Travels: As much as half of his time; he needs to see more stores to be reassured that IKEA is developing in the right direction.
At home: In Switzerland. “But my heart remains in Sweden – I am Swedish and will die Swedish.”
Enjoys: Work. Poking around in the garden. (Roses.) Fishing, an occupation he has little time for, although he did catch a perch the other day. “I used a casting rod in Lake Möckeln for the first time in years.” Rowing. Walking in the woods.
Good food: “Meatballs are high on the list, but nothing compares with a freshly caught and boiled white fish, served with horseradish, maybe parsley, hard-boiled egg,”
Leadership strategy: By example.
Last read: Davidsen’s ” Dostojevskij’s Last Journey” and “Zojas House” by Bertil Torekull, both nonfiction books on Russia. Due to his dyslexia, he reads slowly.
Product(s) he’d least like to live without: Numerous, all of them from his Swedish upbringing. Examples: Swedish caviar in a tube, and a nicely aged farmer’s cheese, or hushållsost. “It beats any Swiss cheese I can get my hands on where we live.”
At the movies: “I go often, at least every ten years...” He doesn’t remember the title of last movie he saw in a theatre. “I have all the movies anyone could need on TV.”
Music: Nothing too old; nothing too recent. “I really loved Louis ‘Satchmo’ Armstrong.”
Being frugal: Makes life easy.
Favorite piece of furniture: The “Poäng” armchair – “An everyday joy.”
Why he deals in furniture: “It sold.” An early pioneer in mail order, he started replacing smaller items with locally produced furniture. The rest is history.
The real thing: An afternoon with Ingvar Kamprad
He’s on the second floor of IKEA Sweden’s building in Älmhult, Sweden, where it all began. His desk is a round Frisco, a model no longer available. It’s a modest table—seats four, maybe five, looks a lot like any other table in the cafeteria at any small company. There’s no phone or computer in this temporary work area where Ingvar Kamprad, the founder of IKEA, spends two months a year. Yet he’s very close to the core of the business here. Just as he lives very close to the philosophy of business in the rest of his life.
IKEA is known for its egalitarian vision and constant search for better ways to do things: a more economical way to serve a customer, to go on a trip or to get the job done; in design, manufacturing or logistics. Kamprad himself is well known for his frugality.
So when corporate management felt that Kamprad, upon turning 75, should be exempt from the IKEA rule of always traveling “behind the curtain” in airplanes, always going the least expensive route, he said, thanks, but no thanks.
“I refused and I still do,” says Kamprad. “I recently flew out to San Francisco, as is always my rule, in tourist class. To me, at 78, this is not a problem. After a 14-hour trip, we drove out to visit the first store. I believe in the power of positive rule models, of setting a good example: If Ingvar can do it, everybody else can do it as well. Besides, part of finding the least expensive way is also living the life of the majority of our customers, to walk in their shoes.”
So, was this frugality a prerequisite for the success of the business?
“Yes, without a doubt,” the patriarch states. “It directly supports IKEA’s business philosophy of creating well-designed furniture at acceptable prices for the majority of people. How are you going to be able to keep a profile of acceptably low costs unless you keep your own costs down?”
200 stores and no end in sight
Nobody knows for sure whether entrepreneurs are made or born, but they all seem to share certain character traits, personality quirks and behavioral patterns. They are driven. They work towards the kind of long-term goals that you and I get a mere glimmer of at best. The time of day and day of the week don’t matter, and work and leisure time are usually one and the same. They’re often great motivators, albeit with a sting, and they always take total responsibility for their own motivation. It’s easy when there’s always a new goal to pursue. Or as Kamprad, who received this year’s SACC New York Lucia Trade Award, puts it, “Most things remain to be done. Glorious future!”
Ingvar Kamprad is widely considered Sweden’s most successful post-WWII entrepreneur. He himself, however, characterizes himself as “a farm boy who, although born with plenty of flaws, also won the top prize.” He concedes that he also has a good eye for the right people for IKEA.
For example, he and wife Margareta “found” Pernille Spires Lopez, the current president of IKEA in the U.S. They were browsing a store in America’s southwest, commenting on how many of the things had been copied from IKEA, when they were approached by a person who spoke Danish...
“I have a very good sense of who will fit in to the Ikea family,” he says. “The person, the individual, is the most important aspect of what we do, everything else can be solved. All other problems or difficulties will be mounted and mastered if you work with the right people.”
Other than that, he says, it’s all luck.
Be that as it may, his creation now spans four continents; store No. 200 recently opened in New Haven, Conn. By the time you read this, there will be 203 stores -- 21 or 22 of them in the U.S., and 11 or 12 in Canada depending on, well, when exactly you read this. A new store will open in Arizona later this year. A third location in Russia opens this winter. Each store sells close to 10,000 individual items.
Is th company profitable? That’s held pretty close the vest, but IKEA will tell you it served 15 million portions of Swedish meatballs in 2002... that’s how many sofas? The company sold more than 12 million units of one particular coffee mug. Customers worldwide simply love IKEA’s formula of well-designed home furnishings and accessories at affordable prices. Overall revenue for this fiscal year will reach $1.8 billion in the US alone.
Being Swedish is important...
It's difficult to know where IKEA ends and the man begins; the two are so intertwined that the distinction becomes blurry. He both created IKEA and is IKEA: an amazing mix of chief of strategy, bearer of the corporate culture and values and a benevolent father figure for all of his disciples. IKEA people are still, at 80,000 employees worldwide, very much a breed of their own.
Kamprad has always maintained an extremely low profile in the media. In his native Sweden, he was accepted early on as "the real thing," dedicated to pursuing the vision of creating well-designed furniture at affordable prices for the masses.
From a management point of view, Kamprad was a real-life example of management-by-walking-around long before the term was coined. Early on, he decided to leave the day-to-day operations of his company to managers and concentrate on two things: long-term strategies for the continuation of the IKEA concept, and its product range and mix.
Drawing on its Swedish heritage, IKEA recognizes that work/life balance is important for people today. IKEA US offers more flexibility to its diverse co-workers and better health plans than do most comparable retailers. In 2003, IKEA was named one of the best 100 companies in the U.S. to work for as a young mother. Always the egalitarian, Kamprad comments on another aspect of this area of IKEA strategy.
“There’s a lot of talk about diversity these days. When we found out that there were 18 nationalities represented here at the central inventory unit in Älmhult, I posed with all of them to show that we are all one family, regardless of race, religion or background. However, with this diversity, we don’t want to discriminate against the Swedes, either, since Swedish values and ways are the foundation for our entire business concept and philosophy.”
Swedishness is integral to the IKEA concept. Kamprad recalls a meeting in the 1980s that included, among others, former Volvo CEO P G Gyllenhammar. There, the auto mogul commented that he wanted to “Americanize” the Volvo to better fit American tastes.
“This was never the IKEA strategy,” Kamprad says. “We were always proud to be Swedish—we feature the blue and yellow colors on our buildings, and we represent Swedish values, culture and, of course, design.”
He is quick to add that this has nothing to do with the company’s recruitment strategy; 70% of its store managers worldwide are local. Still, “strengthening the Swedish identity becomes ever more important under those circumstances. There was a time when we always wanted a Swedish-trained book keeper at every store, but that had to do with differing bookkeeping practices throughout the world.”
To own, or not to own
Speaking of Swedishness: The ownership of IKEA has been a controversial topic for Kamprad, and speculations about his wealth constantly appear in the pages of business magazines in Sweden and abroad. IKEA was handed over to a Dutch trust in the early 1980s, so Kamprad isn't an owner of the actual IKEA concept anymore, no question about that. But the extent to which he influences the company's day-to-day decisions now and whether his heirs will one day be able to do the same remains an open question.
He dismisses the importance of who owns what: “The actual nationality of the ownership of a company is not important. Whether Swedish herring is owned by Norwegians or Swedish chocolate by Americans is inconsequential; what means anything is intent.
“Take us: IKEA is owned by a foundation located in Holland, yet we are the most Swedish of all the larger Swedish export companies. The important thing is having a good owner—a knowledgeable owner who understands how to best develop the organization and its people, and safeguard the values developed so far.”
The ownership structure of the different entities that constitute IKEA would take a whole other article to explain, and isn’t something most of us would be able to follow anyway. The basic idea behind the present ownership has two aims: Kamprad wanted to ensure the survival of his creation and simultaneously try to keep the actual power inside the family, without giving his heirs the disadvantage of having the tax burden that follows ownership of a multi-billion dollar business. Nobody other than the founder himself and the handful of people that went through the process of creating the web of IKEA foundations and corporations at the end of the '70s and early '80s seems to understand and fully grasp the structure behind IKEA's ownership. Much thought and care was devoted to creating a safety net to keep the IKEA concept true to its origins. The ownership strategy was at one point described as a division between the hand, which owns, and the spirit, which governs.
Kamprad resisted pressures from IKEA’s board of directors in the early 1970s to take the company public, something that in his mind would be in direct conflict with the firm’s long-term strategies. Take, for example, the case of Russia.
“Our present operations in Russia are one of these areas where we know it is going to take a long time to reach profitability,” he says. “Nobody has anything to do with this. Nobody. We can afford this, we know we can afford investments like that for a long time. We can manage it in an appropriate way and have no outside owners whose constantly increasing expectations we have to live up to.”
So, from the company to the man: How much is he worth? Some in the media circus say he’s out-earned both Bill Gates and Warren Buffet; others more conservatively place him among the 15 richest individuals in the world. He dismisses the question out of hand.
“Speculations about IKEA’s wealth and me or my family are moot. IKEA was transferred to the foundation in Holland 30 years ago. Today, although I work a lot for the foundation, the accountants in there are reluctant to pay even small travel costs, so as to avoid talk about the Kamprad family withdrawing money from the foundation.”
An expansive future
After the first IKEA store opened in Älmhult, it took seven years for the second store to open just outside of Stockholm, in 1965. Now, opening new locations has become a science for the company, and continued expansion has become an express train.
"Our real challenge for the future is preserving the concept behind IKEA and taking care of what we have achieved so far," Kamprad had stressed at our first meeting in 1998, fifty stores ago. “As a retailer you have to constantly be open to change – change in product lines, in display and in appearance."
One of the fundamentals of the IKEA concept, he expressed then, is a willingness to seek out new vistas and adopt new ways of doing things. And yet, only about 20% of the IKEA product line changes every year, sometimes more – and not always to Kamprad’s liking.
“Appearances and presentation must change, but ours is a very conservative business. Some of our products, such as the Ögla chair or Ivar storage system, have been part of our catalog since the 1960s. If you look at our list of 200 biggest-selling items today and compare it to ten years ago, you will find that very little changed in terms of names on the list.”
Sure enough: In both 1994 and 2004 catalogs, you’ll find for instance the Billy bookcase, the Ivar storage system and the Sultan bed.
“So this is indeed a conservative industry. People’s basic needs and wants don’t change that much over time. The base remains constant; colors change from year to year. All the more important to constantly rethink and improve what you already have.”
It sounds like a wise prescription for the future.
Text: Ulf Martensson
What’s in a name?
Klippan, Änga, Örebro, Ögla, Ivar, Bosse... ever wonder where all those names came from? They’re all Swedish nouns, names and places. And one person manages a database with all the used and available names and product descriptions for IKEA’s 28,500 products and product lines. That person is Maj-Britt Olausson, whose title, sortimentssekretarare, could be loosely translated as “secretary of the product range,” has all of it at her fingertips. She also keeps 7,500 additional names handy, just in case.
The product range and their presentation are the core of the business. Olausson keeps track on one part of that core. Her work area is in the front of whare Kamprad spends his time, the round table, while in Älmhult, Sweden.
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