Hi,
This is Vikaas here, Investment Advisor and Founder of www.jaagrav.com. Today I am going to talk about a furniture dealer’s testament.
Well, you must be absolutely crazy to get into furniture business and talk about principles and someone’s testament. However, one Swedish just did and created one of the most spectacular companies across the globe – IKEA.
Ingvar Kamprad, founder of IKEA shared “The Testament of a Furniture Dealer” in 1976. It is such a wonderful read. It is about Kamprad’s thoughts on business, marketing, human behaviour, frugality, decision making, how to avoid lawyers, etc. – treasure-trove of wisdom. Thought of sharing some of the best snippets which I found and few of my thoughts as part of this podcast.
I have covered this in 2 parts. I am going to talk about the 1st Part today
- What is good for our customers is also, in the long run, good for us – Customers are the lifeline of any business. Unless your customers are happy, your business will not survive in the long run.
- We know that larger production runs give us new advantages on our home ground, as well as more markets to spread our risks over. That is why it is our duty to expand. – Economies of scale work wonderfully well, especially if you have saturated the circle. Read how D-Mart followed this strategy to become the most valued retailer in India on my website, will create a podcast in a while.
- We shall offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them. The product range must always be limited to avoid any adverse effect on the overall price picture. The main effort must always be concentrated on the essential products in each product area. – You can’t be everything to everyone – it’s that basic.
- The main emphasis must always be on our basic range – on the part that is “typically IKEA”. Our basic range must have its own profile. It must reflect our way of thinking by being as simple and straightforward as we are ourselves. – Believing in your value proposition and why should customers come to you.
- “Throw-away” products are not IKEA. Whatever the consumer purchases shall give long-term enjoyment. That is why our products must be functional and well-made. But quality must never be an end in itself: it must be adjusted to the consumer’s needs. A tabletop, for example, needs a harder-wearing surface than a shelf in a bookcase. In the first example, a more expensive finish offers the consumer long-lasting utility, whereas in the latter it just hurts the customer by adding to the price. Quality must always be adapted to the consumer’s interests in the long-term.
- Low price with a meaning:Most people usually have limited financial resources. It is the many people whom we aim to serve. The first rule is to maintain an extremely low level of prices. But they must be low prices with a meaning. We must not compromise either functionality or technical quality.
- Profit gives us resources: The aim of our effort to build up financial resources is to reach a good result in the long term. You know what it takes to do that: we must offer the lowest prices, and we must combine them with good quality. If we charge too much, we will not be able to offer the lowest prices. If we charge too little, we will not be able to build up resources. A wonderful problem! It forces us to develop products more economically, to purchase more efficiently and to be constantly stubborn in cost savings of all kinds. That is our secret. That is the foundation of our success. – No brainer, cash flows rather than profits are the key to any business survival
- Wasting resources is a mortal sin at IKEA. It is not all that difficult to reach set targets if you do not have to count the cost. Any designer can design a desk that will cost 5,000 kronor. But only the most highly skilled can design a good, functional desk that will cost 100 kronor. – “Jugaad” is the key. Be approximately right rather than being precisely Wrong!!
- Expensive solutions to any kind of problem are usually the work of mediocrity. We have no respect for a solution until we know what it costs. An IKEA product without a price tag is always wrong! Before you choose a solution, set it in relation to the cost. Only then can you fully determine its worth. – Hope, consultants are listening!!
Hope you enjoyed listening to this!!
For more interesting topics, you may check out my website, www.jaagrav.com. If you want to reach out to me, you may email me at vikas@jaagrav.com
Thanks!