HIGHLIGHTS: Jesper Brodin - CEO of IKEA

0:00Hi, everybody. Tune in to this short version of the podcast, which we do every Friday. For the long version, tune in on Wednesdays. hi everybody i'm nicolaj tangen the ceo of the norwegian sovereign wealth fund and today i'm really thrilled to welcome jesper brodin the ceo of ikea now ikea as you know runs this iconic blue and yellow stores that had that have transformed perhaps your living room but for sure homes worldwide and they brought a slice of scandinavian design to almost 900 million visitors every year wow that's quite something well that's quite something thank you for the opportunity, Nikolai, to be part of this incredible podcast.

0:40And thank you for doing the commercial for IKEA so I don't have to. Jesper, I would love just to go visiting a store with you. So can we just put on our customer hat and let's go into an IKEA store. So we enter the door. What is the first thing we see? Actually, it's interesting since I had the pleasure to work very close to Ingvar Kamprad, our founder, for many years. Walking a store with him, I realized that there is nothing left to chance, so to say. So the first thing you will actually experience coming to IKEA is a person. In a time of AI and digital revolution, it can be quite interesting that we believe that nothing can replace that human first impression.

1:24when somebody greets you, and that somebody will also hand you a bag, which was Ingvar's, of course, insight, that if we hand out bags, you will begin your shopping even sooner. So that is both a friendly gesture and a smart commercial trick from IKEA. I suspect. Now, affordable design for everybody. It sounds pretty simple, right? But why has nobody managed to replicate what you do? Well, I think there are a lot of good companies out there who try it. But it's an interesting question because it is definitely a very tricky task what we're trying to achieve. So we have this formula of design, which we call democratic design.

2:06So that represents five things. It represents function. So at IKEA, we sort of say committed to do things functionally. folding chairs, storage units, things that truly work for people in life at home, not at least in small spaces. That's a great commitment to quality where we work through understanding true families' needs. We only sell sofas with washable covers, for instance, and so forth. So quality is the second dimension. The third dimension, or there is no real numbers to them, but a third dimension is about form, where we then have decided to take a Scandinavian look on things. So we do have traditional things, we do have more modern things, but we have our particular Scandinavian point of view on how we think things should look like, typically quite simplistic.

3:00Fourth dimension, sustainability, which says a lot about how the product was made in relation to people and planet. And then you have all of these at a low price. So one of the things that is required is definitely scale in order to, so to say, achieve all these identities in a product. But it requires a lot of knowledge from an engineering point of view to actually build things in a smarter way. So again, I think a lot of competitors do a good job. But IKEA is dedicated for every product to try to actually design it in a way to prove that you don't have to be rich to be smart. Ingvar Komprad founded IKEA in 1943 when he was 17 years old and you worked with him for a very long time right well I had the opportunity to work as assistant to him starting in late 99 for three years actually and then of course ever since we became good friends and I had the pleasure to work with him how would you describe him as a person because he was a bit of a what should we say a fairy tale type of figure in Sweden right well he was a very special person when I when I started as his assistant I I didn't really know him that well and what I found many things I found interesting and one of the things what is very authentic person so as he told me his life story you know he made a success in his late 30s the company was growing he made a lot of money and only to realize that for him, the personal success or the value of money had actually quite little interest for him.

4:33So he returned to his childhood style and his childhood principles, which was a person who lived a quite thrifty life. He was very cost-conscious. I tried to convince him to change his old Volvo, but he kept it for the rest of his life. Today it's donated actually to the Volvo Museum in Gothenburg. And as far as I know, it still runs. And he was a true entrepreneur. He was a person with great vision. He was not so good at strategy, I would say. He skipped that part and he went straight for actions on the store floor, on the factory floor and so on. And he just, that was the two places he loved to be.

5:12He basically detested the boardrooms or the committees. And for him, life was about the factory, developing products with people or the store, making sure that we make a better job for our customers. Tell us how you think technology will shape IKEA going forward. To start with, you can say IKEA was late in the digital revolution, if you like. So basically, platform companies like Amazon and more revolutionized retailing for good, I would say. And that revolution started in the early 2000s. IKEA continued to be very successful with our store formats and with our business. So it was first somewhere around 2012, 14, 15, we started to see changed behaviors with our customers.

6:01So we were late on that. And as I referred to before, we decided to make the online and the omni-channel transformation. Interesting enough, Nikolai, as we took that decision, we had no clue about the pandemic that came a few years later. Now, thanks to us shifting to online, it actually saved the company during the pandemic. We would have been in massive red numbers, in layoffs, and in a great retraction of volumes and everything if it wouldn't have been for the opportunity to actually operate through online. So it gave us a good lesson, I think, to keep your eyes and ears open for the changes in the world.

6:40So we see AI is coming big. And for us, that's going to revolutionize. And it's already in our value chain revolutionizing goods flow, helping simplify and saving costs through goods flow. It's helping us in customer service at scale. It's helping us when it comes to home planning, how you actually serve your customers in making a sense of home planning in the future. And probably it's going to help us in many more ways that we don't know today. how do you encourage people to take risks i mean it's a it's per definition a risky business well i try to be a good example myself and do mistakes um what's the biggest what's the biggest mistake you ever made well where should we begin i i think if you look at the last part um if we say the definition of mistake is that you have acted on a problem but didn't find the right solution, if you say it like that.

7:36And I think the last years we have been more entrepreneurial than in a very long time, in particular when it comes to transformation of retail. So we have invested both digitally and physically, as we spoke about city stores and other things that simply didn't work in the beginning. But by having that spirit and not just working linearly, but actually iterate a lot of different tests and trials, you will be faster in finding the pathway to the future. so how do i encourage people well i have one of my favorite techniques is i have a banana card and the banana card was actually invented in a dialogue with a big group of ikea colleagues who said openly that i will feel sometimes afraid of daring to make mistakes what would be the consequences so i invented this card where i basically co-sign in advance for your mistake And I've handed that out to a lot of people.

8:32And I actually do follow up with everyone who I handed this card to. But more as an encouragement to say, if you do a mistake and you look for somebody to share that burden with, you can count on me. And obviously, symbolically to say, don't wait with acting on your ideas. If you have an idea and you don't act on it, it's not only that we miss the opportunity of learning. But I think people who don't act on ideas, slowly and gradually, there's something dying inside, you know, if you give up on acting on your ideas. And for us, it's important to be a live community of people who go for their ideas and continue to look for the next horizon.

9:11What is your vision and your dreams for IKEA for the next 10 years? So for IKEA, for the next 10 years, I think the dream is to continue to be able to grow and meet and reach more people, both offering jobs and meeting more customers around the world. And I think the biggest dream in all of that is to be a proof point that it is actually possible to be a good business by doing good business. So the integration of people, respectful people principles when it comes to diversity, inclusion, respect for people, but also setting up IKEA as a truly climate smart value chain and driving financial excellence through that is the big vision.