In: Economics
Ingvar Kamprad—Wealthy Man, Frugal Man, Entrepreneur
Extraordinaire Although octogenarian Ingvar Kamprad, the founder of
Swedish-based IKEA, is one of the wealthiest individuals in the
world, he nonetheless lives quite frugally. Kamprad avoids wearing
suits, flies economy class, takes the subway to work, drives a
ten-year-old Volvo and frequents inexpensive restaurants.i “It has
long been rumored in Sweden that when his self-discipline fails and
he drinks an overpriced Coke out of a hotel minibar, he will go to
a grocery store to buy a replacement.”ii Kamprad was “born in
Småland in the south of Swedena region known as home to many
entrepreneurs and hard-working people, who are adept at using
efficiently what limited resources they have.”iii Kamprad
developed an entrepreneurial spirit in his youth. As a youngster,
Kamprad rode his bicycle throughout the neighborhood, selling
matches, pens, and Christmas cards to the local residents.iv Then
in 1943 when he was only 17 years old, Kamprad used a cash gift
from his father to form a company called IKEA. The name IKEA was
derived from Ingvar Kamprad’s initials plus the first letters of
the farm and village where he grew up (Elmtaryd and Agunnaryd).v
Initially, IKEA was a catalog company that sold pens, picture
frames, wallets, and other bargain goods. “Kamprad used his
village’s milk van to deliver his products when he first started
the business. In 1951, IKEA began selling furniture made by local
carpenters; six years later Kamprad opened the first IKEA store in
Sweden. In 1985 the first U.S. IKEAwhich measured three football
fields longopened in a Philadelphia suburb called Plymouth
Meeting.”vi By 2010, IKEA had grown to 316 stores around the world
with 699 million visitors, in-person and online.vii IKEA “has
stores in thirty-three countries, while continuing to expand
markets in China and Russia.”viii As stated on the company’s
website, “[t]he IKEA vision is to create a better everyday life for
many people. We make this possible by offering a wide range of
well-designed, functional home furnishing products at prices so low
that as many people as possible will be able to afford them”ix and
to do so without compromising quality.x “Consistent with the
Swedish lifestyle, the IKEA product range is functional,
attractive, child-friendly and family-centered, covering the needs
of all family members.”xi “IKEA uses natural materials such as pale
wood, natural textiles (linen and cotton), glass, clay and
untreated surfaces. The natural character of these products has
bestowed on them a universal utilitarian appeal.”xii A signature
characteristic of the company is that “all IKEA productsfrom
furniture to the now famous mobile kitchenscould be packed in
flat, stackable boxes that could be mailed or transported and
reassembled at home.” xiii Interestingly, the flatpack idea for
furniture arose by accident when an employee took the legs off a
table in order to load it into a customer’s car.xiv “[T]he IKEA way
of doing business combines a very Scandinavian embrace of
paternalistic employment policies and a social safety net with a
hard-core drive for profits and market share that bows to no
competitor, anywhere, anytime.”xv IKEA’s unrelenting quest for
profits reflects Kamprad’s frugality. Indeed, Kamprad’s thriftiness
is infused into IKEA’s culture; for example, employees become
catalog models and managers share hotel rooms when they travel.xvi
“Kamprad obviously appreciates what it takes to earn his money and
realizes that there are no guarantees to economic success tomorrow
apart from hard work.”xvii Kamprad founded IKEA on the basis of a
family business model, and the company’s values are still based on
this model. The family business model has special features that
differentiate it from other business models. Typically, the owner
of a family business has a strong entrepreneurial character,
establishes the company’s
objectives and operational strategies, and desires to control most,
if not all, of the business areas.xviii An important characteristic
of the family business model is that the workforce feels that they
are members of the familythey identify with and are committed to
the company, which boosts both their dedication and performance.xix
As head of the “family business,” Kamprad, like many fathers, leads
by example. As Kamprad says: “ ‘If there is such a thing as good
leadership, it is to give a good example’ and ‘I have to do so for
all the IKEA employees.’ “ xx Kamprad firmly believes that the best
example he can provide for his employees is to work hard and adhere
to strict business ethics.xxi Another characteristic of Kamprad’s
leadership approach is a willingness to admit his mistakes and own
up to his weaknesses. Even with his long career and extraordinary
success with IKEA, Kamprad had his share of challenges. “As IKEA
grew, so did Kamprad’s problemsalcoholism, allegations of a Nazi
past, deaths at a store openingbut nothing deflected him.”xxii
Kamprad describes “his association with the ‘new Swedish’ wartime
pro-Nazi party [as] ‘the greatest mistake of my life.’ “xxiii The
manner in which Kamprad dealt with the revelation of his
involvement with the Swedish pro-Nazi party helped people to “fully
accept him as a leader. By showing human weaknesses rather than
only strengths, his employees and the general public could relate
to him and learn from his behavior. The episode also [shows] that
Ingvar Kamprad is a leader who really impacts the people around
him in an inspirational and positive way.”xxiv Some of Kamprad’s
other leadership characteristics include humbleness, a caring
nature for IKEA’s employees, a commitment to simplicity and
frugality, and a constant desire for renewal.xxv At different times
throughout his career, Kamprad has become reflective about what he
has accomplished and he proceeded to jot down bits of his
management philosophy. One philosophical gem is: “By always asking
why we are doing this or that, we can find new paths. By refusing
to accept a pattern simply because it is well established, we make
progress. We dare to do it a different way! Not just in large
matters, but in solving small everyday problems, too.”xxvi Another
of his lofty pronouncements is: “Wasting resources is ‘a mortal
sin’.”xxvii Kamprad also promises “a better life for many.”xxviii
From the mistakes and the successes, what lessons should
otherscurrent leaders or those aspiring to become leaderstake
away from Ingvar Kamprad’s experiences?
Discussion Questions
1. In what ways is Ingvar Kamprad a manager? In what ways is he a leader?
2. Describe the nature of followership that Kamprad seems to have encouraged at IKEA.
3. Using the Leadership Grid and its underlying leader behaviors of ‘concern for results’ and ‘concern for people,’ explain the leadership orientation of Ingvar Kamprad.
4. Use the concepts of transactional, transformational, charismatic, and authentic leaders to describe the leadership of Ingvar Kamprad.
5. What are the key leadership lessons provided by Kamprad’s experiences?
6. What skills would you personally need to develop or refine to
become a leader like Kamprad? What could you do to develop or
refine these skills?
1. Ingvar Kamprad is the manager and the leader for his business. He has played these two roles at a time in his organisation.
Ingvar Kamprad is a manager in the following ways:
a. As a manager, he makes sure to employ potential workers to earn profits in light of organisational goals.
b. His efforts to control operational strategies in light of organisational goals win him over his competitors.
c. As a manager, he makes efficient use of his employees. Example - his employees become catalog models for his products.
d. As a manager, he makes sure to maintain good relations with his employees. Like - managers sharing hotel rooms on business trips to have good relations with each other.
Ingvar Kamprad is a leader in the following ways:
a. As a leader, he decides where to lead the organisation by esatblising organisational goals for the enterprise.
b. As a leader, he has made sure to retain his employees to make productive use of employees by treating employees not workers, but family members of the organisation and leading them to work hard and follow ethics under his supervision.
c. As a leader, he has made sure to infuse the cultural values of Swedish lifestyle like child-friendly, family oriented to grab the maket.
d. As a good leader, he has identified the needs of the various customers from a family like adults, children and has designed products as per their needs and provided them at low cost without compromising quality which wins him over his competitors.
e. As a good leader, he has made sure to make the products from such natural ingredients that ensures environmental as well as human safety. This has given his company world advantage.
f. As a good leader, to grab the market share he has made sure to design and transport products in such a manner that they could be assembled at home easily. This provides customers ease using his products.
g. As a leader, he has made to sure to accept his weakness along with his strengths. So, that to overcome those weaknesses to be a step ahed in good leadership.
Thus, Ingvar Kamprad is a good manager as well as a leader.