An organizational design as an enabler of growth for a circular fashion business

A 7MM € European scaleup in circular fashion space “on a journey to more sustainable consumption” had experienced strong organic growth over the entire existence of the business. The founders had carried out several successful financing rounds to obtain external capital to support the strong growth of the business and further geographical expansion during the past years. Along their journey they had innovated a unique business model combining both private and business thrift sellers of secondhand clothes, and charity organizations, with private buyers deploying a consignment revenue model with a capability of processing in excess of 10K bags of secondhand clothes per week.

As the founding team got bigger combined with number of new key recruits, the management of the business realized that in order to support further growth they also had to transform their old organizational structure from a lean startup, which had minimal, if any, documented processes or workflows and where all the information was readily available and shared amongst all the employees, to an organization model more suitable for rapidly growing scaleup business with the ability to deliver value for rapidly growing consumer base, various fashion brands, and B2B clients directly. The dilemma that the management faced was – “how to change the organizational structure, create more formal processes and workflows, but still keep the agile startup atmosphere which was the foundation of continuous innovation?”

HKH Management Consulting (HKH) was invited to advise and help the scaleup and its founding team to evaluate alternatives for how to redesign the organization. Over a period of nine weeks the HKH team approached the assignment using a structured 3-phase approach for carrying out organizational design changes and redesigns. Based on the analysis, the HKH team made a recommendation for the new organizational design, which would allow the client to make their strategy happen in bigger scale (as a result of growth), continue to boost its performance, adapt to ever changing conditions in the marketplace dynamics, improve coordination and decision-making (seen pivotal by the founders as the business grew), and improve risk management capabilities.

The comprehensive 3-phase approach that the HKH team deployed during the assignment included, firstly, a business case for the change, secondly, an assessment of the current state of the organization and design for the future state, and thirdly, the change roadmap and implementation schema. The business case phase included a detailed look into the business opportunity and suggested solution, project objectives, scope and approach, project deliverables and business outcomes, strategic alignment, dependencies and constraints, risk assessment and mitigation, change impact assessment, project costs, benefits, simulated NPV (Net Present Value), and key success factors and KPI’s. The assessment of the current state and design of the future state was done based on evaluation of six different dimensions: 1) capabilities, 2) structure and governance, 3) talent management, 4) processes, 5) technology, and 6) culture. The third, and final phase, included a detailed roadmap how to reach the target state, change programs and projects governance, change project initiation, project implementation, and tools for post project evaluation.

Case outcomes

After completion of the assignment, the client had a structured plan for how to initiate various internal projects for the organizational redesign journey combined with effective tools to use for internal communications in order to keep all employees aligned to the organizational change and ultimately strategic objectives. Two years after initiating the change, the client has successfully transformed its organizational model, internal processes and workflows. They have continued their strong organic growth (+50% year-on-year topline revenue growth) while having been able to keep their innovative “startup spirit.” The company has also been recognized by investors as a class-act example of a scaleup that has been successful in transitioning its operating model to one that is better aligned with a business experiencing rapid growth. A recognition that is achieved by only the most viable startup businesses.

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