#104 Ingvar Kamprad IKEA

In "Leading by Design: The Ikea Story," Bertil Torekull narrates the remarkable journey of Ingvar Kamprad, from his humble beginnings in a remote Swedish village to founding Ikea, one of the world's largest privately-owned companies. Kamprad's philosophy, shaped by the harsh conditions of his childhood, emphasized frugality, simplicity, and an unyielding desire to provide quality furniture at the lowest possible price. His approach involved direct importation, self-assembled products, and a relentless focus on cost-cutting without compromising on quality, which allowed Ikea to thrive despite industry pushback. Kamprad's unique management style fostered a culture of responsibility and innovation, while his complex, secretive corporate structure aimed to ensure Ikea's longevity and independence. Despite his immense success, Kamprad remained an outsider at heart, wrestling with self-doubt and a persistent underdog mentality.

• Ingvar Kamprad grew up in a harsh, isolated environment in Sweden, which influenced his philosophy and approach to business.
• Kamprad is known for founding Ikea and aiming to give the firm eternal life.
• The book "Leading by Design: The Ikea Story" by Bertil Torekull provides insight into Kamprad's life and the growth of Ikea.
• Kamprad's upbringing was marked by loneliness, silence, and the struggle for survival, which played a role in shaping his dreams and ambitions.

"This book is about a man who grew up in this harsh environment, which was to mark his whole life and fundamentally color the philosophy with which he built his vast empire consisting of thousands of employees and millions of customers all over the world."

The quote highlights the significant impact of Kamprad's childhood environment on his life and business philosophy.

• Kamprad's family emigrated from Germany to Sweden, where they faced poor business affairs and started a guest house.
• Kamprad's mother was a key influence, demonstrating that nothing was impossible, which resonated with his own life theory.
• Kamprad exhibited entrepreneurial skills from a young age, engaging in various business deals and showing a particular interest in trading.
• His desire to help his father financially and to be self-sufficient shaped his business approach, emphasizing frugality and growth within means.

"Survival has never been taken for granted. In this stony silence, this harsh, moraine immorality, the dream of Ikea first grew, for everything requires its special soil."

The quote encapsulates the tough conditions that fostered Kamprad's resilience and entrepreneurial dreams.

• Kamprad started Ikea at the age of 17 and ran it until he was 91, with a gradual accumulation of wealth.
• He initially sold various items through mail order before focusing exclusively on furniture.
• Kamprad's business model was built on direct importation to ensure the lowest possible prices and studying other businesses to learn what to do and what not to do.
• His experience working as a clerk and selling files to his employer demonstrated his knack for identifying and capitalizing on business opportunities.

"The man is Ingvar Kamprad, furniture dealer. He aims to give his firm eternal life."

This quote underscores Kamprad's identity as a furniture dealer and his long-term vision for Ikea.

• Ikea's growth was slow and deliberate, starting as a one-man operation and gradually expanding its workforce.
• Kamprad's entry into the furniture trade was initially commercial, focusing on selling as much quality furniture as possible at the lowest prices.
• He learned important business lessons from competitors, including the significance of negotiating and the impact of even small amounts on price.
• Ikea faced a critical moment when competition in mail order became intense, leading Kamprad to innovate by establishing a permanent display for customers to view products directly.

"In 1948, I appointed my very first employee. Two years later, the firm had grown to a staff of seven or eight."

This quote indicates the modest beginnings of Ikea and its incremental growth under Kamprad's leadership.

• Kamprad recognized the limitations of mail order due to quality issues and the inability of customers to physically examine the products.
• The decision to focus solely on furniture and domestic articles marked Kamprad's transition to a furniture dealer.
• Ikea's modern concept was born from the idea of using a catalog to entice customers to visit an exhibition, which evolved into the Ikea stores known today.
• The establishment of a physical store allowed customers to compare products and make informed choices, leading to the selection of higher-quality items despite higher costs.

"The basis of the modern Ikea concept was created. And in principle it still applies. First and foremost, use a catalog to tempt people to come into an exhibition, which today is our store."

This quote explains the foundational business strategy of Ikea, which combines catalog marketing with physical store experiences.

• Ingvar Kamprad introduced a novel concept that combined mail order and furniture store into one.
• He believed that this business idea was unique and not in practical use elsewhere.
• Kamprad's approach was meticulous and focused on long-term growth, which he described as "step by step, ferociously."
• The success of this model was immediate and laid the foundation for the future Ikea store.
• Kamprad experienced fear and uncertainty at the grand opening of the store, concerned about the store's capacity and fulfilling promises to customers.

"Mail order and furniture store in one. As far as I knew, that business idea had not been put into practical use anywhere else. We were the first." "Step by step, ferociously." "Success was immediate and it created the embryo and resource for the store we created five years later."

These quotes illustrate the originality of Kamprad's business concept and his determined approach to growth. The success of this idea led to the establishment of the Ikea brand.

• Ikea's growth was rapid and transformed the company into a major firm.
• The company established "unwritten laws" that were eventually documented.
• Ingvar Kamprad focused on values such as helpfulness, thrift, and responsibility.
• Kamprad's strategy included meticulous documentation and communication within the company, similar to practices by other successful entrepreneurs like Henry Royce.

"Many of our unwritten laws were already written by this time. Helpfulness, thrift, and a strong sense of responsibility."

This quote emphasizes the core values that shaped Ikea's culture and operations, highlighting the importance of documenting company principles.

• Kamprad stressed the importance of watching costs and translating them into clear prices for customers.
• Ikea's advertising brochures would disclose the cost of their compilation, emphasizing that waste is ultimately borne by the customer.
• This approach to cost transparency and efficiency is a recurring theme among successful businesses.

"To this day at Ikea, we try to translate everything into a clear price and state it." "Our advertising brochures have on the front or back information on what they cost to compile, often with an indication that is, in the end, the customer who has to pay for whatever we waste."

These quotes reveal Kamprad's philosophy on cost management and customer transparency, which is a key aspect of Ikea's business strategy.

• Kamprad admits to having been so absorbed in work that he missed out on his children's childhood.
• He expresses regret and acknowledges that childhood is a time that cannot be reclaimed.
• Kamprad's reflections serve as a cautionary tale about the balance between work and family life.

"But everyone with children knows that childhood does not allow itself to be reconquered."

This poignant quote captures Kamprad's sorrow over prioritizing work over family, underscoring the irreversible nature of childhood.

• Kamprad reminisces about the close-knit beginnings of Ikea when it was like a family.
• As the company grew, maintaining the same level of intimacy became impossible, which is a common sentiment among entrepreneurs.
• Kamprad's best memories are from the time when Ikea was smaller and more personal.

"The days of the family have passed. The Ikea spirit still lives on, but in another way. But those days at the beginning on the farm at home when Ikea was really a family. That remains my very best memory."

This quote reflects Kamprad's longing for the simpler times and the close connections of Ikea's early days, a sentiment often shared by founders as their companies expand.

• Kamprad acknowledges his own fallibility and the inevitability of making mistakes.
• He admits to being too trusting and not learning from early failures.
• Kamprad's candidness about his weaknesses and errors is part of his broader message to entrepreneurs.

"I have not been able to avoid severe losses. Both fiascos and triumphs have marked the history of the firm." "For a long time, I found it difficult not to believe people."

These quotes highlight Kamprad's acceptance of mistakes as a natural part of the entrepreneurial journey and his personal struggle with trust and learning from past errors.

• Kamprad faced opposition from competitors and supplier boycotts as he sought to revolutionize the furniture industry.
• The industry's pushback resulted in challenges for Ikea, which Kamprad had to overcome.
• The conflict was rooted in Ikea's direct-to-consumer sales model, which disrupted traditional wholesale practices.

"The atmosphere became increasingly rancorous, and Ingvar had many tearful nights." "Superficially, the battle was about whether fair exhibitions could sell to the visiting public, which Ikea did, or whether only wholesale trading could occur."

These quotes convey the difficulties Kamprad faced as he challenged industry norms and the emotional toll it took on him.

• Ingvar Kamprad discusses the resistance Ikea faced from established industry players.
• The National Association of Furniture Dealers attempted to limit Ikea's competitive practices.
• Ikea was banned from various activities but continually found creative solutions to circumvent these restrictions.
• Ikea's resilience and innovation allowed it to eventually overtake its competitors despite the pushback.

"Year after year, the same complaints against Ikea were made. By 1952, restrictions had gone so far that exhibitors were not even allowed to take orders."

This quote highlights the extent to which the furniture industry attempted to stifle Ikea's business practices through restrictive measures.

"The National Association of Furniture Dealers succeeded in forcing the fair to ban Ikea from even giving the prices of exhibited goods."

This quote exemplifies the targeted actions against Ikea aimed at hindering its ability to compete on pricing.

"Petrified conservative sales thinking was up against a new and insolent price pressure."

The quote contrasts the traditional sales mentality with Ikea's innovative approach to pricing, which was seen as a threat by competitors.

• Problems are viewed as opportunities for innovation and growth.
• Ikea's self-assembled furniture concept stemmed from the need to reduce transport damage.
• The design was adapted for machine production, which saved costs and lowered prices for customers.
• Ingvar Kamprad believed in nurturing supplier relationships by paying promptly and offering cash discounts.

"Regard every problem as a possibility."

This quote encapsulates Kamprad's philosophy of transforming challenges into opportunities, a principle that has been instrumental in Ikea's success.

"We were forced to design our own and that came to provide us with a style of our own, a design of our own."

The necessity to create unique furniture designs due to competition led to the development of Ikea's distinct style and product offerings.

"Ikea paid within ten days with a deduction for a cash discount. Others did not pay for three or four months and yet made the same deduction."

This quote highlights the importance Kamprad placed on building strong relationships with suppliers through fair and prompt payment practices.

• Poland's transition from communism provided an opportunity for Ikea to expand and attract young, educated employees.
• Ikea's management style empowered employees with responsibility and encouraged the use of imagination and common sense.
• Ingvar Kamprad's approach to management favored independence and entrepreneurial spirit among his staff.

"Ikea's simple and open structure of command has become a dream for people used to inaccessible state hierarchies."

This quote reflects on Ikea's management structure, which was appealing to individuals accustomed to rigid, bureaucratic systems.

"Because young people were given responsibility, because employees were permitted to use both imagination and common sense."

The success of Ikea in Poland is attributed to the company's culture of entrusting employees and valuing their creativity and judgment.

• The early history of Ikea demonstrates the importance of learning from both successes and failures.
• Ingvar Kamprad's vision extended beyond profit to creating a company that could withstand various challenges.
• Going public was rejected as a strategy due to the potential negative impacts on Ikea's long-term vision and independence.

"The story of Ikea is a businessman's manual. It teaches that few events in the inception and growth of a company can be ignored as unimportant both fiascos and success."

This summary encapsulates the entrepreneurial journey of Ikea, emphasizing the significance of every event in shaping the company's trajectory.

"It was not only a long life for Ikea I wanted to achieve, but also its independence of any one single country."

Ingvar Kamprad's quote reveals his ambition for Ikea to be a global and enduring entity, not tied to any specific nation's interests or policies.

• Ingvar Kamprad designed a complex ownership structure to ensure Ikea's longevity and protect it from external threats.
• The structure involves a combination of foundations, coordinating groups, and a decentralized approach to management.
• The intricacies of the structure are largely kept secret and are difficult to understand even with visual aids.

"Now Ikea had a Danish head office, a Dutch foundation, a Belgian coordinating group, whatever the hell that means, and a founder living in Switzerland was Comprad."

This quote illustrates the complexity and international nature of Ikea's corporate structure, which spans multiple countries and legal entities.

"No one and nothing was to destroy or endanger his business vision, whether a member of the family or market forces or politicians."

Kamprad's quote underscores his determination to safeguard Ikea's future against any potential internal or external disruptions.

• Ikea's culture was perceived as casual and somewhat disorganized, but it fostered entrepreneurship and innovation.
• Ingvar Kamprad had a particular affinity for independent thinkers and mavericks within the company.
• The company's growth necessitated the delegation of financial responsibilities, which led to conflicts when the founder's vision was not aligned with new management.

"The combination of lone wolf and herd animal is, in fact, the sum total of Ingvar's own makeup."

This quote reflects on Kamprad's personality as both an independent thinker and a team player, which influenced his management style and company culture.

"A decisive moment in the growth of a company is when the founder has to hand over the financial function to somebody else."

The quote addresses a critical turning point in a company's development when the founder must trust others with key financial responsibilities.

• Ingvar Kamprad's company is experiencing growth, prompting the need for more structure.
• The early members of the company are likened to pioneers, compared to Jesus and his disciples, with Ingvar as Jesus.
• These pioneers are criticized for being frivolous in their business methods.
• Jan, a key figure in the company, felt fired multiple times but was seen as a necessary "enfant terrible" and super entrepreneur.
• Ingvar did not restrain the energetic young men who joined the company, allowing them to test the limits of ideas.

"The pioneers would be accused of being frivolous in their business methods."

This quote suggests that the early methods of the company were seen as unorthodox or not serious enough, reflecting a tension between innovation and traditional business practices.

"Ingvar comrade has never really had anything against mavericks, however rowdy they are."

Ingvar Kamprad appreciated individuals who were innovative and unorthodox, similar to himself, and gave them more freedom than they might have received elsewhere.

"Camprad preferred them to make mistakes rather than be idle."

Kamprad valued action and learning from mistakes over inactivity, emphasizing a culture of experimentation and learning within the company.

• The IKEA way refers to the company's culture and is studied like a "Bible" within the organization.
• Ingvar wrote "A Furniture Dealer's Testament" in the 1970s, an internal company textbook outlining the IKEA way.
• The text serves as a guide for managers to become cultural ambassadors of the company.
• It emphasizes the spirit of the company, the importance of maintaining a good company culture, and the need for internal growth alongside external expansion.

"Gradually, this insight would lead to a phenomenon that goes under the name of the IKEA way, the global company's Bible study that takes a furniture dealer's testament as its number one textbook."

This quote explains how the IKEA way became a foundational element of the company's identity, guiding its practices and management philosophy.

• IKEA has four basic laws that have been in place since its inception.
• These laws focus on financial stability, property ownership, self-financed expansion, and humility without boasting.

"A good cash reserve must always be insured."

This quote emphasizes the importance of financial security for the company.

"All property must be owned mean you have to own the stores and the land that the stores are on."

Ownership of property is a core principle, ensuring control over the company's physical assets.

"All expansion is to be largely self-financed."

IKEA aims to grow through its own earnings, minimizing reliance on external funding.

"There should be no boasting."

The company values humility and discourages self-aggrandizement.

• Ingvar Kamprad's testament outlines the nine commandments of IKEA.
• The testament shares similarities with Henry Ford's business philosophies.
• It emphasizes customer-focused quality, cost-consciousness, company spirit, profit as a resource, achieving results with limited resources, simplicity, innovation, concentration of efforts, responsibility, and continuous improvement.

"We have decided once and for all to side with the many. What is good for our customers is also, in the long run, good for us."

This quote highlights IKEA's commitment to its customers and the belief that serving them well is ultimately beneficial for the company.

"Quality must never be an n in itself. It must be adjusted to the consumer's needs."

Quality is defined by customer needs, not by arbitrary standards.

"Profit gives us resources."

Profit is not just about financial gain but about acquiring the means to achieve the company's goals.

"Wasting resources is a mortal sin at IKEA."

Resource efficiency is a core value, reflecting a focus on sustainability and cost-effectiveness.

• Ingvar Kamprad, despite his success, felt like a misfit and struggled with self-doubt.
• He identified with being an outsider and understood the feelings of not fitting in with the establishment.
• Kamprad's personal philosophy included being a rebel and a friend of the people, balancing patriotism and capitalism.

"A small, naive, 17-year-old entrepreneur fussing over a lost dollar and crying when he's misunderstood."

This quote reflects Kamprad's enduring sense of being an underdog and his emotional connection to the business.

"A rebel and friend of the people, a patriot and a capitalist, all in the same bargain box."

Kamprad's identity was multifaceted, combining elements of rebellion, approachability, nationalism, and business acumen.