The Idea of IKEA

For a good example of the five unconventional acts of coherent leadership, consider
the story of IKEA, the world’s largest furniture manufacturer and retailer. The identity
of this enterprise is embodied in two simple statements. The first lays out its value
proposition, which founder Ingvar Kamprad articulated this way in the mid-1950s: “to
create a better everyday life for the many people.”

The second statement embodying the identity of this enterprise is a succinct

reference to the way IKEA involves customers in its operating model: “You do your
part. We do our part. Together, we save money.” Each store, for example, is laid
out so that customers pick up their furniture from the warehouse and assemble it at
home.

From its earliest years, IKEA has devoted itself to building and managing this
identity. Kamprad started the enterprise as a college-age entrepreneur in 1943,
selling seeds, postcards, and stationery. In the 1950s, he realized that furniture in
Sweden was so expensive that many people, especially those moving into their
first home, could not afford it. Part of the expense came from an elaborate system
of middle merchants that bought and distributed furniture. From that moment,
Kamprad’s company, IKEA, would give people low-cost style at home.

Kamprad demonstrated his commitment to this identity when he began buying

furniture direct from manufacturers, bypassing distributors to reduce the prices paid
by customers. When Swedish industry leaders saw the threat he posed, they tried
to prevent their suppliers from selling to him. So he moved on to producers in low-
cost Eastern Europe, where manufacturers could customize the product to his
needs and give him an even better price.

The first IKEA retail store opened in Älmhult, a Swedish village, in 1958. Kamprad
and his staff began to put a great deal of time and thought into translating the
strategic into the everyday: designing and building capabilities that set IKEA’s retail
stores apart. For example, the company began explicitly creating a capability in
consumer insight, learning how IKEA’s customers lived, how they aspired to live,
and what frustrated them about their current living situation. Kamprad became
known for walking up to shoppers in IKEA stores and asking, “How did we
disappoint you today?” Today’s company-wide requirement that managers visit
customers in their homes is a direct extension of this original practice.

As IKEA expanded around the world, it codified and standardized many practices,
but it also purposefully reinforced its participative way of bringing capabilities to
scale, and thus translated the strategic into everyday practice. IKEA is a place
where managers routinely let their coworkers figure out new ways to do things, and
it deliberately percolates the best of these ideas back up to the central
organization. As Torbjörn Lööf, CEO of Inter IKEA Systems B.V. (which manages
the worldwide store franchise system and the “IKEA concept,” the intellectual
property shared by the full system), puts it: “Of course there are areas where we’re
very strict and structured. But people don’t resist. They know [the IKEA concept]
has been extensively tested, [and] they know we’re constantly trying out new
things, and if they prove out to work, [those ideas] become part of the concept.”

IKEA is also known for its ability to cut costs to grow stronger. (See “Is Your
Company Fit for Growth?” by Deniz Caglar, Jaya Pandrangi, and John Plansky,
s+b, Summer 2012.) Its people look for cost-saving opportunities relentlessly in
every way that doesn’t affect the quality of the merchandise, the customer
experience in the stores, or the efficiency of operations. That frugality is reinforced
by an annual moment of discipline: The company reduces prices by an average of
2 percent at the start of every fiscal year. “This means we always start with a
minus,” says Peter Agnefjäll, president and CEO of the IKEA Group. “If our group
turns over €27 billion [US$28.7 billion], we start with a minus of €500 million
[US$532 million]. If we don’t do more, we’re going to lose.”

IKEA’s culture reinforces all these practices. “The glue, or the inner strength, of
IKEA is the cultural part,” says former CEO Mikael Ohlsson. If you’re an IKEA
manager, and you visibly waste resources or reprimand a subordinate for
suggesting an idea, you’ll hear about it immediately, not just from your boss, but
from everyone around you.

Finally, IKEA uses its global scale, and its status as the world’s largest home
furnishings brand, to shape its future. For example, it purchases furniture in such
large volumes that suppliers go to great lengths to meet IKEA’s specifications.
Although the leaders of this enterprise are conscious of its enviable market
position, they are careful not to become complacent. As Jesper Brodin, the range
and supply manager for IKEA of Sweden, put it, “Our number one threat is not the
markets or the European economy or the recession or anything like that. It is
ourselves and our own capacity to transform and deliver.”

IKEA’s Identity Profile

Value Proposition

IKEA delivers value as a low-price player and experience provider. It creates “a

better everyday life” at home for many people around the world – providing
functional and stylish home furnishings at very low prices with a high level of
quality, sustainability, and customer engagement.

Portfolio of Products and Services

Known for its flat-packed furniture and its self-pick, self-carry, and self-assemble
model, IKEA sells affordable furniture and other home-oriented products.

Capabilities System

IKEA delivers its value proposition by excelling at four differentiating capabilities:

 Deep understanding of how customers live at home: IKEA applies this insight to a
variety of design, production, and retail practices.
 Price-conscious and stylish product design: IKEA integrates customer engagement,
supply chain efficiency, and price considerations into the design process itself.
 Efficient, scalable, and sustainable operations: IKEA has developed its own
distinctive operational capability integrating supply chain, manufacturing, and
retail practices.

 Customer-focused retail design: The company knows how to create a distinctive

combination of immersive and open-warehouse environments that provide
engagement, inspiration, and a distinctive “day out” shopping experience where
people can comfortably spend time choosing the things they live with every day.

IKEA’s Value Proposition

IKEA is one of the most prosperous merchants in the globe. IKEA employs more than
100,000 individuals in more than 50 countries worldwide and ranks among Forbes Top 50
World’s Most Valuable Brands.

Ikea’s growth can be largely ascribed to its forward thinking strategy and the construction
of a well-organized global network from production to distribution.

Ikea’s business plan is “to offer 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.”

This strategy gives the company a competitive advantage and a clear vision of what it
wants to achieve, guided by its strong values. Here are a few of Ikea’s strong points that
have pivoted the company into the forefront of the world market.

Pricing
Sales outlets
Personal visits
Sustainability
staff
Marketing is essentially delivering value to the customer in the most efficient and
effective way possible so they will want to take an action.

To communicate value, you need everyone who works on your marketing campaigns to
have a clear understanding of your value proposition – not just for your company as a
whole, but for every action you desire a customer to take.

The Ikea Phenomenon

First of all let me introduce you to Ikea we all know nowadays. Ikea was founded in
Sweden in 1943. It operates 370 stores in 47 countries. So what makes ikea so
special? How did Ikea gain customers trust and create the “Ikea phenomenon”?
Lets take a look at Ikea’s successful concept through four main points of Keller’s
Brand Equity model.
Brand identity
When you see Ikea’s logo what comes to your mind? Most likely it’s gonna be house
furnishing, cheap prices or perhaps the Swedish heritage. Brand identity consists
around the question “who are we?” what kind of image the brand wants to give to
consumers.
Slogan “make room for life” is talking to everyone there isn’t any target group.
Ikeas whole concept is build around the idea of creating better life for everyone. To
implement this Ikea creates furnishing products that are affordable for everyone.
Everyone knows Ikea from it’s build-it-yourself concept, Nordic designs and
convenience. Ikea has also managed to get it’s origin part of the identity with
advertising, colours and some products they offer.
Brand meaning

Brand meaning considers what brand stands for. For many students, young
families or people who need short term furnitures Ikea is the place to be. However
nowadays it’s not only for people who try to save money. You can find Ikea
products in almost every house. The Wide variety of products is remarkable. You
can find anything for a comfy home from Ikea with a decent price and
quality. Leontyne Green Sykes, (CMO of IKEA North America) is telling that the
price isn’t the only key thing that matters for Ikea. They aim for sustainability,
form, function, and quality within the low price. Sounds too good to be true right?
Some people might hate the build-it-yourself practise, but that’s a part of their
brand identity and helps to gain those factors. The flat packed furniture is also
much easier to move around and those who struggle with building the furniture can
always call the helping infos Ikea has. The aim is to make everything the most
effortless and cheap as it can be with a good quality.
Brand responses
Brand responses handle the feelings and judgements that the brand wants to bring
to customers. Ikea is relatively cheap so the quality has to be fair enough to keep
the consumers coming back and spreading the name. People are satisfied with the
price quality ratio. Nowadays Ikea has entrenched into many houses in many
countries so strongly that the designs and feelings from ikea are positive and bring
the home like feelings.
Brand relationships
Ikea has a managed to create a brand relationship with many people around the
world. Brand relationship covers the top of Keller’s pyramid. It considers the
special idea that consumer has about the brand that keeps them coming back.
Ikea is seen as the most effortless and perhaps even funny way of getting everything
from the same place. Families like to go to Ikea, because it has something for
everyone not only the furniture, but also food and place for children to play.
Ikea is unique with its idea of bringing their furnishing ideas concretely for
everyone. You see all the furnishing ideas not only in Ikea’s catalog, instagram or
website, but also inside the store, you can walk in the actual rooms. People like to
visit Ikea, because they get a proper experience how would it be like to have a whole
room decorated by ikea. That is indeed one of Ikeas goals “to be the leader of life at
home”. The moment you step into ikea is the moment you start wondering which
kind of room feels like home the most.

To sum up Ikea has indeed managed become one of the leaders of home with
providing good price quality ratio, wide supply and convenience. Ikea as a brand
has managed to create an unique positive picture as the easiest and funniest way of
furniture shopping that makes consumers want to come back.

IKEA Strategy: a global strategy

COMPETITIVE ANALYSIS
Strengths
The main competitive strengths of the company can be identified to be the low priced
product range of furniture, which possess high value in terms of quality and innovative
characteristics at given price. In other words, IKEA’s business model provides consumers
with home and office interior quality and affordable prices.

Furthermore, IKEA has developed and has been continuously developing a network of
stores to increase the organization’s brand recognition, proximity to consumers and
product availability. The well-developed store environment is accompanied by high
quality of customer service, physical evidence of quality and purchasing processes to
enhance the pleasure of the IKEA experience.

Moreover, IKEA’s success is reinforced by the well-developed pricing structure of the

company. The company has set its supply-chain operations to minimize cost and enhance
profitability by the implementation of a number of competitive tactics, such as:
unification of product range; flat packing; distribution channels, etc.

However, IKEA would not have been the successful company as it is today if the
managerial towards the human resources of the organisation are not adequately
customized to stimulate the successful conduction of the company’s supply-chain
operations. In this respect, the company relies on personnel equality, team work and
horizontal hierarchy which would stimulate information flow and knowledge-sharing
(ikea.com, 2009).

Weaknesses
There are a number of weaknesses, which can be recognised in the operations of the
company. First, the unification of product ranges, which is applied globally, is often failing
in identifying the local preferences of consumers. Second, IKEA finds an obstacle in its
expansion ambitions because of recognised bottlenecks in the production processes.
Moreover, the company appears to be unable in withstanding with the pace of network
store development. Third, despite its brand recognition the company still has relatively
small market share in comparison to its competitors in a number of international markets
(ikea.com, 2009).
Opportunities
IKEA has a great number of opportunities for expansion and further product
development. The company has excellent prospects of expanding in emerging markets in
terms of new consumer needs and purchasing behaviour, such as USA and Japan. Apart
from the emerging international opportunities the company can still acquire greater
market share in the present countries of operation.

Furthermore, IKEA has a wide scope of opportunities in terms of product range. The
company can enhance its innovative product lines and thus respond to the preferences of
different segment groups. This would not only increase the company’s market share but
would also enhance the brand recognition of IKEA among diverse segment groups
(ikea.com, 2009).

Threats
Some of the threats, which IKEA is likely to experience, can be divided into external and
internal threats. One of the greatest internal threats for IKEA is the change of the
organisational culture and operational philosophy of the company. In other words, it
often very challenging for companies to sustain the same environmental culture
endlessly. This may have significant impact on the competitive advantages of the
company.

In the context of IKEA’s macroeconomic threats it can be suggested that as the company
is interdependent with the construction and real estate industries, a global economic
downturn is likely to impede the company’s competitiveness and would specifically have
impacts on IKEA’s pricing structure. This can be also observed in cases when the price of
raw materials fluctuate, which would increase the production costs of the company and
thus impact IKEA’s profitability (ikea.com, 2009).
Tu propuesta de valor desde el cliente: Value Proposition
Canvas
Como ya he comentado en alguna entrada del blog, lo verdaderamente importante de
tu idea de negocio es tu CLIENTE. Para ponernos en la piel de cliente y crear una
solución que realmente satisfaga sus necesidades he hablado ya del MAPA DE EMPATÍA.
Ahora os traigo esta interesante herramienta diseñada por el creador del Business Model
Canvas, Alexander Osterwalder: el canvas de la propuesta de valor (Value Proposition
Canvas), o cómo analizar tu propuesta de valor desde lo que ve y siente tu cliente.

VALIDA TUS HIPÓTESIS EN EL MERCADO CON TUS POTENCIALES CLIENTES

Antes se seguir, algo importante. Todas son sólo herramientas que te facilitarán el
análisis de lo verdaderamente importante: QUE TU IDEA SE CONVIERTA EN UN
MODELO DE NEGOCIO SOSTENIBLE Y ESCALABLE. Para eso tienes que validar tus
hipótesis en el mercado, con tus clientes potenciales, y siempre te aconsejo que elimines
todo aquéllo que no aporta valor a tu solución.

En este sentido, como se observa en la siguiente figura, el Value Proposition Canvas se

centra en los dos bloques más importantes del Business Model Canvas: Segmento de
Clientes y Propuesta de Valor. Descárgate la versión original del Value Proposition
Designer en PDF.

Recibe en tu email recursos de todo tipo para innovar en modelos de negocio.

Enviar

Usa esta información solo para enviarme recursos para innovar, nada de publicidad de
terceros por favor.

CONOCE BIEN A TU CLIENTE

Si estás comenzando a poner en marcha tu idea de negocio, te aconsejo que comiences

por utilizar este canvas, para conocer lo mejor posible quién es tu cliente, sus hábitos y
qué problemas reales tiene y beneficios que consigue al consumir tus productos.

Alex Osterwalder te propone definir los siguientes elementos de cada segmento de

clientes que tengas:

1. Customer Jobs o actividades habituales o diarias: actividades relacionadas con tu

producto/servicio que están intentando realizar tus clientes habitualmente.
2. Pains (dolores): situaciones o costes no deseados que experimentan tus clientes al
realizar las actividades anteriores:
 o ¿le lleva mucho tiempo, le cuesta mucho dinero, requiere de esfuerzos
considerables, …;
o ¿qué le sienta mal?: frustraciones, molestias, cosas que les dan un dolor de
cabeza, …;
o ¿hay otras soluciones de bajo rendimiento?: le faltan características,
rendimiento, mal funcionamiento, …;
o ¿qué dificultades y desafíos encuentran?: sobre cómo funcionan las cosas,
dificultades de hacer las cosas, resistencia, …;
o ¿qué riesgos tiene tu cliente?: financieros, sociales, técnicos, …;
o ¿qué errores comunes comete?: errores de uso, …;
o ¿qué barreras encuentra su cliente en la adopción de soluciones?: costes de
inversión iniciales, curva de aprendizaje, la resistencia al cambio, …;
3. Gains (beneficios): beneficios que esperan obtener tus clientes al realizar esas
actividades:
o ¿qué ahorros hace feliz a tu cliente?: en términos de tiempo, dinero y
esfuerzo, …;
o ¿qué resultados y expectativas espera tu cliente?: en términos de nivel de
calidad, más de algo, menos de algo, …;
o ¿cómo entusiasman las soluciones actuales a tu cliente?: características,
rendimiento, calidad, …;
o ¿qué podría hacer el trabajo de tu cliente o la vida más fácil?: un curva de
aprendizaje más plana, más servicios, menor costo de propiedad, …;
o ¿qué buscan los clientes?: un buen diseño, garantías, las características
específicas, …;
o ¿cómo medirías el éxito y el fracaso de tu cliente y el fracaso?: en términos
de rendimiento, coste, …;
o ¿qué aumentaría la probabilidad de adoptar una solución?: coste más bajo,
menos inversiones, menos riesgo, mejor calidad, rendimiento, diseño, …

AFINA TU PRODUCTO O SOLUCIÓN A TU CLIENTE

Define las características de tu producto o solución e identifica cuáles de estas están

resuleven el problema de tus clientes:

1. Products and services (productos y servicios): productos o servicios que ofreces a

tus clientes para ayudarlos con las actividades reseñadas.
2. Pain relievers (analgésicos): Cómo resuelves los problemas o necesidades
(dolores antes relacionados) de tus clientes (ahorro de tiempo, comodidad, fácil
acceso a información, costes).
3. Gain creators (vitaminas): Cómo estás aportando beneficios a tus clientes en base
a las expectativas de tus clientes antes mencionadas.

Para terminar considera que siempre estarás manejando hipótesis que tendrás que
validar con el mercado y así obtener feedback de tus potenciales clientes.
Este canvas que hemos visto es un buen complemento al Business Model Canvas, ya que
te permitirá encontrar el Product-Market Fit, deteniéndote sobre lo que realmente
necesita tu mercado, tus clientes. El Business Model Canvas te ayudará a encontrar un
modelo de negocio que sea sostenible y escalable. Te dejo un enlace a una guía en
pdf que te puede resultar útil.