The Ikea Edge: A book review by Bob Morris

Posted on: May 1st, 2012 by bobmorris

The Ikea Edge: Building Global Growth and Social Good at the World’s Most Iconic Home Store
Anders Dahlvig
McGraw-Hill (2012)

Outstanding corporate citizenship and outstanding financial performance are NOT mutually-exclusive

What’s in a name?

If the name is Ikea, it tells you who founded the company (Ingvar Kamprad) and the village in Sweden in which he was born and raised (Elmtaryd, Agunnaryd). It is also a name that has become synonymous throughout the world for a wide range of home furnishing self-assembly products as well as stylish but durable accessories of the highest quality.

The title of this review refers to the fact that most of the companies annually ranked among the most highly admired and best to work for are also ranked among those most profitable and having the greatest cap value. In my opinion, that is not a coincidence. As a former president and CEO of Ikea, Anders Dahlvig, explains in this book, global growth enables global social good. Moreover, because global social good is more important to consumers than ever before, those companies who have earned renown for their commitment to it are more likely to thrive. With regard to employees, Dahlvig observes, “I’ve come to believe most people feel motivated and happy is work has a bigger meaning beyond power, wealth, and other inflated statements.” In order words, be associated with, indeed engaged in an organization that is “contributing to a better society.”

What specifically are the most important prerequisites for retail companies to deliver true value to society as well as to shareholders? Dahlvig suggests four defining characteristics:1. A vision with a social ambition combined with a strong value base
2. A business model wherein the product range and price are the main differentiators between you and the competition
3. Market leadership and a balanced global portfolio of markets that defines the company’s short- and long-term growth ambitions
4. Company controlled by enlightened and committed owner(s)

It is important to keep in mind Dahlvig’s clarification in the Introduction: “The purpose of this book is not to tell the story of Ikea. Instead, my intention is to use Ikea as an example of good corporate citizenship.” Throughout his lively and eloquent narrative, Dahlvig shares his insights and recommendations with regard to challenges and issues with which leaders of almost all organizations must now contend. For example, he rigorously examines these in Part 1:

o  How to establish and then sustain a strong and dynamic corporate culture
o  Why diversity (broadly defined) is a sound business choice
o  Major objectives on an environmental agenda
o “Contributing to a better society” within competitive marketplace(s)

In Part 2 (Chapters 6-11), Dahlvig explains how to achieve differentiation through c0ontrol of the value chain; in Part 3 (Chapters 12-17), he shifts his attention to market leadership and a balanced market portfolio; then in Part 4, he examines a process by which to build for the long term, focusing on financials and the proper role of a CEO throughout that process.

Before concluding his book, Dahlvig reaffirms the importance of a company’s purpose: “to fulfill itself, to grow, and develop to the best it can be.” That means outstanding performance in several areas that include but are by no means limited to finance.

Change is the only constant in today’s global business world and it is certain to occur faster and with greater impact in months and years to come. “The changing values in society, the good example set by great entrepreneurs, and the business case for profitability resulting from being a good company are all powerful reasons for change.” They are obviously not the only reasons for change but I agree with Anders Dahlvig that they are among the most important reasons.

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