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.