In business, there are two choices: change or die. You can't stand still, or you'll be roadkill. If there is one industry that provides a constant reminder about the need to change, it's the fashion industry. The best place to go to understand what makes this industry the most dynamic of all is Europe.
Last week, my wife and I took our two daughters, ages 16 and 13, on their first European vacation. We went to Italy and visited Florence, Luca, Pisa and Rome and stayed in a medieval village in the mountains of Tuscany. Like any entrepreneur, I couldn't help looking at what and how goods are sold.
According to the U.S. State Department, 70% of Americans don't own a passport and have never been outside the country. They are missing a great opportunity to learn about a wide range of differences, including educational, cultural, business, age and gender divides. What did I learn on this trip?
First, I am a certified "fashion idiot," according to my oldest. Nice thing to say to your father who just spent a briefcase full of cash to take you on a European vacation for spring break, huh?
Why did she call me this? Well, one day I tagged along with my wife and daughters as they literally fought their way through miles of merchants in Florence.
During this trek through the shopping jungle, I looked through the window of a shoe store. To my amazement, they were selling what looked like my parents' 30-year-old bowling shoes, complete with dirt and scuff marks on them.
I thought maybe this was one of those bring-and-buy shops where people sell their old stuff so the less-fortunate can buy it for next to nothing.
But the store was in a very expensive part of downtown Florence, and the rest of the display appeared to be new items. I went into the store and saw a row of beat-up old shoes. They actually reminded me of the shoes people tied together and threw over telephone lines in blue-collar neighborhoods in Philadelphia and New York.
When I turned the shoes over to see what they cost, I thought they would be dirt-cheap. After I read the price, my head felt light and I staggered into a chair. These apparently beat-up shoes -- which I am sure were stolen from homeless people in one of our major cities -- were selling for more than $150 American. Some as high as $300!
There are no limits to what people will buy to make the right fashion statement. Think about it -- clothing and shoe stores sell the following:
- Ripped jeans
- Ripped T-shirts
- Baggy pants that fall to an indecent level
- Women's underwear that has less material than a man's handkerchief
- Plastic shoes
- Shoes with MP3 players in them
The fashion world teaches us, as business people, a lot about people's wants and needs and what motivates them to buy. The first industry to really understand the marketing message of fashion was the auto industry. Henry Ford made one type of car in one color: the black Model T. In the beginning, that was fine because it was taking the place of the horse and buggy, and it was unique.
But just as fashions change, businesses must change to keep up with the times.The car industry quickly developed different models with a variety of colors and options. Rationally, a car is just a form of transportation, yet people express their individuality through what they drive, wear and own.
For computer manufacturers, it isn't enough to provide a wide variety of technical benefits -- now consumers want their computers in different colors and styles. Same goes for mobile phones and even caskets!
My father died on New Year's Eve, so we went to pick out a casket. You would have thought we were buying a car. The caskets came in all types of styles, materials, colors and accessories. Mind you, when a person dies, there is sometimes a viewing, but in many cases the mourners see the casket for maybe an hour and then it is put into the ground, never to be seen again.
The lesson learned is not that people are so gullible that they will buy what appears to be "pre-owned shoes," but that companies and industries that don't reinvent themselves become irrelevant and disappear.
magazine, 90% of the names on the Fortune 500 have changed since this select group has been tracked. If you want to stay relevant, you have to do the following:
- Look at the world every day -- don't just walk by.
- Take the time to look at other businesses and what they're doing to change.
- Hire people who don't think like you, and ask them to challenge your thinking.
- Read constantly. I am amazed by how many executives I know who don't read books or magazines, but rely on either the local newspaper, television, radio or just the Web.
Do you want to be innovative -- like
, which started out selling typewriters and mining ore, respectively -- or do you want to end up like Bethlehem Steel, a former colossus that has tumbled off the business landscape?
Kramer is the author of five business books on topics related to venture capital, management and consulting. He is a faculty member at the Wharton School of Business at the University of Pennsylvania and the veteran of over 20 start-ups and four turnarounds.