08 August, 2010

The secret to making billions: consistency and great design

Melbourne Herald Sun, 7th August 2010.

Dutifully following Herself around the twisting alleys of the Richmond Ikea between displays of bedrooms and living rooms and kitchen appliances, I though of how many times I had been in this stage set. In Shanghai, in Berlin, in London. In fact you could go to 37 countries all around the world and find the near-identical store.

"It's no wonder," I thought to myself, "that the guy's the richest man in the world".

"The guy" is Ingvar Kamprad - that's the I.K. in Ikea. At such lofty heights, richness is a matter of degree depending on the strength of the US dollar - in March Forbes marked him as No 11 because the dollar was up but a couple of years ago he was No 1.

Like Steve Jobs of Apple, Kamprad has never invented anything new. He took existing technology, applied brilliant design and focussed marketing, and then stuck to it. He founded Ikea when he was 17, now he is 83.

So what can you learn from the secret of his success? He started with a vision. To give working men and women furniture that was elegant, functional, and inexpensive.

As a model he had the Bauhaus movement of 1920s Germany, that still influences every modern-day architect and designer. An object can be simple and made from cheap materials, yet still be beautiful.

One day in 1953, when it was just a small furniture store, an employee took the legs off a table to fit it into a van. Other bosses might have said, "Mind what you're doing!" Instead Kamprad saw a way to cut down the high rate of transport damage and at the same time save on construction costs. The flat pack was born.

Ikea first entered my marketing consciousness a few years ago when I needed a pair of bookshelves. They should match, but to serve different functions they had to be easily adjusted and customised. I saw what I wanted in the Ikea catalogue but when I called they were out of stock, I'd have to wait three months for the next container to arrive.

Blow this, I thought, I'll get them somewhere else. So I searched every furniture shop and showroom in Melbourne. The cheap ones, the dear ones, the fancy ones. None had anything of the simple flexibility that I needed, at any price. I ended up waiting three months.

As a marketer I was stunned. Here were the Ikea stores packed to bursting any day of the week. You'd think that after 60 years there would be a dozen Ikea clones in every high street. But there aren't.

Sure there are cheap furniture stores, but what they sell is limited and for the most part - cheap. They don't have that elegance of good design. This is where Kamprad, like Jobs, is willing to spend money on the very best.

Being publicity-shy he isn't seen much, but here's a quote of his philosophy: "Any architect can design a desk that will cost 5000 kronor," he wrote thirty years ago in A Furniture Dealer's Testament. "But only the most highly skilled can design a good, functional desk that will cost 100 kronor. Expensive solutions to any kind of problem are usually the work of mediocrity."

So if you're a youngster, here's the secret to making $25 billion. Start with a product everybody wants and needs - chances are you're sitting on an Ikea chair as you read this. Make sure the design is simple and functional but also beautiful.

Make buying it easy - think about the way Ikea stores are laid out, the thought and logic that has gone into every step of the process. And make it affordable so the buying decision is not hard.

Old man Kamprad is long retired to his home in Switzerland. But the story is that no major decision is ever made at Ikea without his approval - often as not it's his idea.

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