Innovation/Global Risk

IKEA: Can You Feel Small When You’re Really Big?

Anders Dahlvig Thinks You Can’t!

By Shlomo  Maital     

 

 

 

 Consider IKEA.   This Swedish company, founded by Inqvar Kamprad at his uncle Ernst’s table in 1943, has revolutionized the global furniture business.  It is the world’s largest furniture retailer, and its innovation is its business model, not its products.  We now have a new book, The IKEA Edge, by Anders Dahlvig, who rose from store manager to become Kamprad’s right-hand man.  Here is what Fortune magazine said about this book: 

 Dahlvig does give a brief history of Ikea’s evolution into the privately held retail giant that generated $31 billion in 2009,  with 125,000 employees (ran 300 stores, operated in 38 countries and was the 3rd largest buyer of wood in the world). But more often than not, the book is about management — motivating and inspiring employees, keeping an entrepreneurial streak as a company grows, creating loyalty and diversity, the role of a CEO. The book is rich in ideas about how to take a brand that has a strong regional culture and make it global. While some of these lessons are helpful and refreshing (Dahlvig suggests having numerous people report to you so you don’t have time to micromanage or hover), I wanted more of a personal story about his time at the company. Instead the book is written in the style of Ikea itself: practical and no-frills.

 What is IKEA’s secret of success?  Fierce supply-chain management, bulk buying and the creation of a unique customer experience.  Consider IKEA’s restaurants. Their real purpose?    

   “Take, for example, the fact that its restaurants generate $1.5 billion in sales. But the main reason behind those 15 Swedish meatballs for $3.99 is not to make a profit — it’s to highlight the store’s low prices and get the customer to shop longer.”

  Dahlvig knows clearly why IKEA and any company exists:  ” A company’s reason for existence should be to contribute to a better society.”   

    It’s hard to imagine these words coming out of the mouths of most U.S. CEOs, says FORTUNE.  But it might serve them well if they at least read the book.

    IKEA’s founder is now 85, and about to retire.  Dahlvig is worried.  He recently told BBC’s Business Daily:    “What will happen when the founder of IKEA is not around?  What will happen to IKEA?    The founder is 85, this transition is about to happen. He is less visible in the business.  Transition is on the way. My biggest worry for the company is, the loss of the values, he is the guardian of that. This is the soul of the company. The consequence of losing the values is, the loyalty of employees declines, and we become like every other company.   This is our first generational change.  That’s a worry.   The fact that IKEA is becoming bigger, a bureaucracy, the small company feel is declining, maybe inevitable, but,  I’m worried about that, and worried about the loss of the culture and the values.   And I don’t have a solution, how you can act like a small company when you are the size of IKEA.” 

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