The Story of IKEA
How creativity and action in the face of the unexpected and shaped their future
As you may have heard me say, serendipity is the engine of innovation and winning strategy. It enables you to discover the unseeable, explore the unexplored, and benefit from the unexpected, or “unknown, unknowns”. (If you’re new to the “unknown, unknowns” idea, jump to the bottom of this post for more detail.)
This week, we share a story of how being open to the unexpected and acting on the opportunity it provides can create exponential value for an organization.
So let’s talk about IKEA.
In case you’re not familiar with IKEA, they are a furniture retailer headquartered in Sweden. They are known for their combined store-warehouse format in which you stroll through their stores, writing down the rows and shelves of the items you want. You then collect your items from the shelves and rows on your way to check-out.
Have you ever wondered why their stores are like this? Do you assume it was the result of an innovative strategy involving target demographics, Venn diagrams, and competitive analysis that landed them here? Spoiler alert—it wasn’t.
In reality, it was a series of unexpected events in which open minds and creative choices led IKEA to where they are today. Does IKEA matter? As of September 2023, there were 482 IKEA stores are operating in 63 countries, and in fiscal year 2018, they sold $45.82 billion of IKEA goods.1 Their strategy seems to be working.
Background
IKEA was founded by Ingvar Kamprad in 1943 in a small town in Sweden2. His goal was to create well-designed products of high quality at low prices. This meant the company must operate with low overhead, high product turnover, and direct delivery from their factories. They also had to be creative and save costs in other ways; for example, they created revolutionary flatpack boxes for their products and required customers to assemble their furniture themselves.
IKEA originally started with just one store in 1965 in Stockholm, Sweden. Quickly, the demand exceeded the store’s capacity, causing long lines and unhappy customers. Not knowing what else to do, the store manager began to allow customers to go into the storage section of the store and pick their products from there. Surprisingly, all were happy to do so and expressed no hesitation or dissatisfaction with the arrangement.
The Birth of the “Open Warehouse”
When Kamprad heard about this, he saw it as an opportunity. By opening up what was traditionally a “behind the scenes” space, IKEA could unlock more square footage in each store, reduce costs, and increase overall efficiency.
They also discovered that IKEA’s customers valued the opportunity to gain speed and convenience in exchange for reduced service and comfort—even if it meant lifting and loading large and heavy boxes. No one had ever offered them that tradeoff.
This decision shaped IKEA’s strategic direction from that point forward, creating the “open warehouse” concept you see today.
Applying the Insights
When the unexpected occurred—the stores were overrun, and they couldn’t serve all of their customers—an individual, the manager, made a new connection between two things that were previously thought to be unrelated: customers and warehouses. The result was fortuitous. It worked for customers and it worked for IKEA. The success was shared throughout the organization and they looked at how to adopt this strategy going forward.
The manager had an open mind and took a gamble, and IKEA was able to respond to this “unknown, unknown” in a way that created and unlocked value that didn’t exist before.
“When it’s unclear what the repercussions of the shock will be, and who will change their behaviors, and how, then you need serendipity to point you in an expected strategy direction.”
- Jose Santos and Peter Williamson, Discovering Strategy: Dealing with Uncertainty by Harnessing Serendipity
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