Strategy

Inside IKEA’s Digital

Transformation
by Thomas Stackpole

June 04, 2021

Employees search for "Click & Collect" goods ordered online for contactless pickup at an IKEA store in
Duesseldorf, Germany on January 12, 2021. Rolf Vennenbernd/picture alliance via Getty Images

Summary. How does going digital change a legacy retail brand? According to
Barbara Martin Coppola, CDO at IKEA Retail, it’s a challenge of... more

What does it mean for one of the world’s most recognizable retail
brands to go digital? For almost 80 years, IKEA has been in the very
analogue business of selling its distinct brand of home goods to
people. Three years ago, IKEA Retail (Ingka Group) hired Barbara
Martin Coppola — a veteran of Google, Samsung, and Texas
Instruments — to guide the company through a digital
transformation and help it enter the next era of its history. HBR spoke
with Martin Coppola about the particular challenge of transformation
at a legacy company, how to sustain your culture when you’re
changing almost everything, and how her 20 years in the tech
industry prepared her for this task.

How is the digital transformation at IKEA changing how the

company actually operates in the day-to-day?

In practical terms, we’ve approximately tripled ecommerce levels in

three years. We have transformed our stores to also act as fulfilment
centers. To make that work, the flow of goods needed to change, the
supply mechanisms needed to change, and also the floorplans of the
store needed to change. Ecommerce is open 24 hours a day, while
traditional stores are not, which means we’ve needed to learn how to
operate at two speeds, while operating from one space. Goods can be
delivered from the stores, or from different distribution centers —
and algorithms are helping figure out where the goods are being
sourced from. We’re rapidly expanding data and analytics and
changing how they’re embedded in decision making.

With the pandemic and with the closure of approximately 75% of our
stores, we ramped-up and accelerated even more as people turned
online and towards digital solutions. Things that would normally take
years or months were carried out within days and weeks.

The digital transformation is not a goal in and of itself, and it is so

much more than technology. We are transforming our business: We
are exploring potential new offers to customers, new ways to bring
our offers to customers, and new ways to operate our business. And
in order to be successful, digital needs to be embedded in every
aspect of IKEA. Digital is a way of working, making decisions, and
managing the company.

How would you describe what it is you’re trying to do through

this process?

To realize our mission, we need to stay relevant, and we need to

evolve with the ever-changing needs of our customers.

Now, this process is a bit like an iceberg. At the top of the iceberg, we
have the customer needs and adaptation — revamping everything
around customer interaction and new purchasing journeys — and
under the surface we are making huge changes to our business and
operating model. And what is under the surface is a much bigger
change than what we see above.

I’ll give you an example. We are revamping customer interactions

both digitally and, in the store, and we’re connecting them. For
instance, you might start planning your new kitchen by yourself at
home on ikea.com, and then you come to the store or connect with a
remote customer meeting point, and we should be able to meet you
where you are. Another example is the “Shop & Go” feature in the
IKEA app — available in a few countries — which allows you to use
your own mobile device to scan, pay for items and skip the checkout
line in the store. That requires a complete modernization and
reengineering of all the tech landscape within IKEA. It also requires a
different way of operating to fulfill the goods to be bought. It requires
reengineering of the full value chain, which needs to be governed by
data and become more flexible than before. The result is meant to be
a seamless, consistent customer experience.

These transformations are happening at many layers within the

company, and they require a multi-year strategy and a clear North
Star to follow.

How has your strategy changed as you moved through this

process? What did you think it was going to be like at the
beginning, and what has surprised you and what has changed
along the way?

The scope of the strategy has increased significantly over time as the
company realized that digital needs to be embedded into everything
we do. Our first focus was on revamping all meetings with the
customer, especially online with new and improved navigation and
search function. We secured high growth for ecommerce which went
from 7% of revenue to 31% in 3 years.

Inventory management, logistics, fulfillment, and supply chain

overall had to be modernized through data, which in turn brought in
new ways of working and operating. For example, stores became
fulfillment centers. We’re also embedding new skills and people who
bring new agility.

Substantively, what does digital transformation mean for a

company like IKEA? How does it change the company’s DNA?

The DNA of IKEA doesn’t change, and it’s important that it doesn’t.
Operating model wise, it means we’re adding data, increasing speed,
using analytics in all our decision-making. Also, the skills we’re using
are changing. I recall when I started at IKEA, my boss, Jesper Brodin
said, “We’re changing everything — almost.” To me, this means we’re
changing how we do things, but the soul of the company stays the
same.

Can you elaborate a bit on how to make sure the vision for the
company remains consistent, even as you’re enacting
fundamental changes?

We are reinventing IKEA for the future, no less than that. At the
beginning, this meant we needed to ensure that the transformation
kept the IKEA DNA intact — that is, the culture, the values and the
vision of creating a better everyday life for the many people. The
question then became; how do we express these in the digital
environment? And this led to the notion of human-centric
technology. How to embed ethical behavior, respect diversity, how to
treat people fairly — without bias — through technology. This means
that we are focusing more on what we should do with data, rather
than what we could do with data.

IKEA has been gaining consumer trust for 78 years by having the
unique opportunity and privilege to be invited to people’s home. This
means we have built a lot of trust. And we want that same level of
trust, if not higher, in the digital world. We know that data in the
digital world is not being treated with the level of respect people
require, and we are working on a new way that puts people and their
privacy at the core.

So, we’re taking a new approach. Our starting point was asking
ourselves the most fundamental question: How do people react when
they have more control over their own data, specifically on how and
when they interact with a company? Our first step to tackle this was
the Customer Data Promise, our commitment to putting people first in
all data-driven processes. We want to provide customers with
understanding, control, and the ability to make decisions about their
data, so we added a functionality that lets consumers edit their data
in the app at any given time. They see a centralized data control panel
in the app, where they can change and personalize their inspirational
feed and get contextual access to their data settings.

And what we have seen thus far is that first, the data we are capturing
is more relevant. When people decide what data they share with you,
what you get is more relevant to their needs. Second, that there is
more trust, therefore more engagement, and people are coming back
and interacting with us more.

How does your experience at a place like Google shape how you
think about a task like this digital transformation at IKEA?

I’ve worked in the technology industry for over 20 years for many
innovative companies. And during that time, every single experience
has given me learnings that I’m applying to IKEA’s transformation
today.

If I think about Google specifically, I’d say that speed, agility, and a
strong customer focus, are important learnings I took with me. So,
when you think about how to create products in the unknown, it’s
really about fast iterations, learning through those iterations, and
giving consumers the chance to gift it back, so, little by little, we build
the product together with customers.

Another learning from Google is that people are the most important
asset a company has. You need to take care of people, and make sure
that the right skills are present. This is what attracted me to IKEA,
people here always come first, and they are the number one priority
for the business. Recently we’ve been hiring for skills we didn’t have,
as well as reskilling a lot of people so that together, we can become a
high-performing team, caring for people’s wellbeing whilst
continuously learning and growing.

And the last thing I learned, I would say, is purpose. At Google, I was
going to work with the deep belief that I was making people’s lives
better — at that time we were revolutionizing how technology could
help people. And I have that same feeling at IKEA. This has helped us
a lot when going through our transformation. We know there will be
challenging times, but we also know there is something bigger than
our own reality, it helps us put energy and heart into creating an
IKEA for generations to come.

Culture plays a huge role in how successful digital

transformations are, right? How much of being a successful
CDO is addressing cultural and human issues?

Transformations are about moving large numbers of people, not just

a few people who have the necessary digital skills. That’s why culture
is so important.

Coming in at a top executive level, I had to first become accepted as

part of the community. IKEA originates from the south of Sweden.
The company values are about hard work, humbleness, being down to
earth, and a strong entrepreneurial spirit — people want to go the
extra mile for the company. I had to show through my behavior that I
share the same values. Then, it was about meeting people and
communicating an inspiring vision. Finally, it was about putting
forward simple steps that people can see themselves following.

Another part of leadership in transformation is having an open mind

and believing that many things are possible, as well as knowing the
importance of people and bringing them along in that journey with
you. I always say to people “We’re going to do this and succeed at it,”
which is not unrealistic, but rather a push to the teams to know that
they can achieve the goals they set out to accomplish. And it’s
important to bring your whole self to work, including the vulnerable
side, especially during the pandemic. Saying “I’m human, I’m having
a hard time right now,” allows other people to be vulnerable too.
Giving people the permission to be human doesn’t make you less
effective, in fact I see it as an important step to building trust.

How do AR and VR feature in your plans for IKEA’s future?

They are important new technologies that we need to test and try.
We’ve been testing VR in the store, to visualize how a piece of
furniture fits in a room. We recently acquired a California company
by the name of Geomagical Labs. With their new AI technology, we
will bring home visualization to a different level. By letting you scan
your home, one room at a time, and turn it into a 3D model in which
you can try out the IKEA home product range from any location. It’s
a tool for democratizing home design, and that means it must be
accessible to everyone. You will be able to access it via any
smartphone — iPhone or Android; it needs to be simple enough for
people to use it.

As a leader, how do you think about using new technologies to

support rather than replace workers?

To automate or digitize IKEA, it may sound at times like we’re

moving away from the humanity of it all, but in fact it’s the other way
around. We are enabling people to do more of what they love, to
learn and try new and different jobs that weren’t possible before. We
want to relieve people of repetitive tasks, so a lot of our work right
now consists of reskilling and helping people carry out a variety of
roles.

The pandemic, of course, changed and accelerated everyone’s

plans regarding projects like these. But what has your
experience been, and what have you learned from it?

There’s been a lot of learning throughout this process. And many

challenges remain. But the key is resilience, it’s never quitting. Giving
the organization the strength to solve any problem. The resilience we
have built so far is why we are where we are now, in a position of
strength, always looking to grow and improve.

Editor’s note: This interview has been edited and condensed for clarity.

TS
Thomas Stackpole is a senior editor at Harvard
Business Review.

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