBL Building Blocks ........................................................................................................ 25 TCBL C .............................................................................................................................. 25 2
TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
hampions ........................................................................................................................... 25 5
CONCLUDING REMARKS ............................................................................................... 27
DOCUMENT INFORMATION .................................................................................................... 28 Revision History ................................................................................................................ 28 Statement of Originality ..................................................................................................... 28 Copyright ........................................................................................................................... 28 Disclaimer .......................................................................................................................... 28 Acknowledgements ........................................................................................................... 28
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INDEX OF FIGURES Figure 1 – Library of business model archetypes (source: LINKS Foundation) ......................... 7 Figure 2 – Origin of business model magnets .......................................................................... 10 Figure 3 – TCBL business model magnets short-listed in Y4 ................................................... 11 Figure 4. The TCBL Associate’s Customer Journey (source: LINKS Foundation). .................. 27
INDEX OF TABLES Table 1 – TCBL business model practices ................................................................................. 9 Table 2 – The two approaches underlying TCBL business model innovation .......................... 10 Table 3 – Value network of Short-Run Production business model ......................................... 14 Table 4 – TCBL offerings enabling the Short-Run Production business model. ...................... 14 Table 5 – Value network of the CMT Hubs business model. .................................................... 16 Table 6 – TCBL offerings enabling the CMT Hubs business model. ........................................ 16 Table 7 – Value network of the Design Co-Workings business model. .................................... 18 Table 8 – TCBL offerings enabling the Design Co-Workings business model. ........................ 19 Table 9 – Value network of the Circular Materials business model. ......................................... 21 Table 10 – TCBL offerings enabling the Circular Materials business model. ........................... 22 Table 11 – Value network of the Retail Experience business model. ....................................... 24 Table 12 – TCBL offerings enabling the Retail Experience business model. ........................... 25
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1 INTRODUCTION TCBL has ultimately been about business model innovation in the T&C industry. Business model innovation, in fact, has represented the prominent tool leveraged by TCBL – as an EU-funded project and a global movement with responsible innovation in its DNA – to actualize its vision of unleashing transformative forces in the European T&C sector in order to make it more sustainable, fair and competitive. In more detail, the project has been working since its inception to simultaneously advance and democratize business model innovation. On the one hand, acknowledging that purpose and profit are not necessarily at odds, the TCBL ecosystem aspires to be recognized as the go-to place for forward-looking T&C businesses willing to turn sustainability into a competitive advantage. TCBL eschews competition on price – often resulting in delocalization practices and ‘race to the bottom’ problems – and moves towards competing on knowledge, cutting-edge know-how on the four key TCBL concepts – circular, transparent, human, digital – as the bedrock of competitive advantage going forward. TCBL-enabled business models intend to put Associates in the position of outperforming the old guard of competitors through greater value delivered (‘red ocean’) or by carving out new market spaces untainted by competition (‘blue ocean’1). On the other hand, driven by its values and principles, the TCBL Community is firmly committed to leaving no one behind. This holds true especially when it comes to SMEs, startups, and artisan companies, which are more vulnerable due to their limited headcount, R&D budget, and experience in internationalization. Along these lines, in order to lower entry barriers to business model innovation, TCBL has established an enabling ecosystem that facilitates access to knowledge, tools and supporting measures. By doing this, T&C companies of any kind can undertake innovative business model journeys by standing on the shoulders of the TCBL ecosystem, thus reducing the costs and risks of experimenting on an uncertain terrain. As the project nears the finish line, the present handbook intends to take stock of TCBL experimentation with innovative business models with the purpose of illustrating the most recent findings and distilling takeaways for the post-grant exploitation. Concluding these introductory comments, the document is structured as follows. Section 2 gives an overview of the approaches adopted so far by the TCBL project in business model innovation. Section 3 explains the rationale underlying the analysis of TCBL business model magnets. Section 4 examines each of the short-listed business model magnets by means of the protocol of analysis chosen. Finally, section 5 discusses some concluding remarks.
1
Kim, W. C., & Mauborgne, R. A. (2014). Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. Harvard Business Review Press.
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2 BUSINESS MODEL STUDIES IN TCBL In its 4-year journey, the TCBL project Consortium has dealt with the theme of business model innovation by means of two distinct yet complementary approaches: outside-in and inside-out. In the exploratory phase – from the early days of the project till (approximately) the halfway mark – outside-in thinking allowed fresh knowledge to percolate into the TCBL environment, providing guidance to the first batch of Associate companies willing to dip their toes into the water of responsible innovation in the T&C realm. This was instrumental to getting a common view of the possibilities ushered-in by innovation dimensions defined by the call under which the TCBL project was funded (i.e., sustainability, openness, data). In such a venture, information processing and knowledge ordering mainly followed a top-down logic, according to which a unit of analysis is progressively broken down to gain insight into its compositional subsystems until the entire specification is reduced to base elements. Along these lines, an initial ‘big picture’ of the relevant market was gradually constructed to codify a library of business model archetypes (Figure 1) – based on the above innovation dimensions – already in place in the T&C sector. These archetypes – extensively presented in the Primer2 released in Y2 – allowed to capture innovative patterns of value generation as reusable descriptions. This recalls what 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 code anew. In the same vein, TCBL partners, instead of consuming energies in order to explore from scratch the complex and fast-evolving business model landscape, can consult the TCBL business model library and selectively select archetypes as source of inspiration. By exploring and formalizing the outside world, a number of initial hypotheses were reinforced while some emerging trends, by that time peripheral in TCBL’s scope of work, became seeds for new TCBL endeavors. Not by chance, a number of business model patterns discovered in the exploratory phase triggered initiatives subsequently activated by the TCBL project, which rapidly became household names in the TCBL movement. For instance, when it comes to sustainability-driven archetypes, the Second-Life business model3 inspired the TCBL journey into circular fashion, resulting in services meant to maximize the value of end-of-life garments (e.g. Second Life4) as well as partnerships with TCBL Service Providers enabling circular business practices at the garment and fabric level alike (e.g. Circular Fashion5, Reverse Resources6). Concerning openness-driven archetypes, the Do It Yourself7 business model
2
http://www.ismb.it/sites/default/files/Documenti/Research_Docs/WP4_Primer.pdf
3
Second-life business model regards the establishment of an online or offline 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. 4
https://tcbl.eu/project/second-life
5
https://circular.fashion
6
https://reverseresources.net
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Do It Yourself business model consists in the 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’).
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TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
spawned a wave of interest in digital fabrication (e.g. involvement of FabTextiles8 and activation of new services9) as well as in proximity production (e.g. ‘short runs10’, combined with the enrollment of Sqetch11 and SourceBook12 as TCBL Service Providers). As far as datadriven archetypes are concerned, the Predictive Offering business model13 raised awareness of the potential residing in data intelligence for re-framing the customer experience, which has been the driving force of TCBL creations like My Yorkshire Wardrobe14.
Figure 1 – Library of business model archetypes (source: LINKS Foundation)
8
https://fabtextiles.org
9
https://tcbl.eu/project/os-circular-fashion
10
https://tcbl.eu/project/short-runs
11
https://www.sqetch.co
12
https://sourcebook.eu
13
Predictive offering business model combines art (i.e., on-trend clothes) and science (i.e., algorithm deciphering personal styles and tastes) in order to surprise and delight customers through a recommendation engine while saving their precious time. 14
https://tcbl.eu/project/my-yorkshire-wardrobe
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TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
As the TCBL experimentation playground took shape, outside-in thinking was gradually replaced by inside-out thinking with the purpose of building innovative business models powered by project developments, such as offerings made available by TCBL Labs, Service Providers, and Advisors. In such an exploitation phase, the Consortium decided to zoom in on a number of promising and on-the-ground pilots, known as ‘Business Cases’, each driven by a cohort of Associate companies acting as TCBL ‘early adopters’. These Business Cases were conceived to generate immediate evidence of the tangible effects that the TCBL ecosystem can exert on T&C businesses. In this second approach, the underlying logic was primarily bottom-up, according to which individual base elements are pieced together to give rise to more complex entities. Along these lines, in project Year 3 the roster of TCBL Business Cases encompassing six pilot experimentations morphed into three business model practices (Table 1) that came to light by pairing the six Business Cases according to emerging strategic axes15: •
•
•
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Natural Cotton and Eco-Friendly Production, which were operating value chain reconstruction to introduce natural fibers and reduce chemical usage, led to the ‘reconnecting value chains’ business model practice. Short Runs and Independents, which were re-organizing the production process of small workshops and manufacturers in the quest for agility and rediscovery of local sourcing, led to the ‘re-structuring production’ business model practice. Bio Shades and Digital Heritage, which were working on reinventing the consumer experience by exploring new creative possibilities, led to the ‘re-framing consumer markets’ business model practice.
http://www.ismb.it/sites/default/files/Documenti/Research_Docs/TCBL_BUSINESS CASE_EVOLUTION.pdf
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TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
Table 1 – TCBL business model practices
Re-connecting
Re-structuring
Re-framing
Business opportunity
Embrace integrity across the supply chain to deliver high-quality and environmentallyfriendly materials
Establish collaborative production processes inside a trusted community of likeminded businesses
Reinvent the consumer experience by exploring new creative possibilities
Innovation drivers
Radical transparency, green inputs, sustainable processes, certified supply chain
Agility, responsivity, resource sharing, rediscovery of local sourcing
Product turned into experience, radical new product meaning, disruption/tradition mix
Target audience
T&C companies, especially the ones situated along a specific value chain (e.g. cotton, silk)
Small workshops and manufacturers
Fashion designers, fashion brands
Sector under the lens
Textile
Clothing
Fashion
Focus
Value chain
Value network
Value proposition
Alignment with TCBL impacts
20% footprint reduction
5% of manufacturing capacity returned
Customer-driven service environment
Each business model practice was then associated to a portfolio of pertinent platform services, Lab services, and advisory services. Making an analogy with the restaurant industry, each business model practice represents ideally a page of the Ă la carte menu that the TCBL project provides to TCBL Associates inclined to taste the flavors of new business model journeys. All in all, taking into account this second approach to business model innovation, the delineation of these three business model practices in Year 3 passed through the collection and codification of all insights cumulated in TCBL on-the-ground experimentation: needs and concerns expressed by Associate enterprises shaped pilots, which in turn resulted in business model practices.
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TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
Table 2 summarizes distinctive traits of these two approaches to business model innovation (i.e., outside-in and inside-out).
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TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
Table 2 – The two approaches underlying TCBL business model innovation
Outside-in
Inside-out
Phase
Exploration
Exploitation
Underlying rationale
Inform and inspire TCBL actions
Codify how the TCBL ecosystem can support T&C businesses
Information processing and knowledge ordering
Top-down
Bottom-up
Main input
Market ‘big picture’
Needs and concerns expressed by TCBL Associate
Main outcome
Library of business model archetypes
TCBL business model practices
Timing
Year 2
Year 3
Concerning the approach adopted in project Year 4 for dealing with business model themes, it is a synthesis of outside-in and inside-out. In fact, it coalesces the two previous approaches in order to bring to the fore business model destinations – known as ‘business model magnets’ – capable of attracting T&C companies into an alternative, value-based market space. In such a way, the approach underlying business model magnets strikes the right balance between inside-out thinking and outside-in thinking (Figure 2): whilst business model magnets are business model destinations hinged on TCBL offerings (i.e., inside-out), their viability under certain conditions is proven by market success stories coming from T&C value chains (i.e., outside-in).
Figure 2 – Origin of business model magnets
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3 DEFINING BUSINESS MODEL MAGNETS As explained in section 2, in order to provide the first wave of TCBL Associates with a ‘compass’ to orient their business model experimentation within the TCBL ecosystem, a comprehensive library of business model archetypes was elaborated in project Year 2. Making an analogy with set theory, that activity was meant to obtain (approximately) the universal set of business models that can be powered by the three TCBL innovation dimensions (i.e., sustainability, openness, data). In the transition from exploration to exploitation, business model magnets represent the next step along the maturity journey of TCBL. Moving from the universal set of business models that are feasible in the TCBL space to a restricted number of entities whose market viability under certain conditions is proven by success stories coming from T&C value chains – either in the nascent TCBL-enabled market space or in traditional T&C value chains – business model magnets have the power to attract T&C companies in an alternative market space characterized by an eye on sustainability, inclusion, and transparency 16. The following sections cast a light on five of them (Figure 3), chosen as a function of their centrality in the TCBL ecosystem: • • • • •
Short-Run Production Local CMT Hubs Design Co-Workings Circular Materials Retail Experience
Figure 3 – TCBL business model magnets short-listed in Y4
The protocol of analysis crafted for the sake of the present handbook examines the following dimensions for each business model magnet: • • • •
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Challenge for the T&C industry (i.e. sectoral issues calling for the business model). Business rationale (i.e. distinctive features of the business model). Value network (i.e. interfaces with other actors that are needed to implement the business model). TCBL building blocks (i.e. how TCBL offerings support the business model).
http://www.ismb.it/sites/default/files/Documenti/Research_Docs/TCBL_Policy Brief.pdf
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TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
•
TCBL champions (i.e. companies in the TCBL community that are fruitfully implementing the business model).
Concerning TCBL building blocks, the following TCBL-enabled offerings are considered: • •
TCBL Lab services17, including Lab projects that are part of the latest catalogue released, for which the reader is referred to TCBL Deliverable 3.4. TCBL Business Services18 delivered via the TCBL open platform by means of the Weeave single-sign-on, for which the reader is referred to Deliverables 1.4 and 5.5.
When it comes to TCBL champions, without any claim of being exhaustive, each magnet is illustrated by two companies into the TCBL ecosystem that epitomize the business model in action. Those two companies are selected in view of their capacity to present different perspectives, often dichotomous, of the same business model.
17
https://tcbl.eu/projects
18
https://tcbl.eu/business-services
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4 BUSINESS MODEL MAGNETS IN ACTION SHORT-RUN PRODUCTION CHALLENGE FOR THE T&C INDUSTRY •
•
•
• •
Minimum order quantities chosen by top-tier textile manufacturers are often too large to be affordable and/or feasible for small-sized and mid-sized players, who are thus inhibited from competing on an equal footing on the acquisition of marquee clients. The presence of a fixed component in the cost structure of textile manufacturers determines economies of scale at the shop floor level: cost per unit of output decreases with increasing scale. This principle determines inefficiencies in low volume production as the unit cost increases as volumes decrease. While experimenting with low volume production, lead times carry substantial uncertainty due to large volume orders receiving priority in business-as-usual scenarios. Buyers requesting low volume production may not hold sufficient bargaining power to warrant good quality delivery. In a regime of delocalized production – driven by the attempt to seek resources at a competitive cost – logistics of materials and related cost implications can become more critical in the presence of low volume production.
BUSINESS RATIONALE Textile manufacturers can leverage the Short-Run Production business model in order to implement local sourcing closer to market needs, for both practical (e.g. decrease of supply chain costs, greater control) and ethical reasons (e.g. reduction of environmental footprint, boon to the local economy). Short-run producers deliver and sell smaller quantities at a competitive price by combining sustainable nearshoring, small-batch production, and short lead times. The business model represents a diversification avenue for artisan fabric makers and processing houses (e.g. dying, printing) as well as a one-of-a-kind downscaling opportunity for large mills that produce short-runs during intermittent or structural overcapacities, wish to broaden their offer, and/or have leftover fabric to sell.
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TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
VALUE NETWORK Table 3 – Value network of Short-Run Production business model
Role
Stakeholder
Rationale
Customers
Fashion houses
Order small runs of textiles and fabrics with short delivery times, high quality, and compliance with sustainability standards.
Partners
Digital matchmaking platforms
Provide a window onto manufacturers interested in doing short runs at fabric level. Ensure that each transaction is fulfilled by online electronic means in a trustworthy and secure way. Aggregate demand to reach minimum order thresholds and/or increase bargaining power on the buying side.
TCBL BUILDING BLOCKS Table 4 – TCBL offerings enabling the Short-Run Production business model.
Type of TCBL offering
TCBL offering
Supplier
Value proposition
TCBL Lab services
Short Runs
Textile Centre of Excellence (Make Lab)
Provide an out-of-the-box framework for getting started with short-run thinking, coupled with access to relevant sectoral stakeholders in different countries.
TCBL platform services
Sqetch
Sqetch
Assist suppliers and customers in getting in touch with one another and performing transactions for short-runs delivery.
Sourcebook
Sourcebook
Connect fashion houses to manufacturers, textile specialists, and a vibrant community (e.g. hackathons, exhibitions, conferences, think tanks).
TCBL CHAMPIONS The Short-Run Production business model is exemplified in the TCBL ecosystem by Trafi Creatività Tessile (experimental style) and Lanificio Paoletti (luxury orientation): •
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Trafi Creatività Tessile19 is an Italian company that carries out innovative treatments on all textiles. Its core competencies reside in needle-punching, space dyeing, and recycled fabrics. Thanks to 50 employees and a factory of 5000 sqm, know-how is turned into textiles and fabrics that meet clients’ creativity, imagination and flair.
http://www.trafi.it
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TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
•
Tapping into the Short-Run Production business model, Trafi Creatività Tessile serves fashion houses and ateliers on a European scale by providing them with highly customized materials that resonate with niche couture markets. Lanificio Paoletti20 is an Italian family-run woolen mill specialized in creating and producing textiles made of pure, carded wool. Founded in 1795, the company serves the most exclusive fashion brands in Italy and worldwide by combining traditional materials (e.g. Alpago wool) with the relentless search for new designs. Through the Short-Run Production business model, Lanificio Paoletti can easily downscale production – even 3-meter samples – in order to pursue new creative opportunities for valorizing rough local wool.
LOCAL CMT HUBS CHALLENGE FOR THE T&C INDUSTRY •
•
• • •
Artisans, independent designers, and fashion startups struggle to find partners – particularly manufacturers – willing to work on low volume garment production (i.e., from one-off bespoke pieces up to 1,000 pieces) due to ingrained practices of large minimum order quantities. The specialization of equipment, coupled with sequential workplace layouts, brings rigidity into the workflow of garment producers, who might be hesitant to embrace change and experiment with flexibility. Inherent inefficiencies in as-is low volume production (see Short-Run Production). Lead times uncertainty in as-is low volume production (see Short-Run Production). Logistics hiccups and related cost implications in as-is low volume production (see Short-Run Production).
BUSINESS RATIONALE The Local CMT Hubs business model brings short run thinking from textile to garment production. Local sourcing closer to market needs can in fact be fruitfully implemented by garment producers that span the gamut from home sewers to larger manufacturers trying to down-scale. Whilst pre-production processes (e.g. product design, pattern making, pattern grading) are generally handled by the buyer, Local CMT Hubs cut material to the exact specifications, stitch together the cut pieces of fabric to form the finished piece of clothing, and trim and final check the garment. When it comes to target segments, this business model allows for cooperation with designers and startups willing to get their brand going with no inhouse production. On a parallel thread, Local CMT Hubs can be hired as contractors by established fashion brands in search for responsiveness, excellence in execution, local sourcing, and adaptability of production capacity. Their penchant for experimentation with new workplace models (e.g. replacing the traditional assembly-line configuration with island configurations) makes Local CMT Hubs particularly agile in terms of set-up time without lowering product quality or the human experience at work.
20
http://www.lanificiopaoletti.it
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TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
VALUE NETWORK Table 5 – Value network of the CMT Hubs business model.
Role Customers
Partners
Stakeholder
Rationale
Independent designers and startups
Order small-sized lots of garments to enable personal design style as well as made-to-order services.
Established fashion brands
Order mid-sized lots of garments while reaping the benefits of short delivery times, flexibility, and compliance with product specifications.
Digital matchmaking platforms
Provide a window onto suppliers interested in doing short runs at the garment level. Allow Local CMT Hubs to bid for jobs posted by designers. Ensure that each transaction is fulfilled by online electronic means in a trustworthy and secure way.
TCBL BUILDING BLOCKS Table 6 – TCBL offerings enabling the CMT Hubs business model.
Type of TCBL offering TCBL Lab services
TCBL platform services
TCBL offering
Supplier
Value proposition
Short Runs
Textile Centre of Excellence (Make Lab)
Provide an out-of-the-box framework for getting started with short-run thinking, coupled with access to relevant sectoral stakeholders in various European Member States
Workplace of the Future
Sartoria Sociale
Provide bespoke support to garment producers in testing novel, collaborative and flexible workplace models.
Sqetch
Sqetch
Assist suppliers and customers in getting in touch with one another and performing transactions for shortruns delivery.
Sourcebook
Sourcebook
Connect fashion brands to garment producers and a vibrant community (e.g. hackathons, exhibitions, conferences, think tanks).
TCBL CHAMPIONS The Local CMT Hubs business model is exemplified in the TCBL ecosystem by Coco&Rico (aggressive young brands) and Katty Fashion (exclusive timeless brands): 17
TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
•
•
Coco&Rico21 is a French atelier equipped with a 200 sqm production facility, which offers a wide range of services, including prototyping, cutting, sampling, customization and markings. Driven by production entirely in France, ethical and environmental sustainability in production, and quality in raw materials, Coco&Rico has the ambition to create an alternative to fast-fashion. Through the Local CMT Hubs business model, coupled with the internationally-recognized quality of the ‘Made in France’ label, Coco&Rico produces clothing in small and medium series ordered by independent designers and fashion brands. Katty Fashion22 is a Romanian company established in 2003 to provide garments for mid and high street labels in the UK. After the global crisis in 2008, the company decided to eschew large series orders for fast-fashion brands – resulting in very large volumes and low margins – and gradually switch to short-run thinking. By means of the Local CMT Hubs business model, whose orders provide more than 95% of annual turnover over the last three years, the company today serves prosperous niche markets related to high fashion brands from Western Europe.
DESIGN CO-WORKINGS CHALLENGE FOR THE T&C INDUSTRY •
•
•
•
•
Taking a helicopter view, today’s fashion world is not made for ‘independents’: design tools aspire to be bought by big brands, fabrics are only available at a decent price in large lots, and price-based competition is fierce. Becoming independent is often the result of an individual decision to make a life change, especially for people in search of purpose and meaning, such as those working in large and attractive international companies who feel exhausted or employed well below their capacities. However, working alone is isolating as it keeps the fashion designer detached from his/her community. When it comes to economics, overhead costs that would be incurred by ‘independents’ for owning or renting a space in a trendy district can be insurmountable. Furthermore, high-cost equipment (e.g. pattern making software, body scanners, laser cutting machines) can be off-limits if these items are purchased. Sharing economy mechanisms are thus needed to access resources on an as-needed basis. Fashion is changing as a result of innovation paradigms capable of unleashing farreaching transformative forces, especially in the digital space. Distributed manufacturing can eschew classical factories thanks to digital fabrication in Fab Labs, AI delights customers through predictive offerings, and blockchain can have a gamechanging role in implementing radical transparency, just to name a few. This means that fashion designers need to work in an interdisciplinary way. Support is thus crucial to make them acquainted with models and values brought on by the digital revolution. In a market still saturated with fast-fashion, ‘independents’ tend to be more in tune with emerging conscious consumers that are looking for personalized, sustainable and
21
https://www.cocoetrico.com
22
http://katty-fashion.com
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TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
ethical clothing. As a collective force, ‘independents’ represent a huge potential for a radical transformation of the world of fashion. However, in absence of a credible network representing them, the market often seems to not take them seriously.
BUSINESS RATIONALE In a fashion ecosystem in perpetual effervescence, independent designers need to work in the right environment, which should be able to provide them with all the fundamental services to develop their talent in the best conditions and to support their entrepreneurial ventures. Design Co-Workings are enjoyable collaboration spaces where fashion designers meet, share ideas, and exchange practices. Design Co-Workings’ residents, instead of owning or renting a space for individual usage, opt for a shared space where they can work independently but, at the same time, reap the benefits of synergies with co-workers as well as support services. Concerning the community dimension, proximity with like-minded fashion professionals turns these spaces into breeding grounds for creativity, inspired by contemporary visions, daily cross-fertilization, and original (perhaps provocative) ideas from the vanguard of responsible fashion. When it comes to services made available to residents, they comprise – inter alia – the usage of digital fabrication equipment for prototyping and small-scale production, access to multi-label showrooms or pop-up stores, professional training, business mentoring, and joint planning of events and exhibitions.
VALUE NETWORK Table 7 – Value network of the Design Co-Workings business model.
Role Customers
Partners
Stakeholder
Rationale
Independent designers
Access support services in a flexible, nonexclusive manner (‘fractionalization’). Cultivate joint projects going far beyond the personal ‘comfort zone’ of each participant.
Fashion students
Enter the community of fashion professionals at an affordable price.
External service providers
Make available to Design Co-Workings’ residents a number of specific services targeting purpose-driven fashion designers.
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TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
TCBL BUILDING BLOCKS Table 8 – TCBL offerings enabling the Design Co-Workings business model.
Type of TCBL offering TCBL Lab services
TCBL platform services
TCBL offering
Supplier
Value proposition
TCBL Trends
Textile and Clothing Design Lab Athens
Gather and filter insights from premium fashion trend services and give access to Design Co-Workings’ residents.
Fabricademy
Fab Textiles + TextileLab Amsterdam
Equip interested Design CoWorkings’ residents with a unique blend of skills concerning new ways of designing, prototyping and producing in the T&C sector.
Digital Heritage
Textile Museum of Prato
Equip interested Design CoWorkings’ residents with skills related to digitization and preservation of textile archives as source of inspiration for contemporary collections.
OS Material Archive
TextileLab Amsterdam
Allow interested Design CoWorkings’ residents to access an archive of innovative and sustainable materials of industrial relevance.
TCBL Café
Fabbrica ARCA
Organize public events gathering people from every walk of life interested in sewing, knitting, and embroidery, who can become tomorrow’s Design Co-Workings’ residents.
LITA.co
LITA.co
Make available for fundraising purposes a crowdequity platform with an international footprint.
TCBL CHAMPIONS The Design Co-Workings business model is exemplified in the TCBL ecosystem by Hall Couture (haute couture) and CO-Factory (inclusive fashion): •
23
Hall Couture23 is a shared working space in Paris dedicated to fashion creations driven by entrepreneurship, innovation and responsible practices. Hall Couture makes available to its 100+ residents a full-fledged workshop equipped with machines and workstations, customized training programs on digital fabrication, commercial coaching, and a showroom to present products and collections. By means of the Design Co-Workings
https://hallcouture.com
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TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
•
business model, Hall Couture is recognized as go-to destination in Paris for independent fashion designers, either residents (e.g. 1-month or 6-month packages) or visitors (e.g. 1hour or 1-day packages). CO-Factory24 is a social co-working factory headquartered in Ljubljana, which provides services to both creatives and T&C companies. The co-working space, managed under the ETRI umbrella, intends to ignite cooperation on textile-related themes (e.g. valorization of local cultural heritage, creation of basic textile products, access to labelling standards) with creators excluded from the labor market or belonging to vulnerable groups in society. Through the Design Co-Workings business model, CO-Factory has become a role model for social entrepreneurship and cooperation in Slovenia.
CIRCULAR MATERIALS CHALLENGE FOR THE T&C INDUSTRY •
•
•
• •
24
The textile industry operates largely according to a linear, take-make-waste production process: tons of non-renewable resources are consumed to produce clothes that are often used for only a short time, after which they are incinerated or sent to landfills. Every second, the equivalent of one garbage truck of textiles is landfilled or burned 25. In the last 15 years, clothing production has approximately doubled 26. This is primarily ascribed to the fast-fashion phenomenon with its quicker turnaround of new styles, increased number of collections offered per year, and lower prices. This results in a selfperpetuating cycle of over-production and over-consumption. Greenhouse gas (GHG) emissions from textiles production exceed 1 billion tons of CO2 equivalent per annum, which account for 10% of global emissions, more than those of all international flights and maritime shipping combined27. This pattern, coupled with an abnormal consumption of water and discharge of hazardous chemicals, makes fashion one of the major polluting industries in the world 28. Less than 1% of material used to produce clothing is recycled into new clothing, representing a loss of more than USD 100 billion worth of materials each year 29. A large number of observers acknowledge that the linear system is ripe for disruption: not by chance, if nothing changes, the fashion industry will use up a quarter of the world’s carbon budget by 2050, according to the Ellen MacArthur Foundation 30. However, most of the efforts to mitigate negative externalities focus on reducing the impact of the current
https://tcbl.eu/labs/social-hub
25
https://www.ellenmacarthurfoundation.org/news/one-garbage-truck-of-textiles-wasted-every-second-reportcreates-vision-for-change 26
https://www.ellenmacarthurfoundation.org/assets/downloads/publications/A-New-Textiles-Economy_FullReport.pdf 27
https://www.unenvironment.org/news-and-stories/story/putting-brakes-fast-fashion
28
https://www.ekoenergy.org/how-polluting-is-the-fashion-industry
29
https://www.ellenmacarthurfoundation.org/assets/downloads/publications/A-New-Textiles-Economy_FullReport.pdf 30
Ibid.
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TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
linear system (e.g. using more efficient production techniques, reducing the impact of materials) rather than directly tackling the root cause of the system’s wasteful nature.
BUSINESS RATIONALE By considering the environment not as a constraint but rather as an opportunity, the Circular Materials business model tends to keep textile materials at their highest value at all times. This happens through reverse logistics, an approach that moves goods from their (usual) final destination for the purpose of capturing untapped value through restorative and regenerative practices (e.g. upcycling). This usually goes hand-in-hand with a broader commitment for a cleaner planet, for instance in terms of green inputs (e.g. renewable energy, organic dyes, non-use of pesticides) and sustainable processes (e.g. local production, traceability). All in all, the business model appears in two versions that have a common denominator: closing the loop of product lifecycle. The B2C or ‘retail’ version targets educated and conscious consumers with genuine pieces of garment obtained by re-using or recycling end-of-life materials. The B2B or ‘wholesale’ version, for its part, makes available to sustainable brands materials recycled from discarded textile waste as the input for new fascinating collections or stand-alone outfits.
VALUE NETWORK Table 9 – Value network of the Circular Materials business model.
Role Customers
Partners
Stakeholder
Rationale
Conscious consumers (B2C)
Demand sustainability and integrity of the fashion industry. Reward brands that take a stand for the environment.
Fashion brands (B2B)
Generate valuable and fascinating outputs (e.g. new collections) in a green way so as to resonate with the new guard of conscious consumers.
Garment factories and fabric mills
Turn waste into value, either in the form of revenues (e.g. monetary compensation) or avoided costs (e.g. cost of disposal).
Marketplaces for leftover fabrics and scraps
Run a business out of matchmaking recyclers with waste producers.
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TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
TCBL BUILDING BLOCKS Table 10 – TCBL offerings enabling the Circular Materials business model.
Type of TCBL offering TCBL Lab services
TCBL platform services
TCBL offering
Supplier
Value proposition
Second Life
Centexbel
Provide innovative practices for maximizing the value of end-of-life textiles, especially through recycling.
OS Circular Fashion
FabTextiles
Make available to Circular Materials’ companies a catalogue of patterns and 3D models for digital fabrication based on discarded textiles and materials.
BioShades
TextileLab Amsterdam
Provide non-chemical dying solutions and organic cold dye baths for recycled materials.
Felt the Future
Sanjotec Design Lab
Share know-how about using textile residues as main input in the development of new felt-based circular products.
Reverse Resources
Reverse Resources
Connect recyclers with garment factories and fabric mills in order to set-up a transparent trading of leftover fabrics and scraps.
Circular Fashion
Circular Fashion
Enable Circular Materials’ companies to design green products while accessing a circular materials database.
TCBL CHAMPIONS The Circular Materials business model is exemplified in the TCBL ecosystem by Rifò (B2C) and Anneka Textiles (B2B): •
31
Rifò31 is an emerging Italian brand that makes high quality garments and accessories by using 100% upcycled textile fibers, especially cashmere. Following the company’s notion of ‘ethical clothing’ – based on three main values of quality, sustainability and responsibility – Rifò transforms old clothes into a new yarn that is used to craft warm and soft products, all manufactured within a radius of 30 km. By means of the Circular Materials business model, Rifò is a slow-fashion brand recognized for its sustainable men’s and women’s collections.
https://www.rifo-lab.com
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TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
•
Anneka Textiles32 is a UK-based startup committed to battling the take-make-waste attitude of the fashion industry by upcycling the most problematic blended fibers that are very difficult to pull apart. The company focuses on researching, exploring, and designing recycled textiles towards tomorrow’s circular high-value outputs, especially yarn and felt. Through the Circular Materials business model, Anneka Textiles makes available to the T&C industry next-generation materials made from discarded knitwear with no harsh chemicals or dyes, and entirely produced with a British supply chain.
RETAIL EXPERIENCE CHALLENGE FOR THE T&C INDUSTRY •
•
•
• •
In the throw-away culture ignited by fast-fashion, the continuous launch of new clothing lines, especially low-priced ones, encourages people to impulsively purchase clothes they do not need. As a result of the symbiotic over-production and over-consumption, clothing utilization (i.e., the average number of times a garment is worn before it ceases to be used) has decreased by 36% compared to 15 years ago33. Clothing rental, a potential solution to the nagging issue of garment under-utilization, is not necessarily sustainable, taking into account where and how garments are made (e.g. production outsourcing to low-wage countries, CO2 emissions from transport in case of delocalized production, use of chemicals) as well as core operations (e.g. recourse to toxic solvents in cleaning, waste of dry cleaning bags). Clothing rental is often confined to women’s couture (e.g. Girl Meets Dress, Rent the Runway, Gwynnie Bee, The MS. Collection, Infinite Style by Ann Taylor). Because of that, other segments (e.g. men, kids) seem to be peripheral in the ‘closet sharing’ movement. The inherent standardization of mass production dissatisfies consumers in search for creations imbued with symbolic value that transcends the product itself. Personalized fashion was traditionally restricted to affluent customers of haute couture. In contrast to prèt-à-porter, exclusive custom-fitted clothing requires the client to visit the atelier for measurements and fittings while the garment is constructed by hand from start to finish in countless hours of work. This sense of exclusivity left limited room for ‘democratizing’ personalization in fashion.
BUSINESS RATIONALE The Retail Experience business model places personalized fashion at the core of its value proposition by tapping into a new breed of digital technologies and organizational models to reinvent the consumer experience. Digitally-enhanced personalization, in fact, offers an appealing, cost-effective way for consumers to form an emotional connection to a particular product or brand, while suppliers enjoy increased loyalty and customer satisfaction rates. Looking at the TCBL space, the Retail Experience business model appears in two main variants. Firstly, mass customization combines the flexibility and personalization that are peculiar to bespoke manufacturing with the low unit costs associated with mass production,
32
https://www.annekatextiles.co.uk
33
https://www.ellenmacarthurfoundation.org/assets/downloads/A-New-Textiles-Economy_FullReport_Updated_1-12-17.pdf
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TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
resulting in a game-changing on-demand model that keeps no inventory or overstock. Secondly, garment servitization allows individuals to no longer need ownership of an item of clothing as they can instead access a locally produced infinite wardrobe only for the time a garment is needed. Offerings are composed by AI algorithms deciphering personal styles, tastes and even individual calendars in order to delight (and surprise) customers through personalized recommendation.
VALUE NETWORK Table 11 – Value network of the Retail Experience business model.
Role
Stakeholder
Rationale
Customers
Trendy consumers
Enjoy a superior customer experience driven by the opportunity to personalize clothes and accessories. Combine personal gratification (e.g. reflection of personal lifestyle, trendy design, product as experience) with care for the planet (e.g. low environmental impact).
Partners
Local garment manufacturers
Open new routes to market. Exploit production flexibility to serve local Retail Experience companies with ‘lot size one’ or short-runs.
Third-party logistics providers
Ensure timely and accurate order fulfillment.
Professional garment cleaners
Make sure that clothes receive the care they need.
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TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
TCBL BUILDING BLOCKS Table 12 – TCBL offerings enabling the Retail Experience business model.
Type of TCBL offering TCBL Lab services
TCBL platform services
TCBL offering
Supplier
Value proposition
My Yorkshire Wardrobe
Textile Centre of Excellence (Make Lab)
Share know-how about providing locally sourced clothing as a service.
Industry 4.0
DITF
Make available ‘Simulate, Print and Cut’ digital solutions to seamlessly connect 3D virtual simulation with shop floor production activities.
BioShades
TextileLab Amsterdam
Provide Retail Experience companies with non-chemical dying solutions to reduce their environmental footprint.
Wave
Consorzio ARCA
Leverage the power of crowdsourcing challenges to solve critical technical and creative problems exhibited by Retail Experience companies.
Sqetch
Sqetch
Assist local garment producers and Retail Experience companies in getting in touch with one another and performing transactions for ‘lot size one’ or short-runs delivery.
Sourcebook
Sourcebook
Connect Retail Experience companies to local garment producers and a vibrant community (e.g. hackathons, exhibitions, conferences, think tanks).
TCBL C HAMPIONS
The Retail Experience business model is exemplified in the TCBL ecosystem by My Yorkshire Wardrobe (garment servitization) and Bivolino (mass customization): •
34
My Yorkshire Wardrobe34 is a UK-based clothes rental service for men being developed through TCBL by TCoE in cooperation with C&J Antich. The service brings local suppliers and customers together using personal style profiling linked to 3D scanning, online calendars, and social media. Through a subscription, customers can sign up for casualwear, business-wear or a mixed collection, thus receiving regular scheduled deliveries,
https://tcbl.eu/project/my-yorkshire-wardrobe
26
TCBL Business Model Magnets TCBL Handbooks Textile & Clothing Business Labs
•
35
supplemented by same-day deliveries to take account of unexpected events. Through the Retail Experience business model, My Yorkshire Wardrobe taps into AI and Industry 4.0 technologies to deliver stylish, ready for use customized clothes that are locally manufactured through short-run schemes. Bivolino35 is a Belgian clothing manufacturer, specialized in bespoke men's shirts and women’s blouses. Customized clothes are produced on-demand on the basis of measurements within 2-3 weeks. Such a make-to-order model implies no stock and 100% availability in all possible sizes and fits, all with an eye on the planet (e.g. minimization of process waste, limited carbon footprint due to manufacturing in Europe). Personalization is ensured by a patented biometric sizing technology and a Web configurator to customize fabrics, cuffs, designs, and colors. Acting as a trailblazer of the Retail Experience business model (launched in 1997), Bivolino has a leading position in the European mass customization landscape.
https://www.bivolino.com
27
5 CONCLUDING REMARKS Coming to conclusions, business model magnets are not isolated entities. In fact, they are an integral part of the TCBL ‘Innovation Landscape’36. To set the scene for post-grant exploitation, the TCBL project established a framework meant to orchestrate the various TCBL business development activities in a coherent and self-reinforcing manner. In this context, three interdependent activity streams have been rolled-out: • •
•
Push, focused on TCBL Labs, channeled day-by-day creative experimentation towards market valorization and service creation. Pull, focused on TCBL Pilots, addressed needs and concerns expressed by Associates engaged in on-the-ground experimentation, resulting in TCBL business model practices. Anticipate, focused on TCBL-enabled business models to formalize a number of market destinations known as ‘business model magnets’.
Looking ahead to the post-grant phase, the main takeaway is that the outcomes of the above activities constitute the fundamental elements of TCBL engagement with Associates along their ‘customer journey’, as shown below.
Figure 4. The TCBL Associate’s Customer Journey (source: LINKS Foundation).
In this initial Discovery phase, Associates try to find their way in terms of expected returns for the company and sought-for impacts on the industry/planet. Depending on where they are and what opportunities/challenges they are facing, TCBL Associates can explore possibilities offered by business model practices, namely ‘re-connecting value chains’, ‘re-structuring production’, and ‘re-framing consumer markets’. Once the direction has been identified, the Selection phase is about picking the destination – the ‘business model magnet’ – for a specific business model journey. For instance, taking into account those described in this handbook, Short-Run Production, Local CMT Hubs, and Design Co-Workings fall under the banner of ‘re-structuring production’, Circular Materials is part of ‘re-connecting value chains’, and Retail Experience is an instance of ‘re-framing consumer markets’. On the basis of the target business model destination, Associates enter the Checkout phase, where individual offerings provided by TCBL Labs, Service Providers, and Advisors – the ‘TCBL building blocks’ – can be accessed in order to actually make things happen. As a result, by standing on the shoulders of TCBL ecosystem, Associates can build new business lines, tweak/pivot their as-is business model, and move towards market sweet spots.
36
http://www.ismb.it/sites/default/files/Documenti/Research_Docs/TCBL_BUSINESS_CASE_EVOLUTION.pdf
28
DOCUMENT INFORMATION REVISION HISTORY This document is Annex I to TCBL Deliverable 4.4, “TCBL Business Systems – Scaling Up and Out”. Authors: Thanos Contargyris (MIRTEC), Michele Osella and Elisa Pautasso (LINKS), Jesse Marsh (Prato), Richard Axe (TCoE) and Frédérique Thureau (IFM). This Annex is authored by Michele Osella and Elisa Pautasso. REVISION Version 1
DATE 30.07.2019
Version 2
02.08.2019
Version 3
05.08.2019
AUTHOR Michele Osella and Elisa Pautasso Michele Osella and Elisa Pautasso Jesse Marsh
ORGANISATION LINKS
DESCRIPTION Final draft for review
LINKS
Incorporating reviewer comments Final layout and edits
PRATO
STATEMENT OF ORIGINALITY This deliverable contains original unpublished work except where clearly indicated otherwise. Acknowledgement of previously published material and of the work of others has been made through appropriate citation, quotation or both.
COPYRIGHT This work is licensed by the TCBL Consortium under a Creative Commons Attribution-ShareAlike 4.0 International License, 2015-2016. For details, see http://creativecommons.org/licenses/by-sa/4.0/ The TCBL Consortium, consisting of: Municipality of Prato (PRATO) Italy; German Institutes for Textile and Fiber Research - Center for Management Research (DITF) Germany; LINKS Foundation (LINKS) Italy; Skillaware (SKILL) Italy; Oxford Brookes University (OBU) UK; imec (IMEC) Belgium; Tavistock Institute (TAVI) UK; Materials Industrial Research & Technology Center S.A. (MIRTEC) Greece; Waag Society (WAAG) Netherlands; Huddersfield & District Textile Training Company Ltd (TCOE) UK; eZavod (eZAVOD) Slovenia; Consorzio Arca (ARCA) Italy; Unioncamere del Veneto (UCV) Italy; Hellenic Clothing Industry Association (HCIA) Greece; Sanjotec - Centro Empresarial e Tecnológico (SANJO) Portugal; Reginnova NE (Reginnova) Romania, Centexbel (CTB) Belgium, Institut Français de la Mode (IFM) France, IAAC (FabTextiles) Spain, Cleviria (Cleviria) Italy, and Sqetch (Sqetch) Netherlands.
DISCLAIMER All information included in this document is subject to change without notice. The Members of the TCBL Consortium make no warranty of any kind with regard to this document, including, but not limited to, the implied warranties of merchantability and fitness for a particular purpose. The Members of the TCBL Consortium shall not be held liable for errors contained herein or direct, indirect, special, incidental or consequential damages in connection with the furnishing, performance, or use of this material.
ACKNOWLEDGEMENTS The TCBL project has received funding from the European Union's Horizon 2020 Programme for research, technology development, and innovation under Grant Agreement n. 646133.
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