Challenges Faced by Ingvar Kamprad, IKEA's Founder

The IKEA Legend: Ingvar Kamprad

One of the earliest challenges faced by Ingvar Kamprad occurred in a situation that is best highlighted in a story that later turned into the IKEA Legend.

Kamprad originally founded a furniture retail store based on an order-by-mail sales model. In such a situation, transport and logistics become important business factors. It should also be considered that in 1950, furniture was a different product than in the 21st century. Most furniture items were produced in factories or by craftsmen as single-piece items. The factory worker or the craftsman would assemble the entire wardrobe, bed, or table in such a way that the end product would be one solid furniture item. There was no way to dissemble the end product easily.

This turned out to be a challenge. Each item had to be transported to the end customer as bulky freight. This special status increased the cost of transport and storage. Besides, as each item had to be pre-assembled, the costs of production were higher as well.

A New Business Model

One day, it is reported that Ingvar Kamprad overheard one of his draughtsmen (a kind of designer or engineer) named Gillis Lundgren. The man had difficulties fitting a table into a transport. After many unsuccessful trials, he shouted out loud: “Oh God! Let’s pull off the legs and put them underneath!” Ingvar Kamprad understood that his employee was correct in his assessment of the situation. Moreover, Kamprad understood the potential of this remark.

Soon afterward, IKEA introduced new product lines of furniture which were designed to be sold unassembled. In this way, the costs of manufacturing (no more assembly) and logistics (standard transport costs due to optimized measures) could be reduced significantly.

Adjustments Were Made

This was at first a challenge to the company as the design of furniture became a core function of IKEA. Then it was a significant change to the way the customer received and perceived the final product. It required efforts to make the customer understand the benefits of having to assemble his furniture himself. These benefits were the lower price.

Ingvar Kamprad consequently channeled all cost savings he gained from lower manufacturing and logistics costs directly to the customer in form of low prices. In this way, he also established IKEA as a cost leader in furniture retail.

The case emphasizes Ingvar Kamprad’s strength in understanding his own employees and being open-minded to their ideas. It also highlights his ability to see beyond the immediate need and use the full potential of an idea by changing the corporate strategy (and even the entire company!) while becoming a cost leader.

Kamprad's Struggle With Dyslexia

Ingvar Kamprad was known to suffer from dyslexia to some extent. This led to a situation when he had difficulties remembering the order numbers of his own products. This was actually not a business challenge but a personal disadvantage. However, Kamprad’s solution to his problem provides interesting insights into his personality as a leader. Instead of ignoring or delegating this issue, he came up with a creative idea.

The Solution

Normally products would be identified by some kind of code. The code would give indications about the nature and origin of the item but only to the educated user. However, as Ingvar Kamprad had dyslexia, he would have difficulties with any sort of code. He decided to use names instead of code. Beds, wardrobes, and hall furniture would be named after Norwegian places. Chairs and desks would get men’s names. Materials and curtains received women’s names and garden furniture would be identified by the names of Swedish islands.

As all these names were known to Ingvar Kamprad he could visualize and memorize his products without any further difficulties. Today the names of IKEA furniture are iconic. Many people understand that a BILLY bookcase is an IKEA product. Not only Kamprad but also the IKEA customers seem to like the idea of more “human” products. So in the effect, Kamprad turned a personal challenge into a high-value marketing tool for his own company.

The case is a good illustration of Kamprad's ability to take challenges head-on rather than avoid them, with creative rather than standard solutions.

The Nazi Past

In 1994, IKEA received some negative press. A customer in one of the IKEA restaurants sat on one of the IKEA chairs when the chair suddenly broke down and the customer got injured. In order to benefit from the heightened interest in negative IKEA stories, some journalists then decided to research more into IKEA’s and Ingvar Kamprad’s history. Eventually the Swedish newspaper, “Expressen”, revealed that Ingvar Kamprad had a close friendship with Per Engdahl in the 1950s. Per Engdahl was the leader of a right-wing political movement and was known for his sympathies with the German Nazis.

In this case, it should be pointed out that many Swedish people hold the opinion that the country did not adequately deal with its own history during the Nazi era. Though occupied by German troops, many Swedish men served voluntarily in the SS organization. Moreover, a small but significant portion of the population was assumed to have some sympathy for the Nazi ideology, especially as the German Nazis officially considered the Swedes as being part of the so-called Arian Master Race. Therefore the revelation spurred a very controversial discussion among the Swedish people.

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Kamprad's Response

Ingvar Kamprad reacted without much delay. He wrote an open letter to his employees and then gave an interview to an important Swedish newspaper. In both cases, he fully acknowledged his involvement and called it the “Greatest mistake of his life.” Moreover, he said that this friendship was a result of the “sickness of his youth," but that he would like to ask first his employees and then the Swedish public for forgiveness.

A Great Businessman and Leader

These examples of hardship are all important, as they proved a very high leadership quality in Ingvar Kamprad. He was willing to admit mistakes and overcome difficulties. While his earlier successes have proven that he had many strengths and business acumen, his ability to admit weakness let people fully accept him as a leader. By showing human flaws rather than only strengths, his employees and the general public could understand that he is one of them. This makes it possible for them to relate to him and learn from his behavior.

I see my task as serving the majority of people. The question is, how do you find out what they want, how best to serve them? My answer is to stay close to ordinary people, because at heart I am one of them.

— Ingvar Kamprad for Forbes, 2000

Unfortunately, Kamprad passed away on January 27th, 2018. He is remembered as being not aloft but very much down to earth, and as a leader who impacted the people around him in an inspirational and positive way.

Sources and Further Reading

• Ikea.com: The Story of Ingvar Kamprad
• Encyclopedia Britannica: Ingvar Kamprad
• New York Times: Ingvar Kamprad Dies at 91

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

Comments

Sridhar Rajamahanty on September 02, 2018:

Inspiring for Business improvements

0_O on October 17, 2012:

You wanna be an old man?

Pen on May 07, 2011:

I dream that one day will be like you

Sej on April 28, 2011:

Very insightful

Peter on April 26, 2011:

Hi, can I use your article for my paper?