WHAT IS GOOD FOR OUR CUSTOMERS IS ALSO GOOD FOR US IN THE LONG RUN. WE ARE NOT ON THE STOCK EXCHANGE, SO WE CAN ACT LONG TERM.
–Mikael Ohlsson, CEO, IKEA Group
IKEA's history and ownership model have created a strongly values-based organization with a social mission. It is clear that much of its leadership is born from this values base, but that many of its strategies are also good for its bottom line, particularly given its longer-term investment approach.
Jack Welch, the former CEO of General Electric, famously said that: “Shareholder value is the dumbest idea in the world. [It] is a result, not a strategy. Your main constituencies are your employees, your customers and your products.” While many current-day CEOs may agree in principle, the pressure of quarterly earnings reports can nevertheless push executives to favor short-term profits over long-term success.
What happens when the “short-term profit obsession” is absent? Not surprisingly, managers start thinking long term. Founded in Sweden in 1943, IKEA is the world’s leading home furnishings company, with a fully-integrated supply chain, including its own industrial group – Swedwood and Swedspan. The parent company of the IKEA Group, INGKA Holding B.V., is owned by Stichting INGKA Foundation in the Netherlands.
IKEA’s unique ownership model allows it to take a long-term view on its costs, investments and products. The approach has resulted in some pioneering actions on the sustainability front such as setting a bold 100% renewable energy target and selling only energy-efficient lighting in its stores.
How has the long-term approach affected profits? FY2010 profits for IKEA Group have increased 6.1% to $3 billion.