Karan Girotra is a professor at Insead in Fontainebleau, France. Serguei Netessine is the Timken Chaired Professor of Global Technology and Innovation at Insead.
With the Winter holiday shopping season, fashion apparel retailer Zara has been the focus of media attention — the New York Times recently profiled the innovative fast fashion business model pioneered by Zara, while Elizabeth Cline's book on the costs of fast fashion has climbed up the sales charts.
Despite this very recent popularity, the novel business model of Zara has gone virtually unnoticed for over 30 years, allowing Zara's parent company, Inditex, to grow from zero to almost $20B in revenues. Why wasn't it copied immediately? How can it be so sustainable and continue growing? The answer lies in a different type of innovation that Zara used: Business Model Innovation.
We have long been fans of the Zara business model...