Contents
When a powerful group blocks your way, two responses seem obvious: you give up, or you fight it head-on, in court, in public, with a price war. Ingvar Kamprad chose a third way. He sidestepped, going where his opponents had no influence – an example of the Indirect Approach. Necessity became an advantage the competition could not match.
A troublemaker in the furniture market
Situation
Ingvar Kamprad founds IKEA in 1943 at the age of 17 in Småland in southern Sweden. In the 1950s he sells furniture by catalog, and starting in 1958 also in his own furniture store in Älmhult, considerably cheaper than the established retailers. In the mid-1950s, the association of Swedish furniture retailers calls for a boycott. Many Swedish manufacturers stop supplying IKEA.
Link to the principle
The established retailers use their strength: they control access to the manufacturers in their own country. A direct fight against this alliance would have been long and expensive for a small company, with an uncertain outcome.
First detours
Situation
With Ikano, Kamprad founds a company of his own to do his buying, so that suppliers do not have to sell directly to IKEA. In 1959 he hires Ragnar Sterte as head of purchasing. IKEA builds up a small network of suppliers in Denmark. But that is not enough. For 1961, IKEA expects to need up to 40,000 dining chairs, and half of them are missing.
Link to the principle
Even here, Kamprad is looking for the line of least resistance. He gets around the boycott through another company and another country. But only the next move is truly unexpected.
The letter to Warsaw
Situation
In 1960, Kamprad reads that the Polish minister of foreign trade will visit the chamber of commerce in Stockholm. He writes to him. A few months later the answer arrives, in essence: welcome to Poland. In January 1961, Kamprad travels to Warsaw with his father Feodor, with Ragnar Sterte and with the designer Bengt Ruda. At first the Polish authorities refuse them access to the factories. Marian Grabinski, a manager at the Polish foreign trade organization for furniture, obtains permission, and the next day the group visits a chair factory in Radomsko.
Link to the principle
Poland lies behind the Iron Curtain, an unusual destination for a Swedish furniture retailer in 1961. That is exactly why nobody expects this move, and the Swedish retailers’ reach does not extend that far. Kamprad chooses the line of least expectation.
Cheaper and bigger than ever
Situation
IKEA buys chairs, tables and upholstery fabrics. The prices are almost 50% below production costs in Sweden. The quality, however, still needs work. IKEA offers long-term contracts and brings new technology and advice on cutting costs. Kamprad and his people even smuggle tools to the suppliers. The ÖGLA chair is among the first orders in 1961 and stays in the range for decades.
Link to the principle
The detour not only gets around the boycott; it creates an advantage the opponents cannot match. The Swedish trade could not or would not compete at these prices. According to the IKEA Museum’s account, the boycott ultimately made the company stronger.
The other side of the coin
Situation
Production in Eastern Bloc countries remained part of the IKEA model. In the 1980s, IKEA also had furniture made in East Germany. Some of the workers in these factories were political prisoners. This was confirmed in 2012 by an investigative report that IKEA had commissioned from the auditing firm Ernst & Young. IKEA acknowledged that it had known at the time that forced labor might be used and had done too little to prevent it, and expressed its regret.
Link to the principle
The indirect route often leads into territory nobody is watching. Sometimes that also means there is no oversight. If you sidestep, you have to look especially closely at whom you are getting involved with.
Key takeaways
Key lessons
- If a strong group blocks your way, ask where its influence ends.
- Go where nobody expects you, and where, for exactly that reason, nobody stops you.
- A detour can become a lead the opponent can no longer close.
- Invest in your partners on the new route instead of just exploiting them.
- Check what happens on the unobserved route. A lack of oversight can be costly.
Summary
When the Swedish furniture trade boycotted IKEA in the 1950s, Ingvar Kamprad did not fight the cartel head-on. He sidestepped, first to Denmark, then, in 1961, to Poland. There he found factories that produced at almost half the cost and could deliver large quantities. The boycott turned into a price advantage that made IKEA big. This shows the Indirect Approach and its downside: the unexpected route demands vigilance of its own.
Sources
- Basil Henry Liddell Hart: Strategy. London: Faber & Faber 1954.
