Read the mini-case, Innovation at IKEA *BELOW* and answer the questions: 1. Disc
ID: 450851 • Letter: R
Question
Read the mini-case, Innovation at IKEA *BELOW* and answer the questions:
1. Discuss the three input components of the Congruence Model as they apply to the success of IKEA.
2. Consider Schein’s four key organizational culture factors as described in Highlight 12.6 (BELOW). What examples can you identify within the IKEA organization that contribute to the company’s strong corporate culture?
3. Based on the level of technological complexity and the degree of environmental uncertainty present at IKEA, what type of organizational structure would you expect?
*TEXT BELOW*
Innovation at IKEA
Redecorating and renovating have become a popular international pastime. In a world facing persistent terrorist alerts and lagging economies, more and more people are opting to stay home and make their homes safe havens. This phenomenon has contributed tremendously to the success of IKEA, the Swedish home furniture giant. In the past 10 years sales for IKEA have tripled, growing from over $4 billion in 1993 to over $12 billion in 2003.
Much of IKEA’s success can be attributed to its founder, Ingvar Kamprad. Kamprad used graduation money to start IKEA in the small Swedish village where he was born. He started off selling belt buckles, pens, and watches—whatever residents in the small local village of Agunnaryd needed. Eventually Kamprad moved on to selling furniture. One day in 1952, while struggling to fit a large table in a small car, one of Kamprad’s employees came up with the idea that changed the furniture industry forever—he decided to remove the legs. IKEA’s flat-pack and self-assembly methodology was born, and it rocketed the company past the competition. “After that [table] followed a whole series of other selfassembled furniture, and by 1956 the concept was more or less systematized,” writes Kamprad.
Kamprad is dedicated to maintaining the corporate culture he has helped define over the past 50 years. He is a simple man—his idea of a luxury vacation is riding his bike. He is fiercely cost-conscious and, even though his personal wealth has been estimated in the billions, he refuses to fly first class. He values human interaction above all, and, even though retired, he still visits IKEA stores regularly to keep tabs on what is going on where the business really happens.
The culture at IKEA is a culture closely connected with Kamprad’s simple Swedish farm roots. It is a culture that strives “to create a better everyday for the many people.” IKEA supports this culture by
• Hiring co-workers (IKEA prefers the word co-workers to employees ) who are supportive and work well in teams.
• Expecting co-workers to look for innovative, better ways of doing things in every aspect of their work.
• Respecting co-workers and their views.
• Establishing mutual objectives and working tirelessly to realize them.
• Making cost consciousness part of everything they do from improving processes for production to purchasing wisely to traveling costeffectively.
• Avoiding complicated solutions—simplicity is a strong part of the IKEA culture.
• Leading by example, so IKEA leaders are expected to pitch in when needed and create a good working environment.
• Believing that a diverse workforce strengthens the company overall.
The IKEA culture is one that resonates for many. The buildings are easy to identify—the giant blue and gold warehouses that resemble oversized Swedish flags are hard to miss. Millions of customers browse through the Klippan sofas and Palbo footstools (Nordic names are given to all IKEA products) in the stark, dimly lit warehouses. The surroundings may not be lavish and the service may be minimal, but customers keep going back not just for the bargains but to experience the IKEA culture as well.
HIGHLIGHT 12.6
Schein’s Four Key Organizational Culture Factors
Myths and stories are the tales about the organization that are passed down over time and communicate a story of the organization’s underlying values. Virtually any employee of Walmart can tell you stories about Sam Walton and his behavior— how he rode around in his pickup truck, how he greeted people in the stores, and how he tended to “just show up” at different times. The Center for Creative Leadership has stories about its founder, H. Smith Richardson, who as a young man creatively used the mail to sell products. Sometimes stories and myths are transferred between organizations even though the truth may not lie wholly in either one. A story is told in AT&T about one of its founders and how he trudged miles and miles through a blizzard to repair a faulty component so that a woman living by herself in a rural community could get phone service. Interestingly enough, this same story is also told in MCI (now Verizon).
Symbols and artifacts are objects that can be seen and noticed and that describe various aspects of the culture. In almost any building, for example, symbols and artifacts provide information about the organization’s culture. For example, an organization may believe in egalitarian principles, and that might be reflected in virtually everyone having the same size office. Or there can be indications of opulence, which convey a very different message. Even signs might act as symbols or artifacts of underlying cultural values. At one university that believed students should have first priority for facilities, an interesting sign showed up occasionally to reinforce this value. It was not a road sign, but a sign appearing on computer monitors. When the university’s main computer was being overused, the computer was programmed to identify nonstudent users, note the overload, and issue a warning to nonstudent users to sign off. This was a clear artifact, or symbol, underlying the priority placed on students at that school.
Rituals are recurring events or activities that reflect important aspects of the underlying culture. An organization may have spectacular sales meetings for its top performers and spouses every two years. This ritual would be an indication of the value placed on high sales and meeting high quotas. Another kind of ritual is the retirement ceremony. Elaborate or modest retirement ceremonies may signal the importance an organization places on its people.
Language concerns the jargon, or idiosyncratic terms, of an organization and can serve several different purposes relevant to culture. First, the mere fact that some know the language and some do not indicates who is in the culture and who is not. Second, language can also provide information about how people within a culture view others. Third, language can be used to help create a culture. A good example of the power of language in creating culture is in the words employees at Disneyland or Walt Disney World use in referring to themselves and park visitors. Employees—all employees, from the costumed Disney characters to popcorn vendors—are told to think of themselves as members of a cast, and never to be out of character. Everything happening at the park is part of the “show,” and those who paid admission to enter the park are not mere tourists, but rather “the audience.” Virtually everyone who visits the Disney parks is impressed with the consistently friendly behavior of its staff, a reflection of the power of words in creating culture. (Of course a strict and strongly enforced policy concerning courtesy toward park guests also helps.)
Explanation / Answer
1. Three inputs of the Congruence Model are: (i) environment (ii) resources and (iii) history. In terms of environment, Ikea has a very conducive environment. Its employees are known as co-workers. They are supportive and function efficiently as a part of the team at Ikea. All the employees are respected and they are motivated to innovate and improve operations. Thus, the environment is such that all the employees are respetced and they share the organization's objectives and goals. In terms of resources, the key resources are technology and human resources. Use of technology and innovative methods have led Ikea to introduce flat pack and self assembly methodology. Human resources are constantly encouraged to innovate and improve operations and processes. In terms of history, Ikea was started by Ingvar Kamprad in a small Swedish village. In the year 1952, the company changed the furniture industry by introducing flat pack and self assembly methods. The focus, ever since, has been on making self assembled furniture.
2. (i) Myths and stories - There are numerous stories about Ikea's founder Ingvar Kampard and these stories contribute to the company's culture. There are stories about how the company was started on a small scale, how he started by selling belts, pens and watches and how he revolutionized the furniture industry. (ii) Symbols and artifacts - The symbols and artifacts at Ikea demonstrates a culture of being a cost-conscious organization. Unnecessary wastages and unimportant expenditures are discouraged. The artifacts in terms of the building and decoration shows the principle of keeping things simple at Ikea. (iii) Rituals - The recurring event at Ikeas is treating employees as co-workers, keen involvement of the founder and encouraging everyone to innovate. (iv) Language - The language and its impact in Ikea's culture can be gauged from the method of naming of products at Ikea. Nordic names are given to the products to highlight its history and heritage.
3. I would expect a vertical structure as the level of technological complexity is moderate. There will be a chain of management, with the CEO at the top. CEO will be the main decision making authority. Authority is delegated to lower level managers. My expectation is so because Ikea is good at designating tasks to employees or departments within the company.
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