Case Study: Innovation at IKEA

Redecorating and renovating have become a popular international pastime. In a world facing persistent terrorist alerts and lagging economies, more and more people are opting to stay home and make their homes safe havens. This phenomenon has contributed tremendously to the success of IKEA, the Swedish home furniture giant. In the past 10 years sales for IKEA have tripled, growing from over $4 billion in 1993 to over $12 billion in 2003. Much of IKEA's success can be attributed to its founder, Ingvar Kamprad. Kamprad used graduation money to start IKEA in the small Swedish village where he was born. He started off selling belt buckles, pens, and watcheswhatever residents in the small local village of Agunnaryd needed. Eventually Kamprad moved on to selling furniture. One day in 1952, while struggling to fit a large table in a small car, one of Kamprad's employees came up with the idea that changed the furniture industry foreverhe decided to remove the legs. IKEA's flat-pack and self-assembly methodology was born, and it rocketed the company past the competition. "After that [table] followed a whole series of other self- assembled furniture, and by 1956 the concept was more or less systematized," writes Kamprad. Kamprad is dedicated to maintaining the corporate culture he has helped define over the past 50 years. He is a simple manhis idea of a luxury vacation is riding his bike. He is fiercely cost-conscious and, even though his personal wealth has been estimated in the billions, he refuses to fly first class. He values human interaction above all, and, even though retired, he still visits IKEA stores regularly to keep tabs on what is going on where the business really happens. The culture at IKEA is a culture closely connected with Kamprad's simple Swedish farm roots. It is a culture that strives "to create better every- day for the many people." IKEA supports this culture by:

Hiring co-workers (IKEA prefers the word co-workers to employees) who are supportive and work well in teams.

Expecting co-workers to look for innovative, better ways of doing things in every aspect of their work.

Respecting co-workers and their views.

Establishing mutual objectives and working tirelessly to realize them.

Making cost consciousness part of everything they do from improving processes for production to purchasing wisely to traveling cost- effectively.

Avoiding complicated solutionssimplicity is a strong part of the IKEA culture.

Leading by example, so IKEA leaders are expected to pitch in when needed and create good working environment.

Believing that a diverse workforce strengthens the company overall.

The IKEA culture is one that resonates for many. The buildings are easy to identifythe giant blue and gold warehouses that resemble oversized Swedish flags are hard to miss. Millions of customers browse through the Klippan sofas and Palbo footstools (Nordic names are given to all IKEA products) in the stark, dimly lit warehouses. The surroundings may not be lavish and the service may be minimal, but customers keep going back not just for the bargains but to experience the IKEA culture as well. Sources:

http://archive.cinweekly.com/content/2004/03/24/0324travelikea.asp; http:// www.azcentral. com/home/design/articles/0812ikea12.html; http://strategis.ic.gc.ca/epic/ internet/inimr-ri.nsf/en/gr-76894e.html; http://www.geocities.com/TimesSquare/1848/ ikea.html; http://www.sustainability.com/news/press-room/JE-teflon-shield-Mar01. asp?popup=1; http://www.benefitnews.com/retire/detail.cfm?id=345.

Answer all the Questions:

1. Discuss the three input components of the Congruence Model as they apply to the success of IKEA.

2. Consider Schein's four key organizational culture factors as described in Highlight 12.6. What examples can you identify within the IKEA organization that contribute to the company's strong corporate culture?

3. Based on the level of technological complexity and the degree of environmental uncertainty present at IKEA, what type of organizational structure would you expect?