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Innovation: A Cautionary Tale of the Fashion Industry

Innovation is everything. It is the most significant way any business creates value, the heartbeat of our global economy, and what drives society forward. Most sectors and businesses hold this truism in high regard and take the idea of innovation extremely seriously.


By Michelle Blair Gabriel, Graduate Program Director, Sustainable Fashion Glasgow Caledonian New York College

Impactful innovations have changed the nature of our world, and in turn provided a dynamic space of profit and influence to the organizations bringing those innovations to life, and in some instances creating whole new sectors of the global economy. The steam engine changed how we experience proximity, facilitated the industrial revolution and created monumental wealth for the Vanderbilts, whose wealth still influences the world today, and Facebook fundamentally changed how we relate to one another making Mark Zuckerberg one of the richest people in the world, as examples.

Every MBA worth their McKinsey consulting salary understands the importance of innovation to the success of a business, having been pummeled with business innovation frameworks from Joseph Schumpeter to Michael Porter. It’s largely assumed that in a competitive market, organizations that don’t innovate simply die off; but what if that isn’t quite true? What might we learn from this seemingly illogical behavior?

Enter the fashion industry. This roughly $3 trillion industry is one of the oldest industrialized sectors and employs possibly the world’s largest labor workforce. Its impact on our world, both culturally and economically, is enormous. It is also a sector with an extremely unique relationship to innovation.

At first glance, fashion can seem like innovation incarnate. By definition, fashion is clothing that changes over time. Clothing style trends provide innovation in the form of new visual styles, new ways to be seen, new ways to perform identity, and new consumer goods to be purchased. With this capacity for innovation, It’s no coincidence that fashion is a sector used to expedite economic development for nations hoping to join the circle of global power players. The economic and political rise of China in the last several decades was highly dependant on cornering of the global fashion industry, and the recent industrialization and economic growth of Bangladesh is based on much of the same – currently the fashion and textile sector accounts for 80% of exports and 20% of GDP for the nation.

Despite this seemingly intrinsic relationship to innovation, fashion businesses, and the sector as a whole, fail to consider innovation beyond style. Over the last 300 years, the fashion industry has not significantly innovated on the technology of the sector, using largely the same machinery that might have been seen in factories in the 19th century and instead relying on extremely low wage workers to produce garments. The sector still relies on antiquated industrial processes which are dependent on coal or wood burning energy sources and unprotected laborers to make happen. The last impactful and scaled material innovation was polyester in 1941. The way goods are delivered, the types of goods produced, the way goods are sold, the common business model – the list goes on – no process in the supply or value chain of the fashion sector has had meaningful innovation for the better part of a century, if not longer.

In the absence of deeper, more dynamic innovation, the most transformative innovation for the fashion sector has been fast fashion, which has simply offered fashion faster and cheaper. More of an operational efficiency than strategic innovation. And yet, in the absence of a culture of innovation or viable alternative innovations, fashion companies squeeze value out of speed, low cost, and style change, the same opportunities available to every other company in the sector.

This unique set of behaviors and history has led to a sector with extremely unique conditions – and a unique set of challenges which can serve to illustrate the value of dynamic innovation and as a cautionary tale for what happens when innovation is not prioritized. The fashion sector is in a race to the bottom by nearly every metric. Margins have been reliably declining for decades with more goods than ever produced each year. The value of goods produced is plummeting as well, and this is only getting worse the more goods that flood into the already saturated market. Given these dynamics, it’s no surprise that the rate of market exit is precipitously rising across the sector.

Observing the fashion industry is like watching a slow car crash. You don’t have to be clairvoyant to see the likely outcomes for the sector which will likely end badly for everyone involved, but it’s hard to stop the momentum once already in motion. If we go back to Michael Porter and Business 101, we know that when many businesses all pursue a low cost strategy as a primary source of value, the effects are deleterious for the sector as a whole. Value collapses for products, services, and individual businesses and the value the sector is capable of producing as a whole declines. In these conditions, businesses become ruthless in pursuit of any scrap of value capture, applying extreme pressure throughout the value chain, adding complexity and opacity if a few pennies can be gained, and marginalizing any existing investment in innovation, exacerbating declining value sector wide.

The challenges of the fashion sector result in global impacts, not just for businesses but for the largely marginalized Global South workforce which brings fashion to life and is reliant on it individually and at a state level for economic viability. The impacts are not just economic, but environmental, social and political. The vicious cycle of business in the fashion sector doesn’t have to be a cautionary tale; it is possible to transform it to become a redemption arc. The tool to transform this vicious cycle to a virtuous one is, of course, investment in dynamic innovation.

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