Not long ago, no matter where you were in the world, there was a particular smell to a Burberry store. An earthy scent tickled the memory, sparking thoughts of loamy ground and windswept moors, warm fireplaces and woolly sweaters.

It was also, as it happened, the smell of the Burberry headquarters, a 150-year-old landmark building with a remodelled interior a stone’s throw from the Houses of Parliament – not to mention an office on the top floor, a broad white expanse of glass belonging to Christopher Bailey, the brand’s chief creative officer.

This makes sense, in many subtle ways. Burberry Hearth, the olfactory representative of the company, was not only Mr Bailey’s idea but is also an expression of its creator. It is a candle and room scent that references his memories of growing up in the Yorkshire countryside, and has been successfully monetised.

As such, the scent represents the way Mr Bailey has long bridged the gap between fashion’s creative and corporate worlds. And it offers a clue as to why, when Angela Ahrendts, Burberry’s chief executive, announced she was moving to Apple , the board of one of the UK’s biggest luxury fashion companies took an unprecedented step by naming Mr Bailey as her replacement.

When he takes over in mid-2014, he will become the first designer of a leading public brand to take the top spot on both the business and aesthetic sides.

“It’s a unique and very risky move on Burberry’s part,” says luxury brand consultant Robert Burke. “Traditionally, luxury groups such as LVMH and Kering keep a balance between a creative director and a CEO. That makes this a case study that will be very closely followed by the rest of the industry. If it works, it will change the playing field for the future. If it fails, it will drive everyone back to the old ways.”

There are £2bn in revenues, more than 50 different collections annually, and 11,000 employees depending on the outcome.

Not that you would know it to look at him. Mr Bailey, 42, is a low-key figure who favours jeans, classic Harris tweed jackets made in a Burberry factory in Yorkshire, and button-down shirts. His hair, a nondescript dirty blond, is messed up and slightly spiky. In a world where designers use image as a short cut to fame, his nondescriptness sets him apart. Along with his politeness, this has earned him the title of “fashion’s Mr Nice Guy”. He remembers “every employee’s name, plus their children’s names, plus their dogs’ names”, according to former Burberry vice-president Justin Cooke.

This may be partly a result of a working class background that he says keeps him humble. He was born in Halifax, West Yorkshire, a historic wool industry centre, and raised with his elder sister by a carpenter father and window dresser mother. After graduating from the Royal College of Art and working at Donna Karan and Gucci, he was plucked by Rose Marie Bravo, then chief executive, to be Burberry creative director in 2001.

Yet niceness is a quality not often associated with a pioneering chief executive. This fact – combined with a lack of formal business education and the luxury sector’s tough environment – explains the mixed investor reaction to his appointment.

“We believe that in a company as big and complex as Burberry, even for a person as talented as Mr Bailey, it is hard to have enough time to carry out both these roles,” wrote analysts at Sanford Bernstein. On Tuesday, the day of the announcement, the stock closed down almost 8 per cent, even though the same day the company reported revenues up 14 per cent to £1bn in the first six months of the year.

Insiders say this scepticism demonstrates ignorance of the way Burberry has functioned in recent years. There has long been a “dual reporting” structure in place for every area of the business, from creative to licensing and retail – and Mr Bailey, with Ms Ahrendts, has had the last word in strategic decisions as much as skirt lengths.

“I was in a number of interviews with him where he was asked about the share price or expansion strategy, and he was quite capable of responding for himself,” says Mr Cooke. “When he spoke to the retail team, it wasn’t about what a hanger looked like. It was about how many units were sold.”

“This is rare in my experience,” says Mimma Viglezio, a luxury management consultant and former executive vice-president at Gucci Group. “Most creative directors can’t read a profit and loss statement.”

Mr Bailey has played a crucial role in the brand’s success, in design terms and beyond. He elevated the iconic, if dated, Burberry trenchcoat to such a multidimensional extent that he was named designer of the year in 2005 and 2009, and menswear designer of the year in 2007 and 2008. The Queen recognised his services to his industry with an MBE in 2009.

He also conceptualised Burberry’s identity as the ultimate British brand, enlisting young talent from singers to actors to models for the advertising campaigns. He drove the move from multiple London offices to the seven-storey Westminster headquarters, arguing that it needed to be united in an environment that communicated its mission “to protect, to explore, to inspire”. With Ms Ahrendts, he was the architect of the digital strategy; the brand is now routinely called the “most connected in luxury”. Ironically, criticism of the company in recent years has centred on the lack of fashion-forward product on the runway rather than any corporate decisions.

“People are always saying his collections are quite commercial, as if that’s a bad thing,” says Mr Cooke, pointing out that for someone running a global business, this may be the crucial job qualification.

Yet no matter how thoroughly Mr Bailey has shaped the brand so far, formally adding Ms Ahrendts’ responsibilities to his own creates an entirely different set of expectations.

“It could be the best possible decision they have all made, or the worst,” says Mr Burke. ‘The only thing we know for sure at this point is: everyone is watching.”