While most people enjoying a few days in an isolated Mediterranean town a few kilometres away from a deserted beach would probably head for some surf rather than read the latest issue of a seminal commerce periodical, for better or for worse Mediolana’s CSO does not fit into this category; his recent, all-too-brief sojourn in Cyprus was dominated inasmuch as anything else by an article from the September 2012 issue of the Harvard Business Review by no less a figure than Patrizio Bertelli, CEO of Prada S.p.A. Staying Independent in a Consolidating Industry is an at times astonishingly frank account of the recent milestones and overarching philosophy of one of the global fashion industry’s most celebrated brands; whether one has any direct interest in this sector or not, the piece is well worth a few minutes of anyone’s attention.
A close reading, however, reveals a company that has had more of its fair share of challenges during the past twenty years or so, particularly those relating to its public flotation on the stock exchange, as Bertelli recalls: ‘Originally we planned to go public in Milan in late September 2001, but the 9/11 tragedy, followed by the second Gulf War, the outbreak of SARS, and a global credit crisis, upset our plans. We reacted to these events in a timely and innovative way, seizing new opportunities, and launched our IPO in Hong Kong in June 2011.’
Despite the (perhaps merited) positive spin put on his company’s trajectory by its charismatic CEO, there is no disguising that Prada suffered a ten-year delay in terms of its intended corporate trajectory – and this from a corporation that enjoys the advantages that only hundreds of millions or even billions of dollars in annual revenue and thousands of employees may confer. Clearly, there are lessons to learn from this hiatus – but what are they?
1. Plan for External Shocks. Like a great many companies across the economic spectrum, Prada was held back by a number of serious and mostly unexpected events. But beyond a point, should these events really have been so unfathomable? Certainly by the time of the outbreak of the Iraq War, more prescient analysts should have factored the massive reallocation of resources towards military expenditures into their calculations; moreover, was it really inconceivable that the greatest housing bubble of all time (at least, to date) could eventually pop, particularly given the recency of the dotcom bust?
2. Incorporate Change. Bertelli reminisces about the world in the 1990s as ‘a very different place’, and in some ways it indubitably was: most people were not betting their futures on the economic emergence of the BRIC countries, let alone Indonesia or Vietnam. But as any follower of major international football tournaments will tell you, change is something that has to be incorporated into planning. Croatia did not exist as an independent country in 1990, when Yugoslavia were placed fifth at that year’s FIFA World Cup; in the 1998 World Cup, Croatia finished third.
3. Let the Head Rule. Bertelli freely admits his regret that Prada acquired companies where the founding designer was still working as these were extraordinarily difficult entities to manage: ‘It was challenging to even talk to those designers, let alone meet their marketing expectations.’ Years expended on fulfilling the whims of difficult egos could have been spent, as Bertelli acknowledges, on developing Prada S.p.A.’s core brands – and perhaps getting to that magical IPO that bit sooner in the process.