JÖNKÖPING INTERNATIONAL BUSINESS SCHOOL
JÖNKÖPING UNIVERSITY
L e a d e r s h i p C h a n g e s i n Fa m i l y B u s i n e s s es
A Case Study of IKEA
Paper within Leadership
Author:
Borvander, Annelie
Oore, Jasmine
Praski, Trent
Samuelsson, Sandra
Tireus, Carl-Johan
Tutor:
Müllern, Tomas
Jönköping
December 1999
Table of Contents
1 Introduction ........................................................................................... 1
1.1
1.2
Problem discussion ................................................................................................................ 1
Methodology .......................................................................................................................... 2
2 Theories ................................................................................................ 3
2.1
2.2
Leadership and culture in family businesses ...................................................................... 3
Transformational Leadership ............................................................................................... 6
3 IKEA ..................................................................................................... 8
3.1
Ingvar Kamprad ................................................................................................................... 10
4 Analysis ................................................................................................ 12
5 Conclusion ........................................................................................... 14
References ................................................................................................ 16
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1
Introduction
Family businesses are special in character and culture as compared to other businesses.
Their goals and strategies are, to a great extent, determined by the owners’ goals for the
business. These personal objectives play a vital role for the companies’ progress and also
for the realization of the leader change process. The founder of a family business is most
likely an individual who has realized a dream and is often entrepreneurial in character. This
person is usually very devoted to the company and wants to have a high degree of control
over all areas within the business. It is very common in family businesses that the owner influences the whole company culture since he/she is both the owner and the leader. Many
owners of family businesses are very charismatic leaders and ”are” the company itself.
While this can be good in certain situations, problems may arise when the owner steps
down (Johansson & Falk, 1998).
IKEA is an example of a very successful family business with a charismatic leader/owner.
IKEA is a Swedish firm that was founded in 1943 by Ingvar Kamprad. The company has
grown rapidly since then and now has more than 140 stores in 29 countries. The success of
IKEA depends to a great extent on three factors:

Ingvar Kamprad as a leader and entrepreneur.

Ingvar Kamprad as the man behind the business idea.

The company culture, which is influenced by Ingvar Kamprad.
What can be understood from these success factors is that Kamprad plays a big role in the
success of the company. He has always been the ”centre” of the business, and will probably
continue to be until he passes away. Today Kamprad is no longer the CEO of the company, but he is still the owner and remains very much involved in the organization (Björk,
1998). Within this paper we are using the terms ”owner,” ”founder,” and ”leader” interchangeably when referring to Ingvar Kamprad, as he has, over time, encompassed these
roles. It should be mentioned, however, that the ownership of IKEA today is a complex
structure.
1.1
Problem discussion
Many family businesses provide economic stability and career paths for their founders and
the coming generations. However, they can also give rise to numerous conflicts, especially
when it is time for ownership or leadership changes. Since many of the owners of family
businesses are also the leaders, in many cases this can cause problems when the owner is
too old or tired to continue running the business. At some point in the business development path the owner/leader will encounter the possibility of a shift in the leadership post.
This change can be a very demanding process. The owner has a range of choices, including
letting other family members take over, selling the company to an outsider, or remaining
the owner and letting an outsider take over the CEO post (Johansson & Falk, 1998).
If the family business has had a very charismatic owner/leader who has influenced the
company culture to a great extent, it can be even harder to change leaders. The problems
can be magnified if the owner takes in an external CEO, but remains the owner. Even with
an “outside” CEO, the owner may still have difficulty letting go of the decision-making
process and other activities within the company. This can lead to conflicts between the
1
CEO’s way of running the business and the owner’s view, with the owner always having
done it in his/her way and continuing as the “informal” leader. Even if there are no conflicts between the CEO and the owner, having an owner as an “informal” leader can still
create problems. If the owner has formed the organizational culture and continues to maintain it, even without being the formal leader, problems occur when the owner withdraws
totally or dies. What will happen then to the organization? How will the success live on? It
is not necessarily a negative change for an organization to lose the owner; perhaps the original owner could not see the need for crucial changes. However, a withdrawal can also be
fatal for the company, if there is no adequate replacement for the owner available.
IKEA is a large family business with a unique company culture, largely influenced by Kamprad. Kamprad has been involved in the company as a leader from the start, but handed
over the “formal” leadership role to an outside CEO a couple of years ago. He is still the
owner and very much an informal leader for the company. He has always been the front
figure for IKEA and is a very charismatic leader. As long as he is a part of the company,
the culture and vision can live on, but there is a question as to what will happen when
Kamprad ends his involvement in the organization. This question has been raised by IKEA
itself, and individuals within the organization are seeking solutions to this problem. What
should IKEA do to handle this eventual future problem? These questions have led to our
purpose:
Our purpose is to investigate what kind of problems might occur when Ingvar Kamprad ends his involvement with IKEA and to look at how IKEA handles these eventual
future problems.
We are going to look at the problems of leadership changes in family businesses in general
and in application to the IKEA case. We are also going to interview a few employees at
IKEA to see if and how they are being prepared for the absence of Ingvar Kamprad.
1.2
Methodology
This paper is done based on the intention of giving the reader some insight in what kind of
problems a family business might encounter when the founder who created culture and
have the vision disappears from the company. To get a deeper understanding of our chosen topic we decided to focus our study on IKEA and Ingvar Kamprad. Due to this our
choice for the empirical research for the project became an explorative case study. The case
study approach is appropriate to use in empirical studies with descriptive character. It
makes it possible to use different methods for the collection of data, like interviews, direct
observations and also secondary data like historical material. (Lekvall & Wahlbin, 1993)
The research was carried out through two semi-structured phone interviews and gathering
of secondary data. Both interviews were held with employees of IKEA International in
Denmark. The first interview was with Maria Tiréus, Assistant to the CEO, and the second
with Ree-Yong Yuen, Developer in the Culture and Competence Department. The reason
for having semi-structured phone interviews is that it makes it possible to have a more
open conversation while still having some basic guidelines to go from. The secondary data
were collected through books, Internet and other papers written about the topic chosen.
After all the information gathering and searching the material was systematically compiled,
analyzed and interpreted.
2
According to Eriksson and Wiedersheim-Paul (1997) there are two basic requirements that
scientific document have to fulfil validity and reliability.
Validity means how well the researcher succeeds to link the theory to the empirical evidence, if the study succeeds to study what it was intended to study. In our case it is important to point out that each situation of leadership change in family business is different
due to the characteristics of the leader. This inflicts a problem; it is not possible to write a
complete guide for how to act when a strong leader leaves the involvement of his/her creation. So not being able to derive more than two interviews should not be seen as all that
negative. It is a paper devised to shed light on a still less travelled road.
Reliability means that a measuring instrument should give reliability and stability in the
measuring results. A high degree of reliability presumes that the result must be irrespective
of the researcher. One thing we did to obtain high reliability in the study was the use of
secondary data from Internet, books and other papers. Some limitations that have to be
remembered are the judgements and ideas presented are highly personal and other people
could interpret the situation differently.
2
Theories
In this section, we are going to present some theories for later use in the IKEA case, in order to give the reader an overall view on our topic and a better understanding of our analysis. First, we will discuss the culture and characteristics of family businesses and the problems that can occur when there is a change of leader/owner in these kinds of businesses.
This will later be connected to IKEA to see if and how they can handle these eventual
problems. We will also discuss the concept of transformational leadership and, in the next
section, apply it to Ingvar Kamprad’s leadership style.
2.1
Leadership and culture in family businesses
In a family business, it is very much the founder who creates the company culture, so the
presence of strength and character in the founder is one of the most significant factors in
the development of the culture. Founders often have a dream or vision that they set out to
accomplish, and may act in almost a religious fervor in carrying it out. The founders’ strong
belief in their tasks creates a kind of magnetism to which followers are drawn (Dyer, 1986).
It must be noted, however, that charismatic leaders may actually become a problem for the
company: if the culture is centered around the leader, once the leader abdicates the formal
leadership role, it is difficult for the company to sustain the culture. The maintenance of
culture is necessary in order for the company to reach its goals since culture behaves as a
compliment to formal controls. However, as a business grows, the family becomes less cohesive and the culture, less pronounced. This is especially true once the founder has relinquished leadership duties. Therefore, there is an increased emphasis on cultural awareness
within the company and, possibly, even a redefinition of culture as a new leader steps in
(Engman & Torstensson, 1998).
The family spirit is determined by the present attitudes, values and norms in the company,
while the expressed family values create a common purpose for employees and help to establish a sense of identification and commitment. The employees of a well-run family business feel like a part of the family and the atmosphere is usually much more caring than that
of a publicly held organization. Within a family business, the owner/leader has a certain
3
leadership style that he/she thinks is the most successful one. This creates a continuous
pattern in the leadership style throughout the life of the company, which is seen to be an
advantage in the culture of a family business (Kets De Vries, 1996). Within this family spirit
is the need for trust and, as Kets De Vries (1996) suggests, trust is one of the pillars of corporate culture. It is important to have trust between family members with respect to job
descriptions and contributions.
In addition, the importance of combining the goals of the company with those of the family is increased. Leaders must be able to balance important issues between the business and
the family in order to resolve potential problems that may occur (Thornton, 1998).
Now we examine the nature of family businesses and the potential pitfalls that may result
when a transfer of leadership exists. As noted by Ward, 1987, “keeping a family business
alive is perhaps the toughest management job on earth.” He notes that only 13 percent of
family businesses last through the third generation and less than two thirds survive the second generation. It is common for the first generation to build the business only to have
the second generation harvest it and the third generation either auction what is left or start
from scratch (Ward, 1987).
Family businesses are increasing in importance as new generations feel that having a “job”
is no longer good enough. People want to have more say in their life and running their own
business can help them plan their own destinies (Kets de Vries, 1996). In addition, they are
unique in that they face special challenges in times of leadership transitions that other businesses do not. First of all, many family businesses are small and, therefore, lack financial
capabilities and staff skills that larger firms often possess. Also, disputes among family
members are not hard to find, and are often more heated than public held businesses. Because of these, the transition process must be especially smooth and efficient in family
businesses. (Friedman & Friedman, 1994)
Second, internal family business successors often lack the tools of planning for the successful future of both the company and family. As the business matures and the family demand for money grows, it is imperative that new leaders reinvest in strategies that will
promote future growth for the company, and keep these strategies separate from family
problems. Often, family members are tempted to “cash in” their profits late in the life of
the business rather than investing in growth. These tools are developed through extensive
business planning, which for business owners means change and, therefore, the compromises that accompany change. Owners are often reluctant to change proven strategies of
the past for those that are less certain (Ward, 1987).
In the transition process, family businesses often make the mistake of not preparing the
successor appropriately. This is particularly true when heirs are direct family members who
have been given broad titles, such as executive vice president, but are then left alone to
learn about the business and end up drifting without assuming any authority whatsoever.
Then, on the date of succession, the heir is handed over all responsibility and is expected to
run the company successfully. A better approach is to give responsibilities to the successor
incrementally, and provide clear job descriptions for both the founder and successor during
the transition process (Aronoff & Ward, 1992). The John Deere Company acted in this
manner when its leadership was shifted from and internal to an external position. The successor had worked in the company for 32 years and had become well accustomed to the
corporate culture and was, therefore, properly prepared for his leadership duties (Rose,
1995).
4
The owner him/herself may be at the root of succession problems in family businesses,
primarily due to reluctance to give up authority held since the inception of the business. As
noted in Ward, 1987, “the single most important factor in the success of any transition is
the business owner.” Essentially, the owner is the key figure in making the transition rough
or smooth. Ward describes phenomena such as “semi-retirement,” which refers to those
owners who only take a few months off from their leadership duties each year, and “return
of the parent,” where the owner returns to the business after some years of unfulfilling retirement.
The founder may also experience obstacles of his/her own. Whether the successor is from
within the family or external, it is often difficult for the owner to resist taking credit for the
accomplishments of the successor, and may even feel like a failure if the successor has performed exceptionally well. In addition, founders may ask questions about the business such
as “what is the value of this business apart from me? How can I communicate what I do to
a new generation of management? How do I move functions to people? How can I pass on
my skills? How do I transfer my business relationships?” (Aronoff & Ward, 1992). Furthermore, they must prepare to let go of power and confront the mortality issue in real
terms Consequently, it is important for founders to find new roles, ones that match their
unique capabilities and maximize their name and reputation (Kets de Vries, 1996)
Reluctance of family business owners to step down has its consequences on the business.
These include confusion among employees as to whom they should take orders from, and
fear that unclear leadership may mean a potential sale of the business, resulting in a possible loss of work for the employees and, thus, lack of motivation. The consequences are not
only with employees, but also with the successors who may have just become accustomed
to their new positions. They may feel reluctant to make changes, knowing that the owner is
always looking over their shoulders. In fact the largest problem with successors, according
to a father-son study, is the letting go of the older generation (Ward, 1987).
Often, the problem of new leadership is heightened when successors find the need to integrate new ideas with old, and integrate their own strategies with existing ones. If it has
been some time since the owner has stepped away, the business has probably grown considerably. It is noted that ideals of the original owner and the successor may be intermingled, since the owner has probably started the business in an entrepreneurial fashion
through instinct, whereas the successor must use planned and administrative efforts
(Friedman, 1998).
Further important factors in the transition process are the characteristics of the successor.
As noted in Aronoff & Ward, 1992, a leader with charismatic, visionary ideals is not required (as a successor) and may even be detrimental to the long-term growth of the company. “It’s not that the leader’s charisma or brilliance is not valuable. But as the world and
organisation grow, the company’s boundaries must become permeable enough to allow
ideas and information to flow in from outside sources.” Corporations often find difficulty
in maintaining momentum after the departure of highly influential leaders. This is referred
to as “post-heroic leader stall” and should be avoided by not creating a “cult of personality” of the leader. Thus, the core ideology of the company should be formulated in a specific, concrete manner (Aronoff & Ward, 1992).
Since transitions are often over a longer period of time in family organisations versus nonfamily ones, family businesses may not see a change in leadership for a whole generation, as
opposed to the typical five to seven years in non-family businesses (Rose, 1995). It is im-
5
portant, therefore, that new leaders enter the business in order to bring fresh, external experiences and insights into the business (Aronoff & Ward, 1992). If leaders change less frequently, there is a greater possibility of stagnation in growth due to the lack of fresh ideas.
One of the most important lessons that successful family businesses are aware of is the
need to combine strategic revolutions with changes in leaders. It is often easier to challenge
traditional ideas and implement change while the passion in new leaders is still alive (Ward,
1987).
A final concern in regards to the transfer of leadership in family businesses is the fact that
issues of leadership succession are often more fervent within family organizations. Consequently, many families end up selling the company rather than getting involved in the succession process (Friedman & Friedman, 1994).
2.2
Transformational Leadership
Transformational leadership is, according to Bass & Avolio in Northouse (1997), concerned with the performance of followers and also with developing the followers to their
fullest potential. Transformational leaders are very charismatic and good at motivating their
followers. There are five elements that are characteristic of transformational leadership,
shown in figure 2.1. We have modified Northouse’s model (1997) in that we have divided
charisma and idealized influence into two separate elements, since we believe that they
should be attributed equal importance.
Attributed Charisma
Individualized
Consideration
Idealized Influence
Transformational
Leadership
Inspirational
Leadership
Intellectual Stimulation
Figure 2-1 Elements of Transformational Leadership (modified version of Northouse model, 1997)
Attributed charisma is one important element of transformational leadership. Charisma is
a concept that was first introduced by Max Weber in 1947. He saw charismatic leaders as
being highly esteemed people possessing exemplary qualities. Charismatic leaders display a
sense of power and confidence in themselves. They also remain calm during crisis situations. They are good at articulating goals and provide reassurance in the face of obstacles.
Charismatic leaders have extraordinary influence over the employees and their followers
usually feel an attraction and a will to follow them (Bass &Stogdill, 1990).
Idealized influence is another factor that characterises a transformational leader. By this
the leader shows his/her most important values and beliefs to the followers and tries to ob-
6
tain everybody’s commitment to these values and beliefs. The leader also considers the
moral and ethical consequences of his/her decisions. At the same time the leader displays a
conviction in his/her ideals and values and takes a stand on difficult issues. (Ibid)
Intellectual stimulation involves the leaders’ stimulating the followers to be creative and
question what has not been previously questioned. These leaders encourage non-traditional
thinking to deal with traditional problems and supports their subordinates when they try
new solutions (Northouse, 1997).
A leader that shows inspirational leadership looks optimistically at the future and provides continuous encouragement for followers. The leader expresses confidence that the
company will achieve its goals. An inspirational leader creates a vision for the future, which
he/she motivates down to the followers (Bass & Stogdill, 1990).
Individualized consideration is when leaders view followers as individuals rather than as
members of a group. These leaders listen to their subordinates’ concerns and needs. They
serve as coaches and provides useful advice for the subordinates’ development (Kellerman,
1984).
Problems with transformational leadership
Most research shows that subordinates perform better and are more satisfied with their
work when they have a transformational leader (Bass & Stogdill, 1990). If this is so, are
there any negative aspects associated with having a transformational leader? A transformational leader is very charismatic and concretizes a vision for his/her followers, thereby raising their excitement and effort. This is, in most cases, seen as positive, but what happens if
the followers put too much faith in their leader and cannot handle situations without
him/her? There is the danger of having a transformational leader in the way that the subordinates look up to the leader and see him/her almost as a deity. The followers then become too dependent on the charismatic leader, relying on him/her to inspire and motivate
them to perform. The subordinates feel comfortable and dedicated to the leader’s vision.
This dependence of the subordinates can be problematic when the transformational leader
must be succeeded, leaving the subordinates with a feeling of hopelessness and fear of the
future.
This problem might be amplified in family businesses, since the owner is usually the one
that has created the whole organizational culture. The owner is the one that had and realized a vision in the creation of the company. The owner also formed the business idea of
the company with the basis of the organizational culture derived from personal values.
When this owner/leader steps down, finding an equivalent replacement that can carry on
the company culture (if this is desirable), is clearly a challenge (Johansson & Falk, 1998).
All companies that have had a transformational leader must be aware of the problems that
might arise when their leaders disappear. How can the company replace them, and do they
want to? How should they handle the problems of keeping the company culture alive even
when their leader is gone? In the analysis, we look at if and how IKEA approaches this
problem.
We will, in the next section, use some of these theories and models in application to IKEA.
First, we give some background information on IKEA, and then we examine Kamprad’s
leadership style more closely.
7
3
IKEA
Ingvar Kamprad founded IKEA in 1943. In 1954, IKEA had 15 co-workers and, since
then, IKEA has expanded to include a number of home furnishings stores and support
companies around the world. Today IKEA has more than 50 000 co-workers around the
globe. In 1954 IKEA had an annual turnover of 2 billion USD, and in 97/98 this figure
was 7016 billion USD. The IKEA group today is a mixture of many different companies
and foundations (http://www.ikea.com/content/).
Inter IKEA Systems B.V. is the owner and franchiser of the IKEA concept. IKEA retailers
worldwide operate on a franchise basis. Most IKEA retailers belong to The IKEA Group,
which also includes the product development center, IKEA of Sweden AB and IKEA trading and wholesaling companies. IKEA Group activities are co-ordinated by IKEA International A/S in Denmark, while The IKEA Group is owned by a charitable foundation in the
Netherlands. IKEA of Sweden AB is responsible for the entire IKEA product range on
behalf of Inter IKEA Systems B.V.. All products in the IKEA range are distinguished by
the label "Design and Quality, IKEA of Sweden" (Ibid).
So what made this story possible? In a book by Stellan Björk (1998) IKEA’s success is explained as a triunity or a trinity – the entrepreneur, the business idea and the company culture. And just like the holy triunity, which is born from the father, IKEA grew from its
founder, Ingvar Kamprad.
The entrepreneur
In 1986 Ingvar Kamprad left his post as CEO of IKEA and was replaced by Anders
Moberg. Today, Ingvar is still very active within IKEA as a chairman of the boards within
the IKEA group. At the age of 73, Ingvar Kamprad can look back at an exceptional
achievement. The company went from owning one small furnishing shop in Älmhult in
1943, to more than 140 stores around the world today. This makes him one of the world’s
greatest entrepreneurs (Ibid).
The business idea
IKEA’s business idea is to ”help create a better everyday life, which means offering a wide range of
home furnishings that combine good design, good function and good quality with prices so low that as many
people as possible can afford them.”
IKEA’s strategy has always been a low-price one and this is why customers keep coming
back. According to Björk (1998), there is a love-hate relationship between IKEA and its
customers. Customers say, “never again will I stand in those lines,” but still return again
when it is time for a new kitchen table. Kamprad is the one guarding this low-price strategy. There are always people within the company pushing to raise the profit margin, but
Kamprad maintains that it is better to make money on low prices and high volumes. He
believes in providing people with quality home furnishings at low prices, while weakening
the competitors’ marketshare.
How is it possible for IKEA to sell home furnishings at 30-40 percent cheaper than its
competitors? It is not the objective of this report to look into the financials of IKEA, but
the answer lies in the concept of ”cost awareness.” Ingvar Kamprad writes in the furniture
dealer’s testament: “Waste of resources is one of mankind’s biggest diseases.”
8
The company culture
IKEA has a very strong company culture and this is reflected in everything from the company’s dress code and cars, to the way in which IKEA does business. Kamprad believes
that ”most things still remain to be done - a glorious future! Time is your most important
asset. Split your life into 10-minute units and sacrifice as few as possible to furniture”
(Sjöberg, 1998). The corporate culture of IKEA is built on this philosophy all the way from
design teams to suppliers, and in the end to its customers. A continuous strive for improvement in all areas of the value chain is an effective way to shape the industry to better
fit IKEA’s future strategies.
Miriam Saltzers writes in her report ”Identity across Borders” (1998) about how IKEA
works in order to safeguard this special “IKEA spirit.” She writes that in the 80s, IKEA introduced a special training seminar called “IKEA Way.” Today, these training programs are
held a couple of times each year as weeklong seminars in Älmhult. Young managers from
all IKEA units around the world meet Ingvar Kamprad who talks about IKEA’s philosophy. During these days, the participants are given lectures on such topics as IKEA’s history, its product range, the distribution system, and the human resource idea. On the last day
there is a small ceremony at which the participants receive a pin: a miniature IKEA insert
key. This is a token of having become an “IKEA ambassador,” a “culture-bearer” with a license to further spread the IKEA culture in his or her own organisation.
Another way the IKEA spirit is spread around the world is through Kamprad’s visits to
stores world-wide. A visit by Ingvar is a big event all over the whole world. Normally he arrives at seven o’clock in the morning and does not leave until six o’clock in the evening.
During the day he meets all the employees, and he always has a person with him that whispers the employees’ names in his ear so he can address them by their first names when they
shake hands.
So how is this IKEA culture shown?
The dresscode of IKEA is often noted; nobody wears suits or ties and this is one of, and
probably the best known, visible ways that the IKEA culture is shown. Björk (1988) recounts in his book some of the tools the IKEA management uses to show the “IKEA
Way.”
Position
Tool
Risks
Humility
Leisure-wear
Simplicity
First-name basis with each oth- In some countries this is too
er
much intimacy
Efficiency and low cost
Symbolic policies, such as only Not always appreciated by
flying economy class and stay- those who must travel a lot.
ing at cheap hotels.
Table 1 Tools for showing the IKEA culture (Björk, 1988)
9
Almost a uniform
3.1
Ingvar Kamprad
Ingvar Kamprad was born in Elmtaryd in 1926. Kamprad’s interest for business was evident at an early age when he began selling matches as a little boy, then expanded the business to sell fish, and later, pencils, ballpoints and watches. During the whole school period
he maintained his business and his strong commercial interest prompted him to register his
own commercial company in 1943 in Agunnaryd: IKEA (Torekull, 1998).
Kamprad established a testament for the company in 1976, with nine different commandments. These can be seen as Kamprad’s vision for the company and for what the employees should strive towards. The commandments are: (Salzer, 1994)
 The product range- our identity. IKEA shall offer a wide range of home furnishing
items of good design and function, at a price so low that the majority of people can afford to buy them.
 The IKEA spirit, a strong and living reality. The true IKEA spirit is founded in everybody’s enthusiasm, their constant will to renew, their cost-consciousness, their willingness to assume responsibility and to help, on their humbleness before the task and on
the simplicity in their behaviour.
 Profit gives us resources. The aim of accumulating the financial resources is to obtain
the best result in the long run. IKEA shall have the lowest price picture and marry it to
good quality. Kamprad is guiding them to develop products in a more economical way,
to purchase better, and to save on all costs persistently. This is IKEA’s secret and the
reason for their success.
 To reach good results with small means. Waste of resources is a moral sin at IKEA. Expensive solutions to all kinds of problems are often signs of mediocrity.
 Simplicity is a virtue. If many people have to function together in a society or in a company there must be rules. The more complicated these rules, are the more difficult they
will be to observe. Simplicity and humbleness characterize relations within IKEA, with
their suppliers, and with their customers.
 The different way. By daring to be different, IKEA finds new ways. By refusing to accept a pattern just because it is established, they get further. A keyword in the organization is ”why.”
 Concentration of energy- important to our success. Kamprad states that they cannot do
everything everywhere at the same time.
 To assume responsibility- a privilege. The IKEA-family wants to keep the human beings
central, and supporting each other. They have their rights but also their obligations.
Freedom with responsibility. All in the organization’s initiative and their ability to assume responsibility and make decisions.
 Most things still remain to be done. A glorious future! Happiness is not to reach one’s
goal but to be one the way. IKEA’s glorious fate is to be at the very beginning in all areas. Time is the most important asset.
Behind the testament is a huge passion for the company and the company idea. The testament is made very thorough and the spirit of Kamprad is shown in all nine command-
10
ments. You can both sense his feeling for humanity where the people are central. Kamprad
believes that kindness, fellowship and helping one another are important. Also, the Lutheran basis of valuation, like responsibility and honesty, can be sensed. These can be said to be
IKEA’s short- and long-term goals and are all influenced by Kamprad’s values, standards
and ethics.
As established that well-run family businesses have caring atmospheres (Kets De Vries,
1996), Kamprad’s style is in line with this notion: Björk (1998) writes that Kamprad is
known as a leader who likes to hug his co-workers, but is also capricious and ironic. Former co-workers have, in interviews, described Ingvar as a ruler that wants to draw in his
closest co-workers into something equivalent to a religion sect with himself as the preacher,
which is also shown in the testament.
Kamprad is a man that cares about everything that has to do with IKEA, the business as
such, as well as the people within it. Some people call it possession, which can be interpreted in both a negative and positive way. He is very enthusiastic, has a strong will to continually improve, and he also wants to do his best with his creation, IKEA. In his leadership
style, his thoroughness and attention to detail is evident. He believes that it is not enough
to just focus on overarching, strategic questions. One loses the sense of what is really happening in the company and on the market. He is said to be a very down-to-earth leader and
sees the importance of close contact between the management and the business of IKEA,
the customers, and the products. He is described as being both very determined and soft in
his way. He can be somewhat slow in his decision-making, but as soon as he is certain of
something, he realizes it with great energy. He is known to be involved in a little bit of everything (Sjöberg, 1998).
Kamprad can be seen as a charismatic leader. He possesses strong values, is self-confident,
and seems to have a strong desire to influence others. He is a strong role model for the beliefs and values he wants his employees to adopt, and he also articulates the goals for the
organization. Some of his goals are seen in the nine commandments he created and these
are also intended to motivate and guide the employees in their work. From the very inception of IKEA, he has been the centre of the company and will continue to be so until he
dies. He sees IKEA as a big family and speaks to them as a father speaks to his children.
Due to his strong influence from the beginning, the company culture is more or less a reflection of his beliefs and his vision.
In the model below, we summarize the leadership style of Ingvar Kamprad according to
the transformational model shown in the previous chapter.
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Attributed CharismaShows self-confidence,
power and makes his
employees devoted.
Individualized
Consideration- He treats
everyone in the
organization as an
individual
Ingvar Kamprad
Intellectual StimulationHe is an entrepreneurial
leader that keeps asking
why they do things the way
they do.
Idealized InfluenceInfluence his values and
beliefs on his followers.
Inspirational LeadershipHe creates and passes on a
vision, and believes in a
good future.
Figure 3-1 Ingvar Kamprad's leadership style
In the next section, we examine more closely what problems IKEA, as a family business,
might encounter when Kamprad ends his involvement with IKEA, as well as how they
handle them. Some of these problems have already been solved, but there are still issues to
be considered.
4
Analysis
As noted by Ward (1987), the toughest job for a family business is to keep it alive after the
founders step down. Often family members lack the tools of planning for the company’s
future and become tempted to “cash in.” Since the 70s, Kamprad has, in interviews, stated
that he is planning for his death and, during the 80s, he cleaned up the IKEA structure in a
way that would give IKEA “eternal life” (Björk, 1998). He did this by setting up a variety
of foundations and today The IKEA Group is a mixture of foundations and companies
spread all over the world, as shown in appendix A.
With these constellations Kamprad has, according to Björk (1998), succeeded in giving
IKEA eternal life, by spreading the risk, creating a capital reserve, and ensuring that the
Kamprad family will be economically secured. Thereby IKEA has avoided many of the pitfalls, such as the “temptation to cash in,” noted by Ward (1987).
In 1986 Kamprad announced that IKEA appointed a new CEO: Anders Moberg, who had
worked within IKEA for 15 years. Ward (1987) addresses the problem of reluctance to relinquish the authority that has been a large part of the owner’s life since the inception of
the business. According to Sjöberg (1998), Kamprad did state that this decision was one of
the toughest decisions he ever had made, but was convinced that he and Moberg would
find a way that would make it easier for him to gradually let go. Ward (1987) describes a
problem due to the reluctance to give up involvement. He writes that successors may feel
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reluctant to make changes because the eye of the founder/owner is always over their
shoulders. In an interview with Maria Tiréus, assistant to the CEO at IKEA, she said that
Kamprad still is very much involved in running the business. This can be seen as reluctance
to give up authority, but it is not seen as a problem within IKEA, since Kamprad is considered a big asset and takes decisions in consultation with the CEO.
A further important and, from our perspective, more interesting factor, is the characteristics of the successor. Aronoff & Ward (1992) write that a charismatic leader with visionary
ideals is not required as a successor. As far as the CEO’s responsibilities, this might be true
for IKEA, but as Aranoff & Ward (1992) noted, corporations often find difficulties in
maintaining momentum after the departure of highly influential leaders. This “post-heroic
stall” could be avoided by not creating a “cult of personality” of the leader, and this is
where we anticipate some potential problems for IKEA. Kamprad is still the symbol of
IKEA and very much its informal leader. IKEA can also see this eventual problem in its
organization and tries to solve it by documenting the history of IKEA and video recording
Kamprad. Individuals within the organization claim that they are not trying to replace him,
as that would be impossible, but that they want to keep him “alive” through book and
films (Tiréus, 1999).
The main problems we identify in the IKEA case are the cultural problems that might arise
when Kamprad is gone. Kamprad had a brilliant business idea when he founded the company and he was the one that created the vision for where the business was heading. As we
described previously, Kamprad was, and still is, a transformational leader, although his
leadership role is not formal.
A large problem for family businesses is that the company culture is built on the founder
and his/her vision. The founder might have problems giving up his/her authority, since the
business has been a large part of their life. This problem is relevant in the IKEA case since
Kamprad has had difficulties in ”letting go.” He is still a senior advisor at Ingka Holding,
which is the decision-making unit of the IKEA group, and he influences the culture in
many ways. When the CEO has more time to focus on the business, while the informal
leader, in this case Kamprad, can maintain the culture within the organization, this can also
be seen as advantageous.
IKEA sees the cultural issues as their main concern for the future. According to Tiréus,
Kamprad is seen as an asset when it comes to keeping the culture alive. It is, according to
her, important that the culture stay alive, otherwise it is improbable that IKEA will survive.
Kamprad is the symbol of IKEA and the basis of the culture is that he is the one that
knows IKEA by heart. So how does IKEA look at the future when Kamprad is gone?
Who will take over his leadership role?
Tiréus says it is impossible to replace Kamprad and that IKEA is not even trying. What
they are trying to do is to keep the culture alive by, first of all, documenting the IKEA history and everything that Kamprad has done. There are several people working full-time
with the issues of the IKEA culture trying to keep records of everything relevant. Another
way of keeping the culture alive is through the ”IKEA Way ” seminars. With these seminars, the management are taught the culture and history of IKEA and are then certified to
give ”Mini IKEA Way” seminars to their subordinates. In this way, all the IKEA personnel
get the opportunity to learn the IKEA way of doing things.
13
Ree-Yong Yuen of the IKEA Culture department is responsible for the international human resources. Her primary function in this area is the management of the ”IKEA way”
seminars previously mentioned. In an interview with Yuen, she explained that the seminars
are a way of ensuring that employees actually ”live the culture,” rather than simply reading
or hearing about it. This is established through the fact that each manager at the seminar is
allowed two questions for Kamprad. Furthermore, these seminars allow the managers to
gain a clear vision of the company’s culture and understand the company’s business ideas,
which they are then able to translate into their respective branches.
In addressing the question of who will take over Kamprad’s leadership role, Yuen states
that no definite answer has been given as of yet, although the CEO and the cultural and
competence manager will play crucial roles. Also, no specific plans have been laid out in
the event of Kamprad’s death.
Another important factor for keeping to culture alive is, according to both Tiréus and
Yuen, in recruiting the right people from the beginning. The people that start working
within IKEA have to share the same values as the existing culture. It is very important that
the future personnel share values like cost-awareness and honesty. It is also important that
the existing personnel act as good role models for the incoming employees.
In a letter published in Leadarskap ekonomen, number 3 (1988), Kamprad writes his own
thoughts on how IKEA’s culture will live on after his departure. To sum up the letter,
Kamprad writes:

The leaders are important. This is why we only should recruit people that share our
ideas and values.

IKEA shall have a simple and effective ideological basic education for all new personnel.

Through ”IKEA Way,” or in another way, we shall educate IKEA Ambassadors who
will transfer the culture within the organization.

With intervals of five years, IKEA should have an internal campaign with an ideological message.
This is consistent with what the employees interviewed have stated, as well as with our own
knowledge derived from the research.
5
Conclusion
We have determined that a number of potential problems may arise with the transfer of
leadership and, in this case, with the ending of Kamprad’s leadership role. As well, the severity of the problems is amplified by the charismatic nature of Kamprad, especially as a
leader of a family business. Although IKEA is not a family business in the traditional sense
of the phrase, as Kamprad’s children have not succeeded Kamprad in managing the company, IKEA is a family business in its spirit and culture. Therefore, the primary problem, as
we see it, appears to be one of culture and its maintenance. For the moment, and for the
near future, it appears that IKEA is well aware of these pending problems and is addressing
them through such programs as the ”IKEA way.” Whether or not IKEA will succeed in
14
maintaining the culture created by Kamprad will remain a question until he actually ends
his involvement with the organization. Our personal belief is that the culture will be carried
on by the employees who have come into contact with Kamprad, but that difficulties will
be encountered when a new generation of employees replace the ones who personally met
IKEA’s original leader.
15
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Electronic sources
http://www.ikea.com/content/
Personal Interviews
Tiréus, Maria. Assisant to the CEO, IKEA International, Denmark.
Yuen, Ree-Yong. Developer, Culture and Competence Department, IKEA International,
Denmark. (0045 49 155000)
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