Scanning Horizons
Just the facts, Ma’am
In 2005 the Internet witnessed a new craze: Chuck Norris ‘facts’. My son and his friends delighted in hunting down new and more outlandish statements regarding the prowess of the martial arts actor, sharing them with anyone they could corner:
“Hey Dad, did you know…
- Fear of spiders is called arachnophobia, fear of tight spaces is called claustrophobia, and fear of Chuck Norris is just plain logic!
- Chuck Norris doesn’t dial the wrong number; you pick up the wrong phone.
- When Chuck Norris enters a room, he doesn’t turn the lights on, he turns the dark off.”
There’s a price to be paid for being a parent.
Information, it seems, has intrinsic worth – even if you didn’t chuckle at those yourself, you can see how a group of eight year olds could be entertained by Chuck Norris factoids. And, with some imagination, it’s clear that there can be ‘gold in them thar hills’. Who would have thought a decade ago, for example, that video clips uploaded to Youtube of a man playing the game Minecraft would have any financial value? And yet Joseph Garrett’s Stampy Cat is in the top 10 most viewed YouTube channels worldwide, has 1.7 million subscribers (one of them being my 8 year old daughter), and earns him a reported £246,000 per month.
History is replete with such examples, of people almost stumbling into fame and fortune after recognizing the value of seemingly innocuous data. Swiss engineer Georges de Mestral invented Velcro after noticing burrs clinging to his trousers while hiking in the mountains; Coca Cola was the result of a pharmacist’s lab assistant accidentally mixing cocoa leaves and cola nuts with carbonated water; Percy Spencer developed the microwave oven after noticing the chocolate bar in his pocket melted when he walked in front of a magnetron. Of Facebook founder Mark Zuckerberg, Kevin Spacey (executive producer of The Social Network) notes:
“Mark was a geeky, socially awkward Harvard undergrad who wanted nothing more than to be cool. Using his computer skills by hacking into Harvard’s computers, he pulled up the pictures of every girl on campus to create a sort of “hot-or-not” site exclusive to Harvard. Though the prank nearly got Mark kicked out of college, he and his friend Eduardo Saverin realized that they were on to something big, and thus the initial concept of Facebook was born.”
From my own youth I recall the Magic Eye pictures- patterns of dots that, if you crossed your eyes, would slowly swim into focus to reveal a three dimensional image- an apt metaphor for the broader issue I want to discuss here. We’re at a point in history when those who are able to recognise and act on some specific emerging trends – patterns of dots – who are able to make a leap of logic and utilise information seemingly unrelated to their industry or even stated expertise, have the chance of striking gold. People who, through accident or intuition, can separate the signal from the noise. Squint at the following, and ask yourself whether a picture begins to emerge.
Known Knowns
In the early 1990s, when Cuba was heavily dependent on oil imports from the Soviet Union, the collapse of the USSR devastated Cuba’s economy. Exports nosedived, GDP plunged and oil supplies to Cuba halved. Buses couldn’t run, and power cuts were frequent. Food imports dropped by 50% and fertilizers – products of the Haber-Bosch process – became unavailable. In very short order, the country became incapable of feeding itself, and the extent of its reliance on fossil fuels was laid bare – a strong signal coming out of the noise.
History records the response to that signal as “the Cuban miracle”. Cubans survived the crisis by learning how to live with less oil. They had to learn to grow their own food, and all available land was pressed into service. Since chemicals and pesticides weren’t available, food production was almost all organic. Before long, Havana was able to provide half of the city’s food requirements from urban gardens. Through a programme of food rationing, land re-distribution, and community gardening, Cuba became self-sufficient within five years.
Humanity today is an oil-based civilisation: fossil fuels are woven into the very fabric of our societies, and in navigating our way through the daily ritual we give little thought to the depths upon which our dependency rests. As you read this, however, consider any article of clothing you may be wearing. Ponder on its provenance- its history, where and how it was manufactured. What role has energy played in each stage of its life cycle- in the ham sandwich the designer ate when creating the original sketch, in the fertilizer used to grow the cotton that formed the basic fabric of your shirt/ skirt/ patterned socks? For sure, energy was used in the cutting and making of the garment itself, but so too in heating the water for the worker’s morning shower, and in the twenty-minute bus ride to the factory to start that day’s shift.
Shipping 5,000 pieces from Ho Chi Minh to Highbury certainly requires vast amounts of energy, as does the packaging and labelling and finishing. And now, consider the following:
- That fossil fuels are a finite resource;
- That fuel prices historically trend upwards;
- Not that the most optimistic prediction of a global peak in oil production is circa 2030, nor that we’ve passed the most pessimistic prediction circa 2013. No, consider the fact that there is general recognition that a peak in oil production will actually occur someday, and consider the implications on the downward side of the oil production curve.
Resource depletion is one of a number of major, significant trends shaping the 21st century. Oil production in 33 out of 48 out countries has now peaked, including Kuwait, Russia and Mexico. Regarding water, literally the source of life, twenty-one of the world’s thirty-seven largest aquifers in locations from India and China to the United States and France have passed their sustainability tipping points, meaning more water was removed from them than replaced in the past decade. Thirteen aquifers declined at rates that put them in the “most troubled” category, and research indicates that this is a long-term problem that’s likely to worsen as reliance on aquifers grows.
As another example China, which accounts for more than 90% of the world’s rare earth supplies, has warned that the decline in its rare earth reserves in major mining areas is “accelerating”, as most of its original sources are depleted. Other major trends include climate change and food security, and the impact of all these are exacerbated by population growth – an estimated 9 billion people on the planet by 2050, up from a current 6 billion.
These are ‘known knowns’, and according to former US Secretary of Defence Donald Rumsfeld this places us in a fortunate position. He famously said:
“Reports that say that something hasn’t happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns – the ones we don’t know we don’t know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.” (Emphasis added)
As an industry, retail already has a fairly clear picture of the challenges we’re facing. What’s stopping the industry from acting?
Tree huggers, Greenwash, and spin.
For so long, the retail sector’s prevailing view of sustainability has been that of a niche issue, difficult to monetise (either as profit or cost), and at best to be managed as a reputational consideration. The fundamental driver, however, has been completely wrong. The argument has often been that if consumers were to vote with their feet, adopting and promoting sustainable products, the market would respond accordingly. In reality, Gallup polls conducted over the past 10 years have consistently shown a majority of consumers (a year on year average of 61%) are very concerned about sustainability issues. Despite this concern, consumers are typically constrained by limited incomes and limited choice – an inability to see the full picture – and so retailers themselves are also presented with an imperfect view.
Unsurprising, then, that service providers such as PLM companies have in turn not received strong signals from potential clients, and that the various ethical and environmental concerns that make up “corporate social responsibility” are only recently becoming recognised as priorities for software development. Nevertheless, the trends described above (resource depletion et al) now promise to capture the attention of retailers in a manner they understand very well indeed – one that eclipses even consumer concerns.
In the starkest possible sense: resource depletion threatens to increase costs, and slim down already thin margins. Climate change and issues of food security are already having an impact on individuals and communities where products and commodities are manufactured and grown. And the growing trend towards disintermediation by retailers, the reduction in the use of intermediaries between producers and the retailers themselves as a means of further eliminating cost, brings issues faced by those communities into sharp relief.
In some cases, retailers are beginning to recognise that if these issues are not managed effectively then there will most certainly be an impact on operational effectiveness. For example, the growing trend of smallholder farmers’ (e.g. as cotton producers) children who are leaving farming for arguably more stable lives in cities, coupled with the increasing age of farmers themselves, threatens continuity of supply 10 or 15 years in the future. And this is only one of a range of challenges to be addressed, whose root causes need to be understood.
This is the picture that emerges when we examine the status quo of retail and brand operations today. But like Zuckerberg and other opportunists, can we also find value in acting on that knowledge?
Fortune Favours the Bold
The World Health Organisation estimates the value of the global pharmaceutical industry to be circa $300 billion, rising to $400 billion in the next 3 years. Quite incredible, given that modern medicine literally ‘grew’ out of an unwashed petri dish on Sept. 3 1928. On that day Scottish biologist Alexander Fleming returned to his lab to find a strange fungus on a culture he had left in his lab- a fungus that had killed off all surrounding bacteria in the culture. If a modern Emperor’s ransom can arise from happenstance – a convergence of accidental events whose genesis would have been overlooked by anyone with lesser skills than Fleming – how much greater is the possibility of success arising from willful application of proven technology to known issues?
Talking to my eldest daughter recently, she expressed the view that ‘this climate change thing will all be ok’ because ‘they’ll fix it’. I hold a similar view: I’m optimistic that technology plays a significant role in future solutions, that we can adapt and indeed thrive. I also believe that the ‘they’, however, is ‘us’ and that the ‘fix’ must come from industries taking a proactive stance. In the 20 years I’ve spent in the retail sector (a significant portion of which has been in apparel and with PLM technologies) I’ve often wondered why it is that Product Lifecycle Management tools have not been developed to take advantage of the opportunities that seem to be apparent.
In U.S criminal law ‘means, motive, and opportunity’ is a common summation of the three aspects of a crime that must be established before guilt can be determined in criminal proceeding. Similarly, in understanding the growing challenges described above (motive), and the sophistication of existing technologies (means), shouldn’t the presence of a final element (opportunity) propel PLM providers into the development of sustainability functionality? Fortunately, as history has so often demonstrated, fortune may be about to favour the bold – the vendor who develops the tools, and the brand who uses them to repair potential rifts in the fabric of their international operations.
WAGJLL (What A Good Job Looks Like)
To date, the retail industry has adopted a ‘Compliance Based’ approach to the social and environmental challenges that emerge from contemporary supply chains. The industry fixes the visible cracks in the dam; it passes a cursory inspection, and everybody moves on until the next leak emerges and the dance is repeated. In my work with Fortune 500 companies, government and non-governmental organisations, if there’s been one constant it’s that a solely compliance based approach to complex issues does not work.
Still, though, that kind of reactive approach is what many retail programmes are focused on And while I certainly don’t advocate eliminating these programmes, it’s important that both PLM customers and PLM providers realize that compliance audits and guidelines – the most popular currency for ‘measuring’ sustainability – are the equivalent of taking one’s temperature using a (more, or less, sophisticated) thermometer. Whether by plastic strip, mercury rods, or digital readings the outcome is the same- the thermometer highlights the problem once it already exists. And likewise, the audit reveals the symptoms, but rarely addresses the cause. Service providers who are able to move past such an approach (which, we must recognise, typically adds cost to their client) and focus on addressing what are increasingly business critical issues (adding value) will be feted. It is that simple. And from what I can see, the early adopter who is able to articulate not only problem but also solution will be in high demand.
The Sustainable Apparel Coalition (SAC) in the US represents a third of the global market share of footwear and apparel retailers and advocates this kind of approach. In their own words, as stated on their website:
“The Coalition’s vision is an apparel and footwear industry that produces no unnecessary environmental harm and has a positive impact on the people and communities associated with its activities.”
And there’s the opportunity we discussed above- 1 in 3 of the world’s apparel and footwear retailers are signed up to addressing social and environmental challenges. If that isn’t a signal for PLM vendors to seriously consider developing appropriate technology then what is?
Clearly, although still in the early stages of development, Higg offers a degree of sophistication which steps beyond the more traditional compliance approach. And yes, there is so much more that can be developed- for example, existing PLM functionality can clearly be utilised to further the SAC’s stated mission as well as catering for other sets of guidelines, regulations, legislation and private standards. And this is all without mentioning that PLM itself is an ideal vehicle to deliver both present and future tools. Carbon footprints, supply chain transparency, purchasing practices, impact assessments, ‘what ifs’- the list is a long one.
In considering the title of this article, I settled on ‘Scanning Horizons’ because I wanted to emphasise exactly that point. Sometimes when we’re in the trenches, head down, designing next season’s collection to a strict deadline, it can be difficult to remember the importance of lifting our gaze. In doing so, what becomes apparent is that it is not only effort but also direction of travel combined which brings the rewards. Sometimes we have to stop and look at where we’re going, instead of just responding to the bumps in the road. I believe we’re at a point today where means, motive and opportunity have converged to enable PLM vendors to add new and very real value to their retail clients, provided they are creative and bold enough to look to the horizon.
