American Giant Hoodie

American Giant Hoodie

An article titled “This Is the Greatest Hoodie Ever Made” article appeared a few months ago on Slate.  It’s an interesting article, but what grabbed me most about it is that it’s yet another example of technology disrupting traditional business models.  (The author raved so much about the hoodies by American Giant, that the post went viral and caused fulfillment issues for the business).

The author stated that the key to making the greatest hoodie ever is disintermediation:

Today, when you buy a hooded sweatshirt, most of your money is going to the retailer, the brand, and the various buyers that shuttle the garment between the two. [Not to mention the retail].  The item itself costs very little to make—a $50 hoodie at the Gap likely costs about $6 or $7 to produce at an Asian manufacturing facility. 

American Giant has found a loophole in the process. The loophole allows Winthrop to spend a lot more time and money producing his clothes than his competitors do. Among other things, he was able to hire a former industrial designer from Apple to rethink every aspect of the sweatshirt, from the way the fabric is woven to the color of the drawstrings around your neck. The particular loophole that Winthrop has found also explains why he wanted to chat with a technology reporter: It’s called the Internet.

We’ve seen this kind of disruption in manufacturing, real estate, travel, retailing (especially in some categories, such as books), and now even education… basically anything with an intermediary is ripe for disruption (if you have “Agent” in your job title, be very very scared).  And it’s not just consumer markets that are affected – it’s the talent market as well.  Here in Australia there’s a lot of controversy over the skilled visa (“457 visa”) program.  I wonder how long the debate will be relevant in a world where traditional barriers to accessing knowledge and skills are rapidly falling away?   The challenge for both employers and governments is to adapt to this changing economy and way of working and get the best talent with the least number of artificial barriers.

2 thoughts on “Hoodies, Disintermediation, and the 457 Visa Program

  1. I was recently at a Deloitte conference in singapore for Global Employers. In an innovation session, people were starting to float ideas around, questioning whether and how those traditional barriers could be broken down around employing and moving a global workforce. There was the idea of the truly global employee. How can we make it easier for someone to be a citizen of the world so they can move around freely, or bring the world to them, so that they don’t have to go anywhere at all? While these were interesting ideas, I didn’t get the impression that those working in the space thought them very realistic. I’d love to hear about what really innovative companies are doing in this space to break down those traditional barriers. The only thing I know much of that is enabling this is the concept of the Global Employment Company.

    • Thanks for your thoughts Kate. It is happening – though it doesn’t necessarily follow the traditional model of a full-time employee in an office. IBM’s Liquid program is a good example – and one which I’ll write about in a future post. That’s from the corporate side. From the international side, the Treaty of Rome guaranteed free movement of workers between member states in the EU, and perhaps that’s a model we can learn from (there’s a similar right between Australia and New Zealand). But the technology is way ahead of the legislation – so often the case. I think we’ll find that companies will increasingly seek to find the best knowledge workers, regardless of where they are in the world, and gain competitive advantage by doing so.

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