Tensions are situations where companies are confronted with two or more options which are normally opposed. So in the end, regardless which one you take, you will need to compromise. Fashion brands face many different tensions when dealing with sustainability, but one that seems to be quite fundamental is a tension between short-term and long-term perspective when making business decisions. Brands need to balance short-term goals such as stock market performance and sales with the development of capabilities that allow them to achieve a sustainable competitive advantage and a long-term growth. For example, brands might experience the short-term need of reducing prices of the raw materials they use in production, and at the same time, they need to think how to avoid the long-term risk of the increasing price of cotton as a commodity. This is using cheaper cotton now while also investigating an alternative way of accessing cotton in the future, like investing in five of recycling facilities. Over the last couple of years, we have been studying local text, Alan Fastened Production in Norway. Here we often saw this tension between short-term and long-term perspectives. The few Norwegian textile and fashion manufacturers that have managed to survive during the decades of outsourcing to low cost countries now experience an increase in orders and turnover. This means that they had to hire more people in production, but hiring people is a considerable upfront investment. Not least because it is close to impossible to find skilled workers. To deliver on orders, business owners have to take on the risk of putting more people on the payroll, keeping fingers crossed that orders will keep coming in. However, given the lack of skilled workers, they also have to take on the responsibility of educating new employees in production before becoming a real value to the company. Finding the right balance between hiring more people to secure the long-term growth of the company, and carrying the short-term costs of doing so is a challenge. Another example of this is Delim the Danish underwear brand we mentioned earlier. They face daily tensions between the company's investment in environmental and social responsibility and in making enough profits to survive. This is for example expressed in the owner's decision to use a local dye factory. As the local dye factory that Delim used to use was about to shut down, the bank decided to take over the factory. For their brand ethos, it is key to control the dying stage since they want to control that no hazardous chemicals go into the garments. The dye factory has run a deficit for years, only surviving because of the financial support of the Delim brand. Today, the dye factory is close to being self-sustained and Delim is able to produce a unique product that is organic all the way through all production stages, in contrast to most competitors. Had Delim taken a short-term perspective to its business decisions, investing in the dye factory would not have happened. The short-term versus long-term perspective of companies also has a great impact on the speed of decision-making. Often, businesses need to make fast changes to respond to new competitors, changing consumer preferences, and disruptions in financial markets. However, companies that change too fast can fall into a speed trap where they give more importance to the speed of decisions rather than the content of that decision. These dynamics can end up contributing to the company's bankruptcy because they have made a fast but not well-thought-through decision. The other extreme is the case of companies that grow too slow and fall into a slow trap. In these cases, the quality of content is emphasized at the expense of speed. These companies risk missing opportunities because they spent too much time thinking about decisions. The speed of the fashion industry puts brands under constant pressure to produce and deliver fast, both putting the quality of business decision at risk, and making it difficult to find the time to learn from mistakes. When facing tensions, some brands prioritize economic profits above everything else. Others however use these tensions as a driver for innovation, trying to find a balance between the two opposites. If we take Buff as an example, we see how the company has used the tension between it's passion for nature, and the use of polyester in production as a driver to search for a more sustainable solution. Since the preservation of nature is part of Buff's DNA, they figured that they should align this value with the kind of materials they use in production. Since then, Buff has worked closely with suppliers to create 100 percent recycled polyester fiber. This fiber is now used in many of their head and neck accessories. If Buff's main priority had been to make as much profit as possible in the short-term, investing in fiber development would not have been a good decision. However, taking a long-term perspective help them transform their supply chain towards a more sustainable one, giving them the market differentiation in the long run. The tensions that arise from changing organizational practices towards sustainability will face brands with many questions and hard decisions to make. It will also push them to find new ways of working and new collaborators as they search for alternative ways of running their business as we've seen with Buff. Collaborations is natural way to approach the tensions and challenges that sustainability possess. They take many shapes depending on the challenges that they all face. These could be collaborations between industries, coalitions amongst brands, or partnerships amongst brands, governments and research institutions. In this complex and globalized world, if you want to do things different and better, you have to find the right partners to help you. But as we shall see in the next video, collaborations face tensions on their own.
