From the CD-ROM "Concepts and strategies"

Feedback from a rich source of information

by Peter Small

In the early 1980's, London was regarded as the leading fashion design capital of the world and sported hundreds of new trendy designers. Most of these up and coming designers were invited to take sales units in a new, market style store that was opening in Kensington High Street. As I'd had such a success with "Street Theatre", I was invited to take part.

With so many fashion designers under one roof, the store was an immediate success. But, for each individual designer, it wasn't so good for sales because the sales were effectively shared. For the designers, it was a highly competitive situation: their creations had to be chosen by customers who were choosing from among the best in London. For me, it was an even greater challenge because I found myself in the midst of over one hundred of the most creative designers in the UK and had to compete with them for sales. And I wasn't a designer.

I decided not to sell clothes and instead sell costume jewellery, which I knew people would need when they bought new clothes. I didn't know anything at all about buying jewellery, but, all the trendy London Club people were coming to this high profile store and all I had to do to find out what the latest jewellery fashions were was to observe the fashionably dressed people who were passing by.

The trick was to pick out the fashion leaders from the fashion followers. With the help of the sales girl, I managed to get an idea as to the kind of jewellery that was currently fashionable. There was no possibility of being able to manufacture these items, so, I went to the fashion wholesale area in London where many middlemen were dealing in costume jewellery. At the time, most of these specialist wholesalers were located in and around Berwick Street, just south of the main London shopping area of Oxford Street.

By diligently searching through the stocks of all the wholesalers, I could find items of costume jewellery that corresponded to the fashion items I'd spotted the fashion leaders wearing. The fashion leaders who visited Hyper Hyper at that time included many famous pop stars, movie and television personalities and even Princess Diana - who at the time, was living just a few hundred yards from the store, in Kensington Palace.

It wasn't long before our jewellery counter started to attract attention. Even the fashion leaders themselves started to recognise that we were stocking the latest fashions and pretty soon we had a string of regular customers.

The items that sold, we replaced with identical items from the wholesalers. Those that didn't sell, we sold off at cost. In this way it worked like an evolutionary strategy, with the overall quality of our jewellery counter getting better and better. Also, we found there was no longer any need to have to rely solely on spotting what the fashion leaders were wearing. They started to come to us, asking for things they wanted.

Very soon, the fashion magazines found out about our costume jewellery counter. Fashion editors and their assistants were constantly visiting the store to borrow clothes for fashion shoots for their publications. Invariably, they would need some high fashion jewellery accessories to go with the clothes. They would come for these accessories to our jewellery counter and we found ourselves in more fashion magazines and with more credits than any other designer in the place.

All this, with no planning, virtually no overheads and no organization. It was an event driven, customer designed system that was self-organising. A solution created as a result of an evolutionary design strategy.

The supply side strategy

Comparing the way this jewellery business had evolved with the way biological systems evolve, I suddenly saw Berwick Street - the place where I was buying my stock - in a new light. At that time, there were probably around one hundred different jewellery wholesalers in and around Berwick Street: each providing various types of fashion accessories and all run as entrepreneurial enterprises in competition with one another.

Despite this competition, they were all making a profit because buyers from all over the country were going there to buy their stock. It then struck me that this was not only a good place to sell from, it was also a place to get the information as to what to sell. Just as my customers were giving me information as to what to buy, the wholesalers were also getting information from their customers telling them what jewellery to stock.

Every retailers going to Berwick Street to buy stock arrives knowing what their own customers want and passes this information on to the wholesalers by buying and asking for particular items. This allows the wholesalers to acquire up to date knowledge of the current fashion trends on a large geographic scale. In essence then, the wholesalers in Berwick Street have positioned themselves in a solution space where they can find out exactly what to ask their manufacturing contacts to make.

Looking at this complete system as an abstraction, it would appear as fashion information flowing through a complex network of inter-connected nodes. The information starts from the customers, feeds through to the retailers, then on to the wholesalers from where it goes to the manufacturers who use it to decide what to make. The information reflects customer requirements and then feeds back again as desired product. It is a system of constant, backwards and forwards information flow. A seemingly chaotic pattern of activity, yet, all part of a dynamic, continuously adapting system.

Of course, there are many original design initiatives that enter the system, but, these are unpredictable, random events that sometimes do and sometimes don't create chaotic instabilities of demand and supply. No serious trader bothers to look too closely at the origination or reasoning behind these creative efforts; they are treated simply as statistical noise that business strategies have to allow for.

The product here is fashion costume jewellery, but, looking at the abstraction of this system - the information flow from the customers to the basic product manufactures - would see this same model applying to almost every possible commercial system.

The dynamics of the middleman

As I looked more closely at the way this system was working, I became conscious of other factors that were having an influence. As already mentioned, there were over one hundred different wholesalers in and around Berwick Street and I couldn't buy from them all. This meant that I had to be selective, limiting my sources to only a very small sub section of all the total sources available as I was limited by the amount of money I had available for buying each week.

The usual practice for the weekly buying was to have a quick look around to see what the various wholesalers in Berwick Street were stocking. Then, I'd make a mental list of those that seemed to have the kind of items my customers had been asking for . Having made this list, and putting it in some order of preference, the procedure would be to work through this list until the week's buying money had run out.

Effectively, this selection of wholesalers was equivalent to creating a "virtual design team" on the fly each week: made up of the wholesalers who were currently right on the ball with what my customers were wanting.

I didn't have to know much about any manufacturing techniques; I didn't have to worry about team spirit; arrange training; deal with conflicting egos or provide a variety of rewards, incentives and inducements. My virtual team of designer/suppliers simply supplied whatever goods my customers wanted: on demand, hassle free and whenever I wanted them

In the fashion business, as in digital technology, fashion trends tend to come and go quickly and unpredictably. This constant flux I could easily cope with by using this strategy of varying the wholesalers I bought from. I bought from six or seven of them each week, but, it was never the same wholesalers every time.

What would happen is that as trends or fashions changed, the wholesalers would vie with each other to get new designs from their manufacturing contacts to correspond with the changes. Some wholesalers would be quicker at spotting a trend than others and would usually have the lion's share of the new business for the time that fashion lasted.

The way the dynamics of the system worked was that the wholesalers who were benefiting from a current trend or fashion were too involved with their busy trading to be ready to take advantage of the next change of fashion when it came along; their buying money would be committed and they'd be locked into manufacturers who were geared up for the currently popular fashion.

This invariably meant that any change in trend or fashion was catered for by other wholesalers who weren't so busy. These less busy wholesalers and their manufacturing contacts would have had the time and resources available to explore other possibilities and would be in a better position to act when the fashion changed.

This made it easy for me to keep up with new trends and sudden fashion changes because, in the parlance of the time, I would only need to find the wholesalers who were "hot" and buy from them. In this way, my virtual team was constantly changing as the wholesalers were engaged in a continuous cycle of leap frogging over each other as they vied with each other to be the first to bring out any new fashion trends.

Mapping this across to e-business and e-commerce solutions, the parallels between the changing fashions in costume jewellery and the changing trends in technological developments are quite obvious. In such a changing environment it makes a great deal of sense to have virtual teams of specialists that can be put together on the fly to deal with any technological issues. Only in this way can the emergent changes due to technological developments be handled efficiently

Experts and specialist in technology, like the costume jewellery wholesalers and manufacturers, can easily become locked into areas of speciality while their expertise is hot. This makes it likely they will be unprepared when trends change. Experts and specialists need a learning curve and explorative time before they can properly leap onto the next bandwagon. They can't do this if their time is fully taken up with contracts using the passing technology. It does seam reasonable therefore, to suppose that expertise of all specialists will run hot and cold and it will be up to the skill of the people who hire their services to spot which state they are in.

Where the idea for the Kempelen Box originated

It was in light of this experience that led to the idea of a Kempelen box. Wouldn't a Kemplelen Box act much like the group of wholesalers in Berwick Stree? If a group of experts assembled in one place, wouldn't it become a focal point for people looking for experts to go to? Wouldn't this then become a focal point of information, which would adapt and change in response to changing technological trends? The stigmergy research project is intended to test this idea out.