Online Extra: Sweden's Answer to Sam Walton
To understand what makes Ikea Group tick, you need to understand the values and vision of its 79-year-old founder, Ingvar Kamprad. It's a vision he'll describe to anyone he meets. "Kamprad has long been a cultural icon and the chief spreader of the Ikea gospel, and he believes it's best spread from mouth to ear," says Harvard Business School professor Christopher Bartlett. "When he speaks, whether it's to customers or employees, people are electrified."
Charismatic, down-to-earth, and a serious tightwad, Kamprad also has an amazing story -- dyslexic farm boy becomes retail genius -- that most of Ikea's 90,000 employees seem to know by heart. That's not surprising, considering that Kamprad's saga and the subsequent rise of the Ikea empire are enshrined in a small museum in the basement of Ikea's offices in Almhult, the site of the first store.
Although Kamprad gave up day-to-day management of the company in 1986, he remains involved, popping up at store openings to greet customers or showing up unannounced at sales-training meetings, shaking hands, and making small talk with staff. "He's an entrepreneur, and he will never fully let go of the business before he dies," says Ikea CEO Anders Dahlvig. "Ikea is his life."
Kamprad got his start in retail at the tender age of six, buying matches in packs of 10, splitting them up, and then selling them to neighbors for a profit. By 17, he was running a mail-order business, selling pens, picture frames, nylon stockings, and wallets from a shed on the family farm in Smaland, a province in southern Sweden known for the industriousness and thrift of its people.
In a canny move, the enterprising teen recruited the local milkman to make his deliveries. Kamprad came up with the name Ikea by combining his initials with the first letters of the farm and village where he grew up.
Two big qualities stand out in Kamprad's style. One is his near-manic frugality. A Harvard Business School case study recounts Kamprad's terse reply to a manager who asked, for good reasons, to fly first class to a meeting. "There is no first class at Ikea," said the boss. To this day, everyone flies economy.
The other attribute: an acceptance of mistakes. In the 1970s, Ikea opened a bank in Denmark that nearly went under. When a local journalist asked Kamprad whether the employee running the bank would be fired, Kamprad said no, noting that the employee "learned a lot during the process, so why should he go and practice what he learned somewhere else?"
That tolerance certainly stood Kamprad in good stead when his own controversial past came to light. In 1994, a Swedish journalist revealed that between the ages of 16 and 25, Kamprad attended several pro-Nazi meetings led by Swedish right-winger Per Engdahl.
Ikea's boss managed to turn a potential public-relations disaster into a coup by penning a public letter of apology to his then 25,000 employees entitled "The Greatest Mistake of My Life." In it, he wrote: "You have been young yourself, and perhaps you find something in your youth you now, so long afterward, think was ridiculous and stupid." It worked. Several hundred staff members signed a letter of support saying "We are here whenever you need us, from the Ikea family."
That loyalty to Kamprad has stayed strong, says Steen Kanter, a former senior Ikea executive who now heads his own consumer-products consultancy. "He has a core group of people who are culture bearers for the brand, who will go out and fight World War III for him," says Kanter.
Anders Moberg, a former Ikea CEO who now heads the Dutch retailer Royal Ahod, says Kamprad greatly influenced his own management style: "He trained people to look at things from the cutomer's' point of view."
Two of Kamprad's three sons are involved in the business. The eldest, Peter, sits on the board of Ingka Holdings, Ikea's parent company, and the youngest, Mathias, is country manager for Ikea in Denmark. Middle son Jonas spends most of his time on Ikano Group, a collection of companies with interests in banking and real estate owned by the Kamprad family since the 1950s. Company insiders say it isn't apparent that any of them is being groomed to replace Dahlvig eventually.
Ever frugal, Kamprad transferred ownership of the Ikea group to a charitable foundation called Stichting Ingka Foundation in 1982. Although the official line is that this change is aimed at ensuring the long-term survival of Ikea by preventing it from being sold or broken up after Kamprad's death, tax considerations have certainly played a role.
Kamprad himself, now a rich man, lives with his second wife in Lausanne, in tax-friendly Switzerland. Although Kamprad's three-decade battle with the bottle is well documented, he insists he has the problem under control, taking monthlong periods of abstinence several times a year. His one luxury is a vineyard in the South of France. But between shuttling to Ikea openings in Russia and touring factories in Poland and China, Kamprad has little time to tend to his vines.
By Kerry Capell in Helsingborg, Sweden