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Making business headlines today was the announcement that Paul Charron, a 17-year veteran of the $5B fashion apparel and accessories company Liz Claiborne will retire as CEO. Intrigued by the fashion world thanks to Project Runway and reading this recent news made me realize what a fascinating company Liz Claiborne is. It was the first company founded by a woman to be listed on the Fortune 500. The company has more than 40 brands in its portfolio (including hip fashion brands like Juicy Couture and Lucky Brand) that are available at over 30,000 points of sale worldwide. Lastly, Liz Claiborne is an innovative company that started as a low-end disruptor to established women fashion brands.

Liz Claiborne was founded by a group of designers who identified an important unmet Job to be done in the marketplace - helping women conveniently find fashionable ensemble driven clothes that are appropriate for wearing to work. Fashion brands such as Calvin Klein and Bill Blass were getting this Job done but their ensembles were too expensive for the average working woman. Recognizing the importance of keeping the clothes affordable, Claiborne established a low-cost model in the 1980s (at this time they challenged norms in the fashion industry by testing the concept of manufacturing overseas in Asia). They also recognized the importance making the shopping experience of the working woman more convenient and simpler. They were faced with a major stumbling block addressing this challenge. At this time department stores were classified according to items; pants in one department, skirts in another and blouses in yet another. This made it challenging for women to put together a decent outfit, forcing them to move around from one section of the store to another. Furthermore, the buyers at the department stores were not equipped to make purchases from one manufacturer across product lines. Liz Claiborne worked together with retailers to test a model wherein a section of the store was dedicated to a type of occasion (e.g., sportswear, suits that work, etc.). This model laid down the foundation for the brand and lifestyle "store-within-a-store" concept that is very popular today.

Over the last decade, Liz Claiborne has also had success riding out the waves of disruption in retailing. If you are interested in learning more about these patterns of retailing throughout history from specialty stores, to department stores, to category stores, catalogs and now the Internet, we recommend the HBR article Patterns of Disruption in Retailing authored by Clayton Christensen and Richard S. Tedlow.

The Nobel Peace Prize was awarded to Muhammad Yunus and his microcredit institution, Grameen Bank, today, validating the notion that disruptive innovation can be a powerful driver of peaceful, harmonious development. Disruptive innovations often democratize or decentralize a traditionally restricted product or service, enabling mass consumption. This is of course an opportunity for companies looking to create new growth, but in many cases it can also be a liberating force for underserved segments of society, enabling radically new access to the tools and levers of the modern economy. Yunus? microcredit scheme ? which is spreading from his native Bangledash across the developing world ? is a wonderful example of this sort of low-end innovation. Financial services, particularly access to credit, provide the liquidity and leverage people need for enterprise and development. In much of the developing world there are no modern financial services designed for the poor, leaving people prey to loan sharks and stuck in patterns of indenture and poverty. Grameen solves this problem by focusing on what its customers actually need ? small loans with no fixed repayment scheme, delivered to villages by ?mobile bankers? on foot or bike and enforced by a communal structure that limits loan amounts to groups of people based on constituent members? repayment status. These microloans might enable a villager to buy a new cow or school books for a child while building a credit history without getting trapped in a cycle of spiraling debt. They are so well designed that Grameen has long been profitable and boasts a 99% recovery rate; all the microamounts ? from pennies to hundreds of dollars at a time ? have added up to $5.72 billion in loans since inception. A final note: the way in which Yunus happened upon his microcredit strategy is telling. He met a poor rural weaver who told him that she was virtually enslaved to her lenders due to the massive amounts of interest they charged on the tiny loans they gave her. Yunus then spoke to others in her village and realized that the lack of access to affordable credit was their primary impediment to development and enterprise. What?s more, the amounts needed by the villagers were miniscule ? the entire village needed just $27 of capital! He immediately put up his own money and asked the villagers to repay him whenever they could. Within a year they had all paid up, and the idea for a business was born. Going to villages and talking to people in need enabled Yunus?s insight. He listened to the frustrations in their lives and designed a solution to help make things easier. Yunus helped lift millions out of poverty and built a profitable business by understanding and addressing nonconsumers? Jobs to be Done. See: http://nobelpeaceprize.org/eng_lau_announce2006.html http://www.grameen-info.org/