IKEA is typical of our survey respondents with revenue growth as a top priority. However, Peter Agnefjäll makes it clear that the goal is “responsible growth with a vision.” In fact, the vision, articulated by his predecessor (and company founder) more than 70 years ago, remains to “create a better everyday life for the many people.”
While that mission remains intact, growth requires being open to change in society and customer demands. Recognizing change, Mr. Agnefjäll put some specific cornerstones in place as heset an aggressive and public goal of doubling revenues by 2020. The four cornerstones of the “Growing IKEA together” strategy are: growth, people,sustainability and lower cost.
Pursuant to the fourth cornerstone, there has been a real change in consumers’ perceptions of “value for time,” along with natural aging of IKEA customers who, when starting a college career or first home, were quite happy with the IKEA philosophy of “do-it-yourself” thinking. “We do one part, the customer does one part, and together we save money.” now, some customers demand “we (IKEA) do more — home deliveries, assembly and installation,” and the ability to design, configure and even buy electronically.
IKEA anticipates shifts and develops products and services to meet them through market research — and a great deal of ethnography through extensive visits to homes.
As we have seen throughout this KPMG and CGF study, the key enabler for IKEA, too, has been a “holistic agenda.” Mr. Agnefjäll recognizes the need to have everybody aware of the company’s goals, metrics and KPIs. As important, the people who work for IKEA must all be a part of the effort and IKEA has to be a “great place to work.” Part of this is a novel two-part incremental bonus system. First, all employees can get an extra month’s pay if the company meets certain specified economic goals. Second, IKEA has a loyalty program for employees. All employees who have been with IKEA for over 5 years share in this second bonus. The point of both is to ensure that profitable growth benefits the employees in finite ways beyond the positive work environment.
However, to make all the work payoff, Mr. Agnefjäll recognizes the “constant area you need to address: avoid silos.” He notes how the 1990s business advice was to delayer hierarchical management. The imperative now is to do this (cut layers) horizontally to make the “process from supply to customers as efficient as possible” and to “share the same knowledge.”
IKEA shows how the commitment togrowth can be implemented successfully by recognizing the “constant balancing”of interests needed to provide the vision of the everyday life to as manypeople as possible.
Business: 322 home furnishing stores in 28 countries
Annual revenues (2014): €29.3 billion (US$33.1 billion)
Brands: about 9,500 products