IKEA E-Book

Johan Stenebo

• Herausgeber: Gibson Square
• Kategorie: Fachliteratur
• Sprache: Englisch
• Veröffentlichungsjahr: 2010

Beschreibung

How did IKEA become the world's largest design brand, as popular as Lego, CocaCola and Nike? Still privately held, the company is renowned for its secrecy. In this candid analysis, former IKEA top director Johan Stenebo writes for the first time from inside corporation how the company transformed itself from one rural Swedish store of all sorts to a global behemoth with a turnover of over $30 billion and 700 million visitors a year purely on cash flow. Revealing IKEA's daring and unique business model warts and all, he covers the leadership of IKEA's controversial founder Ingvar Kamprad, whose right-hand man he was, and IKEA's resourceful ways of brand management using companies like Greenpeace and WWF to cover environmental issues.

Leseprobe

THE TRUTH ABOUT IKEA

THE SECRET BEHIND THE WORLD’S FIFTH RICHEST MAN AND THE SUCCESS OF THE FLATPACK GIANT

Johan Stenebo

Contents

Title Page

Foreword

The rise and fall of IKEA UK

Introduction

Ingvar Kamprad

1 The secret behind IKEA

2 The man and the myth

The company

3 The IKEA-machine

4 The Suppliers

5 ‘The product range – our identity’

6 Logistics – the journey of the product

7 The IKEA-culture

The future

8 The winds of change

9 The world’s richest man…and a liar?

10 A good company?

11 The Kamprad monarchy

Afterword

Appendix:: The testament of a furniture dealer

Copyright

Foreword

After 20 years with the company, I left IKEA around New Year 2009. Nonetheless, a bit unexpectedly my memories of IKEA didn’t fade away. Experiences from the past re-appeared, new outlines and conclusions took shape and fundamentally changed my understanding of IKEA. As new questions demanded answers, the IKEA I now viewed from the outside changed completely. A new truth about my ex-employer saw the light of day.

I wish to point out that it is my truth and that it is based entirely on my two decades in the corridors of power at IKEA.

I want to thank Stefan, Maria and Madeleine for all their help with the book. As well as my colleagues Mikael Bragd and Göran Swedérus from Retail Factory AB without whose advice and assistance I would have stood alone. Obviously also my editors Björn Öberg and Susanne af Klercker who have so successfully enhanced my manuscript, solicitor Dan Engström for all his advice, Martin Jonsson and Ola Mork from Morkman AB and last but not least the editorial staff at Forma Publishing Group that made this book possible in a relatively short period of time.

Johan Stenebo

The rise and fall of IKEA UK

Most people know that a visit to an IKEA store can be a truly unpleasant experience. But how disagreeable a Saturday at IKEA can be with sold-out stock, crowds and queues for everything from checkouts to hot dogs is nothing compared to the bizarre exploitation and ill-treatment of customers by the IKEA group with Ingvar Kamprad at the helm from the middle of the nineties and onwards in Great Britain.

It may sound somewhat exaggerated to accuse a company of exploiting its customers. The fact is that this is the most appropriate word I can find for it. Let me start at the beginning in order to describe how Great Britain became the golden goose of IKEA. The company established itself relatively late in the British Isles, in 1987, in comparison to almost all economically important nations in Europe. The first store was in Warrington outside Manchester, after which followed another four stores in the Midlands, Newcastle and London. A substantially larger store was built in the London council of Brent Park, an area known for its social problems and high criminality (the store is nowadays called Wembley on the company homepage). Next to the store, the UK managing director at the time Birger Lund erected an ugly discolored building with far too many floors which was to house the British head office for a number of years. Nine years later, in 1995, IKEA still had five stores in a country which counted well over 50 million inhabitants and was one of the largest economies in the world. In other words, the company and its brand led a dormant existence there.

But the Swedish home furnishing company eventually grew in importance with the British public. In the company’s particular niche of Scandinavian-designed furniture at low prices, competition was, compared to many other IKEA-markets, largely nonexistent. At the beginning of the nineties the IKEA brand reached a critical mass as far as the degree of recognition was concerned and turnover took off at the five stores. Also internally within IKEA, not least with its owner Ingvar Kamprad, the enormous potential of the UK market became obvious. IKEA had become the in-thing in Britain and IKEA UK an established part of the group.

Under the leadership of Birger Lund, IKEA UK was not a very impressive selling machine. Birger was an able financial controller, and later became manager for the Kamprad brothers’ own multimillion group IKANO with banking as an important activity. However not only did he, as a manager, lack the deep commercial knowledge that IKEA needed in Britain, at the time the entire group lacked a coherent commercial concept. Most things did therefore not work out well in IKEA stores. In the British stores things were even worse. The room interiors faced the wrong way against the customer flow, price labels were in the wrong place, if items had a price label at all, best-sellers were displayed to their disadvantage and important products were constantly running out. These were blunders that within IKEA Germany, the shining star within the group at the time, were considered as breach of duty with a subsequent written warning or even dismissal, but they seemed not to stand in the way of promotion on the other side of the English channel.

It was hardly surprising when Birger Lund was promoted sideways and upwards to manager of IKEA Sweden by IKEA’s pompous Northern Europe manager Bengt Larsson. Bengt’s previous financial controller, Ingvar’s former assistant and the future Chief Executive Anders Dahlvig became UK manager.

During the years with Dahlvig at the helm, IKEA UK Ltd went from a backward position both, financially as well as commercially, to the top of the IKEA group. Dahlvig had rare qualities of leadership and breadth of knowledge. He instilled confidence in his British co-workers who during the previous years had been deprived of their self-esteem by conceited Swedish managers speaking English much like the Swedish chef in the Muppet show. Dahlvig took advantage of the IKEA-fever that at the time was spreading across England, by making the most of the marketing so that the stores were filled with customers, and by drastically elevating the commercial standards to make as much money from them as possible.

New stores were built in Leeds (mentioned later in the book), Thurrock and Nottingham whilst the old ones, by now rather run down metal boxes, were rebuilt and refurbished. However, during the same period of this wave of success at IKEA UK, the first British law on retail outlets saw the light of day. The main purpose of this legislation was to protect shops in the inner cities against competition from the enormous shopping precincts which were mushrooming outside the town centres. The result was that IKEA, being a large foreign company with enormous stores outside the town centres as part of its strategy, would rarely be granted permission to construct new centres.

IKEA UK rapidly shot up in the sales statistics and suddenly the UK division had the biggest growth rate within the group. It was an outstanding success. The crowds of visitors grew dramatically year on year in a way that the group had never experienced anywhere else in the world. But it was millions of new and old IKEA-enthusiasts who were forced to share with each other the same miserable experience as before, in the same handful of stores. Each year the pressure on the stores, on the co-workers and the logistical resources increased to cater for a flow of customers that never ran dry.

Naturally there were plenty of advantages with the enormous growth of IKEA in Great Britain. First and foremost the turnover increased. Within a few years the market went from being one of the IKEA-world’s more mediocre selling machines to a position amongst the third or fourth most successful, on a par with Germany and North America, in monetary terms. Obviously it is not enough to just have enormous crowds of customers in order to increase sales. Equally important is to put up the prices as much as the wallets of the customers allow. But that is not one of IKEAs core strategies. It was Dahlvig who introduced this unusual pricing strategy in the UK, nonetheless. After all IKEA had always stood by the motto ‘beautiful furniture at affordable prices’. Having had previous experience as a successful controller he decided that since there was no competition at all IKEA could demand any price they wanted in the British market. This was his interpretation of the comprehensive pricing strategy of the group: ‘IKEA prices should always be ten per cent lower than comparable products by competitors’. All of a sudden IKEA found itself in a market without competition on comparable products and it quickly lost all self-control. Soon enough IKEA UK had the highest sales price of the entire world’s subsidiaries apart from IKEA USA (whose high price are pushed up by exceptionally high marketing costs rather than policy), an embarrassing pricing strategy the company has maintained to this day as far as I can judge from prices in Europe.

I will never forget how my co-workers from the IKEA business area Storage, Media and Dining and I tried to get the British management to abide by the global pricing strategy of the group within our department only to be rebuffed year after year. An unfamiliar arrogant attitude that only profits counted while our competitors actually had higher prices had crept into IKEA UK. When we went to London, for example, in order to check the ugly face of this policy became clear at the first attempt, at B&Q in Thurrock, a few hundred metres from the IKEA store in the same shopping area. Several other storage shelves were 20-30 per cent cheaper than IKEA’s BILLY and IVAR. Within IKEA company culture this was, and is, an absolute mortal sin. Naturally the IKEA UK MD Göran Nilsson knew that this was the case. And soon the management and company culture of IKEA UK was about to descend into chaos.

One might have thought that an expanding company such as IKEA UK would become a bit less tight-fisted as far as its operational budget was concerned. Extreme pressure on sales demanded plenty of staff as well as a few other extraordinary measures in order to be able to handle the chaos in the stores. Not so, however. Ingvar let the IKEA group’s executives know that the newly found power house within the IKEA family should not only have the highest rate of increase on its sales, they were also expected to have even higher pricing levels than before. The result was that IKEA UK was quickly granted the ungrateful task of covering financially for its less successful sister-companies around the world. At this time it was really only IKEA Germany which financed the brand’s progress worldwide. Germany had carried this burden since the eighties, which is why Britain was welcomed as another cash cow.

During these years up until 2000, IKEA’s British subsidiary showed a profit which in percentage points surpassed the cost level of many sister-companies. Swedish legislation regarding company secrets unfortunately prohibits me from quoting the exact figures, but let me give a fictitious example by comparison. Say, the Hennings company runs ten textile stores and in all has a turnover of one billion kroner per year (£90/$140 million). The turnover of one billion corresponds to 100 per cent. The company’s profits after having paid the purchase of all goods and materials are, say, 50 per cent. From the remaining 50 per cent it must cover all the costs of running the company and make a sufficient profit. The total cost of running Hennings corresponds to 40 per cent of turnover. Thus Hennings makes a profit 10 per cent (turnover less purchases less running costs), which is a fine result for any company. Now imagine a case, as with IKEA UK Ltd, where profits are actually higher than the cost of running the entire company! Very few retailers like that exist anywhere in the Western world.

Obviously such profit levels cannot be healthy for a subsidiary in the long run, as it amounts to ruthless exploitation of the customer. Only someone who shopped or worked in the British stores at this time can really understand the immense pressure both customers and co-workers were subjected to when far too many people crowded into a far too small space day in day out. As a customer you could frequently go neither forward nor backward in the store aisles, but were forced further into the interior of the building like penned cattle. This was a common state of affairs in the Wallau store in Germany when I first started working for IKEA. But there it happened one or two days a week. In the case of the UK the crush soon became unbearable throughout the week, and in many stores during all opening hours. This was a totally unique situation within the IKEA-world. Nowhere else – neither before nor after – has the customer experience been so unbearable, for such a long period, as in the British stores.

Just as unique was the fact that the crowds and the confusion became worse by the day, week and year. As soon as we thought that the limit of what was bearable had been reached we ended up in an even worse chaos. A shocking example was Brent Park in London where it was not physically possible to expand and catch up with demand irrespective of whether the authorities allowed store expansion or not. Soon enough each British store faced this reality.

With the quickly increasing volumes of items which were to be pushed through each unit in order to satisfy the customers a limit was reached. In other words IKEA discovered that there was an absolute limit to how many pallets with IKEA-products you could actually store and sell in a single store. Without new licences to establish new units or to expand, this physical limit consisted of the four walls of the store in the form of storage and sales areas. Confronted with this fact there was only one thing to do, cut the number of items on sale. The starting point was the range – the number of different items on offer to the customer – which was considerably more limited than with any comparable competitor. The London stores first cut their range at a rapid pace, then the rest of the British stores followed suit. This was done in such a dramatic manner that small stores in the Swedish and Norwegian provinces – which as far as turnover and number of customers were only a fraction of the British giants – soon offered a far larger range to their customers.

Anders Dahlvig was promoted to deputy Europe manager at the beginning of this process by the new Europe manager Bengt Larsson, hence Dahlvig’s direct responsibility for what was about to unfold in IKEA UK Ltd was limited. The new MD was Göran Nilsson, who in many ways followed the lead of his chairman of the board Bengt. This duo, must, together with the chief executive Anders Moberg, but above all Ingvar Kamprad himself, be considered ultimately responsible for the exploitation of the British co-workers, customers and stores.

Faced by a country where new planning permission was, on the whole, impossible to obtain, and definitely not to the degree that the pace of growth required, IKEA’s management, under Ingvar’s supervision, nonetheless put all their efforts into one thing: planning permission. Despite the fact that all previous efforts with the local authorities had failed, Larsson and Nilsson carried on with a belligerence that defied reason. Over a period of 7-8 years IKEA only obtained the odd planning permit every other year. At the same time the company was growing by 15-25 per cent each year, and the pressure became enormous.

A group of stores that were full to bursting point ought to reasonably have asked themselves if the strategy for planning permissions was sustainable. They were hardly getting any permits. The situation was so serious that not even a hypothetical rate of establishing 2-3 new UK stores annually would have alleviated IKEA’s growing pains. One obvious alternative would have been to divert the flow of customers from the stores into mail order, or rather internet selling. The IKEA brand was red hot in the country. Publicity and catalogues were pumped out at an ever increasing rate. It seemed that the British people could not get enough of the company’s products. Attempts to steer the customers away from the stores to other forms of outlets should have been the only feasible way to reduce the pressure on customers in the stores. Even a less successful home page with sales of parts or the entire IKEA range would have become an immediate success. As far as I am aware (I left IKEA UK in 1996) a number of attempts at convincing the company to get going with web based sales were made around the millennium period, but Ingvar put a stop to all efforts in that direction. IKEA’s dictator prevailed.

Ingvar’s resistance to internet sales seems strange. Ingvar and his co-workers wanted to, at all costs, keep IKEA UK as cash cow for an expansion which was superior to everything within the group. At some point fairly soon the stores in Britain would reach boiling point, the logistical flow would collapse, customers would turn their backs on the company and the wave of success would peter out.

Obviously the brilliant and omniscient Ingvar, as well as the Chief Executive and management, must have known what was going on in the British stores. In detail. Anything else would be unthinkable within IKEA where the Chief Executive was required to constantly be one step ahead of Ingvar in his feeling for and control over the company s domain. But no one chose not to act.

I don’t think that the resistance to a solution on Ingvar’s part came from greed. If that were the case he would have been pleased about the English super profits year in and year out. That would be against his nature. Ingvar would never show any joy over profits and definitely not over super profits. With his focused expression and his lack of participation at board meetings he showed that he was by no means displeased. This brilliant business man could never be pleased. IKEA is his baby and all parts of IKEA are just as dear to him. But one part had to be put back in order for another to be able to grow in the future. His decisions were completely rational from his own point of view and were, essentially, two fold.

Profit is a fundamental necessity for IKEA to survive and grow, in line with its company culture. It may sound obvious, but the unique thing here is that profit should never be allowed to become a goal in itself, only a means to develop further. With bad profits in most other subsidiaries during this period, and a Germany which had achieved such high market shares that the company had reached a zenith in that market, it was time for a new cash cow. This naturally became IKEA UK Ltd.

Ever since the company opened its first store in the Swedish village of Älmhult, a tiny, completely unknown place to everyone apart from the villagers themselves, cars had been the key to the success of the company. A long time before other retailers, stores on cheap land which could only be reached by car became a prerequisite for success. By the turn of the millennium IKEA had well over one hundred stores which could actually only be reached by car. Whether the store was in France or Norway, a car was a requirement in order to reach the store. To open a new sales channel like internet sales, is not something Ingvar Kamprad would ever have seriously considered. As I discuss later in the book, he maintained that web-based selling as a phenomenon, irrespective of country, would threaten the attraction of the stores in the long run. Customers would, according to Ingvar, simply order from the sitting room sofa rather than bothering to visit a store. If the customers were able to pick the best out of what IKEA offers, the surplus sales (all those extra items that you do not really need but you still put in your trolley) would not happen.

There are bound to be many important, experts who, with years of experience behind them, would argue against his point of view. But at IKEA there is ultimately only one person who decides: the founder Ingvar Kamprad. One of the biggest problems in the group is that each and every person he meets within IKEA, and elsewhere, is a yes-man. On the whole, extremely able professionals, but ultimately his puppets. I was, after all, no different when I worked with him. You can discuss business for hours with Ingvar, but definitely not the principles of IKEA’s business. They were sacred. As far as I am aware only one person has seriously told Ingvar off and survived and that is Bertil Torekull who wrote the book about IKEA. On the other hand Torekull was not employed by IKEA. Therefore for someone to in earnest take a stand and defend the UK stores in the board room and argue passionately for internet sales against the expressed approval of the old man, is completely unthinkable. Someone doing so would have been without a job before he even got to the last page of his power point presentation.

At the beginning of 2000, competition caught up with IKEA in the UK market both regarding price as well as design. The IKEA niche of Scandanavian-designed furniture, at high quality and low prices, started to become more and more narrow. This is, in reality, not so remarkable. Every economics student reads microeconomics and learns about supply and demand. In short the theory says that if one player in a market charges substantially high prices because he is alone, new players will be attracted by the surplus profits a high price formation allows. IKEA UK had the highest sales prices amongst more or less all IKEA countries during this period. We have also seen that this subsidiary maintained surplus profits which exceeded any comparison both within as well as outside the company.

Consequently it soon enough became just as crowded in the marketplace as in the IKEA stores. Customers chose at an accelerated speed to not accept unpleasant crowds and crazy prices which were easily beaten by the competitors. The fallout for IKEA UK was serious. Suddenly the growth in sales halted and was turned into lost market shares. Setback followed setback as dropping sales figures were quickly followed by demands for cost-cutting from the group’s management. The golden boy of the IKEA group had within a period of nearly one year been put back in the corner of shame from whence it had come a decade earlier and had become IKEA’s problem child in the worst sense of the word.

Ironically, IKEA UK in the end got both all the stores it needed as well as the internet sales the circumstances required. Since 2006 a large part of the range is sold via the net (if only for the moment) in England and Wales. The 18 stores which IKEA UK now covers England, Wales, Scotland and Northern Island. But it seems a paradox that this much-needed expansion, in order to ease the pressure on the existing stores and to make the customer experience more pleasant, came several years after IKEA UK’s enormous growth in turnover and customers.

Introduction

The small man from the personnel department in Älmhult who greeted me confirmed all my prejudices about IKEA-people. A large lump of chewing tobacco of the type the Swedes call snus hid the bulk of his upper teeth and coloured the rest of them brown, a pair of black clogs, a navy blue shirt with an enormous collar, shoulder-straps and a pair of ill-fitting tobacco-brown corduroy trousers. In the middle of the yuppie-frenzy at the end of the eighties he was certainly an unusual sight. In those days double-breasted suits with a sheen, broad lapels and a colourful tie were a must for any company employee, almost irrespective of position. But obviously not at IKEA, I concluded as I sat down in the room.

The job of the IKEA-man was to make me fill out a form, take a Polaroid picture and ask me a couple of standard questions. The latter possibly to eliminate the worst ruffians at an early stage. Apparently I passed, as a couple of weeks later I was summoned to the IKEA headquarters in Helsingborg. I was, to say the least, surprised. I admit that I left my double-breasted suit at home and wore something much more plain, but compared to the personnel person opposite me I was still hopelessly overdressed.

I was not at all happy with my job at Åhléns. My fiancée at the time, Eva, had seen the IKEA-ad looking for ‘key people of the nineties’ in the Dagens Nyheter newspaper. After which she ceaselessly reminded me of it in her sing-song Swedish Dalarna dialect until I rather reluctantly sent in my application written on my dad’s IBM typewriter.

Role models amongst the Uppsala economists of my generation were people in the mould of the character Gordon Gekko from the movie Wall Street, and certainly not the founder of IKEA Ingvar Kamprad. Entrepreneurship seemed like being a greengrocer. Attractive company cars and sharp suits attracted us more than clogs and snus. In other words I was in two minds about IKEA even after I had put my job application in the post.

‘How the hell can you write that?’ Anders slapped his knees with laughter while he sat opposite me with my application in front of him.

‘I was amongst the absolute top in my economy class, but I am at the same time a humble person’, he quoted and continued laughing with snus all over his mouth dismissing any attempt of explanation. You should just know that I got in as twenty-fifth reserve, I bitterly thought to myself.

Anders Moberg was the chief executive at IKEA. Naturally I was somewhat surprised when he came into the room and introduced himself. But it occurred so suddenly that I never had time to get nervous. A tall athletic man, a bit over thirty, strikingly good-looking, with a contagious smile, his charisma filled the room. He put some questions to me of which ‘What makes a retail business successful?’ was the hardest. My reply then was that a company’s competitive power was a function of its logistics. Jan-Eric Engqvist, personnel manager for the company, who was also present at the interview, told me how Anders had handpicked me from amongst thousands of applicants.

Anders suddenly starts talking again, puts his head a bit to the side, leans forward and points at me. The whole time with the broad tobacco-coloured smile on his face.

‘Damn it, you are so bloody cocky, we’ll send you to Germany.’

Whether this was good or bad news I did not know at the time. However I did understand that I had just been taken on.

‘Anyway Jan-Eric’, Moberg said to Engqvist, ‘could Anders not be sponsor for Johan?’ This Anders was Anders Dahlvig who at the time was assistant to both Moberg and Ingvar Kamprad. (He was after that chief executive for ten years and resigned on the 31 August 2009.)

The fact that this was the beginning of a 20 year long journey during which I would be able to – from the inside – experience the fantastic success of IKEA I did not know at the time. During my time with the company it went from a turnover of SEK 25 billion to 250 billion, from 30,000 to 150,000 employees, from around 70 stores mainly concentrated in Northern Europe to 250 with global coverage. This was an unparalleled expansion and achievement, and IKEA has undoubtedly become the biggest Swedish business story of modern times.

I was able to follow and, I hope, contribute to this unique success in various positions within the company: manager for furniture at the store in Wallau, Germany, head of sales for living rooms at the sales office in Helsingborg, project manager and later manager of the store in Leeds, England, responsible for storage, media and dining room furniture at IKEA of Sweden AB (IOS) in Älmhult and managing director for IKEA GreenTech AB in Lund. I was to shadow my sponsor Anders Dahlvig and was during three years in the mid nineties assistant to Ingvar Kamprad and the chief executive Anders Moberg and worked closely with both, sometimes around the clock. During this period I was also responsible for environmental issues, PR and communication within the group.

During these years I obtained a good insight into IKEA and the character of its founder. I was able to follow the rise of the company at close quarters until IKEA was the brightest star in the global home furnishing market. This book is about my impressions during these twenty years.

Why does one write a book about one’s ex-employer? The question is valid. Because of bitterness as one feels wrongly done by? Because of greed because one realizes that gossip sells?

In my case none of these.

Why don’t I just leave IKEA behind me and get on with my life? Simply because certain things about the company keep nagging me.

After having left IKEA I started considering the journey I had undertaken. All the successes and the set-backs, the colleagues and the trips to destinations nobody knew even existed. Gradually I began to see the company with different eyes from when I was part of the ‘IKEA-family’, as Ingvar calls it. The image of IKEA that now emerged was distinctly different from the image I had earlier. I understood that I needed to put down my experiences on paper.

What I describe in the book are events that I myself have experienced or situations trustworthy colleagues have witnessed.

The world looks at IKEA with admiration. The successes of the company for many years and in many areas are amazing. IKEA is the kind of company that is never in trouble and always puts the environment and social concerns at the forefront of its policies. It is never caught red-handed when the environmental groups growl and the media bites. It has a brilliant founder who has become a Swedish national icon, and the fifth richest man in the world. It has a solid company culture that has been absorbed completely by its 150,000 co-workers. In short IKEA is a shining sun in the corporate sky that, especially of late, has too often been lined by greyish clouds.

I know that this sunny image does not entirely correspond to the truth. The IKEA-sun is beautiful and marvellous in many ways but it has blind spots.

This book is about those blind spots. In order to understand one first needs an insight into how the company works behind the scenes. To understand the mechanism that has made the success of IKEA possible. To understand what attitudes and values of the decision makers have created such a strong corporate culture.

It is important that we understand large corporations and their actions, just as we try to understand other important powerful factors in our society. The fact that they may be difficult to penetrate or that such an operation may have its perils is no reason to hold back. Without transparency of the powerful factors that influence society, impenetrable colossuses soon appear, giants that have completely different agendas and goals to the rest of society. It is part of the nature of a market economy that, by definition, a company only looks to its own interests. This is maybe the single most important rule in any industry. The only thing that deters companies from losing their way completely in pure narcissism, however, is on the one hand legislation and on the other, equally importantly, scrutiny by media. Just like other companies IKEA has always its own interests at heart. That is in itself not strange, but when the IKEA agenda influences its surrounding in a negative way we need to know. What makes it worse is that the company is perhaps the most closed in the world given its size. This means that no journalist has ever managed to penetrate the massive blue and yellow façade. This is also why any well-informed discussion around the activities and future of IKEA is missing: IKEA staff are sworn to silence.

I mean to say that the image of IKEA of today is oversimplified. The company spends large amounts of resources in order to maintain its rosy image. I know this to be the case as I have myself been part of this work. During the nineties when IKEA went from one media crises to another, I was responsible for PR and communications as well as environmental issues in the company. At the same time I was Ingvar’s assistant who was also chief executive of the group at the time. The formidable capacity that IKEA has to paint an appealing picture of itself is in a way impressive in our media controlled society, but also foreboding. Financial journalists have during all these years swallowed the image manufactured by IKEA itself. Perhaps because they were impressed by the colossus Kamprad. Perhaps because they misunderstood the truth. I am really not certain which.

I am well aware that Ingvar Kamprad and IKEA are among Sweden’s most important national icons. We are talking about a brand that is so strong it has placed little Sweden on the map the world over. Therefore some people in Sweden become indignant about arguments like mine, not to say angry. Stop talking as Ingvar has meant so much; not just for one of the country’s biggest companies but for the country as a whole. My view is that success comes with obligations rather than providing you an alibi. At the end of the nineties I, together with two colleagues, drew up a new strategy: ‘Everything that IKEA does must stand up to scrutiny’. Within IKEA this was at the time ground-breaking. It meant for example that the three of us took an active and uncompromising stand against child labour, something that at the time was not widespread within IKEA. ‘Children are better off working than going into prostitution’, was a common view at INGKA Holding BV, the highest board of directors at IKEA. What they were talking about were children, of which many were young, who worked in slave-like conditions on the Indian peninsula with amongst other things production for IKEA.

I wish to point out that the information and environmental strategy of IKEA, later called ‘Teflon IKEA’ in Newsweek (2001), came about as a direct result of the only serious study of IKEA which was ever made. It was led by SVT’s (Swedish Television) Mikael Ohlsson, called ‘The Workshop of Father Christmas – IKEA’s Backyard’ and was broadcast in 1997. These extremely able investigative journalists were hated by the whole of IKEA’s cadre of managers, but the outcome of their work on the environment and delivery strategies became fundamental.

Today most of the IKEA strategies regarding purchase and the environment are based on a thinking characterized by care and consideration for our fellow human beings and the world around us, but far from all as we shall see. The transparency which is expected of other companies of the same size ought to be applicable also to Ingvar Kamprad and his IKEA. He who has nothing to hide has nothing to fear.

Or does he?

Part 1

Ingvar Kamprad

The founder of IKEA

1

The Secret Behind IKEA

Pages upon pages have been written about IKEA and its extraordinary success in newspapers and books. At universities it has almost become a must to bring up the company as a text-book example for further inspection. Many have tried to answer the question why IKEA has been so successful. Obviously I also have an idea of what has made the company go from strength to strength. My view is informed by the decades I have worked for the company in all its departments. I have experienced great progress, but also terrible failures.

Simplicity is a virtue

The familiar quotation by Ingvar that ‘simplicity is a virtue’ is central to the success story. Only mediocre people propose complicated solutions, he preaches. With this approach I shall also consider the IKEA phenomenon. What single factors have had the strongest influence on IKEA?

First and foremost, the genius Ingvar Kamprad himself since he is the father of most things, albeit not everything, within IKEA. After that the IKEA-machinery, the global value chain from forest to customer, that Ingvar and his team have built and tuned to perfection. Last but not least the IKEA-culture that Ingvar has created and which makes the IKEA-machinery function precisely and at maximum speed.

Let us examine them one by one. We begin with the phenomenon Ingvar Kamprad.

2

The Man and the Myth

In order to understand IKEA one must also understand its founder. Who is he? Truly?

The palace coup

November 1994, Kölles Gård, Humblebæk, South of Helsingör in Denmark

Kölles Gård is a charming building similar to a guest-house in just as charming surroundings a stone’s throw from Öresund. Kamprad bought the property in the seventies when he abandoned Sweden for Denmark in order to avoid Swedish taxes. Today, it has housed the board of directors of the IKEA group for over a decade.

Daylight was fading slowly turning afternoon into evening. Cold winds from the sea lashed the property and its surrounding parkland. It was late Autumn and piles of shrivelled beech leaves happily whirled around in the wind. The only thing out of the ordinary were rows of parked cars outside the hedge that surrounded the house. Reporters stood around in groups outside and keenly watched any sign of activity from inside the house. Photographers with camera lenses as long as your arm were gazing at the building window by window. Flashes now and then lit up the apricot coloured façade. The building seemed dark and abandoned with the exception of a few lit up windows.

In the warmth inside was, amongst others, IKEA’s chief executive Anders Moberg, serenely calm as usual but showing the seriousness of the situation on his pale face. The group around the table had to take a stand on how to handle the situation that had arisen, and that none of them had been able to imagine only a few days earlier.

The unthinkable had happened. The founder and owner of IKEA had been denounced as a Nazi sympathizer and a member of the Swedish neo-Nazi movement during the forties and the fifties. Ingvar and his assistant Staffan Jeppsson were working feverishly in another room in order to try and find a way out of the dark clouds that had now descended on the old man. The tabloid Expressen had released the scoop at full force and the news was spreading like wildfire across the world.

‘If the worst comes to the worst, if Ingvar is not be able to handle the situation, there remains only one solution for us.’ The words were hovering in the stifling air in the room where Anders Moberg and the top leadership of IKEA were sitting.

‘If Ingvar does not find a solution soon and the situation does not calm down, then IKEA will once and for all have to distance itself from Ingvar.’

Thus it had been said. The genie was out of the bottle.

Consider the last paragraph again and its significance. Exactly who said what, I do not know. But the incident was relayed and interpreted for me by Anders Moberg. Could it be said clearer? Ingvar Kamprad is not synonymous with the company IKEA. IKEA is larger than its founder, despite his enormous importance for the development of the company. Ingvar may, in fact, be deposed or rather put aside if he seriously threatens to harm his company.

At this point Ingvar did a complete turnaround and put all his cards on the table, confessed everything and asked his co-workers, not least those of Jewish decent, for forgiveness. With this the story was, in the main, finished with. This rhetoric feat was brilliantly carried out by a man of whom one does not expect anything less. It was used as a textbook example by media educators the world over for a long time.

The driving force

A lot of people have wondered, what is it that spurs Ingvar on? What is it that makes him drive himself so very hard? Because that is what he does.

To suggest as is done in the official version that he is obsessed with proving ‘to people that beautiful furniture does not have to be expensive’ is at best a serious misunderstanding and at its worst a conscious falsification. Basically, he is driven by an enormous need to be validated and nothing else. He wants to show the world around him and himself that the impossible is possible. This becomes very obvious when one works with him, as he over and over again adopts the persona of the underdog. It is this way of doing things that first becomes obvious in Ingvar. He may say something depreciatory about some respected and distinguished design critic for one of the big newspaper barons in Stockholm. He formulates strategies and the IKEA-culture from a down-up perspective: IKEA should never boast, but let the results tell their story. He tries hard to cast himself as the underdog by describing himself as a somewhat dim, alcoholic dyslectic. We will come back to this.

Once Ingvar told me that he only has one close friend. A Swiss man whom he now and then goes on trips with. To my mind and to most people of my generation this sounds rather as if ‘the friend’ was more of a pal or an acquaintance, since the relationship was not more frequent or closer. Other people he socialises with are usually colleagues, apart from his family. So people he pays to work for him. Consequently, their friendship is directly connected to their pay packet. In this place of loneliness the outlook of the underdog can only strengthen.

When Ingvar is able to rub shoulders with the establishment particularly in Sweden, the Wallenbergs, the media and the politicians, through honours and doctorates, then he feels special. Chosen. His need for validation is so great that he resents his company directors being seen in the media limelight. Anders Moberg often asked my advice about whether he should dare accept an interview lest he stole the attention from Kamprad, and what Ingvar thought about it. If there was the slightest hesitation, he would rather decline than risk provoking the wrath of Kamprad.

Conscious leadership

On one of my first days at work at the group’s head office in Humlebæk, Ingvar was in the office. Normally he is either travelling, at home in Switzerland or, occasionally, on a working holiday at his vineyard in France for a couple of weeks. Ingvar and Anders Moberg met just by my desk. Anders went to say hello when something strange happened to his expression. The self-confidence, the assurance and resoluteness disappeared. Instead he had that staring, almost mouth-open gaze that signals fear, which was further accentuated by the strained smile. I felt pure fear rush through my body. If Anders Moberg, the paragon of a strong leader, had such towering respect for Kamprad what should I, a simple assistant, feel? This encounter shaped my behaviour towards Ingvar for well over a year, until I slowly began to realize that he was not that dangerous after all. Quite the contrary.

Range week, the so called IK-days, at the IKEA of Sweden AB head-officeBlåsippan in Älmhult, early Autumn 1996.

As Ingvar’s assistant I follow him closely from one range presentation to another. The week is the culmination of one year’s work that concludes in two to three hours together with the founder. During these hours one’s work is presented, judged and either given the go-ahead, or rejected.

‘This is the worst rubbish I have seen in a long while. How fucking silly can it possibly get? What a disappointment, Johan.’

Ingvar and I had just been witnessing the biggest fiasco of the week. The group had been given the task to develop an outline for home recycling. Their solution was a green tub and a white tub. In plastic. The presentation was deplorable and the excuses during the rather short discussion afterwards even worse. Ingvar asked some questions and took a view on the proposed materials. Afterwards he said thank you in a friendly way and carried on. Only as we were in the car on the way home did he reveal his true feelings.