Page 169 - Performance Leadership

158 • Part III Principles from the Values and Social Dimensions

to offer, the value proposition, what attracts stakeholders to the com-
pany. Aligned organizations have a close match between corporate
image and corporate identity. 13
One company whose success is based on a deep understanding of the
alignment of its own values and the customer value proposition is IKEA.
The company was founded in 1943 and had a 15.2 billion euro turnover
in 2005. It had 221 stores at the end of 2005, which were visited over
14
453 million times worldwide. Its value proposition is to “provide func-
tional, well-designed furniture, at prices so low that as many people as
possible will be able to afford them, creating a better everyday life for
many people.” The value proposition is carried out through the prod-
uct concept. Design, in the beginning of the value chain, is completely
in touch with logistics in the end (to make it efficient to ship goods) and
customer experience. Customers assemble the furniture and accessories
themselves, to keep down manufacturing costs. Customers pick up their
items from the warehouse themselves (a mechanism originally born out
of capacity problems). Customers take their items home themselves.
Delivery is a separate service and is marketed as being reasonably priced.
Even typical back office operations, such as inventory management, are
part of the customer value proposition. Customers can use the IKEA
Web site to view how many items of an article are in stock.
IKEA’s customer value proposition is closely aligned with its orga-
15
nizational values, which are rooted in Swedish culture. Founder Ing-
var Kamprad is known for only flying coach, driving an old car, and
taking the subway to work. There is even a story of how Kamprad took
a soft drink from the minibar, and the next day went to the grocery store
to buy a replacement. True or not, storytelling is a good way of con-
veying how important cost consciousness is. IKEA is very down to earth.
Few IKEA managers at the corporate level dress in suits. Shop man-
agers wear an IKEA sales uniform and manage by walking around. It’s
also significant that every employee can see local revenue numbers.
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One study describes a conversation between Ingvar Kamprad and the
first employee, in which they brainstormed about how to break the
vicious circle between lower prices leading to worse quality. IKEA’s
value proposition is all about that. Cost control has a meaning beyond
optimizing margins: it adds value to the customer through a lower price
for a good-quality product. Although the performance indicators IKEA