Mission First, Strategy Second: How Ikea Evolved into the World's Largest Furniture Retailer

February 01, 2018

Apple, Amazon, Google, Ikea, Facebook—these are just a few brands that have changed the way we live and have become definers of our contemporary culture. But one stands out from the rest—Ikea. The Swedish furniture retailer is not only not a tech company, but was founded in 1943, long before brands started going digital. Yet, it has come to exemplify today’s young adults so much that they are sometimes called the “Ikea generation”. The recent passing of Ingvar Kamprad, Ikea’s founder, is an opportunity to see how the entrepreneur democratized design for his generation and those to come.

Ingvar Kamprad in 1977 © IBL/REX/Shutterstock

When Kamprad started Ikea at the age of 17, he didn’t have any grand scheme to revolutionize the design world. In fact, he didn’t even originally sell furniture. His business idea was to sell more for less. At first, he bought items like pens and picture frames in bulk and then sold them at low prices through his mail-order business. Kamprad added furniture to the offering in order to compete with a business rival, and because of its huge success, he eventually discontinued the other products. This is how all of the other Ikea innovations came to be—through experimentation, observations, and implementation. There was no master plan, but instead astute adaptations to market circumstances. This natural evolutionary trajectory could be why, after 75 years, Ikea continues to be the center of how we buy furniture.

Once Ikea started selling furniture, they had a clear mission from which all strategy would follow. Kamprad wrote in The Testament of a Furniture Dealer that Ikea’s goal is “To create a better everyday life for many people by offering 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.” With this clear vision, Jérôme Bartélmy notes in his article, The Experimental Roots of Revolutionary Vision, that Ikea could successfully innovate through logical incrementalism, where strategy comes from small decisions made through trial and learning.

The Billy bookcase, one of Ikea's most successful products, was designed in 1979. By 2009, more than 41 million had been sold. Photograph by John Gribben, assisted by Kei Yoshino © John Gribben/ Kiosk

For instance, to keep prices down Ikea sources furniture from countries with low manufacturing costs. The original decision to outsource came out of necessity when Swedish furniture manufacturers boycotted Ikea to appease other retailers who wanted to keep their prices high. Kamprad adjusted by turning to Poland where costs were 50% lower. While this was unorthodox, it proved successful and Ikea integrated the practice into their business strategy.

Flat-packed furniture, which is a cornerstone of the Ikea model, was also an experiment in how to provide the best value for the lowest price. Gillis Lundgren was responsible for introducing this concept to Ikea. While selling disassembled furniture made sense to cut transportation costs, it was risky to assume that customers would be okay with building their own furniture. However, Ikea tested it in their stores, and it turned out to be popular.

It was an observant, experimental, logical and competitive business acumen that led Kamprad to eventually shape his business into one that would innovate how people furnish their homes. While no decision was made haphazardly, he made up the strategic plan as he went along, which shows that improvisation is essential for entrepreneurial success. He had a vision and the strategy came from trial-and-error. If something proved to effectively achieve the vision, like flat-packed furniture, it would be integrated, but if it proved to hinder the company’s objective, like manufacturing furniture itself, it would be nixed.

Items like the Billy bookshelf or Poang chair have infiltrated houses across the globe because of their great design, affordability, and quality. A look at Ikea’s history shows that it fits so seamlessly in our lives because the company operated with a democratic mission that guided their strategic incremental decisions through experimentation and learning. To continue its success, Ikea needs to remain nimble, experimental, and fast. Other companies need to make sure that their missions are clear and then assess whether their strategy is helping fulfill their purpose. By integrating logical incrementalism, more companies can not only survive for 75 years but also evolve and thrive in the ever-changing marketplace.