Page 48 - Harvard Business Review (November-December, 2017)

ost retail CEOs begin their careers in merchan- malls; we don’t want to be in every one. We are very
dising, choosing products for stores before they selective, in the U.S. and around the world. And our
Mclimb into the C-suite. Pablo Isla followed a dif- online operations and stores are highly integrated—
ferent path, attending law school and working at a they have been since we launched our website.
bank before becoming the CEO of Inditex, in 2005.
Since then, even as many traditional retailers have How is social media changing the way people
faced challenges from e-commerce, he has led a dra- approach fashion?
matic global expansion: Today the company’s eight People are more connected and aware. It’s made fash-
brands have 7,300 stores in 93 countries. Isla spoke ion more global—everybody knows what is going on
with HBR about what makes Inditex different from in all the different areas of the world. If denim be-
competitors. Edited excerpts follow. comes trendy in one market, other markets are likely
to follow. This is a good thing for us. Our brands have
HBR: You’re known for an informal management 100 million social media followers around the world.
style and for avoiding meetings. How do you
manage without them? Your company’s founder, Amancio Ortega,
ISLA: We have a very flat structure. We don’t have many controls more than half of the voting stock at
formal meetings. In fact, we don’t even have a formal Inditex. How does that change the way you lead?
management committee. People are empowered— It’s very positive. Having the full support of our
they make decisions themselves after a lot of infor- founder and our board allows us to take a long-term
mal conversation and walking around. Also, we focus approach and invest in the business rather than focus
on teamwork and avoid having star employees. Last on short-term results.
year we promoted more than 25,000 of our 160,000
employees; that helps create an entrepreneurial spirit. Does that ownership structure affect the way you
approach sustainability?
Let’s talk about your industry. Many observers Very significantly. Every decision we make, we con-
classify Zara, your flagship brand, as a fast- sider sustainability—not just me personally, but also
fashion company, one that competes with the board and all the employees. Sustainability in-
Sweden’s H&M and Japan’s Uniqlo. Do you cludes the quality of our products, what they’re made
agree with that comparison? from, working conditions for the people making them,
I don’t like labels. We have our own very specific busi- and the ability to recycle them. We have a public com-
ness model. It’s based on the ability to react flexibly mitment that all our stores will be eco-efficient in the
within a fashion season. We use what we call proxim- year 2020. That means they will use 40% less water
ity sourcing, producing most of our goods in Spain, and 20% less energy and that all materials will be en-
Portugal, and Morocco; this allows us to make deliv- vironmentally certified. Today 70% of our stores meet
eries at the very last minute. We pay a lot of attention that standard. Keep in mind that our workforce is very
to the design of every single product. It is not just a young. These people are committed to thinking about
question of being fast. It is the concept of trying to the planet and contributing positively to society.
know what our customers want and then having a
very integrated supply chain among manufacturing, As a CEO who was successful early in your
logistics, and design to get it to them. It has more to career, is there a danger that you’ll become
do with accuracy than with speed. We make deliver- less willing to take big risks, to avoid imperiling
ies twice a week to every store. We use technology that track record?
and algorithms that propose what garments to stock, With our business model, that’s nearly impossible. We
but the store manager can change the order, because begin each season with the collections, building the
we want the store manager to feel like the owner of product from zero. That requires a very creative culture
the product. It’s a combination of technology and in which people feel free to take risks.
human touch.
You’re 53. How long will you remain at Inditex,
How are mall closings affecting your business? and what might you do after you leave?
I say the same thing about malls that I say about physi- I said in a public interview several years ago that I hope
cal stores: High-quality ones will remain very relevant to spend my whole career at Inditex. This is the most
in retailing. In the United States there are many, many fascinating job you can find.

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