CASE STUDY: Successful Innovation – How IKEA Innovates

by Paul Shepherd
| November 14, 2015
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The simplest way to understand business innovation is to see it as a process of focused change. It means putting your creative ideas into effective use, in order to improve your products, services, and your overall business processes. However, oftentimes this practice is easier said than done. Many companies fail at managing this change and sustaining their competitiveness and growth. On the other hand, there are companies that make the most out of innovation. What’s their secret? Well, I think it’s best to explain it through a successful innovation case study.

Why do some companies fail with innovation?

When it comes to innovation, people tend to get overwhelmed by the process of generating great ideas and do not focus enough on their realisation. What they often forget is that ideas are only one small part of business innovation. New ideas can be found anywhere, even at patent offices. Every idea that solves a customer’s pain point is good enough to become a part of the innovation process.

The key element of innovation is the way you implement it in your organisation. You need to focus on putting your ideas into practical processes, creating products and services that customers need. Innovation must be implemented in the very core of the organisation – in its culture, its management processes and the way in which employees are motivated and inspired.

Innovation comes with change. And there’s no way to make positive changes without openness to new business approaches and calculated risks. That being said, keeping an open mind and having the courage to take risks are a must for a truly innovative organisation.

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However, very few people are eager to take risks when it comes to business, although we all know that it’s the only way to experience progress. Trying to protect themselves and their companies, they create strict rules and boundaries. The more silos they put their ideas through, the less the chance to fully reap the benefits of innovation.

Companies have to be open to new opportunities and be ready to drop the rules sometimes. This also applies to the funding of innovative ideas. Annual funding cycles rarely match up with the real needs. In fact, you can never know when a great idea may strike. Always be ready to make some changes to the already established budget to fund an idea that can fuel your business growth.

What is more important, be open to take into consideration ideas that come from your employees. Managers should have in mind that the employees are the ones that know the business processes the best. They are the ones that are most likely to come up with better solutions.

Encourage employees to share their ideas clearly and concisely so everyone can understand them and give immediate feedback. Ensuring proper communication within the company, through proper channels, is one of the bases for success in innovation.  

What makes IKEA a successful innovation case study?

Today, you can find a lot of successful innovation case studies, but you can learn best from IKEA. Here’s why. Founded in Sweden in 1943, IKEA is a Swedish company that designs and sells ready-to-assemble furniture and home accessories. It is known for its modern architectural designs, as well as its attention to continuous product development, operational details, and cost control.

It operates more than 350 stores in around 50 countries which makes it the world’s largest furniture retailer. In the 2014 fiscal year, the company generated a global revenue which exceeded 31 billion USD.

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IKEA is undoubtedly one of the world leaders in business innovation. It carries innovation deep within its philosophy, constantly looking for ways to improve or come up with new service propositions. The interest in its customer buying habits helps this company constantly improve its levels of innovation. This is how IKEA managed to stay on top of innovation and continue changing and adapting even after 70 years on the market.

IKEA excels in 3 basic aspects of innovation:

1. Communication

IKEA communicates widely about its innovation strategy, both with employees and customers. It innovates with its core strength in mind – offering something appealing to everyone at a low price, while maintaining good quality. It saves on costs through transportation and assembly with its flat packaging.  

2. Openness to new ideas and approaches to innovation

IKEA partners virtually everyone in developing its innovation strategy – from top management to internal innovation experts. This is how it manages to apply innovation in everything it does, not only in product development. In fact, IKEA is very popular for its innovative ways of promotion and marketing. Popup advertising, popup lounge, storage balconies, and a moving showroom are only some of the many innovations by IKEA.

3. Innovation management

IKEA has a well-defined organisational and governance structure to manage innovation. Although innovation exists within every pore of the organisation, the founder Ingvar Kamprad drives the entire innovation culture. All the changes related to innovation come directly from the top management. Furthermore, IKEA has operative key performance indicators that measure the innovation achievements and milestones. It has a well-established value system to support innovation.

How can you stimulate innovation in your own company?

Start from the core – create a culture of continuous improvement and creativity. Always be open to new ideas from employees, customers, suppliers, partners, or any other source. Then, open opportunities for every idea to be challenged and enhanced through discussion. Seriously consider every idea, no matter where it comes from. You never know which seed will turn into the biggest tree.

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However, keep your eye on the most creative and thoughtful people around you. Sometimes, you can get some much needed help from them only by asking what they would do if they had to make the final decision. But, you’ll have to know who these people are so you can turn to them directly for advice.

Don’t be afraid to take risks. They are your chance to find that groundbreaking idea for your business. Just, make sure you are ready for failures, too. If you have never failed, it means you haven’t taken enough risks. Learn from your failures and don’t take them too seriously. Remember to have fun along the way. It will help you increase the potential for creative insight and encourage those around you to keep looking for the right solutions.