We’re in the midst of a global economic downturn, and people are having to get used to lower living standards. Does IKEA, as the world’s leading budget furniture retailer, benefit from recessions?
Economic downturns are never good. I lived in Spain until 2009, so I’ve seen how the recession affects people. Everyone, regardless of where they live, wants to have a good life, but people are definitely becoming more value-conscious. When that happens, IKEA becomes an even stronger option than otherwise. We’re responding by lowering our prices even though prices on raw materials are going up. And right now we’re talking with several cities and governments about opening more stores in their countries, which will obviously create new jobs. For example, we’ll speed up our expansion in Spain, Italy and the UK.
We’re doing this interview in a sofa in an IKEA store, not in a corner office. Is that part of your leadership style?
It’s part of the IKEA style. Of course we have offices, but they’re usually pretty informal. We want to meet reality, and part of that is going out and meeting people, from our store employees to our suppliers to people in remote villages. Of course I’m totally insufficient – I don’t have time to meet everyone, but I spend most of my time doing it. So do our other executives, and then we share our impressions. Based on that we form our strategy. Our strategy is 5-10 years, which is sometimes frustrating because we feel things are going to slowly, but it also gives us power and security because we don’t do things ad hoc.
This philosophy seems to become more common among other companies as well.What’s your recipe for success? How did you become CEO of IKEA?
I never planned to become CEO. My working style has always been the same, so I don’t think there’s a big difference between being CEO and being a sales assistant. We have many people who have started on the shop floor and risen through the ranks because they share IKEA’s values. One mustn’t complicate things. Do a good job, do a little extra and be a good colleague. Then you’ll be promoted – if you want to. But most importantly, do what you enjoy. I’ve never believed in career planning, doing something now because it will be useful in the future. If you don’t have a good time doing your job, the result will be crap.
Ingvar Kamprad started IKEA as a teenager. Bill Gates didn’t have a college degree when he launched Microsoft either. Is university education overrated?
What matters is the type of person you are. At IKEA we try not to use the standard format for everything. There’s always a risk with trends – whether it’s university education or corporations using consulting companies – that everyone has to do the same thing. Instead we try to find people who are innovative. We never really look at what kind of education a person has. If you learn something by attending university, it’s obviously good, but a university education that’s static doesn’t have much value. We don’t really put any value on whether people have attended university or not. Some of our top executives have degrees, while others have learned their skills on the labor market.
Where do want to take the company?
My focus is people who lead regular lives, have regular incomes and relatively small homes. They have dreams, too, and want to create a cozy home for themselves. Today technology plays a big role at home, but how can we make our homes beautiful even though we have lots of cords floating about? Sustainability another area people care strongly about. Our new water taps use 30% less water, and now we’re making a big push with LED lightbulbs. LED bulbs use 85% less energy than regular bulbs and last for 20 years. Of course, our challenge is making the LED bulbs as cheap as possible. Natural resources are another important area. We have over 100,000 cotton farmers involved in a new pilot project with WWF, where they use 50% less water and 30% less fertilizer and pesticides – and they still get a better harvest. Our goal is to soon have all our cotton grown that way. And we’re looking at ways of mixing fibers with cotton.
How will people live in 2021?
The basis of our work is being in touch with society and how it influences regular people. Our task is to meet people’s changing lifestyles with our products. Right now people’s wallets are getting thinner. Climate change is having an impact on society. Environmental concerns are becoming more important. Technology is changing people’s home lives. People are getting more concerned about health – what we’re eating, and the materials that exist in our homes. We’re trying to let all these changes inspire us.
But in 10 years, what will my home look like?
There’s a huge difference between different markets. We just opened our second store in Shanghai, and in China there’s an enormous change happening, with rapid urbanization across the country and people having their fist big, modern apartments. People’s incomes are increasing dramatically. Then you have Spain, where young people are moving in with friends or their parents, since living expenses eats up such a large chunk of their incomes. People are becoming more value-conscious, and home life is becoming more important. We’re using our Scandinavian roots to show people how they can improve their living. It has to be good for everyday life, functional, good for kids, and above all not wasteful.
You started your career at IKEA as a shop assistant and have moved up the ladder. How do you spot a potential leader?
Our corporate culture is the basis of our success. Our roots are in [the Swedish region of] Småland, where simplicity, entrepreneurship and community are very important. People who thrive here are motivated by that combination, so it’s natural that IKEA executives spend most of their time out in real life, not in an office. I visit stores and suppliers, I talk to our employees. They know what works and what doesn’t. We try to minimize status and prestige. Back to your question: we recruit based on those values. We want down-to-earth, engaged, honest and innovative people. We recruit people solely on values, not experience. The person, not his or her CV, is the most important part. Then you can learn and develop on the job. It’s about being the same person at work as you’re at home – simple as that.
A company as a caring environment, that sounds a bit old-fashioned…
When I started we had 4,000 employees. We now have 130,000, and we keep adding more. But we like to see ourselves as a caring employer, a company where people like to spend their entire career. But we recruit outsiders at many different levels as well. We bring in 40- and 50-year-olds. The most important thing is that you share our values.
What about women?
The majority of our 17,000 executives are women, and 40% of our top 200 executives are women. We don’t do top-down management, and I think our environment encourages women who otherwise would not have pursued a career as executives. We try to model positions within the company to the life stages people go through, including offering people horizontal moves – new countries, new departments -- if they don’t want to climb the corporate ladder. That’s a good way of retaining employees, regardless of their gender. And we expect our employees to take individual responsibility, which is also a good motivator for most people. We have a new vice-president here in Sweden who used to be a store manager in Holland. When she had her children, she split her job with a co-worker. Now that her children are older, she’s able to climb the career ladder. But of course we’re continually frustrated. There are so many things we want to do, and we always feel we have too few resources to do them all.
So how do you address mistakes?
Only people who are asleep don’t make mistakes. We try to have an environment where you can say “sorry, I made a mistake” and then we fix it. Of course, you shouldn’t make the same mistake many times, but you shouldn’t be afraid of making mistakes, or try to cover them up. That’s when the problems begin.
Have you changed other products that turned out to be failures?
Not failures, exactly, but we’re improved our transportation. We hate to transport air, but we used to transport a lot of it. We have flat packages, but countries have weight limits that you mustn’t exceed, so we still have to transport air. Add to that the growing concern about natural resources. What we’re trying to do now is to mix the wood contents in our furniture. We’re mixing low wood density with high wood density so the furniture is both durable and a bit lighter. As a result, we’re using 25-30% less wood and make the furniture lighter to transport both for our trucks and for our customers.
What’s the most important thing you’ve learned from your mistakes?
Don’t be afraid to take the initiative. If you make a mistake, own up to it and try to fix it. Fear of mistakes prevents a companies, and people, from developing. And it creates bureaucracy and insecurity. As a leader, one should try to inspire people to use their skills. But people hold their skills back if they’re afraid of making mistakes. The only area where I’m very strict about mistakes is ethics.
How long does it take you to assemble IKEA furniture?
The sofa you’re sitting in took me five minutes to put together. 95% of my furniture at home comes from IKEA, and I’ve always assembled it myself. It’s a fun thing to do, and it’s interesting to see what we as a company could do better. It’s like testing my own company at home. I want IKEA furniture to be fast and easy to assemble; sometimes IKEA furniture is simply too complicated.