The Swedish Way: “Great Day Out” Management with IKEA

IKEA was founded in 1943 by Ingvar Kamprad. Ingvar grew up in a small rural farming community, where times were hard and money was tight. And, in order to survive in a community like that, you have to be very thrifty, you have to think on your feet, and you had to live by your wits. We come from very, very humble roots. At that time, living and working in a rural community, many people had to work very, very hard for very little money. So the values that we honor in IKEA are related to where the business started.

IKEA Special Business Model

Selamat sore dan selamat datang di IKEA Indonesia. Hey, my name’s Mark Magee, I’m the general manager of IKEA in Indonesia. I’ve been here four years now, I arrived to set up, build, and operate the first IKEA store in Indonesia. Indonesia is a great country with lots of potential.  Everybody knows about the 250 million people here and the growing middle classes. So IKEA is coming to bring a different level of home furnishing to the people of Indonesia.

The first IKEA store was opened 40 kilometers to the West of Central Jakarta in Alam Sutra. We have a medium standard IKEA store here, 35,000 square meter showroom with 8,000 products.

The History – where times were hard and money was tight

IKEA was founded in 1943 by Ingvar Kamprad. Ingvar grew up in a small rural farming community, where times were hard and money was tight. And, in order to survive in a community like that, you have to be very thrifty, you have to think on your feet, and you had to live by your wits.

The first IKEA store opened in 1957 in Älmhult, Sweden. A small rural farming community. That is the home of IKEA.

We come from very, very humble roots. At that time, living and working in a rural community, many people had to work very, very hard for very little money. So the values that we honor in IKEA are related to where the business started.

IKEA Special Business Model

At IKEA, we believe in doing things our way and we take a different approach to home furnishing we like to inspire our customers. In the store here in Alam Sutra, we have 55 different room sets, all laid out the way you might find them in your ideal home.

We use these room sets to show a combination of say curtains with rugs, with upholstery, with bookcases, with coffee tables. We do this because we want to inspire our customers, to see how beautiful they can make their own homes.

We’re also famous for the single-one-way-around the showroom. And the reason we do this is we want all of our customers to see all of the products. So it makes sense that if we take you around the showroom in a fixed way, you will see all of the beautiful IKEA products with great functionality. But it’s more than that, IKEA is a day out. It’s a day out for the family, you really can’t get around the store less than much two hours. In order to help our customers enjoy their day out, we have a children’s crest where you can leave the children in safety with our coworkers, while mom and dad go and looks for beautiful home furnishing products.

Halfway around the showroom, you’ll find a restaurant. In this particular store, the restaurant has nearly 750 seats. So you see, it’s not just the furniture store, it’s a kids playground, it’s a restaurant, it’s a place we can have fun. It’s a place we can be inspired. We like to think that IKEA is a great day out for the family.

More importantly, we’re also famous for something called DIY, do it yourself. People asked why do we do that. It’s very simple answer. It is because the more that you do then the better price we can achieve for the products.

If you pick the product of yourself, if you assemble the flat packs yourself, then we can get the product at a better price and we can sell it at a lower price. If you buy more, we can get a better price and we can lower price for you. So really IKEA has its own special business model and it’s a great day out for the family.

IKEA believes that the strength of our businesses is our people. We believe that business is best served when we have a highly motivated group of people heading for the same objective. We like to keep our business principles simple. We appreciate honesty, we appreciate cost consciousness. By applying these disciplines in everything we do, from product design to product procurement, to distribution, and to the sale of the products in our stores, we can pass on great products and great prices to our customers.

IKEA Philosophies – Swedish Heritage of the Business

Five Legs of Democratic Design

As part of our Swedish democratic philosophy, IKEA believes that we should create a better everyday life for the many people. We do that by offering a wide range of well-designed functional home furnishing products at prices so low that as many people as possible will be able to afford them. That’s not the end of the story, IKEA also believes in democratic design. For a product to be really truly great at IKEA, we need to follow the five legs of democratic design.

Number one, form. It’s got to look good, it’s got to look great.

Number two, quality. It’s gotta be good quality.

Number three, function. It’s got to work properly, it’s got to do what we wanted to do, day in, day out, for the lifetime of the product.

The fourth thing we like to think about in IKEA is sustainability. Seven billion people living on one planet and our resources will eventually run out. So every IKEA product must be made with the sustainability in mind.

And last but not least, this is IKEA. So it’s got to be a really great low price.

They’re the five functions of democratic design and that comes directly from our Swedish heritage.

Swedish Management Approach

Those are some of the values that stay with IKEA today. IKEA believes that our people should always remain simple at heart.

We should be hard-working, we should stand together, and we believe in togetherness. That’s part of the IKEA philosophy. IKEA believes that the strength of our businesses is our people. We believe that business is best served when we have a highly motivated group of people heading for the same objective. We like to keep our business principles simple. We appreciate honesty, we appreciate cost consciousness. By applying these disciplines in everything we do, from product design to product procurement, to distribution, and to the sale of the products in our stores, we can pass on great products and great prices to our customers.

IKEA has over 390 stores in more than 48 countries. A hundred and sixty thousand people worldwide working for IKEA in design, production, distribution, and retailing of our products. But we all work one way, we all work the Swedish way. So people say what is that. Well to be fair, I’m a British national and I’m working for IKEA. But to work at IKEA, you have to understand what it is that different about the IKEA management style. That management style is very much based in the Swedish heritage and roots of the IKEA business.

What is it that IKEA does differently? What is it the Scandinavian managers do differently?

What is the Swedes do differently? Well we believe that everybody is equal. We believe that everybody’s voice should be heard. We believe that when we listen to each other and take everybody’s view, everybody’s opinion into account, that we make better decisions. If we make better decisions, we make better products, at a better quality, at a better price, and with greater affordability.

So you could say it’s the Swedish management approach that is one of the cornerstones of the IKEA business. And it doesn’t just work for IKEA, it works for other Swedish businesses worldwide as well.

The management style comes from Swedish management experience.

We believe that this is a competitive advantage for IKEA.

This means we are able to maintain our unique Scandinavian designs. So when you buy products from IKEA, people will frequently say, that’s so IKEA. What they mean is it’s very clean-cut Scandinavian design. And of course, IKEA is for the many people, it’s easy to design a great product if you’ve got a limitless budget. It’s more difficult to design a great product at a very low price and that’s what IKEA does really well.

IKEA as Ambassador of Sweden

IKEA’s trade dress is blue and yellow, and it’s blue and yellow because they are the colors of the Swedish flag. What better color to paint the store then to totally represent the national identity of Sweden. Sweden is the home of IKEA and everywhere we build IKEA you could say we build a bit of Sweden.

So what’s important about blue and yellow, and what’s important about what IKEA does. Well we have a very simple location plan. We always look for a great site with high visibility, next to the toll road, so people can see us and get to as easily.

The store is in blue and yellow, that’s our trade dress. When you see an IKEA building, you just know it’s an IKEA, because nothing else looks like that.

This is important to us because it follows our Swedish heritage. Not only is the store blue and yellow, but every IKEA store is designed in Helsingborg. That’s a town in Sweden on the west coast. All of architectures are based there and  every store is designed by architects based in Sweden.

That’s not the end of the story. Every store needs to cater for the local consumer.

So for instance in Indonesia, our customers need praying facilities. So we built into the store design, a mosque. Therefore we combine the best of IKEA, the best of home furnishing design, but with certain attributes designed specifically for our local customers.

Ambassador of Sweden

Yes you could say IKEA is an ambassador for Sweden. Many Swedes have grown up with IKEA. It’s an integral part of their life.

To tell you the truth, many Swedes are very proud and very protective of IKEA. It is the living embodiment of Sweden abroad. It is one of the major signals of what Sweden has brought to the world.

In the case of IKEA, we bring stylish Scandinavian design. Swedes are rightly proud of IKEA. They’re very protective of IKEA but it doesn’t stop there. Other foreign nationals, other expatriates are pleased to see IKEA in Indonesia. And not least of course, Indonesians are happy to be able to access the Scandinavian design, the quality, and the price here now in Jakarta.

Limited to Scandinavian Design

IKEA has been successful in the home furnishing business, I believe for a number of reasons.

First and foremost, only IKEA products are sold in IKEA stores. All IKEA products are designed by IKEA Sweden, so we don’t buy any products from anywhere else. We only buy products designed by IKEA designers and those products are only sold in IKEA stores.

This means we are able to maintain our unique Scandinavian designs. So when you buy products from IKEA, people will frequently say, that’s so IKEA. What they mean is it’s very clean-cut Scandinavian design. And of course, IKEA is for the many people, it’s easy to design a great product if you’ve got a limitless budget. It’s more difficult to design a great product at a very low price and that’s what IKEA does really well.

Good product at a good price.

Business Lounge Journal/VMN/BLJ