What do you do after hanging up your jacket as boss of the world’s biggest clothing retailer? For Pablo Isla, who stepped down from running Inditex a year ago, part of the answer is passing on his expertise to business students as chair of the international advisory board at Madrid’s IE University. And yes, he is still wearing his former employer’s clothes.
When we meet at IE, he’s in a navy blue suit and shirt by Massimo Dutti, the group’s affordable luxury brand. “I was buying this label before I joined Inditex, and I have many of those suits, most of them navy blue,” Isla, 59, says.
He’s by no means the only repeat customer. During his 17-year tenure at Inditex, the group’s capitalisation rose sixfold. In 2021, Isla’s last full year leading the retailer, Inditex generated a net profit of €3.24bn on a turnover of €27.72bn.
As chief executive of the group, and executive chair, how did Isla implement such a successful growth strategy in an already huge company?
One key point is that Inditex, whose brands include Zara and Pull & Bear, has always kept its supply lines local and nimble. “If you have the fabric, you can send this fabric to a factory in Galicia or in Morocco, then you could have in two weeks the garment coming back to the logistics platform and being sold,” he says.
The company’s capacity to produce sought-after garments on a very quick turnround became a template that other high-street retailers have since tried to imitate. Inditex produces about half of its clothing close to home in factories near its headquarters in the town of Arteixo in Galicia, north west Spain, as well as in Portugal and Morocco.
One of Isla’s most significant improvements to this process was to shepherd the development of technology that turned a largely bricks and mortar operation into a hybrid retailer, using its global network of 6,400 stores as display windows and mini distribution hubs for people buying garments on their smartphones.
The move was successful, and by 2021, a quarter of Inditex’s sales came from online purchases. The global financial crash, the eurozone debt crisis and, most recently, the Covid-19 pandemic, reduced consumer spending and cost inflation ravaged the sector. But under Isla, the retailer also expanded its store network while many rivals closed theirs.
Isla won’t talk about Inditex’s competitors. “I will never talk about another company, even with investors.” But he believes there is more than one way to succeed in any market. “In business, you thrive not just because of the business model but your execution of that model. But it is nearly impossible to be successful if you try to replicate another company’s business model without having the right culture.”
He admits Inditex has had a degree of luck in its success with sales of particular garment designs, such as the white polka dot dress produced by Zara in 2019 that became a social media sensation. “In fashion there is always an element of surprise,” he says. “It is something to do with emotions. That is why flexibility is so relevant.”
While keeping things nimble, he also prioritised focusing on the long term bonds. “Some of these suppliers we have had relationships with for over 20 years, so it is very integrated. Also Inditex owns 10 factories and these factories are those that are in contact with these suppliers all the time.”
Inditex operates a very flat dispersed management structure, giving country managers the power to make decisions quickly. “I don’t know what the best word is in English but something like the granularity. When you think about the Inditex buying process, there are hundreds of buyers, so each buyer is not dealing with so many factories,” Isla says. “With this granularity, at Inditex it is not so centralised a supply chain function.”
When he was CEO, Isla shunned the spotlight. “I thought it would be better for the company to be the main character,” he says. “Of course I was doing press conferences. It was not that I was out of touch with the media. I prefer to be low profile.” Low-profile did not mean that his performance went unnoticed: he is one of the few people to top the Harvard Business Review’s ranking for best performing CEO for two consecutive years.
Now he talks openly about how important it was to support the company’s internal culture as leader. “For me, what is essential is how important it is to lead with values,” he says. “Honesty, reliability, respect, transparency, diversity. With your employees, investors, media, suppliers and all the stakeholders. I have always tried to be very reliable, somebody you can trust.”
He also worked hard to diversify the company’s leadership, he says, noting that he appointed women as company heads in key markets, including China, Japan, Australia and Canada. “By diversity, I mean to promote it at every level inside the company. Gender diversity and race diversity.”
Isla cites as his leadership hero his former boss, Inditex founder Amancio Ortega. The two were in daily contact while Isla ran the retailer and they still speak frequently, he says. “It is the most similar to being family without being family. I would say, at the beginning it was quite obvious, the level of understanding between us. We are now very close friends.”
It has been reported that when Ortega was looking for a chief executive in 2005, he set a condition that anyone selected had to agree to relocate to Galicia, and as a consequence several candidates withdrew from the process.
At the time of his appointment, Isla, a lawyer by training, had been chair of Altadis, a Spanish tobacco group (now owned by Imperial Tobacco). He says that he not only expected to be at Inditex for a long time but had no end point in mind when he joined. “Whatever I do, I think about doing it indefinitely. I think it is the only way of dealing with your professional life.”
When Isla stepped down in 2022, Ortega’s daughter Marta took over as chair, while the CEO’s job was handed to Óscar García Maceiras, general counsel and secretary of the Inditex board.
Three questions for Pablo Isla
Who is your leadership hero?
Amancio Ortega. One hundred per cent. I admire his vision to create a company with a disruptive business model. Also, the way he has always been able to get the best of everyone around him [and] his permanent ambition to improve. Everything can always be better.
What was your first leadership lesson?
It was from my father. He had several executive positions. There was always a level of commitment, a level of ethics. Also, he had a practical vision about any business problem, the orientation to the customer.
If you were not doing what you do now, what would you have done?
I became a lot more interested in management, but I also love the legal profession. If I couldn’t have been a CEO, I probably would have become a senior partner or I would have created my own law firm.
If I think in a completely different direction, perhaps I would have been a movie director. It is a big passion of mine.
When I ask Isla whether he had any involvement with the succession planning that appointed Maceiras, he says: “That is totally private. But I have total trust in the way we have organised the succession and the management team for the company.”
Isla also refuses to be drawn on saying anything about Marta Ortega. “I have known Marta since she was a university student, and we have shared many family moments. But I never in life more generally like to comment, or criticise, other people. I prefer to stay quiet.”
Post-Inditex, Isla retains a board position at Nestlé, the Swiss consumer goods group, and is a trustee of the Amancio Ortega Foundation.
At IE University — which is the FT’s partner in Headspring, an executive education company — Isla can share his management experience with students. But he doesn’t see himself as a regular teacher standing in front of an auditorium, and prefers a more fluid approach. He wants to be in conversation with the dean of the business school in front of new students, followed by a question session. “This kind of interaction I like . . . but I see myself very much like this rather than becoming a professor.”
And he is also finding time for another of his passions, the cinema. Isla is co-founder of a film-production company. “When I was starting in university, I was going every afternoon. When I began to rent videos, I was always the shop’s best customer.” It’s a nod to the enduring power of retail in his life.