#372: Amancio Ortega: The Genius Behind the Inditex Group
Nov 29, 2024
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Dive into the life of Amancio Ortega, the mastermind behind fast fashion and Inditex. Discover how his humble beginnings fueled his ambition and led to revolutionary changes in retail. The podcast highlights his philosophy of hard work, humility, and a deep understanding of customer needs. With insights into his unique management style and relentless commitment to his vision, Ortega's story serves as an inspiring guide for future entrepreneurs striving for success in a competitive world.
Amancio Ortega's innovative business model revolutionized the fast fashion industry by prioritizing rapid response to consumer trends and affordable pricing.
Ortega's relentless work ethic, shaped by childhood hardship, drove his commitment to his company's growth and mission from an early age.
His unique leadership style, characterized by humility and accessibility, fosters a collaborative culture focused on continuous improvement within Inditex.
Deep dives
Amancio Ortega: The Henry Ford of Fashion
Amancio Ortega, with a net worth of around $120 billion, has been compared to Henry Ford due to his innovative approach in the fashion industry. Both entrepreneurs emphasize reducing waste and increasing efficiency, focusing on vertical integration to control costs while making products affordable. Ortega mirrored Ford’s drive to serve the lower end of the market, believing that high volume sales would drive costs down and ultimately generate more profit. This philosophy of watching costs and streamlining processes shared a commonality with other successful entrepreneurs throughout history, showcasing the importance of cost control as a competitive advantage.
Childhood Influence on Ortega's Work Ethic
Ortega's childhood played a significant role in shaping his relentless work ethic and business mindset. After a traumatic experience in which he witnessed his mother being denied a loan as they struggled financially, he resolved never to let his family face such hardship again. At the age of 12, he began working immediately to support his family, a decision that marked the beginning of his journey into entrepreneurship. This early sense of responsibility and determination to provide not only set the foundation for his future success but also instilled in him a lifelong mission to work tirelessly for his goals.
Innovative Business Practices and Fast Fashion
In 1975, Ortega launched Zara by pioneering fast fashion, a concept that transformed the textile industry by enabling quick responses to customer demands. Unlike traditional fashion processes that could take over a year for design and production, Ortega’s model allowed Zara to identify trends and deliver new products to stores in as little as 15 days. By integrating design, manufacturing, and rapid distribution, Ortega prioritized customer desires, fundamentally changing how fashion was perceived and consumed. His approach not only catered to consumer demands but also maintained affordable pricing, proving that it was possible to merge fashion with efficiency.
Technological Integration in Fashion
Ortega's forward-thinking approach included the early adoption of technology to strengthen operations within Inditex. He anticipated the need for sophisticated logistics and an inventory system well before many competitors in the fashion industry, enabling rapid turnover and adaptation to market changes. By investing in state-of-the-art logistical facilities and computerized systems as early as 1974, Ortega ensured that Zara could respond swiftly to consumer trends and preferences. This strategic use of technology established Inditex as a leader in the fashion industry, with the ability to efficiently distribute products worldwide.
Leadership Style and Philosophy
Ortega maintains a unique leadership style characterized by humility, accessibility, and a focus on continuous improvement. Unlike typical corporate executives, he prefers simplicity and direct communication, often rejecting formal titles and encouraging open dialogue with employees. His dedication to the company and its employees is reflected in his belief that 'people should be loved' and that the store is the heart of the organization. Ortega’s desire to remain grounded—prioritizing work over accolades—demonstrates his commitment to building a collaborative culture where feedback and adaptation are essential for growth.
Amancio Ortega is one of the wealthiest people in the world. Ortega is the founder of Inditex, a pioneer of fast fashion, an entrepreneur with over 60 years of experience, and has created a business model that is studied in universities that he could not access. His life story is inspiring, educational, and full of valuable ideas for future generations of founders. This episode is what I learned from reading This is Amancio Ortega: The Man Who Created Zara by Covadonga O'Shea.
I remembered a comment that Luis Miguel Dominguin made to me years ago, when he was at the peak of his glory and his son, still a child, played in the garden of his house. "This child will never be a bullfighter. To face a bull you have to go hungry.”
The important thing is to set goals in life and put all your soul into fulfilling them.
I have dreamed of growing the company since I was nobody.
We gave it every day. My priority has always been the company, and I have committed myself to it, with full dedication, from day one.
Ortega is a man of mission. He is so convinced of what he is and what he has to do.
I was convinced that I had to dominate the customer.
Ortega starts with the customer and work backwards: “I am going to manufacture what the customer wants.”
I met Ortega when Zara did not exist. He only had the factories. In those years when nobody thought about technology within our sector, in which there was almost no computer science or mobile phones, he wanted to have a good team in technology.
He built a groundbreaking and avant-garde textile distribution company.
Inditex's business is centered around one simple premise – to be quick at responding to the market.
Their main advantage: an astonishing ability to detect fashion trends, assimilate them, and make them a reality on the hanger at a bargain price, and all in less than 15 days.
Ortega wanted to integrate design and manufacturing first, then complete the chain with distribution and sales in his own stores, turning the customer into his source of privileged information and not just the receiver of a commodity.
I refuse to recognize that there are impossibilities. I cannot discover that any one knows enough about anything on this earth definitely to say what is and what is not possible. — Henry Ford
There are no mature sectors where everything is already discovered, but rather companies or managers with closed minds who resist innovation.
Logistics is a fundamental part of the circle that completes Inditex’s vertical integration process. Inventory control in all locations around the world is as important as getting the design right and producing in a short time; that's why Inditex has invested time, effort, and a lot of money in establishing logistics centers with the latest technologies.
Traditionally, the seller ensures high margins at the beginning of each season, but endures several months of discounts to get rid of stock; the customer knows, therefore, that in the long run they will get the same items at lower prices. Ortega's company renews its clothes in stores around the world every week and twice weekly in Europe. The buyer knows that they will always find new items, but probably won't be able to get what they tried on seven days ago. In this way, customers understand that if they see something they like, they have to buy it immediately, because in a few days it will no longer be in the store. It's about creating an atmosphere of scarcity and opportunity.
Ortega has created a business model that is studied in universities to which he could not access.
I consider myself a worker who is immensely fortunate to have done what he wanted in life and to continue doing it.
It's the most beautiful company in the world.
I want a company with a soul.
Ortega stayed focused on his one great objective: To enable the entire world to dress well.
Ortega refuses to settle halfway to excellence.
He is a man with a lot of personal charm because he is not false. He does not have ulterior motives. He can be very tough, impulsive, very sure of himself, but very truthful.
Ortega does not like to lead sitting in a chair.
He has never liked praise. More than once I've told him: 'What a beautiful collection, how happy the customers are!', and he always interrupts me and asks me: 'Now tell me what's wrong.”
When asked on his advice for future generations of entrepreneurs: “The first thing is that you like what you are doing, that you are passionate about your work. I insist on this idea because it is very important. It has to be something that you would almost pay to do.”
Simplicity is the heritage of geniuses.
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“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth
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“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth
