Leading Leaders, the Role of CEOs and Boards … Interview with Pablo Isla
May 7, 2024 at IE Business School (Invitation only)
Pablo Isla is best known for his 17 year role as the Chairman and CEO of Inditex, the Spanish multinational clothing company that owns Zara, Pull & Bear, Massimo Dutti, Bershka, and others.
He was born on January 22, 1964, in Madrid, Spain. He studied law at the Complutense University of Madrid and later earned a master’s degree from IE University, and an MBA from the Stanford Graduate School of Business. He began his career in the legal sector, working as a corporate lawyer for various firms in Spain and the United States. He joined Inditex in 2000 as the Director of Legal Services. His deep understanding of corporate law and business strategy quickly propelled him through the ranks.
- Isla is widely praised for his strategic vision and leadership style. Under his leadership, Inditex has become one of the world’s largest and most successful fashion retailers.
- His strategy emphasizes a fast-fashion business model, which involves quickly responding to changing fashion trends and maintaining a high turnover of inventory.
- He is known for his hands-on approach and attention to detail. He is closely involved in all aspects of the company’s operations, from design and production to distribution and retail.
- 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.
In 2017, Harvard Business Review recognized Pablo Isla as the world’s best-performing CEO, by Harvard Business Review. HBR said that what stands out is the single word description employees use to convey Isla’s management style. Humble. It’s how his employees talk about him and how he talks of his approach that’s the most telling. He is known for rejecting a meeting culture and the use of hierarchy to command, control, and ego-feed, instead favouring making decisions informally in partnership with his people as he “manages by walking around”.
In fact Isla is so notoriously shy of being in the spotlight that he doesn’t go to his own store openings. Isla described his approach to HBR: “What we want to be relevant is the company or the store opening, and everything always is the result of the work of a team of people. The strength of our company is the combination of everybody, much more than of any single person. And I can tell you that as a company, we try to be a low-profile company, being humble, of course being very ambitious, but being humble. And if we have a big store opening, we want the store to be the relevant thing, and not any particular person.”
Smartly, Isla focuses on putting the spotlight on what is most relevant to the consumer. The core shopper lusting for a $50 pair of affordable but high-fashion high heels from Zara wants to hear about the new store in her neighbourhood, not about how in control some privileged executive is. And he puts the spotlight on the most relevant employees – the front line store managers who are empowered to make product selections and whom he supports via a robust promote from within policy.
During his tenure as CEO, Inditex experienced significant growth and expansion. The company’s revenue and profits have consistently increased, and it has expanded its presence to over 7,000 stores in more than 90 countries. Inditex’s success can be attributed to its innovative business model, efficient supply chain management, and focus on customer preferences.Under Isla’s leadership, Inditex has also prioritized sustainability and corporate social responsibility, implementing various initiatives to reduce its environmental footprint and promote ethical sourcing and labor practices.
Interview at the Global AMP, IE Business School
So 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 in 2022, part of the answer is passing on his expertise to business students as chair of the international advisory board at IE University.
In a recent FT interview he was asked as group CEO and executive chair, how did he 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.
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.