# IKEA—Ingvar Kamprad’s startup from 1943 - URL: https://www.petrikajander.com/kamprad/ - Author: Petri Kajander - Date: 2022-10-25 - Language: en - Audio: https://anchor.fm/s/1cba80bc/podcast/play/59510826/https%3A%2F%2Fd3ctxlq1ktw2nl.cloudfront.net%2Fstaging%2F2022-10-19%2F298035990-44100-2-5837f284ede0f.mp3 ## Hannu Ryopponen - TALKS WITH PETRI **Hannu Ryopponen talks about working with Ingvar Kamprad, how he was as an entrepreneur and what made IKEA successful. He also reveals what happened when he travelled with Kamprad and met dignitaries.** #### Bio Hannu Ryöppönen is a private investor and board professional who, since the 1970s, has served as CFO of many international companies in London, New York, Copenhagen, Luxembourg and Stockholm. He worked for over 10 years in Ingvar Kamprad’s inner circle as a group CFO for IKEA. Ryöppönen has held top executive positions in companies like Royal Ahold, Industri Kapital, Stora Enso, and he has been in non-executive positions on boards of Amer Sports, Samworth Brothers, ICA, Novo Nordisk, Billerud Korsnas and Neste, among others. Apart from his extensive experience in finance and strategy, he has spent well over half of his career in different sectors of the retail industry. [LinkedIn](https://www.linkedin.com/in/hannu-ryopponen-208aa0b4/) [Video](https://www.youtube.com/watch?v=ilSHrtcWano) #### Episode notes - working with Ingvar Kamprad - trust but verify - co-workers - extreme memory and observant - details and big picture - personality - decision-making - store opening visits - frugality - IKEA culture - informal organisation - delegated decision-making - non-confrontational feedback - success factors - Poland as a part of the success - “If we can’t afford it then we don’t build it” - dependency to lenders - cost consciousness - bureaucrazy - “if we talk about it now we should be able to do it tomorrow” - hot dog concept and an instant gratification - customer experience insights - Kamprad training excursions - “retail school” - Design and meet the customer expectations - customer focus - open your wallet early - Stockholm store ("Kungens Kurva") - Walmart and Sam Walton - common sense way of conducting business - what business would Kamprad have started now? #### Episode links [The story of IKEA](https://ikeamuseum.com/en/digital/the-story-of-ikea/) [The testament of a furniture dealer](https://ikeamuseum.com/en/digital/the-story-of-ikea/the-testament-of-a-furniture-dealer/) [Democratic Design](https://www.youtube.com/watch?v=pUrZbiX2ts4) [Kungens Kurva](https://en.wikipedia.org/wiki/Kungens_Kurva) ## Transcript (https://www.youtube.com/watch?v=ilSHrtcWano) [0:00] This is Talks with Petri show, and I'm your host Petri. Today, our guest is Hannu Ryöppönen. Welcome Hannu. Thank you very much. You are an angel investor. You have multiple board positions from startups to multinational corporations. And during your career, which spans over four decades, you have also worked as a group CFO for IKEA. You worked closely with Ingmar Kamprad, the founder of IKEA, for more than 10 years. What's your first memory of working with Ingmar Kamprad? Well, that actually goes back to the interview with him in 1985 in Amsterdam. He had a holding board meeting and I was then invited to join him. And of course, as a finance person, I tried to impress him about my knowledge about finance. [0:56] And at the time IKEA being privately held, I said, well, there's always a way of doing an IPO. And then you can get lots of money and everything will really be good for the growth going forward. And Ingmar looked at me and put his head like this, which is typical from him. And he tells you that I don't really believe what you're saying. And his comment was, over my dead body, this is for the next generation. That was my first impression and my first learning about how to deal with Ingmar. So how did you save the situation? Because we know as a fact that you worked with Ingrid. No, I think overall it must have gone well because I was employed and was there for almost 15 years altogether. So a fantastic employment as such, a very special company in my life and experience. Can you tell something about working with him and maybe your first year, what happened when you observed as a new person and what's going on? [1:56] It's probably a bit different from the other cooperators you worked before. Well, I may be first to note that I did not report to him directly. So I was in meetings. I had also private meetings with him, depending on typically finance issues and so on. But with Ingvar, the meeting started at 7 o'clock in the morning. And by 8.30 or so, typically done. And you thought that you were the only one that could solve the problems you discussed. He had a good talent of how to get you to believe that you are the hero here that can do all of this for him and for IKEA. But? Well, no, that was a fact. And later on in my career, I learned that he often gave the same task to one or two people. And then we also realized this. [2:48] And hence, we kind of as a team came up with a solution rather than individually trying to impress on him as to what was good or bad or the right thing to do. So how did you learn that? Because IKEA, at least nowadays, is emphasizing teamwork and doing it together. And that's one way of doing teamwork. Teamwork has always been there. We were all called co-workers, as opposed to employees or anything else in the internal vocabulary. And the team, in our case at the head office, we were 80 to 90 people, so not that many. So obviously it was a fairly open dialogue and communication across the different functions and also within the function, of course. [3:38] And you pretty much heard right away when somebody had had a meeting with him as to what was discussed and what were the ideas and what should be done going forward. And sooner or later, you realize that he is testing the water in different ways. Part of his management style, in a way, and not a bad one, I have to say. But also showing that he wanted to make sure that all different angles of a solution were covered and maybe made slightly different background, people with different backgrounds commenting and looking at it based on their own experience and knowledge. How did you notice that he's been actually knowing about the issue from other people as well? Was he challenging or he was sort of commenting? [4:28] He was normally extremely knowledgeable about everything. He had, I think, which is a typical entrepreneur's kind of feature, extreme memory. He could pick up things from 20 years ago and say, well, no, that particular chair's acquisition cost was X, and now it suddenly is twice that. How come? It should be at least half of what it was 20 years ago. It was sort of his starting point. But as an example of remembering details, remembering discussions, remembering meetings, quite extraordinary in my mind and very observant. And I think that's the way he succeeded to do what he eventually did. And I think part of an important aspect of leadership to know what's going on and both details and the big picture. [5:25] Can you describe his leadership style? it's very difficult uh to to really summarize it because he his background was in farming in small land in sweden um his dad was a farmer and maybe not the most successful farmer if i understood it correctly had taken quite a bit of loans and so on which i think then colored ingvar's thinking about loans and dependency on others when it comes to financial questions. But very down to earth, very, if you would have met him in the street, you thought it was a farmer who had come to town to buy his whatever meat or bread or something as opposed to a multimillionaire or billionaire rather. very, very normally dressed, normal behavior, never any fancy cars. He obviously supported Volvo, but often the model before the latest one or two before or whatever. So, he came with a very common sense way of explaining or questioning what you were discussing and doing and kind of saying, well, what about this and that and so on? [6:45] Certainly no school book solutions or as I sometimes call them McKinsey solutions. It was, well, everything was homemade more or less or sold at home. Was it a good thing or was it a bad thing? Because what I heard, obviously he was the sole owner. So basically he could do all the decisions by himself. But did he do that? Did he have a team? How was it actually decision-making as well? it was very much team work but typically the final word was Ingvar's and if there's something he didn't like that the team was pushing forward he just postponed the decision and sometimes it could take two or three years to come to a conclusion on something where he his influence then impacted in in a way that he was happy with on that. [7:37] Whatever could be a solution in a store, could be a solution around a product, or even a legal structure or financial solution, then no decision was made. He didn't necessarily take part in the formal decision-making, but you knew that the question was blessed by him. Was he difficult to work with? Like you notice that the atmosphere changes in the office when he's in the building and when he leaves the building. Was there any difference between the public perception of him and the actual working with him? No, extremely approachable and normal, if I put it that way. There was no feeling in the office. He actually stayed often overnight at the office. [8:26] There were some overnight rooms at the office we had in Denmark. And I can tell you a little story about when he visited the second, I think it was the second store around Copenhagen, which he typically went to stores about two or three months after opening. There are exceptions to that too, but later on, that's what happened during my time. He had agreed with the head of Europe, a Swede, who came to the office and that they would leave at 8.30. It was well known that he often wanted to go at like 5.30 or 6 o'clock to see the lorries coming in with the product in the morning and so on and so forth. So Bengt, who was the head of Europe at the time, he showed up and I was just about coming into the office around the... [9:17] Sorry, 7.30, not 8.30. And then, no, Ingmar couldn't be found anywhere. So then finally, we got hold of the chap who was in charge of the building, i.e. the office. And he said, oh, I think I saw Ingmar leaving at 5 or 5.30 or something this morning. Maybe he went to buy fish, which he often went to the fishermen in one of the small villages. So then we said, well, better call the store and check, because this now starts to smell like Ingmar has again jumped the gun. And then we called, or the receptionist called and then talked to somebody and said, no, there's nobody here like that. Then she asked, is possibly the head of Denmark there? Oh, yes, he's here. [10:07] And he's walking around in the warehouse with some old man. I don't know who it is. Well, that was Ingmar Kamprat. That shows his way of sort of operating kind of undercover almost in a way, but making no big deal out of himself or who he is or what he represented in a way or his real power in a way. Did you travel with him? Did you work closely, like extended period of time, like weeks or something when you were? No, I never... Some trips, yes, but not really in an extended way. Sometimes we had joint meetings. He wanted me to join him, and then, obviously, that might have been a trip together. [10:57] I remember one flight to Poland, where there was a big, big... It was in the 90s, so past the Berlin Wall and all of that. We were all, I think, going there for 200 or 300 people to go around some new facilities in Poland. And there were two people, one of our lawyers and a senior European person who had to fly on. And in those days, if you did that, you had to book a business class ticket. Everybody else had, of course, been very careful about making sure we sat as far away from the front of the aircraft as possible, including Ingvar, because he happened to be in Denmark at the time, so he was also on the flight. And these two were sitting at the front when Ingvar arrived and came into the aircraft. [11:48] And of course, he saw the two of them and said, oh, are you on some completely private visit here, or are you going to join us? He never told anybody that you're doing something wrong. He always found a way of explaining or asking in a way that you understood what he meant. Must have been a nice flight knowing that, you know, you're in the beginning of Tripoli already kind of, you know. Well, it can be embarrassing in a way, but of course Ingvar also understood the system, what you could or couldn't do. So I read also I've been doing a little bit of research about Ingvar and IKEA and preparing for this episode. And I also learned that he was okay with mistakes, but you know, until you learn from them. [12:44] How was the culture of doing stuff? Because IKEA was also growing, I think in the 70s, was the huge expansion to different places. they even had a gas flow crisis because of the expansion and the crisis happening in the 70s. You came in a little bit later, but I think that was also a time of expansion. There was also a time of a lot of change. So can you have some recollections of what happened in IKEA in those times and maybe the mistakes? Well, first of all, it was clearly, and I don't remember now if it is part of the furniture dealer's testament or whatever the actual title is, that actually mistakes are allowed. But you should also be quite ready to correct them. [13:34] But I think the joke was more, don't make the same mistake twice. that's sort of bad news because then you don't use your own noodle to figure out what to do or what not to do. But no, the organization, if we take that, is not very hierarchical, typically Swedish democratic sort of approach to life. We were all due with each other, i.e. first person singular, or second person singular, sorry. This was quite a challenge in Germany where, you know, C is the norm, and some of them never got used to actually talking to their colleagues as if they were almost family members. But in Sweden, as you know, that was already implemented at the time, and we certainly pushed for it, made the organization informal, and also your freedom to act within your own sort of framework of your task was quite big. The decision-making hierarchy he was naturally for me I was only sort of one level below him quite quick occasionally you needed to actually go to him or the board there was a board in place but a lot of things you could just do or talk and and sort of even make a decision yourself you felt it yourself that this is I can do if it goes wrong you may have a bit of a challenge but but but but anyway I'm very open and informed also communication channels, if you need to talk to somebody about something and learn more to conclude what you would decide yourself, then the internal competition, i.e. for higher positions and so on, was not really part of the choreography internally. Political infighting during my time, I never really experienced. [15:35] How did the culture change? Because I think at the time you joined us, probably was it for 5,000 people in the company. And probably when you left, maybe I don't know the numbers doubled, tripled. And it was also a time that Ingvar was probably a bit more, well, I would say hands off, but the company was getting enormously bigger and there were more operations, there was more depth. So it was not any more small farmers shop in southern Sweden. It was a cooperation in a lot of different places. No, I think you're right. The 80s, I joined in 85. The 80s and certainly the latter part was very much internally a structuring period where some formalities was put in place as to also decision-making, but also how one works, the country management versus the regional management. [16:45] The company was growing in sales numbers 15% per year, which means that you're doubling every five years or so. That's just the way 15% comes out. And of course, that is a tremendous growth to find the product volumes and these new stores. At the time we built, when I was there, about five to seven stores per year. and many of them were in seven different countries. Some of them were the first door in that particular country. I was involved in opening up the UK, where I now live. That's a pure coincidence. But I was in here in the 87, 88, I think. Italy, a little bit later. [17:33] Spain and a few other countries. So a lot happened during that from, call it 85, 88, 86 to mid-90s. And then the rest is also history in terms of the continued growth into Eastern Europe in particular, where we already were during my time. And then also Asia and everything else. So I think there's only two white spots in the world from a store point of view, and that's Africa. And then also I think Latin America is still without an IKEA store. But I'm not sure. I haven't checked the latest years. So maybe somewhat wrong there. How did Ingvar manage to transfer his knowledge, his vision, all these things, these new locations, new people? [18:25] Because I think there's nowadays at least maybe 10,000, 20,000 different products. and there's so much happening and you know how do you keep it focused and how do you keep the original mission in place how do you make everybody sort of going to the same direction it obviously built very much on i should say the team that was there from the beginning and then obviously has expanded and a new generation come in when was the original team sort of starting to shift to the new one, like the first generational shift? That's actually during my time because somebody like Hans Ax, who was a person who was involved in setting up the Stockholm office in, sorry, Stockholm store in 65, he retired somewhere around 88, 89 as the head of Europe was his last formal job and then a few other ones also on the finance side there are one or two in Sweden who then during that period retired. [19:29] And they would have been there some even from the 50s. I think one of my close colleagues in the, or co-workers, I should say, in the IKEA world in Sweden, he, I think, had employment number five or something like that. So that happened. And then, obviously, these things are all gradual, little by little as people age. and the organization grows also from a management and total employee point of view. Could we check, for example, a little bit of the success factors? So what do you think, what made and makes and keeps IKESO successful? [20:21] Well, there's one thing we don't need to discuss. That's the flatback idea. That's one of the cornerstones of the success to start with. Maybe not today, because it's also been copied in many, many ways. So that's one. One that may be slightly less well-known was Ingvar's way of looking at the Swedish furniture manufacturing environment in the late 50s, early 60s, when they actually saw that he was becoming a bit too successful for their liking. So they started to boycott him in different ways and not produce goods for him. And at that time, only one store in Elmholt. But then he don't know all the details how he contacted Poland or went to Poland. Well, I can fill in if you like to know, and the audience as well. [21:14] Because most of this stuff I learned and told is just basically what I was reading, the IKEA museum, which is an excellent resource. You should go and check it out. It'll probably takes half of your weekend if you do that. Okay. And hope I get most of the facts right. But it was actually, yeah, that was a point. That was part of it. Then there was also that he started to have also supplies because it was becoming the volume because so big and these two combined. Then he learned that there's a Polish delegation coming to Stockholm. So he actually booked and managed to convince them. And then it took a while and they actually went to Poland and started to look. And then he actually managed to secure a exclusive license for the Polish furniture export to Sweden. And I think he also secured Norway. [22:10] And then he was sort of a little bit of a hurry also to probably, I don't know, maybe that was part of the Stockholm plan as well. because now you have a market to fill as well. Yeah, no, no. Some of this I probably have heard, but successfully forgotten. But I know anyway that that was a major success factor in securing good product at good price as well. That was also, in fact, you had to make a profit on everything one way or the other. Yeah, I think that was one of his sort of really key from the beginning when he was doing, because he started actually mail-order business. So this is actually funny for people who are a bit younger and only see like internet business. He was doing basically like drop shipping as well. And he was doing mail catalog. So the catalog was already in the beginning. He was doing newsletters as well, but those were actually physically letters, sending them out and people were ordering stuff and then they were delivering directly from the manufacturers, as far as I understand, to the customers. [23:14] And he was communicating low prices with high value. So it was that sort of oftentimes seen as difficult or impossible. Either you have a low price and not so good quality, but if you combine these two. And this was almost in the beginning, I think, or maybe even from the very beginning. No, no, it's quite possible that it would have happened already, but it was clearly something that during my time, And I think, as I follow, IKEA today has continued, i.e. to give the customer value for money, that you feel that, you know, I paid X, but it was worth paying that X for it, rather than I should have paid half of it or whatever. But Poland as such is an interesting one because I experienced Poland with Ingvar in 1990 to be precise when we opened the first store in Warsaw. I haven't fully understood Ingvar's, you could say, connection to Poland, obviously knowing the facts about the early 60s and so on. [24:18] But how he very much felt that Poland was a key to the success of IKEA growing in the 60s. And then when we met officials and so on in Warsaw in connection with that opening where he also was. Can I pause? Because I know a little bit what you're going to say. But just for the audience to fill in. So basically he went in the 60s. And now we have to remember this is the Soviet time. So it was behind the Iron Curtain. So he was actually quite exceptional for the Polish people and the Poland, I think also other markets in the Soviet side, because he could actually take huge volumes. He paid because of the long-term contracts. He was offering long-term contracts. He was paying pretty much, you know, immediately. So he gave something that the others were not offering for him who were actually coming from the West. [25:14] He was also knowledge transferring. He said that I read in the article that he was smuggling these tool parts for the machinery. So he was actually transforming the factories. He was teaching them how to make efficient production. Because in the beginning, obviously, the prices were really low. The quality was extremely high. And this enabled that when he actually transferred the knowledge to this and sort of modernized these factories, That allowed him to actually produce enormously good products in an extremely low price. This became the success factor for the 60s and for the Stockholm, that big storm. Maybe we should actually talk about a little bit of that as well a bit later. [26:04] Because the others couldn't do that. There was a huge competition in the Swedish market. It was raised to the bottom. basically everybody was offering stuff and, you know, it was just the quality was getting poor. And this was something you couldn't do in Sweden or Copenhagen or Denmark or other places. So that's sort of the basis, I would say, for the, it was so big customer basically for Poland and for the furnitures there that you couldn't miss it. No, absolutely. And as we know, the Soviet Union times, for them to get hard currency, even if it was Swedish kronor, it was still a hard currency compared to the Sloty, I guess, at the time. It was very valuable. But where I was coming to was, he was really seen as almost like a legend in Poland, the way he had operated, also the way he, I think, communicated even during Soviet times with the government and whatever authorities he was in contact in those days. [27:01] This became very apparent in connection with this opening, where there was a lot of dignitaries at the store opening, which normally you would see. Poland is a big country. And I have one particular story I could tell about this visit, because I suspected that I will get a call to visit Warsaw, a connection with this, which I did. So I went to Warsaw, and Ingvar said, we have to go and meet the finance minister of Poland. So I thought you should come with me. Okay, I said, that's fine, I'm here, so let's go. and we went, it was Ingvar, it was another board member, actually he was the CEO of Volvo at one point, and then the Polish manager of Ikea Poland and me, and a Swedish ambassador. So we went into this room, as you can imagine, these big rooms in those days, in the sort of still eastern block type of atmosphere, and then we sat there with the ambassador at the head of the table, and in comes a tall man, I think, close to two meters tall, youngish, 40, something so not really a Soviet chap as such, with his little secretary who was tiny. But anyway, that's just a comical side of it all. So he sits down. But the thing that, because I sat at one end of the four of us, reflected on was he clearly showed so much respect for Ingvar in the way he approached the discussion, of course in a very formal way and all of this. [28:36] And there's a story about him later on, but that's another story. And then Ingvar said, well, let me introduce us then here on my side of the table. So he started, of course, he didn't need any introduction. He went to the two on the other side, the head of Poland and the board member. And then he turned to me and said, and then I have my finance minister with me. So I thought you two could discuss these financial matters, you know, because you're sort of colleagues. And then his name is Andrei Kolekowski. He sort of sat up and said, there's a big difference between him and me. I thought, yes, there you go, Ingvar. We're going to be thrown out now, comparing me to the finance minister of a country with 40 million people. And then there was a silence. [29:24] And then he looked at Ingvar but pointed at me and said, I think he's got more money than I do. Which might have been true at the time, actually. But it's one of these moments where there's a comical aspect of it all as well. And then, of course, he had a sense of humor, this Andrei, very much so. But also where Ingvar, often in these kind of situations, he pushed some sort of funny story that he often had some sort of nose for that will work out okay. Because I don't think he had met this Andrei person before either. He didn't know if he was a serious banker type or if he could enjoy some good sense of humor. But the meeting was then very, very easy and successful and so on. [30:18] But there's a little example of Ingvar's way of both, in a way, negotiating, but also communicating with people. A bit always from behind or below a little bit, as opposed to trying to patronize people. So what I think from here was that he actually didn't want to be the lead. He wanted you to be the guys talking to technicalities. he could sort of step back and give the final word if needed. Otherwise, like you guys talk and I'm just sipping coffee here or, you know, going to buy some fish. Exactly right. And it, of course, made me feel good as well. The finance minister, now you have a new business title. Exactly. But IKEA was quite big already. [31:09] If checking the poll is GDP at the time, you know, who was bigger? Yeah, I don't know. If you would have checked the government's bank account and IKEA's bank account, who had more money under their control, I leave that to somebody else to study. Talking about money, I understood that IKEA was, well, that probably comes from also from Ingmar Kamprad. You know, you had your own bank and you were giving loans to the banks, you were raiding banks. So can you tell about how the financing worked as well on the cash flow because the expansion happened and obviously selling a lot of stuff with cheap prices, but was it highly profitable as well? And how was that part of the business as well? I think part of it, I feel I cannot disclose, but I could say like this, that first of all, the huge success and growth of IKEA from probably early 80s, so just some years before me, if I simplify it, was based on internal cash flow. [32:19] And I should add to that, that most of the land and the stores that were built in those days were built and owned by IKEA. No leasing arrangements or any things like that. That was almost part of the policy that, well, if we can't afford a store, then we don't build it. It's again, as I call a bit of old farmer's philosophy, that you buy the new tractor when you first had a good harvest. And that's very much was part of, and I'm pretty sure today, still a very conservative approach to finance in terms of taking on loans, because he was also, and IKEA was concerned about becoming dependent on lenders. I've seen it in many other cases where at one of my jobs, I had five bankers in my office 24 hours a day for about six months because the company was bankrupt. And they didn't know business, but they wanted to make sure that nothing crazy was going on. [33:20] So fair enough. But that was the opposite, very much so. And yes, we started to put credit valuations on bankers towards the end of the 80s. the Kuwait war coming and all of this in the Middle East. And we said, well, who of these guys might not survive a big catastrophe? And the bankers got their nose out of joint, I think is a very sort of modest way or mild way of explaining it because then, you know, credit valuations today, Moody's and Standard & Poor's and so on is obviously normal life. But that was a bit of a new thing because we felt we had so much money out to sometimes fairly modest banks, not small ones, not local ones, that we had to spend some time on thinking about how many billions should we put with this bank or that bank. [34:16] Because it's not a question of millions that we were dealing with. Were there any financial innovations? Because that's the side you were looking at as well, you know, in the expense. Are there some tips and something, you know, what Ingvar had and, you know, you haven't seen it other places or something, you know, for, let's say, these hopefully more successful startup founders as well who have this positive problem that, you know, what to do with all this cash and how to grow without any bankers involved? Well, let me give you a little comment on that and then we'll leave it at that, I think, because otherwise I'll go into details that I don't feel really I have any right to talk about. But Ingvar often said, well, we sell in Deutschmarks, which was obviously the strong currency of Europe in those days, and we buy in Swedish krona, and that's a pretty good combination. [35:08] Buy in cheap currency, sell in hard currency. And obviously, the world doesn't operate quite like that, but in a simplified way, that was maybe a coincidence, but then it became a fact, and so on. So yes, we had obviously large foreign exchange exposures and flows and so on, not least when Asia came into the picture and fairly large volumes. So that had to be divided among a number of banks to make sure we didn't, again, taking too many risks. And also some banks said we can't take more of this or that or whatever because of their own balance sheet. But anyway, fascinating times and interesting times. And we could innovate a lot. [36:00] Sometimes we had to obviously go and ask for permission in a way or decision because the numbers were just so big that if it would have gone wrong, it could have been fairly harmful. The fruit colony is sort of a trademark of IKEA in some sense, probably not officially, but at least in formal sense. How did you see it in the regular life? And because the low cost means that you also need to keep track of the costs when you're building stuff in the processes everywhere. Can you describe how that came and is it different from the other places you worked? Yes, I could say different in the sense, obviously, every company wants to make the best possible profit they can make. But in every single thing you did at IKEA, the cost aspect of it was the first aspect. [37:02] What should I do? How should I go from A to B? What is the most efficient way from the IKEA viewpoint? It may not be the most efficient way for you as an individual. I spent many Friday nights out in Europe when it was cheaper to fly back on Saturday morning. And family was at home, you know, and so on. So that drew everything, every single item on the profit and loss account in a way. If it was a cost item, it could be salaries. Not that we were bad at paying, but we were also making sure that we didn't have more personnel than we needed. Because headcount is also a way of either increasing or reducing your cost. And so cost was through everything. [37:54] The other end of it, you could say tax was seen as a cost, not a liability to the society. One can have some discussion around that as to where we are, but it's still for a company. It's a cost item that is heavily debated today and has always been as to all kinds of solutions, left, right, and center. But that's probably the biggest and maybe to my family and to some other people around me, not always a good learning, but certainly something that was emphasized and sort of imprinted on me during my IKEA years that you don't become successful financially by spending money. It's more by spending wisely. [38:43] And then investing money is a different story. And also that need to think through. Every store, every time a store was built, I sat on the investment committee, every single item was gone through. Can we do it better, cheaper? flooring, for instance, in a store. What is the best floor that looks okay from a customer point of view? Because normally we don't walk around looking at the floor, we look at the products. But also that it's easy to build and easy to maintain and so on and so forth. There's such an example of all items we're going through and also obviously, it goes without saying, infrastructure or in a store. You don't have toilets all over the place. You try to keep them in one central location the best possible way. But where is that convenience from also customer point of view, the best place to have them? Not Einstein science, but part of the kind of list of checks that were made every time. Sounds like that is actually a balancing act, because there's also the quality side. You have to provide customer value, and there's not a low inefficient and inconvenient it's actually supposed to be the opposite as well so it cannot be the cheapest option always no but at the same time you we also try to create an image of not being very expensive so the customer expectation was not seeing you know very high quality uh taps in the toilet or or on the floor in some sort of marble or whatever um or marble you are absolutely right. [40:29] It's a balancing act like everything else in the end. You want to connect with your customer at the right level with whatever you do. So how do you communicate that to the employees? You say that you had quite a bit of a leeway to do things based on your chargement. How to pick those and how to monitor those and knowing that you do the right thing here? I think we had pretty good controls of our cost levels, as we did of our income levels, by the way. Even in those days before, all kind of digital solutions and so on, everything was pretty much known the next day, at least within a week. We had to remember we go back here to the 80s in my time anyway, and then we operated in different ways of collecting information to a total group view and so on. [41:28] But as an example of cost consciousness and way of operating, we knew that everything being right, we're going to grow about 15% on the top line per year. But we always budgeted our cost line at about 7%. which in itself led to somewhat efficiency every year. Yes, you might end up at 10%, but you still had a gain against your top line by then finding solutions where you change tasks or combine tasks or whatever the case may be. In the Kamperads, the testament of a furniture dealer, that's the name for it, which actually you can find also in that, I can put it actually in the show notes as well. There are these nine points. [42:16] And he mentions that as a number three, profit gives us resources. The aim of our effort to build up financial resources to reach a good result in the long term. And there's another point where he says this is the number five. Simplicity is a virtue. Exaggerated planning is the most common cause of a corporate death. So no bureaucracy, but you have to make profit and still keep it low and improvise and do it differently and don't cut the middleman and think different. I mean, bureaucracy, he called bureaucracy. I mean, he was an absolute enemy of bureaucratic way of operating. And there in my time, there were twice, I think, special internal campaigns of simplifying things, cutting out maybe even extra layers of management, what have you. [43:17] And that was very focused. Special committees were set up to find solutions to different, be it the supply chain solution or something, on his insistence that we are becoming too bureaucratic or bureaucraty, as he would have called it. He was very much an entrepreneur in that respect and said, if we decide something today, we should be able to do it, if not today, at least tomorrow. As opposed to having five committees going through it and discussing it for a year. So can you describe the atmosphere in the company? Was it inspiring, sort of you are in a mission, positive type of way? Because if the cost issue is always there and you have to stay overnight and run with your family. And it sounds like it could be also interpreted in a sort of restrictive and controlled environment and sort of not the most uplifting place to work. [44:16] To me, I can only speak for myself and some colleagues I've discussed this with from that time. It was so much part of the culture that when you did something like that, you felt proud about finding the solutions. every time I went to visit a country management or whatever internally and discuss certain solutions or whatever on my way home I often did my own profit and loss as to did I make any money during this trip for the group i.e. the solutions like my my my trip cost x did I do at least 10 times that in terms of savings or further income or whatever it may be for the group. That whole cost consciousness, that's very much smaller in Sweden. It's a bit like Scotland is known for being very frugal in the UK and maybe the best international example. That was so built into us and Ingvar never forgot to bring something into a discussion about saving or not spending or why do you buy that, why don't you buy that instead or something like that What's the hot dog concept already on your time? [45:36] No, that came during my time, in fact you may remember back in the late 80s people still used checks and obviously cash but checks in particular to pay for. And I had the privilege of then putting together a process of measuring how long it took for people to go through the tills from check payments, cash payments. Cards had started to show up to some extent at the time, but still fairly novel among normal people. And the queues were long. People had obviously bought a lot. So, and also all these sensors and things, nothing, it all had to be done manually. And then I remember, well, the meeting when this all is discussed and so on and so on, he said, here you have a family coming through the tills and they've been arguing for half the day. [46:32] And obviously they had lunch also and ate some meatballs or whatever. And then they come through and they are in a bad mood. So let's give them a hot dog for very, very low cost. And that's where the concept of the little kiosk at the end of the store came, which started really with just hot dogs for almost next to nothing. But there also Ingvar said, well, if I only make one Swedish öre, one cent in profit, that's fine. If I make many of those, that will also be real money. And that's, again, it was his thinking, his how should I try to make the family somehow happy when leaving. The last memory was that hot dog or maybe some sweets for the children or something like that. Ice cream, you know. [47:25] Can we walk through the store from the beginning and maybe you can give some comments, you know. These sort of little things, what actually are the concept of IKEA and the customer focus, and all these, which are actually sort of key factors also, because it's a showroom as well, you know, so it's the place where most of the money is made. I could start with, first of all, my own experience of this together with Ingvar. During my time, he often went to stores after three, four, five months. depending on trips and so on you were more than welcome to join those visits which was often a group of 10-15 people store management the country management and a few other regional managers and then some odd people like me if i happen to be in that location by the way was it ad hoc or sort of planned no no it was more planned and you knew about them and and of course sometimes you also planned your own trips too because they were real experiences this is the only retail school i've been through in my life was ingvar's visit to a store and and it started around seven in the morning on the parking lot the customer drives in it's a parking easy it's a signage good bad blah blah blah you come to the store you go in and then you start every single step and without He shakes hands with everybody in the store. [48:55] And he often complained, my hand is really hurting tonight because I've been sent, well, two, three, four hundred people, depending on the size of the store. And then you go through everything. You go out to the loading base, you go through the office, you go through all the different sections in the store, toilets, you name it. And then out on the parking lot again around nine o'clock in the evening. Wow. Full day. Something. That's a very full day. You have to be ready to have a pizza at the end of the day at the most, if you're lucky. So there was no meatballs in the cafeteria? No, no, no. Sorry, sorry, sorry. Yes, of course. There was lunch. And that was in the restaurant, of course, checking it out. And most of the people who were serving would know who they were serving. And so on. [49:44] Although most people would have known that it was a big visit. But no particular preparations had been made. Store management wanted to show the store the way it was on a daily basis. Cleanliness is another very important aspect of IKEA stores. Not a lot of papers on the floors and so on. Everything you kind of almost get used to walking around picking up small even pieces of paper or whatever. So all that was evaluated and thoughts about solutions on the shelving and maybe even new things and old things. There's one that comes to mind, but not now. And then out on the parking. So that's a day with Ingvar in a store. I've learned so much about retail and how he was so customer focused. [50:40] His old thinking started in a way in two end. That is where you design a product, and then that product is sold in the best possible way and also meets the expectations of the customer or consumer. Everything in between was sort of just discipline, if I put it simply. Very, very fascinating days. I think I did 10 or so of those during my time. And as I said, it's my only retail training I've had. And I don't think there's any better training, actually. So how did it work? Is he observing and commenting? Or was he letting you guys do the work like the finance minister way? Or what was his domain now? [51:28] No, I was... Me and people like me would be very silent and just following. Possibly there could be a question about something that would be a financial question that comes up somewhere in the... what's this and that and so on. But most of it is really how is the layout of the store in relation to consumers and which product is where and so on. Then, of course, there's the other side of it, i.e. how the consumer experiences the store and how to get the consumer to start to shop. And there were these, I don't know an English term for it, actually, Slopocheften, it's in Swedish, sort of open your wallet, I think is actually the term used in English. So always at the beginning, I think still today in IKEA stores, you will find some big baskets with something that costs next to nothing. [52:21] And you say, oh, that would be good to have. You may never use it, but it's good to have. And it costs nothing. So you buy it. And then you have made your first purchase in a way. Putting it, of course, in an IKEA bag, which is hanging there right next to it. And then psychologically, at least that was his thinking, I can't sort of say anything else. He made people kind of ready, opened their wallet so that now I can buy the next one, the next thing and the next thing and so on. And then, well, you see it in many stores today, of course, all kind of special campaigns here and there that sort of are in strategic positions so that you can't avoid them as a consumer. So he actually opened his first showroom and this was also the, going back to the 50s actually, when he was actually doing everything by himself. I think it was the first 10 years he was basically doing running the show more or less hands on. And that's where the experience came. [53:26] The showroom was also the way to actually demonstrate the quality and getting people in. and he wanted to serve coffee to make people feel more comfortable. Then he realized that you need sofas so they can relax a bit and they can see how the sofa looks there. And that's where the, how the showroom came about basically. Well, there was actually some factory he bought and then there was a lot of space. So he actually sort of put the living rooms in there and things like that. And customer base, families and children. So you have to entertain the children and then came to restaurants. And was there something while you were there that, you know, was part of that innovation that, because what I get that Ingvar was always thinking exactly like, okay, if you walk there, are you tired? [54:18] How do you spend more time in there? You know, what would be the optimal way of doing it? It's also the layout that's almost like every 20 meters you have to turn, you have different colors there's the harmony the balance the pricing and then the warehouse comes just to later first comes the inspiration and and also the meatballs i think they they were experimenting with the recipe like three years before it became the famous meatball uh the thing still available on the on the shops yes and at least at the beginning when the meatball concept or the new restaurant concept was put in place early, must have been early 90s. All those meatballs were produced in Sweden for the whole entire IKEA world. So how many tons of meatballs one supplier produced, I have no idea, but it must be lots of them. So it's, no, but you mentioned children's IKEA, for instance, that was something that was at a store visit where I happened to be also present, where IKEA started to mumble about this and say, well, here is a mother now with two children who can't be in the ballroom, which was obviously an interesting concept in itself to get rid of some children at a certain age. [55:36] So I would need a little... Now she wants to look at something, but they have to keep half an eye on them all the time and so on. So some sort of little play area. And maybe I could then put in some children's products here. So they start to play with them and then they like them and then they want mom to buy them. And that's where the children's IKEA concept, which was then, that took a couple of years, I think, to be developed. You got to find the place, the location for it in the store. The whole product range and so on had to be developed. But it's very much a part of the IKEA, I think, store today and product range. Yeah, what I heard that it was Ing writing a letter with his blog, you know, handwriting. And it was like, hey, we need a children range. [56:29] We need to invest on this. And it was like, okay, you got to get them early. So you start really like, you know, three years old children and they get to know the concept. And then they become, you know, having their own families. And this is the long term planning. No, but I know myself when my children were four, five, six, something like that, seven, the ballroom was an attraction itself. Going to Ikea was for them going to the ballroom and having fun, you know, and obviously under supervision, but still that was part of… Ikea for them was a ballroom, not necessarily the rest. How did IKEA differ from the Swedish concept and Swedish version if you traveled around the world? Because they were franchises. [57:23] So they were run by local people. But, you know, I think some of them were also directly. But, you know, it's not one unified concept in a sense that everything is run and done by IKEA. So there are differences and it varies a bit around the world. That's correct, but I don't know today. So this is a bit history now. But in those days, the franchise stores, there was one which was actually family-related in Hong Kong. I forget. It must have been Hong Kong. And then Australia was one franchise, which is now, as far as I know, fully controlled by IKEA some years ago already. But they were not that many. Most of them were run and owned by the IKEA furniture business, as it was internally known as. [58:20] But then, again, the concept following was reasonably tight, not, as you say, 100%. They may not have had meatballs, for instance. But the product range in most cases, and they had certain freedoms. I don't know that area very well, but they were not that many of the total number of stores. Do you remember something about the sustainability? There were some crises also over the years, and these were learning opportunities for Ingmar and for the cooperation as well in a lot of ways. So the IKEA you see nowadays, a lot of that, if you go through the history, became out of necessity. You know, there was something which didn't work. You needed to do something. [59:07] For example, Stockholm, the largest, it was the Europe's largest store when it opened, it was at 65 and it burned down five years later. So you needed to actually do a lot of remodeling and that was then an opportunity to do things better. And then it became the first one. And by the way, what was the name? Can you tell the name of the Stockholm store? because the region was also named by the incident that happened in the 40s. It's kungen skurva. What does it mean for the English speakers if they don't know what that's in the Swedish word? Kung is a king. It's the bend in the road in a way. The king's bend in the road, if I would explain, because the king's bend can be misinterpreted. [1:00:05] but uh but the and i it was a funny i obviously wasn't there at the time but i heard it from and also from hans hax who was the first store manager there and one of the the old guys as to people in sweden thought he had he had definitely gone completely crazy at the time because building something 20 kilometers outside stockholm you know we are going back to the 60s that will never work and it's been probably one of the most successful stores ever in IKEA's history and today obviously Kungenskurva is almost part of central Stockholm and there's actually a lot of stories about this and I think this is part of the success of IKEA as well and thinking about you know differently stuff well what actually happened the 40s was that it was the sweden's king who was uh wanting to drive fast and the driver actually lost control of the car and it went to a ditch and that was sort of the informal name for the place and it had a different name i don't remember the name and then when ikea you know secured the location the potato field strategy as i guess called later on so you you buy basically a cheap land almost like, you know, cost anything land and then you build it there. [1:01:28] And then they asked from the local community, the municipal, that, Hey, could we actually name this? Because we want to be, you know, we are not like the stiff people here. We are, we are like the, you know, the country, country folks. So could we actually call it like, you know, everybody knows it. And then the municipality will say that, yes, you can do that. We have to, you have to change those signs. So they needed to pay those signs. And that was the cost of having their own place. The other thing, if I add, still then you can go on and explain, for example, the store, was that... And I think this puts Sweden also into a quite unique position. After the Second World War, Sweden was not exactly in the place where the rest of Europe was. And they also started to have that welfare state concept, Volkshemmed. [1:02:19] And what I also learned was that particular place in Stockholm or outside of Stockholm, at the time they opened the store, the government was obviously subsidizing a lot, supporting owning your own place, owning your own apartment. So there was like 100,000 new apartments built around that store, which probably helped a little bit with the demand. It's interesting you bring back memories that I probably would have forgotten completely, like the Kungen skurva, where it came from, and so on. But it's so clever. And then if we go to the store, as you already alluded, as you know, Ingmar made a visit to the US in somewhere around 1960, and visited a number of places. [1:03:10] to make a long story short, he also visited the Guggenheim Museum in New York. And as those who have been there, it goes around in circles, you know, where you start from the top and then you walk slowly down. And this is the concept that the Stockholm store, Kungen Skurva, actually was built on. And the idea, the way he has explained it, and the way I've heard it, was that when you are in a store like that or a place like that you feel you know all the time where you are you go in a normal ikea store and you get lost in about 20 meters and that's the purpose i guess and there's only one way of going yeah you don't know the shortcuts that's the way it used to be but uh but that was an interesting and it's only one other store that i know has the same concept as which was built in the late 90s in Chicago, just outside Chicago, with an open big atrium in the middle. So you walk around and I can see that you have a feel for where you are all the time, even if you go through all the exhibitions and whatever it might be. [1:04:22] Going back to the success factors and to the fact that Ingvar was obviously not just living in his bubble, he was traveling and even though there was no internet, well, maybe in our bubble, you know, that's the US defense department at the time. He traveled, like you mentioned, he went to the US in '61 or something around those times. So around the time when, you know, he really started to have the expansion of the business as well. And he went to see the competition, he went to see the retail space. He really benchmarked everything in the US. It was three weeks traveling and he was complaining that his father was accompanying him and he was snoring on the backseat all the time and he was so enthusiastic the whole trip and Ingvar was so tired because I guess he was doing all the talking and all the work more or less there. But he wasn't too impressed. [1:05:14] But there was also, and this is something I think out, Walmart, Sam, Sam Walton, who is the founder, he started i think two or three years later than Ingvar and he had a pretty much the same concept starting with the low prices also doing it in a in a fashion that you you're not going to the city centers you're going outside and uh so Ingvar was aware of this i i would assume so so it was not like isolation but you know he was really like you know competing in a worldwide basis who who does things the best. Yes, all I know about, I obviously know Sam Walton, or not Sam Walton, but Walmart rather quite well from other jobs I've had. But I know that the two did meet, it must have been in the 60s at some point, Sam Walton and Ingvar Kamprad. I don't know anything more about the meeting and the content of it and so on. But he did occasionally in some meetings refer to Sam Walton and discussions with him about various things because yes the concept the idea the thinking you know after the war everything at cars of course america was further with with the family car and so on then big parts of europe at the time but um but anyway um another very successful retailer obviously walmart how did he see competition what was competition good question i have to say that I don't really have an answer to... As you may know, this is no company secret or anything else. IKEA acquired Habitat in the UK in 1990. And the thinking behind that at the time was my boss Anders Moberg and Ingvar and so on, to actually create a center of the city, IKEA, which wasn't terribly successful. I think eventually Habitat was sold, maybe 10 years ago, something like that, if I remember correctly. I was quite involved in the [1:07:27] project when it was acquired, but the whole thinking, I think, turned out to be a bit false, because if you're in a city center, you have logistics costs of very different nature than going out to the potato field, parking, you know, when can you deliver and so on to stores like that, and probably also employment costs and so on, and certainly rents, or if you buy the land, or the buildings would be of very different magnitude than a Kungenskurva in 1965 or 63, whatever, to take as an example. So now we have, talking about Stockholm, I think there's now a, and I probably will go out of curiosity to take a look at it towards the end of next week when I'm in Stockholm, as to a central Stockholm on Hamngarten. There's a Kia different concept. [1:08:23] They are also developing something on Oxford Street in London, which I don't think it's opened yet, but it will be soon. and very different concept with the whole digital world, the multi-channel type of thinking and so on, that is today commonplace in retail, very much part of the whole offering to the consumer. Before we leave the IKEA and go to other topics, is there anything you would like to comment, give some stories or something, comment on maybe the entrepreneur from startup entrepreneur starting his company in 1943 and running it successfully and becoming the richest man according to some sources 2004 in the world yeah so it i think his way of staying independent in his own thinking daring to try things. We talked about the boycott in Sweden and Poland and all new concepts, the way they figured out the flat pack, for instance, which was a novel at the time in the 50s in Berlin. Well, actually almost worldwide, I think. And this ingenuity. [1:09:49] To me, he was the best finance man I have ever met either, also, by the way. And the chief lawyer who had a lot to deal with him, he also said he's the best lawyer I have ever met because he approached things from a common sense point of view. And there was no stupid question in his opinion about anything. And he normally had a very good nose for things. Actually, let me tell you one story here about IKEA that shows you the commercial notes of his. But just this, he had a way of approaching all kinds of things in a very, very structured, common sense, bundfornuf, as it would be known as in Swedish, way, and hence often got to the key issues as opposed to what the highly educated people try to tell you. and often have complicated life due to their education, if I take me that freedom to comment on myself as well. [1:10:56] But there's one story that I never forget, and that was what I mean early, 92, 93, we're sitting in a meeting, and often when the meeting ends, we have four or five people with him in the room. You often then start to chat about this and that, all kind of comments came out. And then Imar said, "You know what? If I wouldn't have Ikea, I would go into pet accessories. This is '92, '93. Well, everyone owns a dog or cat or both today and spend millions on anything from food to all kind of different things that they think is important for pets to have, right or wrong. But that he saw already then, because he never traveled in taxis, he traveled in buses. He stayed close to what was going on in the society. [1:11:54] And that's, I guess, another learning that try to avoid when you're successful, to forget your background or your basis and how normal people live. And that's a really valuable key point because he had a suit, he had a Porsche in the beginning, he got rid of those. You know, if you travel coach everywhere, if you travel with Metro, you see the people, you see the IKEA packs, you realize that if you have to carry the flat pack, that you know, is it actually possible to do that? What's happening? How people are reacting? Did he actually do also home visits like, you know, really observing what's happening in the regular people's lives. No, I don't think in that way. It was done in Ikea very much so, to learn, especially in new countries, how people lived, the size of their flats or houses and solutions. We all, cultures have slightly different behaviors and preferences and so on. [1:12:53] Let me finish this then with another story about buses and so on. This was some sort of reception in Hong Kong, if I remember correctly, where all the big dignitaries from Sweden, including the Swedish king, was there. Those names you would know, Wallenberg, you know, Jullin-Hammer, and head of Electrolux at the time, I can't remember. But anyway, really big, dark suit, white shirt, you know. Like the Rockefellers of US, you know, all the Sweden, you know, yeah, that type of people. And then all of them standing, they're coming in their big black limousines and so on, one at a time, of course. And then standing there, half circle around the king. And then a bus stops outside. Regular service bus. [1:13:40] Regular service. And Ingar comes out. Of course, he's dressed appropriately. No question about that. Because he was a guest. What is the proper? Because, you know, once again, informal. And, you know, what's he actually having? No, no. He respected. If he was somebody's guest, he respected the circumstances. is maybe not the most cutout suit. It could be 25 years old or something, but proper and good. Forgive my joking here a bit. But anyway, so he walks in through the doors and the king sees him. He turns around, lays all the Jüllenhammers and Wallenbergs and sits, stands and chats with Ingmar for 10, 15 minutes. That shows also how he was respected at the other end of the society. and so on. So anyway, interesting man. I feel like I had a real privilege and honor to be able to work so closely with him and experience a lot of different things with him and also hearing stories that my colleagues would have experienced. [1:14:46] What is your favorite word? My favorite word? sorry i've drawn a blank on that one i don't think of any favorite word as such no sorry i i i can't give you a good answer well let's try another one what is your least favorite word uh oh yes it's not quite a word but it's a low value for money reverse of Ikea I guess no no it sits there in the background and I learned that during my Ikea years what turns you on creatively spiritually or emotionally happiness happy people good company good jokes and what turns you off sadness illness. I mean, we went through COVID here recently. War, not least. We hope we had passed that stage of civilization, but clearly we haven't. Very, very sad. We are all at war in Europe in my mind today. And we can see it on our cost of livings and everything, even if Helsinki is not bombed or Tallinn or London or any Frankfurt or anything else. But not that different from a war. [1:16:21] That makes me very sad and frustrated because I can't do much about it. What is your favorite curse word? Perkele. I learned that from Jorma Ollila. What sound or noise do you love? Abba music. What sound or noise do you hate? when a machinery doesn't work and it makes all kind of noise that shouldn't be there what profession other than your own would you like to attempt if i look at i probably would have been a pretty good lawyer as well what profession would you not like to do singing no i take that back sorry uh drummer If you could be a co-founder of any startup in any era, which one would you choose? [1:17:30] Disruptive, like IKEA, if we take that as a startup in 1943, although it didn't start as it is today. But what I would see as a disruptive, trying to change the way we operate in one way or the other would be. And that's why I have also tried to do my direct investments myself in startups. It's something that disrupts business. Any final words to the audience? I think entrepreneurs in particular, honesty and seeing realities, listening to the people around you, I think can be very helpful. I know many of them are extremely opinionated and they know what is best, but it may not always be that you're completely right. So that openness to influence what at the same time believing in your own strategy, I think, has to be a balancing act, but it can be very valuable to also listen. [1:18:38] Thank you, Hannu, so much for sharing your experience, stories with us today. And thank you everyone for joining today. Until next time.