Zara Continues to Innovate. Lesson Learned: Be the Best Practice, Don't Just Follow It.

I'm always amazed and perplexed by companies who somehow believe that they can follow their way to glory.  Basically, they seem content to follow "best practices" instead of becoming the "best practice".  But as everyone has probably realized, there is no such thing as a world class follower, and if everyone is following the same best practice, isn't everyone just in a race to keep up with each other?

And that is why I find clothing retailer Zara so refreshing.  They pioneered "fast fashion" which essentially lets them get the newest, latest fashions to stores more frequently.  To do this, they made changes to how they manufactured, handled their supply chain, marketed their products, etc.  It was a multi-dimensional approach which worked and made Zara the best practice.  They didn't listen to the conventional wisdom and did things their own way.

As a result of their success, others followed their established best practice.  And as the Wall Street Journal reported stated, "Inditex (the parent company of Zara) is responding to a predicament shared by other companies that come up with game-changing formulas: Eventually competitors catch up, forcing the pioneers to do even better to keep their edge. (Please see related story on page B9.) Low-cost carrier Southwest Airlines Co. is making big changes to fend off rivals that have copied its efficient operating model. Inventory-control methods at Wal-Mart Stores Inc. are being mimicked around the world, and Google Inc. is updating its search engine to keep users loyal."

So now that others are catching up, Zara figured it was time to push ahead again (instead of resting).  And there efforts come at a time of economic uncertainty where many organizations are worried about their performance and cutting costs instead of innovating.  Zara continues to forge ahead with efforts as reported in the Journal including:

• "The company is pressing ahead with its expansion plans even as consumers are slowing down. In the U.S., retailers had their worst monthly sales results in nearly five years in January, and some chains are planning to close stores and cut jobs...In the last 12 months Inditex added 560 stores, including entering new markets in Croatia, Colombia, Guatemala and Oman, to reach 3,691 stores in 68 countries. It plans expansion of a similar scope over the next year."
• "Alarm tags are now attached to garments at the factories. In the past, at a big Zara location such as the four-floor store on Madrid's Alberto Aguilera shopping street, 10 people spent an average of 12 hours a week putting on the tags. Now, Inditex estimates, those salespeople spend 3% more time serving customers."
• "Store managers also use new hand-held computers that show how garments rank by sales, so clerks can re-order best-sellers in less than an hour -- a process that previously took about three hours. These orders arrive, together with new pieces, two days later."
• "Also, each of the company's various store brands shipped merchandise separately in the past, concerned that mixing even behind the scenes could dilute their images. Combining the brands into larger volumes has allowed Mr. Isla to launch twice-weekly air shipments with Air France Cargo-KLM Cargo. Planes from Zaragoza, Spain, land in Bahrain with goods for Inditex stores in the Middle East, fly on to Asia, and return to Spain with raw materials and half-finished clothes."

• "In another move to cut costs, Mr. Isla [Inditex CEO] installed software in store computers to schedule staff based on sales volume at different times. As a result, more salespeople work at peak times such as lunchtime or the early evening. Inditex says the more flexible schedules shaved 2% off the hours staff work."

Zara's ability to zig when everyone else zags is commendable and counter to what most organizations do.  And they don't just innovate hoping for one large intervention which will save the day.  Instead, they make small and large innovations to constantly improve their business. 

If you wake up in the morning to work for an organization that aims to be the best follower the world has ever seen, continue to follow the supposed best practices.  For the rest, Zara's efforts to innovate and willingness to take risks, big and small, may be worth closer examination.