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Ingvar Kamprad, IKEA Founder, Dies at 91

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On March 30, 1926, Ingvar Kamprad was born on his family farm Elmtaryd in the local parish Agunnaryd.

While this innocuous statement of fact appears to point to nothing of interest, if you add the initials of this child to the initials of his farm and nearby parish, you get IKEA. Ingvar Kamprad was the man who spawned IKEA out of a simple philosophy and practical approach.

Childhood Ventures

Although Ingvar’s father, Frans Feodor Kamprad, was German, his family had moved to Sweden when he was one year old. For all intents and purposes, Frans was as Swedish as the woman he married, Berta Linnéa Matilda Nilsson.

His family did maintain contact with their German relatives and his father was steeped in his long family history, so Ingvar was influenced to some extent by his German ancestry. More on that later.

Young Ingvar demonstrated his entrepreneurial spirit at a very young age. By the time he was five, he figured out how to buy matches in bulk, sell them cheaper than stores, and pocket the modest profit from each transaction.

He quickly learned that it was not the product that was sold, but how you sold it that made the difference. It was not long before he graduated from his match selling enterprise on to larger projects like pens, Christmas decorations, and even fish.

He also discovered the power of advertising and took advantage of announcing his wares in the local papers. The logical next step was for Ingvar to start a simple mail-order catalog, which proved to be another move in the right direction.

There was also the need for assistance in delivering orders received through the mail. Since the milk van made regular stops at his farm, it made sense to contract with the milkman to deliver his orders to the train station.

You could say that this was the first stage of expansion of Ingvar’s business from a one-man operation to a growing enterprise that was tapping into local services and talents to support the growth of his venture.

As he realized that his casual yet persistent efforts to sell products to local consumers was expanding beyond his own backyard, Kamprad decided to formally establish the business that he still operated on the farm where he grew up.

By combining his initials along with the name of his farm and the parish to which he belonged, IKEA was officially founded by Ingvar Kamprad, age 17.

The Birth of IKEA

Throughout all of this, Kamprad stuck to his firm belief that offering materials for less than his competitors produced a surefire path to profitability. By keeping his nose to the grindstone and focusing on finding products customers might want, he continued to grow and succeed.

Also, by expanding his horizons through mail order outreach, Ingvar demonstrated the innovation and flexibility that ultimately led him to build one of the leading furniture manufacturers and retailers in the world.

Not willing to stagnate in one specific product line, he added different items over time. Since there were furniture manufacturers operating near his farm, he decided to add basic furniture items to his growing catalog.

That move was a significant turning point in the life of IKEA.

The Growth and Evolution of IKEA

Very quickly, the numbers showed how much IKEA was making from his furniture division. It took little time for Kamprad to shift gears and focus 100% on offering quality furniture with simple visual instructions for putting together.

As mentioned earlier, imagination is one of the key elements in the success and growth of IKEA. No other mail order business had ever considered selling furniture by mail. It was simply too bulky.

All of that changed when Kamprad noticed an employee taking off the legs from a table for easier transport. Immediately, he envisioned selling furniture in its rawest state: unassembled.

The benefits of this brainstorm were multiple.

Packing furniture was now simplified into one rectangular box that contained all the pieces of the ordered item.

Even better was the savings on factory assembly! By ingeniously suggesting to the end buyer that you can save lots of money putting it together yourself following simple pictorial instructions, there was no need for an assembly line and factory workers.

That is a huge overhead savings that no other furniture company thought of before IKEA began selling furniture in flat boxes through the mail. And IKEA sold lots of those boxes of furniture as the years rolled on.

Practical and simplified thinking led Ingvar Kamprad to consider something previously thought to be impossible to accomplish and to instead come up with a sensible plan to make it happen.

Even more phenomenal is the positive spin that has been put on the idea of putting together your own furniture. There is a name for the strong cognitive bias a person forms towards a product they purchased in which they were personally involved in some element of its creation: the IKEA Effect.

Spreading the IKEA Gospel

When IKEA began growing in earnest and garnering international attention and interest, everyone wanted to know the secret of their success. This was a privately-owned business selling simple furniture, yet it was continuing to expand its reach and influence.

More consumers were becoming enamored with the IKEA approach: simple, inexpensive, and under your own control.

In December of 1976, Ingvar Kamprad offered his philosophy of the success of IKEA in “The Testament of a Furniture Dealer.” Its opening sentence could well be considered the mission statement of this firm:

“To create a better everyday life for the many people, by offering 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.”

This 14-page pamphlet offers nine chapters which outline who they are and expresses their values. The first two chapters take up two pages, while the remaining seven chapters are each covered in one page.

The chapters are:

  1. The product range – our identity
  2. The IKEA spirit – a strong and living reality
  3. Profit gives us resources
  4. Reaching good results with small means
  5. Simplicity is a virtue
  6. Doing it a different way
  7. Concentration – important to our success
  8. Taking responsibility – a privilege
  9. Most things still remain to be done. A glorious future!

A thorough examination of his personal business plan, as reflected in the daily operations of IKEA, offers a glimpse into the mind of a practical businessperson who has preserved this basic precept as the foundation of his success: serve the customer well.

A more extensive treatment of the growth of IKEA and the influence and philosophy of Kamprad can be found in the book he co-authored with Bertil Torekull, Leading By Design: The IKEA Story in 1999.

Regrets of a Younger Age

In 1994, it was reported that among the personal papers in the possession of known Swedish fascist supporter Per Engdahl at his death included private letters between himself and Kamprad.

It revealed that in his teenage years, Ingvar Kamprad joined a pro-fascist movement formed by Engdahl called Nysvenska Rörelsen (New Swedish Movement). His involvement appeared to run from at least 1942 until late 1945 and included raising funds as well as recruiting new members.

For Kamprad, who until this revelation had a sterling reputation as a successful businessman who promoted values such as simplicity and honesty, this was clearly a black mark on a previously pure record.

To his credit, he stepped up and accepted full responsibility for his past decisions. Explaining that he was unduly influenced by his father and paternal grandmother, who still had strong ties to their Sudet-German homeland, he was too young to fully understand the choice he made.

In explaining further in a letter to his employees in 1994, Kamprad stated firmly that his involvement with Nysvenska Rörelsen was the “greatest mistake of his life.”

Although documentation indicates that he continued to be in communication with Engdahl into the 1950s, this does appear to be an episode from his distant past. Many youths are swayed by either peers or family members to make choices that in later years were obviously imprudent. It seems reasonable to offer this exoneration to Kamprad as well.

An Unknown Fortune

As a privately-owned business, one can only guess the true value of IKEA. There is no doubt that Ingvar Kamprad is a very rich man. On January 27, 2018 (the date of Kamprad’s death), the Bloomberg Billionaire’s Index pegged his fortune at a tidy $58.7 billion, ranking him in 8th place.

Considering that Kamprad touted his frugality every possible chance (for instance, flying economy fares and eating meals at IKEA to save money) and even moved to Switzerland in the 1970s to avoid paying Swedish taxes (much to the chagrin of many taxpaying Swedes), it should not come as a surprise that his wealth is in the billions.

He certainly enjoyed portraying himself as a penny-pinching shopper who drove a simple Volvo, shopped at grocery stores at the end of the day to get better prices, and dressed modestly and inexpensively.

While some critics complained that he also owned a French vineyard, a Swiss villa, and a Swedish country estate, he never lived as ostentatiously as most of the ultra-rich around the world. And no one can honestly begrudge him if he did squander a few million of his billions on fancy cars and vacations (and there is no concrete evidence that he even did that).

Ironically, the Swedish government in 2013 performed an estate inventory that determined his wealth to be at $113 million (750 million kroner). The inventory showed two cars, a Volvo and a Skoda, along with other nominal assets. It also noted that more than $20 million was donated to philanthropic causes and interests in the previous year. So much for friendly governmental evaluations.

Family Interests

Kamprad was married twice. His first marriage to Kerstin Wadling lasted a decade, from 1950 to 1960. Together they adopted a daughter, Annika.

His second marriage was to Margaretha Kamprad-Stennert in 1963, with whom he had three sons: Peter, Jonas, and Mathias. His second wife died in 2011, leaving his four children as potential heirs to his estate.

This does not mean that his children are looking at billion-dollar windfalls from his demise. IKEA was transferred to a foundation that Kamprad created; all its profits are either reinvested back to the company operations or are earmarked for charitable causes.

His sons have been named the heirs of the Ikano Group, a holder of a significant minority stake in IKEA. It has been estimated to be valued at about $1.5 billion. His adopted daughter will receive a bequest of approximately $300,000.

Apparently, by Ingvar Kamprad’s own living standards, these amounts should be more than sufficient for a lifetime of leisure and enjoyment.

The Future of IKEA

In the past decade, Kamprad’s involvement and control in IKEA had been diminishing, by his own choice. This means that the future of IKEA will remain strong despite his passing, as he was more of a figurehead than an influencer.

According to Reuters, trends show that IKEA should top $62 billion in sales in 2020. Not bad for a business that is premised on doing things on the cheap!

While Sweden pays honor to one of their more remarkable entrepreneurs whose rise to the top rivals any other rags-to-riches success story you may have heard, remember these words of wisdom penned by Ingvar Kamprad:

Happiness is not reaching your goal. Happiness is being on the way. It is our wonderful fate to be just at the beginning. In all areas. We will move ahead only by constantly asking ourselves how what we are doing today can be done better tomorrow. The positive joy of discovery must be our inspiration in the future too.

The word impossible has been deleted from our dictionary and must remain so.

(excerpted from Chapter 9, “Most things still remain to be done. A glorious future!” – The Testament of a Furniture Dealer)

While this quotation generally referred to the future of IKEA, it can easily be read as a source of inspiration for any person looking to make the most of their own life.

Just as Ingvar Kamprad made so much of his life.

 

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Ray St Jonn

Ray St Jonn