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Business Success Stories - Ingvar Kamprad, Founder, IKEA
"It was our duty to expand. Those who can't or won't join us are to be pitied. What we want to do, we can do and will do, together, a glorious future!"
Iconic furniture company IKEA is close to setting up its chain in India. Yes, the world's largest furniture chain store is all set to invest over 100 crore US Dollars in setting up a pan India store network. IKEA's India business plans have come in the wake of the Union Government's decision to allow 100% FDI in single brand retail stores.
While this collaborative attitude of Ingvar Kamprad, a Swedish entrepreneur and the founder of IKEA, one of the world's most iconic furniture brands, reflects its business outlook, it also conceals one important fact: that IKEA is one of the largest, and most successful, privately held companies in the world.
In 2010, Mr Kampard was named the 11th richest person with an estimated wealth of U.S.$23 billion by Forbes magazine. However by 2011, his net worth declined substantially to about U.S.$6 billion because his lawyers produced documents that proved that the foundation he created and heads in Liechtenstein owns IKEA and its by-laws bar him and his family from benefiting from its funds.
Are you satisfied with the performance of IKEA on an international scale?
Ingvar Kamprad, born on March 30, 1926, founded IKEA in Sweden in 1946. IKEA is the acronym for Ingvar Kamprad, the farm where he grew up, Elmtaryd and his home village, Agunnaryd.
Mr Kamprad started off by buying matches in bulk from Stockholm and further selling them at a fair price, but with a good profit. He reinvested his profits and expanded the business to include fish seeds, Christmas tree decorations and pens and pencils, With these experiences, he founded IKEA with the reward money that he received from his father, for doing well in academics.
A Short Documentary on Ingvar Kamprad
IKEA's revolutionary business plan
IKEA originally sold pens, wallets, picture frames, tables, runners, watches and jewellery. In 1947, IKEA started offering furniture that was produced by local manufacturers close to Mr Krampard's home. He saw an opportunity of becoming a furniture supplier on a large scale and soon decided to discontinue all other product lines and focus on low priced furniture.
Mr Krampard developed the ide of foldable furniture, which is the biggest factor behind IKEA's success. He came up with the idea of foldable furniture when he was trying to fit a table in his car.
IKEA's success mantra
Mr Kamprad's business model focuses on the three dimensions of 'Design','Function' and 'Quality' to provide good quality furniture at a lower price tag. By bringing in innovative design, improved functionality and offering excellent quality at lower prices, he charted out the route to IKEA's success.
Also, Mr Kamprad considers the opening of a showroom a big milestone in the success of IKEA. This is based on the fact that customers like to touch and feel their product before buying it. He found that labelling the product with different names made its identification much easier as compared to model numbers. Most products are thus named on the basis of a special naming system devised by IKEA.
IKEA also came up with the KLIPPAN sofa, which was able to handle tough beating by the kids and came with a removable cover, which was helpful in cleaning. Keeping costs down is an important part of IKEA's philosophy and Mr Kamprad's golden rule. He insists that IKEA prices should be literally breathtaking and the entire team works aggressively to convert this thought into practicality.
The DIY- 'Do It Yourself' Revolution
IKEA is a pioneer of the DIY model. IKEA furniture is well known for its modern, utilitarian design and is designed to be assembled by the consumer rather than being sold pre-assembled. The revolutionary flat packaging reduces shipping costs. For example, the volume of a table would be much larger if it is shipped whole, than unassembled.
Flat packaging also minimizes transport damages, increases inventory storage space and makes it easier for the customers to take the furniture home themselves, rather than needing delivery. In fact, most of the 10,000 plus producs of IKEA are kept in the showrooms only and no extra godown is required.
As Mr Kamprad says- 'Only those who are asleep make no mistakes'. He confesses that IKEAhas made a lot of mistakes, but more importantly, learnt from all of them. Every innovation from IKEA is a result of hardwork of Mr Kamprad, his dedicated team and feedback from millions of consumers worldwide.
Co-Workers and not employees
Mr Kamprad prefers to call his employees as co workers. He believes that the company exists not just to improve the people's lives, but also to improve themselves. Most of the IKEA designers have received numerous awards over the years.
Mr Kamprad initiated the 'Big Thank You Event' as a millemium award to all the workers of the IKEA group worldwide. The total of sales worldwide are given entirely to the employees. Every store worker, from the snack bar staff to the president receives the same bonus;for many of them, over a month's pay.
Mr Kamprad has published a few notable works. In 'A Testament of a Furniture Dealer', he details the fundamental ideology of the IKEA furniture retail concept. He also worked with Sweish journalist Bertil Torekull on the book, 'Leading by Design: IKEA story'.
Mr Kamprad and his family reside in Upper Lausanne, Switzerland. When not on business trips, he loves gazing at Lake Geneva. He takes the subway to work and his Volvo, whenever he drives. He travels by train in second class. He is known to wait until the end of village market to take advantage of reduced prices.
Ingvar Kamprad's personal philosophy has crept down into each member of this company. Though he doesn't get involved in the day to day running of the firm, his employees make sure that his ideas are put to practice.
Let us conclude this brief bio-sketch of Ingvar Kamprad, one of the modern business world's greatest entrepreneurs, with on of his magnificent principles-" You can do so much in 10 minutes time. 10 minutes, once gone, are gone for good. Divide your life into 10-minute units and sacrifice as few as possile to meningless activity."