Building IKEA with Fredrika Inger: Designing for Price, Experience & Real Life

0:00LinkedIn News.

0:30depth of the value chain. That's Frederica Inger, Chief Product and Commercial Officer, IKEA. For IKEA, great design is only part of the equation. We're going to get into that and so much more, so stick around.

0:54With almost 500 stores in over 60 countries, IKEA is one of the most recognizable brands in the world. They are known for their do-it-yourself furniture, which personally, I'm a big fan of. They're also known for their unique flat packaging, functional design, and massive sores where you can get lost for hours. What's less known about IKEA is that everything starts and ends with designing for the price of the product. As the founder of IKEA said, we have no respect for the solution until we know what it costs. Every company has its unique superpower. This is IKEA's. That's why I'm excited to have Frederica Inger on the show.

1:36Frederica is the chief product and commercial officer of IKEA. And there's no one better to talk to about building products at the furniture giant. Not only does she sit at the top of the whole IKEA product range, but she spent two decades touching almost every element of the process, from materials to sourcing to retail management. In this episode, Frederica will share some great insights, including how design at IKEA isn't just about a product, it's an entire value chain. Why IKEA works backwards from a target price to design its offerings. How IKEA's five pillars of democratic design are key to building its products.

2:16Why IKEA studies people's lives in their homes. The reason IKEA emphasizes selling full experiences over selling individual products. And so much more. So let's dive in.

2:32Thank you so much for joining me. It's great to have you on the show. Thank you. Nice to be here. So you've been at IKEA for 20 years, over 20 years. You've done so many roles. Why did you join IKEA and what kept you there all these years? I think it's 22 years now. So the story is that I was studying at the University of Technology. So I have actually a Master of Science. I'm an engineer as a base, but I always had a big interest for design, fashion, architecture. So I was also, you know, looking around, curious about companies that maybe you can combine all the fun you can do with problem solving and engineering with fashion and design and architecture.

3:12and of course also then finding an opportunity to do my master thesis in Ikea. So I actually did that and 22 years later I'm still here. And you've done so many roles, right? Like when I think about the operation of Ikea, what it takes to produce a product, everything from the inception to the design, to the manufacturing, to the supply chain, to the retail. You've done a lot of those. That feels to me like a superpower, right? You can see the whole product development lifecycle. Where does that come into practice in your work? How do you connect the whole dots across? After these 22 years, having, as you say, the opportunity to be in many parts of the value chain, I think maybe good to know that IKEA, you can sometimes think about us as a retailer, but a lot with IKEA is to develop products, develop value chain.

3:56We even have our own industry group, you know, being close to raw material and all that. So I have in my career been both in retail operation, being a store manager, but I also worked in the purchasing office in Ho Chi Minh City and working with purchasing of natural fibers. And of course, most roles I have had in between with product development, business development, business area managers and all that. And of course, with the role I have today, it gives me great experiences to understand. You know, if you do a change here, it changes all the way. when you develop, you cannot only develop for one part.

4:30You really have to consider the totality of every decision you take. So, of course, it's been extremely helpful to have that experience. And how do you connect the dots for people? So, for example, if there's a product designer, are they thinking about the material or you want them to think just on the product design and then there's the material side? Do you want them to kind of push the limits of what's possible with product design? Do they all kind of factor for each other's work or they're all working on their silos and there's a kind of system around it that basically connects the whole dots together.

4:59You always have to design for the totality. And I think IKEA's uniqueness is, of course, that we have the vision of create a better life for the many people. And we really want to do that with great design that people can afford. As a recipe for that, we have what we call democratic design. So every time a product developer do a product, they have to consider five dimensions. They have to do a good form, a great function, built-in quality, sustainability, and then to a low price so that many people can afford it. But in order to do that today, you can't just design a product. You really have to think about every step of the value chain.

5:35So when you design that, you know, what material you pick, how you utilize that material, what production techniques you use, how packaging looks, how logistics is put in place, and then how you sell it, you know, how to cater for both deliverables, home deliverables, but also, you know, to store. So like the whole packaging. So you really have to design the product and the value chain at the same time. That's the job. So let's go deeper into that one, because I think when you say IKEA, when it comes to product design, the immediate thing is the idea of democratic design, right? That's kind of the overarching principle.

6:06And like you mentioned, it's the form, the function, the price, the sustainability and the quality. I don't know if at this point IKEA and Swedish culture are so intermingled together, but is the idea of like affordability and function, are those like culturally Swedish in many ways? In the Swedish way of thinking, you don't want anything to go to waste, right? You want to be looking at resources with a lot of value. So I think it comes, of course, from that. And of course, Ingvar also deciding that strategy for IKEA. I mean, he started and rooted IKEA more than 80 years ago. I think it was 1976 when he put out the strategy that we are here to really serve the many people with the biggest needs and the thinnest wall, let's just say.

6:46That has been very close to who we are. then I think it's very much in line with the Swedish way of thinking about, you know, being a social democrat in the base. So, of course, it's part of that too. So the form is how the product looks, the function is what it serves. And I think you have three principles there. It's who you're serving, where it's supposed to be and how they're going to use it. And then there is the quality side of it. We're going to talk about price a lot because I think it's such an important foundation for IKEA. Like you said, the biggest needs, the thinnest wallets is a very big statement.

7:17And then there's sustainability. I'm sure those can come sometimes with kind of a trade-off between each other. Like a designer would say, hey, I can make this higher quality, but that extra thing will cost more. Maybe you could walk me for an example where, you know, you have those trade-offs and you have to make a decision. You choose like what is really going to be most important of this product. I mean, you always have to live up to kind of a base of all the five. But then, of course, you can stretch one dimension depending on what you're after. There's always a little bit of a trade-off, but then I think we also try to really find a win-win.

7:51But I think we have a good example of democratic design. We have a new favorite product here that we have just developed. It's a new frying pan. It's just sales starting now in the IKEA stores. We gave the development team a huge challenge to take this frying pan, and we really wanted to hit the price of€4 because it was really for the one that needed a great frying pan for absolutely the lowest possible cost and the price that they could afford. Alex, who is the product developer, he's a former chef. So, of course, he got the task. And if you look at the frying pan now, I don't know if it reached fully four euro, but I think at least five dollars, I think, in the US probably going to be the retail price.

8:28It is a product that they have come up with all this idea. I think the function, I think you wanted a nonstick surface. And then, of course, we also know that today in many of the nonsticks, There is, of course, PFAS and things. So they are finding a new way of having a new ceramic-based nonstick material to take on. They have really looked at also how to use more from less and use as little materials as possible, but also very good. So they have managed to find a new kind of spray on the surface instead of a metal plate. So it also works on different inductions. hob. And then of course also they have used at least 70 % recycled aluminium, decided to use aluminium as material as that can be recycled again and again and again.

9:15Also with the functionality of the handle and using aluminium, it's also quite lightweight for old and young people to use. So I think we now have of course a frying pan that you sell for$5 that has recycled content, more sustainable. I think fantastic coating material for the non-stick. Also of course a spray, so it It works on all different hubs. And I think also from a functionality and form, it looks great. And the handle is a perfect fit for many different personalities, too. What happens when you're not able to get that win-win? Do you just send them back to the whiteboard until they're able to checkmark all those five dimensions?

9:50Or is it more of an iteration? You take it out to market, you kind of improve it over time. I mean, we put the price tag first. That's how we think. It comes from a lot of insights. And we understand how people live. And if you really look at many families today, the high inflation and the pressure on the economy, and I think even in Europe, if you take many households, in the end, when everything is paid, they have like maybe 50 euros or$50 left to actually be spent on other things per month. And then, of course, if you have$50 left, what to spend it on? And if you need a new frying pan, yeah, maybe four euro or$4 or$5 can go for that.

10:25But we actually think what people can afford. We use that price tag. And sometimes, as you say, we go back and forth. In this case, I think they invested thousands of hours to really understand what is the functions that they need to put into this as basics. And the development team work here. We work close to suppliers. We work with different innovation, different materials. We have, of course, a lot of different teams. You go back and forth until you crack it. And then, I mean, if you don't crack it, you have to discuss, can you have a little bit of a higher price or actually do we stop the project?

10:53We put a high effort on reaching the price tag that we set out. Yeah, and that comes across from the history of IKEA really strongly. The whole idea of like the price sets the tone and you walk backwards from there. There was even a quote that I really liked. I think it was the founder basically said, we have no respect for the solution until we know how much it costs. It's a really strong statement. It's like this could be beautiful, high form, high function, high quality. But if it costs a lot, that's not good enough. That's a very strong, for me, the idea of like principles in a solid company that's, you know, you come to IKEA, you know, you're going to start with like, how do I make this affordable above everything else?

11:30When you think about the price kind of dimension there, you would say, hey, quality is only in service of something, only in service of better form or function. Everything basically bends into that one, like you're trying to kind of get the quality to be the best within the price, but the price basically dictates the whole funnel. I mean, when we started, it was form, function and the price. And of course, as you say, we have added the dimension of quality, dimension of sustainability. Of course, we are making life sometimes tough for ourselves. But I think quality, I think it's both end because I think it starts with the life at home.

12:04We have such a deep interest in how people live, how they actually use their products. We also put quality a lot in relation to how you use the products. So of course, we have our own test facilities to test the product. How much will you use it? How many times will you open and close the drawer? How many times will you sit in the chair, roll in the bed? So of course, it's also tested a lot for everyday life. So that's in a way how we put a lot of standards into quality. That's the basic need of quality for how to use the product. So there I think we put no compromises. Then of course, if you want to add sometimes a design value of having a bended wood or a more rounded shape or a little bit of another wooden material that costs more instead, you can add features that maybe could be seen and experienced as high quality.

12:50But I think the basic quality for life at home and how you use the product, that's be secure in all products. But I think also good to say that the sustainability is the same because, of course, here we are now committed also to reduce our climate footprint 50%. We also know that a lot of IKEA's climate footprints sit in the materials we use and in the products we sell. So now we also are the challenge of reducing the climate footprint. So it's a lot of problems to crack these days. On the sustainability, I also read that for IKEA, it's not just about the materials, it's also about the behaviors you want people to adopt as part of the products.

13:29What's an example of that, that you're building a product with a sustainability in mind about how you would use it, it's just in a more sustainable way versus how it was produced? I mean, saving water is one. And we have created this little nozzle you can put on your tap to save water. It can save up to 95 % of your water. And I think the whole food and how we really have helped to find extremely smart food storage solution that you can really make sure that you don't waste food and all that. So that, I think, is really good examples of how we have helped people to live a more sustainable life at home.

14:02Energy-saving appliances and all that is maybe also given in a way. Yeah, from a material standpoint. You mentioned the life at home. And when I was learning about IKEA, it really stood out. The idea of conducting research at people's homes, like going and observing them. How does that work? Like you don't start with an idea. You just go and observe pain points like your team goes and they sit around watching people in their home. Like how does that come into life? What's the starting point there? I mean, today with all the different techniques, we can get a lot of data, a lot of insights, a lot of reports, insights on how people live.

14:35Both when I'm out traveling and when the development team's out traveling, we always take the opportunity to visit people in their homes. Normal people in the different markets. So when you go to China or you go to Germany or you go to India or you go to US, of course, you take the opportunity to visit people and, you know, spend time with them in their daily lives, so to say, and see what their needs and dreams and struggles and frustrations and their flows in the home. So you get a lot of insights and a nice connection and a good detailed input on what you can do to solve the problems. I'm envisioning your team goes and sits in like a corner in the house, just quiet, taking notes for like a few hours.

15:14Is that the way it works? Yeah, quite recently I was out traveling in China and I was out and we were going to this. It was a young couple and her mother living in the apartment. And of course, they just had a kid that was, you know, one, two years. They were inviting us to the home. So we were first walking around a little bit and then we were sitting in their living room and have a dialogue about life. What things are doing and what they see and what they are worried about and what they are happy about. And we from that go into different frustrations and go into their kitchens and a lot of small appliances.

15:48And how do you store them and how do you use your and how do you store your different pans? So it's like all that kind of discussion in that detail. You look at solutions from that. You're looking for inspiration of frustrating moments, pain points. And then when you come up with a product idea and you have some kind of prototype, do you also take it to their homes and you're seeing how they use it? Yeah, sometimes we do. We have different ways of testing and customer groups to test solutions later. So absolutely. Given your amazing tenure at IKEA and how much you've seen, any products that like for you, maybe even culturally, you did not put much emphasis on, but you saw it in somebody else's house.

16:28Like what are those kind of big insights you saw by observing people in their homes? Oh, it's a good question. I mean, I think we want also to support people that have big needs and dreams. And we focus a lot on the people that live in small spaces, the people that live with children because they also struggle the most because you have the biggest needs and sometimes the biggest mess. We have a lot of great systems of store and organizing, you know, modular system, how you can build and different solution that you can also make personal for your specific need. That's how we can really help people to find smart and affordable solution to declutter their homes.

17:04Yeah, you're giving them a trend of urbanization. There's like smaller homes and like how those things fit within that and like within sustainability and reusability. Is there also a notion of modularity when you're trying to say, okay, this could have multiple functions to the idea of like the five dimensions saying, hey, one function is this, but really like after that, You can also use it for something else. And you're really buying two for the parts of one in a way. I agree. And I think when we design products, we have, of course, also design principle for circularity. This is one of the whole reuse and the repurpose of a product that we put in.

17:36And as you say, the storage, I think we have put a lot of thinking to make them modular and being able to move them in different functions of the home. And I can just go to myself. I mean, I have been moving with IKEA many times in my life and I like to move. and the luxury in Sweden also that many people can afford a summer house and so on. So I have had a lot of different needs and I still have many of my loved products like my Billy Bookshelf that has been going from the living room to the kids' room to being shoe storage in the secondary to go to different rooms and different functions. When I think about my IKEA experience, it's exactly that.

18:13Like there's some stuff where, you know, it was part of the office. It was part of the children's room at one point. It was just storage at one point. It's very durable. So you feel bad, like even like, you know, getting rid of it. But also you always find different purposes for it. It's so modular in that way. I'm curious. One thing I also saw when it comes to kind of practices that IKEA does in a unique way is that you display products that are during design mode. They're not yet out in the market, but you display them so employees can see them and they can see the progress you're making, what they're thinking.

18:45Is that correct? Is that something you do? And I'm curious, if so, what's the goal behind them? I mean, we sit in an office in South Sweden. It's not in a big city. It's a little bit where Ingvar once rooted IKEA out in a small village called Elmhult. And we have a big office here where we have most of the product development. This is where the company was founded, right? Yes, we have small hubs out in the world. But the majority of the team is sitting here. We also sit together. So every development team sits together. In the middle of it, we also have the whole prototype shop where we both have a digital prototyping, but we also have physical prototyping.

19:19So we have the whole wood and textile and all different materials. It's a very real place because there is a lot of products displayed. And I think it's always a lot of discussions over the product. So we put really the product in the center. Also stress testing, and we have different ways of coming together and discussing and really evaluating if the product is good enough from all angles. And then of course, we also develop a lot on the factory floor and on the shop floor. So we also then take the products, go out to supplier. How can we adapt the product to make it fit production better, to fit logistics better, to really be able to sell efficiently and all that?

19:52So we do a lot here, but we also then use the shop and the factory floor to really adapt it. Lowering the cost and of course, lowering the climate, the impact of the product, would you say? That sounds like a great place to visit and walk around to get some inspiration of what's happening in the future. Actually, on that note, a product being incepted right now, like the ideation of it, how long does it take for it to get to market on average? I normally say that some products we should be able to put in the market in three months and some can take 10 years if that's really going to be changing a platform or changing a material or being part of changing industries.

20:26I think we can accept a long lead time on it. But from idea to market, I would say average two years. We are operating in 63 markets. markets. It's being able to sales start it. Of course, it's also the whole time of starting it up and production and building up that part. And how much of that is that design inception to, okay, this is what we want. Let's go manufacture it as an example. I'm assuming majority of time is spent there or is it actually in the manufacturing side of it? I would say it's maybe 50-50. 50-50? Yes, half time there, I think. And then of course, it depends a little bit on the product.

21:02But, you know, if it's two years, I think half of the time is really to develop and half of the time to build up. Still on the idea of product design, you know, one of the things that's remarkable in IKEA, you can walk around the world. I think there's over 400 stores, if I'm not mistaken. It depends how you calculate now as we are opening smaller formats. So like at this point, you know, origin obviously is in Sweden, Scandinavia, but it's a massively international known brand across the world. My assumption is that some products of IKEA you can see everywhere. Everybody knows them. They're almost meta culture.

21:32They're kind of above everything else. But I'm assuming some parts are unique to each region or unique. I'm assuming this is like part of the region that you would kind of build something very unique to the Middle East or China or something like that. How does that work? You have local teams, like local design teams, cultural teams that basically influence the design materially? or is it like we start globally and then we customize slightly locally, but we don't make big changes? It's a good question. I think every market have around 10 ,000 products. And then, of course, we have a total portfolio of maybe 25 to make sure that we cater for that relevance.

22:12And we have also small hubs of the development center out in China, in India, in Vietnam, and I think also in Warsaw and a little bit of a special setup also with North America. But I think it depends on the product area Because S-I-K-E-A is also really there to find opportunities to lower cost and lower the climate impact. We also want to use scale and we love limitations. We love a limited range because it gives us opportunity to optimize and use the scale for new innovation and better ideas, so to say. But of course, it depends if you take an area like mattresses, for example. We have no global mattresses.

22:46Because in North America, you want to sleep on very soft and high mattresses. mattresses and in asia you want to have very hard mattresses so of course there you have like coconut fiber and latex and in us you have more like so it's like very different in certain areas and then of course it's a mix of using the development team sitting closer to the market but i think also with the more global team sitting here and they are actually utilizing how to best optimize both production development and the totality of the value chain so to say so that's that's how we work. We're going to take a quick break, but don't go anywhere.