Denims are a fundamental part of modern fashion. Everyone seems to own a pair. The massive popularity of denim product has a lot to do with its symbolic value— the notion of cowboys, American Wild West, rock ‘n’ roll, punk rebellion (think Mick Jagger, Blondie, and John Lydon aka Johnny Rotten); the hippie movement in the ‘70s; grunge of the ‘90s; and the supermodel brigade. Titans of denim industry sustained competition using linear business models that massively reduced their production costs. But, at the cost of opaque supply chains with questionable working condition of factory workers and environmental damage (Ethical Fashion Report., 2019).
What if we tell consumers who made
their clothes?
This is the question Nobody Denim’s CEOs John and Nick Condilis asked each other when they decided to create supply chain transparency as their competency. Born in 1992, Nobody Denim is a Melbourne, Australian based denim company. This legacy brand was initially a denim laundry which gives a denim its ‘distress look’ and ultimately its price value. In mid 90s the Condilis brothers decided to expand their denim laundry into denim manufacturing. In this blog I unpack the business model of Nobody using the dynamic capabilities perspective to demonstrate how this brand competes in the premium denim market (see Figure). A business model is the architecture of an organization that is enabled by its dynamic capabilities (Wirtz, Pistoia, Ullrich, & Göttel, 2016). According to Teece (2018), a dynamically capable organization will rapidly capture, create, and deliver customer value through sensing, seizing and transforming capabilities.
Sensing a value opportunity: Sensing is inherently involved with scanning the business ecosystem to identify and propose new customer values (Teece, 2011). For Nobody, the sensing activity was about educating customers on the value of ethical manufacturing in the fashion industry. To achieve this Nobody, opened their factories for customers to experience denim making from cut to finish and importantly interact with their garment workers. To assure customers about their brand integrity in fair work practices they also obtained Ethical Supply Chain accreditation. The rationale for this approach according to John was, ‘we are nobody, we don’t make a lot of noise, but those who wear us, do’.
Seizing the value opportunity: The seizing activity involves designing a value chain to satisfy customers and capture value (Teece, 2011). This activity also includes securing access to capital and the necessary human resources. Similarly, for Nobody, the seizing activity involved building competency in eco-centric denim production in Australia. For this, Nobody invested in ‘cut and sew operations’, ‘trained workers’ and ‘innovative techniques’ that consume less water during denim washing. To minimize their carbon footprint, Nobody also emphasized a shorter supply chain — their head office, factory, laundry, and retail store are all within a 6-km radius in Melbourne.
Transforming the value opportunity: Transforming capabilities involves shifting firm emphases to radical new opportunities. This activity is also needed periodically to soften rigidities developed over time from standard operating procedures (Teece, 2011). For Nobody Denim, the transformation process took place during the COVID-19 pandemic when the global fashion industry faced a massive drop in sales (Walk Free Foundation, 2020). However, Nobody survived the pandemic by capitalizing on their worker capabilities in stitching, sewing, and designing to make medical protective clothing for health care workers. This transition is not a short-term fix but a long-term strategy for Nobody. According to John, the pandemic has exposed the fragility of Australian supply chains and our heavy reliance on other countries for medical supplies. As part of the solution, Nobody invested in infrastructure that will enable it to make up to four million masks, 300,000 gowns, and 170,000 scrubs per year.
- Thus, the key takeaways from Nobody’s business model is how this brand kept customers and their workers central to all their value creation activities. Second, how Nobody built consumer trust by caring for their workers, paying fair wages and being transparent about their production process. Nobody also entices customers with lifetime free repair on their denim.
- Value added: For readers of this blog, John shares some great advice on the perfect way to wash your jeans, “All jeans should be washed as little as possible, turned inside out and washed on a cold cycle and line dried for the longest life. No dryers please!”
Figure - The Business Model of Nobody Denim
VP: What is offered to
customers? Sensing opportunities in ethical supply chains that are of value to
customers.
VC: How is the value proposition
created? Building eco-centric capabilities to seize new customers, business
clients and resources
RM: How is revenue created? Using worker capabilities to transform the revenue to a changing environment.
* Dr. Kanika Meshram is a Lecturer in Management and Marketing at the University of Melbourne. She may be reached at kanika.meshram@unimelb.edu.au. This blog is based on the author’s forthcoming paper and interview with John Condillis from Nobody Denim for their research project on modern slavery in fashion industry.
Key Reference: Meshram, K., Bhakoo, V. & Bove, L. (forthcoming) Building and Sustaining an Anti-Slavery Business Model: A Tale of Two Fashion Brands. Journal of Strategic Marketing.
Additional References
Ethical Fashion Report. (2019). The Truth Behind the Barcode. Retrieved from https://baptistworldaid.org.au/resources/2019-ethical-fashion-report/
Teece, D. J. (2011). Dynamic capabilities: A guide for
managers. Ivey Business Journal, 75(2),
29-32.
Teece, D. J. (2018). Business models and dynamic
capabilities. Long Range Planning, 51(1),
40-49.
Walk Free Foundation. (2020). Protecting People in a Pandemic: Urgent collaboration is needed to
protect vulnerable workers and prevent exploitation. Retrieved from https://cdn.minderoo.org/content/uploads/2020/04/30211819/Walk-Free-Foundation-COVID-19-Report.pdf
Wirtz, B. W., Pistoia, A., Ullrich, S., & Göttel,
V. (2016). Business models: Origin, development and future research
perspectives. Long Range Planning, 49(1),
36-54.
