// you’re reading...

Global Markets

Beyond growth: Innovation and Stability

Beyond Growth - Stability Let’s be clear straight from the beginning: This post assumes that the reader has recognised the evident illogic, impossibility, of the traditional ‘economic growth’ lemma.
In other words: we all know that continued economic growth – usually advocated as the sole solution to continued prosperity and resolution of national and global economic woes by governments and VIP economists – is a physical impossibility. There is only one planet – for now, anyway -, hence only one set of finite resources. I assume this insight as a given.
If you, as the reader, do not agree with this assumption, kindly continue reading elsewhere (namely: on the UK government’s department for Business, Innovation & Skills’ website). But you might want to read this analysis by the Guardian also.

It’s been quite some while ago that the renowned economist Paul A. Samuelson (1915 – 2009), one of the few of his trade who actively tried to put the science into economics, stated:
“Globalization presumes sustained economic growth. Otherwise, the process loses its economic benefits and political support.”

As accurate as the statement is, and as clearly as it illustrates the systemic fault in the way our global economy is set up, he forgot to mention that the growth economy also got us to redefine the term ‘prosperity‘ in what is in reality an entirely inaccurate, and exclusively monetary sense, usually quantified even as a single numeric value (the GDP):

‘Under existing macro-economic arrangements, growth is the only real answer to unemployment – society is hooked on growth.’
Douglas Booth in: ‘Hooked on Growth – economic addictions and the environment’ (2004)

noun, plural pros·per·i·ties.
1. a successful, flourishing, or thriving condition, especially in financial respects; good fortune.
2. prosperities, prosperous circumstances.

This monetary focus of the ‘prosperity’ meaning is not compatible however with the term’s original and far more qualitative definition, which can be inferred when breaking the word down into its original Latin components:
"Prosperity is about things going well for us – in accordance with (pro- in the Latin) our hopes and expectations (speres)." [Source: Prosperity without Growth, p.16, a report by the UK's Sustainable Development Commission, which was closed on March 31st 2011]

‘The welfare of a nation can scarcely be inferred from a measurement of national income.’ Simon Kuznets, 1934

At its root, ‘prosperity’ as very little to do with financial wealth or continued economic growth. Instead, the original meaning the term suggests a certain level of (not the least individual) stability, security, freedom and comfort – none of which are concepts, or more accurately: states of mind, directly and invariably linked to riches, and not linked at all to producing and buying in ever larger quantities (i.e. growth).

How does this critique link to the current status of the apparel industry in general, and the sustainability discussion more specifically?

There are numerous ways how the above relates to current (and past) developments of the fashion industry – good and bad. I’ll restrict myself in this article only on raising a number of reasons why growth – other than what the retailers want to make us believe – is in fact the least of all problems.

For starters, let’s ask as few question:

Question: What is the basic reason for a textile/apparel business to grow?
Answer: To be able and directly negotiate with their buyers, rather than throw middle men; to develop enough skill and expertise to be unique in the market (either by providing quality or quantity of a product or service); to develop a clout that allows to deal with clients more at eye-level; to benefit from certain economies of scale notably in shipping; to retain highly qualified staff and give them a future; to gain a certain ‘importance’ in the market, which makes it less likely to fail.
Conclusion: While cost reduction play some role, most of the initial reasons that come to mind have more to do with guaranteeing survival and creating a slightly less competitive environment to exist in.

Question: What are possibly more important priorities for a textile/apparel company rather than growth?
Answer: Maintain the business! Specifically this means: keep being able make enough money so as to allow owners and employees / workers a comfortable life, without too much stress. Give stable work to employees as well as a stability to the owner/executives. And then there is the issue of brain drain – companies need to remain attractive to be able and do their job well.
Conclusion: The fundamental priorities of a business have little to do with growth, but ultimately with survival only. Growth is a relatively new goal, and one that in reality does not necessarily cater to these basic needs of companies.

Question: Why then this seemingly attractiveness of the growth concept? Why not advocate stability instead?
Answer: Stability implies stability on all levels at the best of times, which again may imply a somewhat more humble attitude and lifestyle that many would like to have. There are hardly any of ‘rags to riches’ stories behind stability. But that’s what many an individual is hoping for: Riches. And indeed, if timing is combined well with growth, riches can be the result. But the riches then are concentrated at the ‘top of the pyramid’, and the pyramid has grown slim with very steep sides.
Counter argument: But there are situation where growing means stability.
Answer: Correct. If the entire environment is optimised on growth, not growing either means loosing out, or otherwise requires creating value not through size but through other characteristics such as quality, or originality.
Conclusion: Addressing the primary needs of stability is a challenge if everything else is geared towards growth. The ‘growth’ then has to happen in an area which is not related to design, but related to enhance the ‘uniqueness’ of a company, and be a leader or ‘early adopter’ in an area not related to growing in size.

From many a case study we know that as far at least manufacturers are concerned, what matters most to them is survival in first place, comfort in second. Only then ‘spreading their wings’ is actually of any consideration at all.
And, for how far sustainability is concerned, this was the ‘golden formula’ of the past, and there is some probability that it will be closely connected to building more sustainable economic systems in the future.

We know from the past – recent and not quite so recent – that when companies grow very large (‘too large to fail’) the effect of them failing is disastrous. Too many unidirectional dependencies point towards them. Entire social groups, or geographical areas may end up in misery.
It has happened in the past: coal mines, the cotton industry in the UK, the silk industry in Switzerland … they all grew from moderately sized structures to monoliths, with difficulties to innovate and move flexibly. They all failed and went under at some stage, taking entire communities with them on the way down.
Size benefits a quite few on the way up, but endangers many more on the way down. Hence how the ‘continued growth’ lemma came into being, and why growing has more characteristics of a vicious circle then it has of a panacea.

And as it happens, for much of what the fashion, textile, apparel industry is concerned with, growing is not an option, and it is all about guaranteeing survival.
The word ‘economic growth’ doesn’t pop up when talking to such manufacturers, because it has no relevance for them. ‘Survival’, ‘maintaining the family business’, and ‘remaining in business and in their community’ on the other hand are the terms commonly heard in such conversations.
Of course, this is very distinctly the case among European (American) manufacturers, but it is equally frequently the topic when talking to manufacturers overseas with a certain pride in their business, their products and their work ethics.

Sustainability – in fairly every flavour of the word – is tightly coupled with doing business differently than up until now. One difference could be that rather than growing, we choose to limit the growth of our businesses voluntarily, and rather operate as collaborating partners where needed.
The lack of size invariably means that a business is firmly standing with both feet in the reality of the life of its workers, its communities, but also the needs of its clients. Size easily leads to loosing overview, getting priorities wrong, and engage in behaviours (lobbying, fraud, nepotism, etc.) that have as such nothing to do with the core business, and are in fact a distraction from what a business really should be focusing on. Size may even be the cause for a business to looses its innovative edge.
But only when remaining innovative – few if any large companies are – a business can do its job well, to the best outcome for every single stakeholder involved.

It's not size. It's the growth of innovation capability which equals sustainability (economic and otherwise). And sustainability equals innovation.

Related Posts Plugin for WordPress, Blogger...
If you enjoyed this post, make sure you subscribe to my RSS feed!


No comments for “Beyond growth: Innovation and Stability”

Post a comment

Previous Posts

Get Adobe Flash player