Sounds + Food 'n' Retail

Ikea - strange, alien values

As has become my custom, during my brief life as a blogger, I like to review books, while reading them, not necessarily after I'm finished. The book, I'm currently reading, is aptly titled "Ikea - The Secret of Its Success," a Dutch translation of a German biography of the business and its founder, Ingvar Kamprad. I've until now read very little in terms of European business, and looked forward to getting a grasp on the European mentality if there is such a thing. To be honest, there are vast cultural differences between countries in Europe, though Ikea's continental growth does serve as an interesting lens to understand some of the issues at play.

My initial thought when meeting people and businesses is that where you are from and when you are from matters a great deal to where you are going. There are a great number of social values that come from living in a given location, at a given time. Similarly, Ikea has had a particular past, which I think define the company and explain its goals.

Where Ikea's from, Sweden, is a strange, alien place to me, even more so, 80 odd years ago, when Ingvar Kamprad, Ikea's founder was born, and 60 years ago, when he founded the company. Painfully, I notice that my own business-education has been coloured by "Western" values, or rather Anglo-saxon capitalist ones, which give (the illusion that) individuals (have) pretty much free reign to reach their dreams, and Ingvar's story is very different from that (though he did achieve his dream, I think).

Briefly, before I describe Ikea's history, what is different about the company, as opposed to other multinationals?

• It is still a private company
• It thinks like a community, which has major consequences on work-relations and innovation
• Work-relations: historically, wages are kept low, workers are treated like family, there are no large power-differentials, and I don't think people get fired much.
• Innovation: the way the business develops often comes out of collaborative thinking—how can we make life easier for our workers, how can we make life easier for our customers? Very organic, pragmatic, and frugal!

Ikea was started in Sweden, a country marked by deep socialist (or shallow communist) values that have affected the way businesses were run and even lead to (insane) tax-levels up to 85% (and even more in some cases). A kind of media-revolution was started by the author, Astrid Lindgren, who noticed that she was paying over 100% in taxes on her income and wrote a lengthy article about it, which was published in the Swedish newspaper, Expressen. This ultimately lead to the fall of Swedish socialist democratic party in 1976, who had been in power for 40 years, though later they would regain their throne.

Ingvar Kamprad, who had by that time already migrated to Denmark for related reasons, had himself had a particular past. He grew up on a farm in a small commune, where value was placed on hard work and family. Originally of Germany, emigrated to Sweden, his family felt some affinity with the Nazi-cause of freeing parts of Germany, separated after the first World War. Ingvar only abandoned these values in his late 20s, after having finished a business-degree and getting married.

By that time he already possessed a strong trader's spirit, importing small goods like pens at low cost, and selling them via mail to his customers at a small profit. He later expanded this to furniture, which organically evolved to what became Ikea. Much of his thinking was pragmatic and he wasn't afraid to listen to the advice of his co-workers, and ignore the advice of his competitors—the more established furniture-retailers. Business boomed, of course, and he soon built more warehouses (which acted as store-fronts) in other major cities in Sweden.

But the taxes were killing him. So much so, that he had to live in debt for several years, while being the owner of a very well-todo store. So, for this, and other reasons, he decided to migrate with his family to Denmark, while keeping Ikea in Sweden. Later he would move to Switserland and do something that probably goes against the grain of every capitalist out there. He gave the business away.

He did so for reasons of continuity. He did not want there to be confusion after he was gone, and he did not want his kids to feel pressured to take over the business. Instead he created a foundation (stichting), called INGKA, in the Netherlands, to make sure that Ikea belonged to Ikea, and not to the whimsical demands of its (future) leaders.

That's as far as I'll go today.

Every book has a different lesson in it. This one on Ikea is about its heritage, its values which are deeply ingrained into the Swedish perception of social community, and how these can be preserved as the business grows. I can't wait to learn more about Ikea and find out. I'm about 50% into the book, writing this, and I want to write about Ikea's expansion at a later date, as well as their internal workings. If you do read Dutch, I do recommend picking the book up here, and for German, check the German Amazon-store here.

For other book-reviews, check out my look at McDonalds "Grinding It Out" here and here, as well as at Starbucks' "Pour Your Heart Into It" here and here.