#372: Amancio Ortega: The Genius Behind the Inditex Group

Amancio Ortega, founder of Zara and Inditex, is likened to Henry Ford for revolutionizing the fashion industry through efficiency and customer focus. With a net worth of $120 billion, Ortega's journey began at 12, driven by a desire to support his family. He pioneered fast fashion by integrating technology, design, and logistics to swiftly respond to consumer demands, reducing costs and offering fashionable yet affordable clothing. Ortega's commitment to privacy, simplicity, and a mission-driven life underscores his management style and enduring dedication to work, influencing global fashion retailing profoundly.

• Amancio Ortega is likened to Henry Ford due to his focus on reducing waste, increasing efficiency, and lowering prices to boost sales volume.
• Both Ortega and Ford emphasized the importance of closely monitoring costs and integrating business processes vertically.
• Ortega's approach to the fashion industry mirrors Ford's philosophy in the automobile industry, focusing on the lower market segment to drive demand and reduce costs.

"The fact that Ortega is the Henry Ford of fashion. If you go back and you read Henry Ford's autobiography, or really any biography written about him, you realize that Henry Ford's philosophy was get rid of waste, increase efficiency through technology, lower your prices to increase your volume, and you'll make more money overall."

• This quote draws a direct parallel between Ortega and Ford, highlighting their shared business philosophies of efficiency and cost control.

• A pivotal childhood incident involving his mother's financial struggles motivated Ortega to work and support his family.
• This experience instilled a lifelong mission in Ortega to never let his family face such hardship again.
• Ortega's early work in a shirt store taught him the importance of responsibility and customer focus.

"I was only 12 at that moment. Still holding his mother's hand, Ortega stopped being a child. After reacting with shock to the words he had just heard, he made an irrevocable decision. This will never happen to my mother again."

• This quote emphasizes the profound impact of a childhood incident on Ortega's determination to succeed and support his family.

• Ortega believes that everyone is born for a specific mission, a belief that has driven his relentless work ethic.
• He consistently emphasizes the importance of setting goals and dedicating oneself to achieving them.
• His philosophy of never being complacent and taking risks has been a cornerstone of his success.

"We are all born for something. He often repeats with an absolute conviction that he has a mission to fulfill. That mission started that day when he was 12 years old."

• This quote highlights Ortega's deep-seated belief in having a life mission, which has been a driving force in his career.

• Ortega learned early in his career that losing sight of the customer is detrimental to business success.
• His critique of the fashion industry is its tendency to ignore customer needs, which he sought to address with Zara.
• Ortega's dedication to customer service gave him a competitive edge in the fashion industry.

"The most important lesson he learned at the store was that customers should never be lost sight of."

• This quote underscores Ortega's belief in the critical importance of customer focus, which has been integral to Zara's success.

• Ortega founded his first company, Goa, at age 27, leveraging his industry contacts and family support.
• Within 10 years, Goa had grown significantly, but Ortega was dissatisfied with merely manufacturing clothing for others.
• In 1975, he opened the first Zara store to directly control the customer experience and product offerings.

"We couldn't sell a nice dress, no matter how nice it was. If what that customer asked for at the moment was something else. I was convinced that I had to dominate the customer and at the same time be by their side."

• This quote illustrates Ortega's realization that direct customer engagement and control over the retail process were essential for success.

• Ortega's desire for control led him to pursue vertical integration, which he termed "rational integration."
• By controlling all aspects of his business, Ortega ensured that Zara could quickly respond to customer demands and market changes.
• This strategy allowed Zara to become a leader in the fast fashion industry.

"I was convinced that I had to dominate the customer and at the same time be by their side. But I would only achieve it if I managed to sell to them directly."

• This quote reflects Ortega's commitment to controlling the entire customer experience, which was a key factor in Zara's growth and success.

• Ortega is likened to Henry Ford in fashion due to his revolutionary idea of making fashionable and affordable clothes.
• His core idea was to fill a gap in the textile business by inventing something unique from existing market offerings.
• Ortega's goal was to enable the entire world to dress well by making and distributing clothes that were both fashionable and affordable.

"Since I started working, I had an idea that obsessed me. Why can't I invent something different from everything else on the market?"

• Ortega's obsession was to create something unique in the fashion industry, similar to Ford's vision in the automotive industry.

"The problem that he's trying to solve is how do you make and distribute clothes that are fashionable and affordable?"

• Ortega aimed to revolutionize fashion by making it accessible and affordable, unlike the existing expensive fashion industry.

• Ortega emphasized working backward from the customer, maintaining a close relationship to understand their desires.
• Unlike designers like Dior or Chanel, Ortega focused on manufacturing what the customer wanted rather than imposing his vision.

"It's better to start with the customer and work backwards. I'm going to manufacture what the customer wants."

• Ortega's strategy was to prioritize customer desires over personal design preferences, ensuring responsiveness to market demands.

"He has to have a very tight relationship with the customer to be able to react fast."

• Ortega's close customer relationship allowed him to quickly adapt to changing fashion trends.

• Ortega computerized his company in 1974, ahead of his first Zara store, showcasing his foresight in leveraging technology.
• He invented a logistics and distribution system to respond immediately to changing customer desires, crucial in the fast-paced fashion industry.

"He has to invent the logistics and distribution system that enables responding immediately to customers' desires."

• Ortega's logistics system was designed to quickly adapt to the dynamic nature of fashion trends, ensuring timely delivery of fashionable items.

"Ortega had an obsession to give the customer what they wanted quickly enough to meet their demand and at a price attractive enough to increase the frequency of purchases."

• Ortega's business model focused on rapid response to customer demands, integrating design, manufacturing, and distribution for efficiency.

• Ortega integrated design, manufacturing, distribution, and sales, reducing production time and costs.
• His model allowed Zara to continuously modify products according to customer demand, unlike traditional fashion companies with fixed collections.

"Ortega saw from the beginning a clear distance between the production process, which was too long and not dynamic enough, and the end consumer."

• Ortega identified inefficiencies in traditional fashion processes and sought to streamline them for better responsiveness to consumer needs.

"Turning the customer into his source of privileged information and not just the receiver of a commodity."

• Ortega's approach transformed the customer from a passive recipient to an active participant in the fashion process, driving product development.

• Ortega's approach defied industry norms, showing that innovation is possible even in mature sectors.
• He focused on finding out what customers want, designing and making clothes quickly, and efficiently distributing them.

"I refuse to recognize that there are impossibilities. I cannot discover that anyone knows enough about anything on this earth definitively to say what is and what is not possible."

• Ortega, like Ford, believed in challenging perceived impossibilities, pushing the boundaries of innovation in the fashion industry.

"It has broken schemes and has shown that there are no mature sectors where everything is already discovered."

• Ortega's model demonstrated that even established industries could be revolutionized with innovative thinking and a willingness to challenge the status quo.

• Inditex focuses on current fashion trends by employing people globally to observe street fashion.
• Designers at Inditex headquarters in Spain analyze fashion magazines to identify dominant trends.
• Once trends are identified, Inditex designs and begins manufacturing quickly to meet customer demands.

"What they are doing is they're tracking the trend. They don't want to know what you're going to wear two years from now. They want to know what you wear right now."

• Inditex prioritizes current fashion trends, ensuring their products are aligned with what consumers are currently wearing.

"What their job is they have to spot the dominant trends. So once they identify what the customers want, they design them and then they start manufacturing and making them."

• Designers are tasked with identifying and creating products based on the latest fashion trends to meet customer demands promptly.

• Inditex is described as a manufacturing logistics company that leverages technology to gain an advantage.
• The logistics process is highly automated, with minimal human intervention, ensuring efficiency.
• The company has a sophisticated system connecting multiple locations for seamless product distribution.

"Zara or Inditex, is a manufacturing logistics company that uses technology as an advantage."

• Inditex integrates technology into its logistics to enhance efficiency and maintain a competitive edge.

"Modern machines with hardly any trace of humans operating them. Our mouths literally opened in front of the futuristic panorama that we had before us."

• The automation within Inditex's facilities is advanced, showcasing minimal human involvement and high efficiency.

• Inditex's headquarters is located in a rural area of northern Spain, which is seen as a strategic benefit.
• The company emphasizes proximity manufacturing, producing goods closer to headquarters for faster distribution.
• This strategy allows for rapid inventory turnover, increasing profitability.

"Zara also produces in those countries. But more than half of Zara's production comes from what they call proximity."

• Inditex focuses on manufacturing closer to its headquarters to enhance distribution speed and inventory turnover.

"The closer they manufacture, the more rapid the distribution in the stores. The more rapid distribution of the stores, the more they can turn over their inventory."

• Proximity manufacturing is key to Inditex's strategy, enabling faster distribution and increased profitability through rapid inventory turnover.

• Ortega, the founder, tapped into the human desire for novelty, revolutionizing the fashion industry with fast fashion.
• Zara's rapid distribution system ensures new products are available frequently, creating a sense of scarcity and urgency among customers.

"Ortega is the inventor of fast fashion. So fast fashion, it's buying the latest clothes to use and discard without guilt the following year."

• Ortega pioneered fast fashion, capitalizing on the human desire for novelty and frequent product updates.

"They have created an atmosphere of scarcity and opportunity."

• Zara's strategy creates urgency among customers to purchase immediately, knowing products may not be available later.

• Ortega views prime retail locations as a form of marketing, spending significantly on location rather than traditional advertising.
• The strategy involves renting prime locations to maintain flexibility and ensure the best store placements.

"He viewed real estate as a form of marketing. And advertising."

• Ortega's approach involves using prime retail locations as a marketing strategy, reducing reliance on traditional advertising.

"Prime retail location is advertising. Because if you are just, again, just where the people are, where they're walking by, your stores become a demo."

• By securing prime retail locations, Zara effectively uses these spaces as a form of advertising, showcasing products directly to potential customers.

• Ortega emphasizes simplicity and privacy, focusing solely on work and minimizing public exposure.
• He values learning from others and considers his work as his university, compensating for his lack of formal education.
• Ortega maintains a hands-on management style, frequently moving through different parts of the company to stay informed.

"You don't realize something very important. I am nobody. I consider myself a worker who is immensely fortunate to have done what he wanted in life and to continue doing it."

• Ortega maintains a humble perspective, focusing on his work rather than seeking public recognition.

"I spend my days moving from one part of the factory to another to see how everything is going. If I'm not in the warehouse, I'm in design. I'm interested in the entire process."

• Ortega's management style is hands-on, ensuring he is involved and informed about all aspects of the company's operations.

• Ortega insists on being called by his last name only, reflecting a preference for simplicity and equality among colleagues.
• He avoids raising his voice, demonstrating a leadership style that is calm and considerate.
• His sensitivity to scorn from a young age influenced his dedication to work and his empathetic approach to leadership.

"I never raise my voice because I don't like others to suffer."

• Ortega's calm demeanor is rooted in empathy and a desire to avoid causing distress to others.

"He was just very sensitive to scorn."

• His sensitivity to criticism from a young age fueled his drive and work ethic.

• Ortega's work ethic is exemplified by his continuous dedication to work, even on holidays and personal milestones.
• His approach to management involves being present and engaged with employees, knowing them by name, and valuing their contributions.

"Why should I stop coming in today? I do what I want to do. I do what I always do, work."

• Ortega's commitment to work is unwavering, emphasizing his passion and dedication.

"I don't have an office. I've never had one. My work is not among the papers, but in the whole factory."

• His management style is hands-on, valuing direct interaction over traditional office work.

• Ortega actively seeks feedback and criticism to improve the company, valuing honesty over flattery.
• He believes in the importance of continuous improvement and is open to suggestions from others.

"Why don't you explain to me the things about Zara that you don't like. I highly value your opinion, and I would like you to critique what could be done better."

• Ortega values constructive criticism to drive improvement within the company.

"Great players want to be told the truth."

• He aligns with the philosophy that honesty and truth are crucial for growth and success.

• Ortega views the store as the core of the company, emphasizing customer service and satisfaction.
• He seeks to create a company with a soul, focusing on inclusivity and accessibility rather than exclusivity.

"We are a chain of stores with a company attached. We live so that the store is focused on selling. All the rest of us are at your service."

• Ortega prioritizes the store's role in the company's success, highlighting its central importance.

"I wanted a company with a soul."

• His vision for Inditex is to build a company that is meaningful and connects deeply with its values.

• Ortega's emotional reactions to the success of Zara stores in New York and Paris reflect his deep personal connection to the company's achievements.
• His ambition and drive are seen as both a strength and a fault by those around him.

"There were so many people waiting outside that it made him cry."

• The success of his stores evokes a strong emotional response, underscoring the personal significance of his achievements.

• While Ortega is known for his stubbornness, he is also willing to listen and adapt when persuaded by others.
• His decision-making process involves balancing his convictions with the input of his team.

"Ortega and I were in total agreement that it was important to buy it, but the rest of the company did not see it that way... And the final result was that we didn't buy it."

• This example illustrates his ability to be flexible and consider the collective input of his team.

• Ortega values simplicity and common sense in both life and business, believing that overcomplication should be avoided.
• His personal philosophy centers around doing what he enjoys and maintaining a continuous desire for growth and learning.

"Simplicity is the heritage of geniuses."

• He believes that simplicity is a hallmark of true intelligence and effectiveness.

"What keeps me going after all these years is to learn and to grow. I continue observing what happens in the world and I listen. Work is what I enjoy most."

• Ortega's passion for learning and growth drives his continued engagement with work well into his later years.