Discover more from Ten thousand and two
Fast fashion, melting pants and liquor-smuggling lessons from prohibition - LuLd #003
A regular collection of clues and hunches for innovation and strategy practitioners
Looking up, looking down is our regular drop of recommendations for reading, watching, listening and doing. Think of them as clues and hunches that we’ve bumped into - they’re not yet joined up into a fully-formed narrative but they hint at a bigger story and feel useful and interesting enough to share.
They range from 10,000ft views of emergent change and how it affects our world, to down-at-two-inches hacks and smart reframes to learn from, to reference and to use as a way to keep your thinking fresh, refilling your wells of insight and creativity.
Like any good innovation practitioner, we’ll aim for to make it mostly relevant - though never too relevant. All opinions welcome in the comments.
Hate scrolling? Here’s the list…
Here’s why we think they’re interesting…
There is a lot going on in the tech space, and pretty much all of it bad news. This is one of many commenting on the challenges for Netflix. More than anything I think it highlights the ubiquity of the term “tech company” as an implied tag for ultra rapid growth and people have then fed a story of inexorable growth into that. Netflix isn’t a tech company, it has used technology really well to be firstly a distributor and now a producer, today it is more LA than SanFran. The truth is technologies don’t make money, business models do. This is a good reminder that existing businesses need to better understand the business model opportunities in their future (as well as figuring out the business model they are in), rather than get dazzled by the latest technology with no sense of what it is for. - Toby
There’s plenty to explore in the miscategorization of any old company as a tech company to bump up growth multiples and valuation (hello, WeWork). I think there’s also an interesting customer perception thing going on in these companies. I think it starts with the rise of the web - it’s a change in perception of what things are worth, and what’s worth paying for. Media was one of the first industries to be disrupted by technology - very quickly, news and newspapers felt like they were something that should be ‘free’. I believe that at a consumer level this paved the way for the rise of subscription models for everything, giving consumers the illusion of access to vast amounts of ‘stuff’ in exchange for a barely noticeable payment. In the case of Netflix, when you no longer pay for each single movie rental, the ‘price versus access to stuff’ ratio seems incredibly good. Technology had a role to play in much of this - from making it easier to offer huge amounts of content, to making access ubiquitous across devices, to making payments so smooth as to be forgettable. Perhaps what’s happening now is not only the increasing difficulty of offering endless stuff (as Disney, HBO and the like turn off the taps to Netflix), but also a consumer reawakening to what’s worth paying for. - Tom
This is a great story about R&D and customer value proposition innovation as told through clothing. It’s packed with great examples and lessons, starting with the initial ‘failure’ of a product out of the R&D lab. But read it for how it illustrates over and over, the simple, powerful truth of successful innovation: problem-market fit then product-market fit, and how they’re solved through curiosity about the customer problem to be solved and creativity in how to position and deliver the solve.
Also: flammable underpants. WTF? - Tom
Agree - really interesting application of technology and scientific creativity to a space where it isn’t obvious, and the way the target consumer need created the R&D brief, so a smart integration from market to tech. I also like the implied strong supplier relationships, where external companies (e.g. Milliken & Co) work closely with the challenge, rather than just pushing out the transactional lowest cost model. This feels like a strongly joined up ecosystem model, where companies see potential and it lifts an entire space. - Toby
Who doesn’t like a good list like this, why companies fail? It’s always a good reminder of understanding the broader context, and putting team right at the top is really interesting. On the business model one I am only surprised it isn’t higher, though I suspect it finds its way into a lot of the others (e.g. outcompeted), and when I look at things like ultra fast delivery, it seems they are all failing on this. The list is a helpful check on what to look out for in a struggling innovation. An interesting analysis would be what this looks like inside large businesses. My hunch would be business models would be really high, experience tells me existing businesses struggle to see beyond their own business model. - Toby
There are some great insights in this piece, especially the (between the lines) human insights about culture, hubris and humility - how many start-ups might have succeeded had they reached outside of their founding team earlier? How many other founders have not had the insight to realise that the idea is simply not a fit, and needs to be ended? I imagine that it’s these human factors which probably dial up even more in the case of corporate innovation failure. - Tom
For some reason I keep suggesting lessons from criminal enterprise, but this account from a bootlegger in prohibition-era New York is really just a cold-eyed breakdown of four different business models available to bootleggers: top line revenues, bottom line costs, net profit (and I guess forget the T in EBITDA). But what I like about it is the subtler observations and lessons about where you want to play in the ecosystem - from issues of scale and the difficulty of operating as an independent, to the distance from the actual crime taking place, and the sad, salutary observation that the greater the risk, the smaller your take. Tom
The main take I get is that as often is the case, manage the ecosystem not the businesses, like selling shovels in the gold rush. His final point is the people who made real money were the politicians and the gangsters. It reminds me a little of the maker economy, where ultimately the platform holding the businesses (e.g. Youtube) make the real money. I think you missed on tax - that was in the bribes. Toby
Probably most of you have heard of Shein by now, a hugely successful player in the online fashion space, surpassing H&M and Zara combined in hyper fast fashion, here is one of the earlier breakdowns which gives really good insight into how they took advantage of an ecosystem, a trend and technology.
Set aside the obvious ethical questions of the space, it has crafted a tight and well honed business model by understanding the nature of fast fashion and then looking at the ecosystem in which it sits (chinese suppliers, customer engagement, use of influencers, etc.). These are strong lessons of analysis and insight for any business trying to find an edge with fresh eyes into a market. Equally interesting is how it is characterised in the article as a tech company, but like Netflix, is using tech to do an existing thing much better, in this case retail. A lot of what is grouped into tech industry seems to miss the point that the key business questions being asked are not tech but industry specific. These are companies applying tech effectively to impact the industry metrics. - Toby
I have to say, I find this story mostly just distressing. The really tight integration between market and factory is impressive, as is the extremely short feedback cycle between what is selling and what is not. But the ethical implications of using technology to drive up consumption and drive down prices, in turn driving up disposability are stark. That said, it’s instructive to see how Shein is now being undercut by other imitators. Where does this end? I predict Shein makes a brand play in an attempt to hold up prices and and differentiate against competitors who realise that it’s fairly easy model to imitate and undercut, especially if factories aren’t that loyal. Poacher turned gamekeeper? That’s the fickle world of fashion I guess. - Tom
I’m really interested in the creative process and the business of creativity - there’s a tension in the requirement to codify, timebox and commercialise an activity which by its very nature is dynamic, intangible and often very personal. Amid the upheaval to working patterns brought by Covid it’s been fascinating to see how different working styles have benefited and been challenged in creative businesses. There have been plenty of articles written about how hybrid working has improved work life balance or efficiency, or how it can be just as good as being in the office, but this is the first study I have seen that shows how remote working can actually be better than in person for some collaborative tasks. - Tom
Creativity declines when doing it online, not exactly an unexpected outcome. What seems somewhat flawed is that it takes as creativity a problem that real people don’t seek to solve in the real world, and in doing so misses out on a whole chunk of creativity, that is what the much discredited Jonah Lehrer called slow hunching. A great term. This “find ten uses for a frisbee” sort of exercise is pretty far removed from creativity requirements in the real world which typically require downtime, reflection, percolation and stimulus. My hunch would be (as Tom suggests) that in the innovation process, some reductive time, selecting down before proceeding vs just sitting in pure creation can be helped by time, distance and focus. I am also not sure on the notion of a process battery of metrics to measure something like creativity.it seems to suggest some way of optimising, but it might just be my bias to the creeping metric phenomena. BTW there have been quite a lot of studies pointing to increased productivity working remotely. - Toby
That’s it for this edition, thanks for reading, if you know someone who you think would enjoy it, please do us a favour and forward it.
Toby and Tom
Thanks for reading Ten thousand and two! Subscribe for free to receive new posts