General criticism and justification

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In the coming analysis, the start-up process of Family One Clothing will be analyzed and interpreted using the existing models and frameworks described in our frame of references. Getting from an initial state to a desired state in a development process means a purposeful movement in one direction. In order to get there it is important to first know where “there” is. As suggested by Mintzberg (1973), the “there” is guided by the vision of the en-trepreneur. Furthermore, we have presented several models how researchers describe the process from idea to market introduction in new venture creation. These models are framed against the backdrop of the entrepreneur. Throughout this chapter we will analysis and examine the literature in relation with the empirical findings in order to fulfill our pur-pose. The empirical findings will be analyzed in the light of the frame of references divided up section by section. Further, the theories regarding the fashion process will be integrated throughout the analysis section.

Analyzing the entrepreneurial capacity

Entrepreneurship is defined by Davidsson (2001) as the creation of economic activity that is new to the market; including the launching of new products and service by new or exist-ing firms. FO has created a new fashion brand with distinctive core values that the foun-ders believe differentiate the brand from other players in the market space. Furthermore, FO has launched a test-collection (a new economic activity) that has been sold, and the company is in the planning stage of a complete market entrance. According to us, the con-ditions for entrepreneurship, as defined by Davidsson (2001), are therefore, to a high ex-tent, fulfilled. Furthermore, in our chapter about entrepreneurship, we discuss the approach on how en-trepreneurs act, and more specifically; how entrepreneurs act in new venture creation. Con-cerning this approach, FO can be seen as an example that supports Mintzberg’s (1973) re-search. Mintzberg (1973) explains that there is little or no formal structure during the start-up concerning the strategic direction. Rather, the strategic direction is guided by the vision that the entrepreneurs hold as a reflection of the ideology of the entrepreneur and com-pany as described by Gray and Ariss (1985). This can be observed in the case of FO to a very high extent. The FO-team founded the company based on ideological grounds, with an attribute of interest. The interest concerns the fashion- and clothing industry while the ideological values of friendship and loyalty of the social group laid the base for the busi-ness, and also defined the market in which these values were strongly grounded. The core values of FO acts like the foundation of the business which is interconnected with the elaborated FO vision that function as guiding star. According to FO, this work as a driving force in order to foster creativity in the seeking of new ways; in order to fulfill the aim of becoming not only a major player, but also a leader in the street fashion market. Now, when we have defined that FO process qualifies as entrepreneurship we are going to further analyze important parts of entrepreneurship; successful innovation and creativity creation.

Innovation and creativity in the team

Innovation is generally seen by the public as an ingredient of entrepreneurship. However, as described it might be a part, but should also be considered separately. Innovation within FO has tangible results such as the products produced, the so called “test-collection”. Furthermore, we are interested in what happens during the process of innovation (a con-cept’s development from idea to market introduction), and especially in strategic elabora-tion when converting opportunities into marketable ideas. In the empirical findings, it can be observed that FO has the aim of creating new wealth through the creation of a finan-cially bearable company. Also, FO has long-gone plans to capitalize a specific opportunity in the street fashion market. How should this be done? In the perspective of Drucker’s (1998) ‘do’s’ and ‘don’ts’ it is possible to observe the path of FO as ‘correct’ or not. Firstly, considering the ‘opportunity’ of Drucker’s (1998) ‘do’s’ there seems not to have been any opportunity analyzing in the FO-case. Rather, after the decision to start it can be observed through the empirical findings that FO seems to have strolled around in the market of street wear indirectly trying to reveal opportunities in the market space. However, the company was founded on specific values (later on these were further developed) and the strolling became a way of discovering customers that would pay for the brand and strengthen the outsiders view upon the customers; fashion as a self-expression (Saviolo and Testa, 2002). Since FO did not have access to the capital required to perform a “proper” market research to analyze where opportunities existed, the entrepreneurs strolled by them-selves trying to discover the market, the opportunities and potentials within it. This can be explained through a metaphor developed by the co-authors JI and JE; the strategic market landscape (see final discussion 6.2) This is what the FO-team has performed; an exploitation (as described by Davidsson) of opportunities that exists in the market. Rather time-consuming, but to FO it seemed like the only option available. This can further be directly observed in the empirical findings, in which the FO-team describes a process trying to identify opportunities in the market, since the post-start decision until November 2005, when the concept was more or less finalized. This has been conducted by FO through collecting information and resources available to them such as the knowledge of VC. Further, two of the founders worked in a large fashion retail store during June, July and August 2005 which made it possible to observe the pref-erences of the street wear customer, as well as interacting with the market directly. All this can be summarized as the Drucker’s (1998) ‘do’ of perceptualization. Furthermore, even though it might be perceived that FO was focused from the start, where FO explicitly focused upon the skate- and snowboard market, it is undoubtly a discovery process that has led FO to the position in which they are today. As discussed in the section above, concerning the market discovery stroll performed by FO, the perspective of focus has been a process of narrowing down the concept. This implies that FO started relatively unfocused but along the way, the more FO discovered in the market, and the more feed-back received from the VC, the more focused FO became, resulting in a specific targeted audience today. Drucker (1998) also stresses that with an unfocused concept, the customer gets confused. This can also be observed as an explicit anxiety by FO, since the team strives to be very clear in the marketing of their concept. The discussion about which catch phrases to use is illustrated through the concerns of JE: “The feedback from those close to the founders and/or involved in the project to some extent has been of great use. The catch phrases that were supposed to capture what the FO brand stands for were understood. However, I still believe we have to re-formulate some of these sentences in order to clarify the concept even more. I do hope and believe that a thor-ough concept, in which one has put a lot of effort, will pay off.” To continue, the focus on street wear shorts as the base of the brand also demonstrate this. This also gains support in the fashion process presented by Saviolo and Testa (2002) in which they state that in the past, fashion companies focused on trying to deliver the total look of the customer, hence the individual customer dressed in only one brand. However, nowadays the customer uses different brands in different combinations to express them-selves and their values more precise. By establishing FO as “the soul of street wear”, and launching the brand based upon trendy shorts works in favor for the focused approach de-veloped by Drucker (1998), as well as a part of the lack of focus on the total look as sug-gested by Saviolo and Testa (2002). This implies that the customer is nowadays more inter-ested to buy different brands and self combine them into the total look preferable to the customer. That is to say, it might result in a pair of Nike sneakers combined with a Diesel T-shirt and FO-shorts. The fourth ‘do’s’ of Drucker (1998) is size. It means that ventures should start in a small scale and thereafter expand. FO had the intention to start with a very small scale produc-tion, however, as the opportunity in the market was perceived as relatively large, as well as feedback generated from the VC during several meetings, they decided upon taking FO to a higher level of ambition, holding an approach of larger scale production. The reason for this was also because of the founders’ vision concerning the creation of a financially bear-able company. With this vision in mind, it seems that the larger scale approach was a neces-sity for the success in the long run. Further, this approach does not naturally imply a mass production as Drucker (1998) would have defined it, rather the opposite. Concerning the last of the ‘do’s’, FO has explicitly aimed at becoming a leader in the street wear market, firstly in Sweden, but thereafter also internationally. For a newly started ven-ture, such a vision and aim is rather radical. However, as suggested by Collins and Porras (1998), successful visionary companies often set big hairy audacious goals and channel its efforts in order to achieve the aim in question. Therefore, the vision and goal of FO, to be-come a leading actor in the street wear market, has support in theory even if it might seem like “impossible” to the general public. To continue, Drucker (1998) presented three ‘don’ts’ for a successful innovation. Since the products of FO do not hold any technological complex details and since there are non gen-eral diversification in the business, this works in favor to FO. Regarding time-focus, the in-novation is to a high extent for the present. This can be observed since FO’s market re-search that has been conducted, are based upon the evolution of the street wear market and how it works today. However, the trend of increasing street wear consumptions, also works in favor to FO even though this is not a major opportunity that the company wants to capitalize upon. The creativity is another important aspect in the holistic view of entrepreneurship. Fur-thermore, it is probably of greater importance in the fashion industry as determined by Saviolo and Testa (2002) in the section of fashion process. Creativity is an intangible part that is to some extent required for successful new venture creation, the point of departure of the innovation. Further, as also determined by Saviolo and Testa (2002), it is of greater importance if it concerns a start-up with little financial resources. We can therefore con-clude that creativity plays an important role in the establishing the FO venture, since no great financial resources are available and because of the fact that FO intends to operate on the fashion market. In FO, creativity plays a central role expressed explicitly as a core value (see appendix B). Further, in the guerilla marketing approach used by FO in the launching-and marketing plan it is obvious that creativity is central.

Modeling the start-up

Window of opportunity

To model up the start-up of FO, we will start by comparing our empirical findings with what Wickham (2001) calls the ‘window of opportunity’. According to Wickham (2001), opportunities in the market space are always existent since businesses always leave gaps. Wickham (2001) argues that the Spotting is when the entrepreneur is scanning the market place for opportunities. Locating is finding a position for the new venture and finding the uniqueness in the market that is needed. Measuring involves evaluating and mapping the market, looking at trends and what impact the product will have. Opening the window of opportunity is when the entrepreneur turns the vision into reality and a venture is created. Finally, the window is closed when the entrepreneur finds ways to hinder competitors to en-ter the same opportunity In the case of FO, we have cannot identify a pure spotting episode. The market place was not really scanned in order to find opportunities to commercialize, it was rather so that JI and EG wanted to create some t-shirts on a small scale basis. However, we think that it is visible that the stage of locating has been an ever going process from the moment that JE entered the business. The positioning of the new venture is something that from the start (April/May 2004) has been discussed, starting with identification of the values the FO-brand should have. This locating phase has also been developed during the start-up proc-ess, taking different turns after discussions within the FO-team, but also after discussions with the more experienced VC. The measuring of the market is something that has been done in various stages in FO’s start-up process. Since the target market was not very precise from the beginning, it has been hard for the team to evaluate trends and impacts of the product; however, a more precise marketing analysis is undertaken during the later parts of 2005 which will in a more detailed way map the market. The window of opportunity for FO has not really been opened at this time; we could say that it stood ajar for a while, during the test collection time. It was a cru-cial time for the team since this was when the team actually realized that people were inter-ested in their products.

Opportunity identification process

Long and McMullan (1984) argues that a number of controlled and uncontrolled factors in-fluence the potential entrepreneurs in the start-up phase. These factors, in different forma-tions, lead to the initial vision which also is called the ‘aha’ experience. This is where the field of opportunity is identified. After this, the process of elaborating the opportunity commences, where the entrepreneurs goes through an iterative process of strategic idea elaboration and opportunity elaboration. This process ends with an elaborated vision, which is to say, the vision with which the entrepreneurs decide to proceed with. What we have identified in the first phases of the FO start-up is very hard to label as un-controlled factors or controlled factors. We believe that the personalities of the three foun-ders has much to do with the initial vision of the start-up, two of the founders (JE and JI) has previously started other ventures and have experienced the challenges with start-ups. Also the founders had an interest in fashion before the start determining that this might have influenced the start-up as well. Saviolo and Testa (2002) further suggests that fashion is about self-expression and the expression for societal change. FO was founded on com-mon values held by the authors, self-expression to a very high extent. Cultural forces might also have impacted the start-up; JIBS is a university which promotes venture start-ups and the Science Park is by many students used for this purpose The initial vision was not as “big and bold” as the venture is today, but still, there was an initial vision of creating cloths, this was the identification of the field of opportunity. When the FO-team entered the opportunity elaboration phase; not much was decided. This proc-ess is something that has been present during the whole start-up phase. It is obvious that the strategic idea elaboration and the opportunity elaboration is a process which has been taking a lot of time and considering from the team. We think it is interesting to see that the initial vision of creating a brand with humble attitude is something that still is intact in the elaborated vision. Further, we believe that it has truly been a process of narrowing down the concept. The initial concept was weak and approached a huge market, through the in-tention of capitalizing on social values within social groups, firstly identified in the snow-board and skateboard market. Still the core values are intact, but FO seems to have nar-rowed down the concept in order to attract a more specific niche market within the huge one determined in the beginning, going from concept based on t-shirt, hoods, and sweat-shirts to a concept based on core products such as shorts. Further, the reflections of the founders also demonstrate this process (see the reflection by JE in empirical findings, sec-tion 3.14.1, and 3.18.1 in the reflections by EG). The decision to proceed is something that we believe never has been questioned. Already from the start, there has been a strong motivation to start-up the FO-venture, even if the start-up has been altered due to feedback from the VC among others. Though, FO de-cided to proceed with the venture as a result of the elaborated idea and concept in

Opportunity recognition sequences

In Bhave’s (1994) model of opportunity recognition sequences, two different stimuli are described as driving forces for new venture creation, i.e. externally stimulated and internally stimulated. Depending on which approach the concept is identified, different stages are undertaken, but once the business concept is identified; the commitment to physical crea-tion is undertaken. Complementing with Wickham’s (2001) ideas that the entrepreneur find their own solutions in order to satisfy a need; this leads to an identification of the business concept. Looking at FO, we cannot clearly identify if the stimulation for the start-up has been com-pletely external or internal. Our impression of the start-up is that there was a decision to start, but according to us, it was not externally stimulated (according to Bhave’s (1994) ex-planation). There were not any factors forcing (which is externally stimulation according to Bhave (1994)) the founders to start the business, but more a simple decision to start mak-ing clothing. This decision to start was directly based on need recognition, perceived by the founders, but not fully internally stimulated by definition either. Rather the founders decided to start a firm and shortly after they recognized a need and an opportunity. We ar-gue that the process of the pre-start-up was something in between the internally- and ex-ternally stimulated. It might have been more similar to Wickham’s (2001) ideas of the busi-ness creation. The founder’s had a need of having garments with a special set of core val-ues of the brand that was not available in the marketplace, and therefore decided, initially, to create a small scale brand. Even though we cannot precisely define if the stimuli were internal or external, we can rec-ognize the opportunity refinement phase in Bhave’s (1994) model. This phase has been on-going over a longer period of time. Bhave (1994) also refers to the concept development as the process of clarifying the business concept by refining the concept until it fits the cus-tomers’ need. The commitment to physical creation is identified in the FO-start-up by the first sketches done by JE, and to a larger extend when the test collection was produced.

Interrelation between discovery and exploitation

According to Davidsson (2003), entrepreneurship is best viewed as a process that unfolds over time. This process can, according to Davidsson (2003) be divided into a discovery-and an exploitation sub process that are parallel. The discovery sub process is the devel-opment from an idea to a business concept while the exploitation sub process is the at-tempts to realize the ideas. Davidsson (2003) stressed the importance of viewing the two sub processes as processes that give feedback to each other. In FO, we can very distinctively see the sub processes of discovery and exploitation. The idea is something that during the whole start-up process has been developed and modified. What also is interesting to observe in the case of FO is that feedback coming from outside parties, e.g. the VC, has been absorbed and has influenced the ongoing discovery and ex-ploitation. We would like to argue that the process observed in FO is something that has undertaken three different forms. In the very start, the concept and idea was quite narrow, but was expanded when the founders decided to start up a more serious business. But after feedback from the VC, the concept was again narrowed down to the shape it has today. This can also be seen at the development of the catch phrases, from using more phrases to cover a larger spectrum, but today it has been narrowed down to “the soul of street cul-ture”. Davidsson (2003) argues that some individuals in some environments generate better busi-ness ideas than others, depending on different factors. Furthermore, it is important to find a fit between individuals, environment and the idea generated. Davidsson (2003) also ex-plains that the nature of the business idea (e.g. complexity) will have impact on the start-up time. Davidsson and Honig (2003) identified that in order to present successful results, the most important factor was to establish and use network contacts, to get access to resources and customers. It is also important to identify, mobilize and cultivate other individuals’ competences. We think that the environment have influenced the founders of FO in the start-up, as dis-cussed in the section about opportunity recognition sequences (Long and McMullan, 1984). Concerning the factors in the environment influencing the start-up as suggested by Davids-son’s (2003), we argue that it is of great similarity to the same approach as discussed by Long and McMullan (1984). Looking at Davidsson’s (2003) idea, he means that people in more creative or stimulating environments are more likely to start businesses, and consider-ing that JIBS is a school which stimulates start-ups, it is likely that it has influenced the founders in the start-up. Looking into the start-up time of FO, it cannot be claimed to be very fast, yet it is not a very complex product. However, we think that the clothing market is of a complex nature, with many different barriers to entry and that this might be a reason why the start-up process has not been faster. Also considering the fact that JE was abroad for one year during the start-up and the fact that all three founders have had school during the start-up is something that most likely have impacted the start-up speed. Furthermore, the founder did not have any previous high level of knowledge of the fashion industry, which makes the start-up process more complex from the founders’ point of view. The use of network contact is something else that has been used during the start-up of FO. The VC has been a central person in the development of both the concept and the busi-ness. Access to resources in the form of contacts and experience was two of the most im-portant reasons for involving the VC in FO. With the VC, FO also cultivated the compe-tence of the VC, using his knowledge of the fashion business. Another important contact that has been accessed is OT, the kite surfer, who is the brother of a friend of the founders. Also with the ex-professional snowboarder, the FO-team used their contacts to exploit a marketing opportunity. This we believe has had a great impact on the start-up. After the es-tablishment we will be able to see if the network contacts will be key resources in the post-start-up phase, even though we will not be able to cover that in this specific study.

1 Introduction
1.1 Introduction
1.2 Background
1.3 Problem Discussion
1.4 Purpose
1.5 Delimitations
1.6 Disposition
2 Research Method
2.1 Data gathering
2.2 Research approach
2.3 Research method
2.4 Action research
2.5 Applied method of action research
2.6 Validity
2.7 Reliability
2.8 General criticism and justification
3 Empirical Findings
3.1 Background to the empirical findings
3.2 April/May 2004
3.3 June/July 2004
3.4 October 2004
3.5 November 2004
3.6 December 2004
3.7 January 2005
3.8 February 2005
3.9 March 2005
3.10 April 2005
3.11 May 2005
3.12 June/July 2005
3.13 August 2005
3.14 Early September 2005
3.15 Mid September 2005
3.16 Late September 2005
3.17 October 2005
3.18 November 2005
4 Frame of References Entrepreneurship
4.2 Innovation
4.3 Creativity
4.4 Modeling the start-up process
4.5 The Fashion Process
5 Analysis
5.1 Analyzing the entrepreneurial capacity
5.2 Innovation and creativity in the team
5.3 Modeling the start-up
6 Conclusions and Final Discussion
6.1 Conclusions
6.2 Final discussion
6.3 Lessons for others
6.4 Suggestions for future research
6.5 Acknowledgements

The strategic path in a creative start-up process

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