The management style of Amancio Ortega
IT IS a short walk from a tiny shop with peeling
yellow paint in downtown La Coruña, in northern Spain, to a dazzling
five-storey store, opened in September by Zara, by far the world’s most
successful purveyor of “fast fashion”. In this stroll across three city blocks,
the career of Amancio Ortega unfolds: from teenaged apprentice in the corner
shop, Gala, a men’s clothing business, to Europe’s richest entrepreneur, the
majority owner of one of its best-performing firms. CEO,
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According
to one employee of Zara who works with him, “the true story of Amancio Ortega
has not been told.” Mr Ortega, the son of an itinerant railway worker, who
started at the corner shop aged 13, had a basic upbringing: an ex-colleague
says he talks of meals of “only potatoes”. He has lived mainly in Galicia, a
relatively poor region with no history in textiles. Yet there, in 1975, he
founded Zara—a manufacturer-cum-retailer that, along with its sister brands,
has over 7,000 shops globally.
Mr Ortega (pictured) is now
80 but he remains energetic and involved in the business (if uninterested in
wearing trendy clothes). He owns nearly 60% of Inditex, the holding company of
Zara and the other chains, which is worth some €100bn ($106bn). According
to Forbes magazine, in September his total assets, of nearly $80bn
including his properties and other holdings, briefly surpassed those of Bill
Gates.
The manner in which he rose
does not fit the usual template. His lack of formal education has profoundly
affected his management style. Those close to him confirm that he does
read—novels and newspapers—but he is reportedly ill-at-ease with writing at
length. He has never had his own office, desk or desktop computer, preferring
to direct his firm while standing with colleagues in a design room of Zara
Woman, the flagship line. One former long-term CEO of Inditex, and Mr Ortega’s
business partner for 31 years, José María Castellano, says that his ex-boss’s
working method is to discuss things intensely with small groups, delegate
paperwork, listen hard to others and prefer oral over written communication.
This preference for close
personal interaction may even have helped him concoct the formula behind Zara’s
success. At a time when the fashion industry mostly outsourced production to
China and other low-wage countries (as it still does), Mr Ortega decided to
keep most manufacturing close to home. Some 55% happens in Spain, Portugal and
Morocco—near the firm’s main markets. That in turn allows twice-weekly
deliveries of small but up-to-the-minute fashion collections to every store.
Inditex’s share price has soared tenfold since its flotation in 2001,
outstripping rivals such as Gap and H&M.
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His leadership style
appears to favour extreme introversion. A video from a surprise 80th birthday
party in March shows him tearful and backing off from assembled staff. He
almost never speaks in public nor accepts national honours—aside from a
“workers’ medal” in 2002. Colleagues say he resented a rare biography of him,
from 2008, by a fashion journalist, Covadonga O’Shea. So few photos existed of
him pre-flotation that investors who visited awkwardly confused him with other
staff. But that low profile means there is room for other top executives to
shine. Inditex’s chairman and CEO, Pablo Isla, has run things since 2011, yet
Mr Ortega shows up to work every day. In many firms a professional manager
might chafe against the presence of a revered founder, but there are no such
reports at Inditex.
In one respect at least, Mr
Ortega is more typical of European billionaires. Like other rich recluses—such
as Ingvar Kamprad, the Swedish founder of the IKEA furniture chain—he goes in
for only limited philanthropy. He pays for 500 annual scholarships for Spanish
students in America and Canada and gives to Catholic charities and for
emergency relief. Larger-scale philanthropy would bring unwanted publicity.
Like others in southern Europe, he may also be wary of inviting political
attacks, such as when Pablo Iglesias, of the left-leaning Podemos party,
insinuated during a lament about inequality that Mr Ortega was a “terrorist”.
The managers of his wealth,
which grows by some €1bn a year, say they are now scrambling to have slightly
less dependence on Inditex, in line with normal investing principles—a
difficult task because Mr Ortega only wants property, an investment “he can
touch” but which is time-consuming to buy and manage. This month he spent $517m
on Florida’s largest office tower, the Southeast Financial Centre in Miami.
Most of his income is still
from Inditex dividends. On December 14th the firm reported results that, once
again, met high expectations in financial markets. The numbers will have
doubtless gratified the limelight-loathing Mr Ortega, who is said in private to
chide others to admire his company, not himself.
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