IKEA achieved what few companies have achieved, but what we believe is a powerful model: the company changed its customers' relationship with the category. It reordered its customers' attribute list, and then some.
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Because IKEA’s many policies are different from the norm and because they fit together in a coherent design, IKEA’s system has a chain-link logic. That means that adopting only one of these policies does no good—it adds expense to the competitor’s business without providing any real competition to IKEA.
For IKEA’s set of policies to be a source of sustained competitive excellence, three conditions must hold:
• IKEA must perform each of its core activities with outstanding efficiency and effectiveness.
• These core activities must be sufficiently chain-linked that a rival cannot grab business away from IKEA by adopting only one of them and performing it well…
• The chain-linked activities should form an unusual grouping such that expertise in one does not easily carry over to expertise at the others. Thus, a traditional furniture retailer that did add a catalog would still have to master design and logistics and build vastly larger stores to begin to compete with IKEA.
When these kinds of questions start to haunt you, it's typically a good sign. It signals a pivot from the kind of customization we just described to some level of standardization. The trigger for this switch is usually the realization that it's not sustainable to keep delivering one-of-a-kind, made-to-order service. Your margins can't take it anymore. Moreover, the complexity of maintaining a wide range of distinct offerings makes the business difficult to scale operationally.
IKEA achieved what few companies have achieved, but what we believe is a powerful model: the company changed its customers' relationship with the category. It reordered its customers' attribute list, and then some.
When these kinds of questions start to haunt you, it's typically a good sign. It signals a pivot from the kind of customization we just described to some level of standardization. The trigger for this switch is usually the realization that it's not sustainable to keep delivering one-of-a-kind, made-to-order service. Your margins can't take it anymore. Moreover, the complexity of maintaining a wide range of distinct offerings makes the business difficult to scale operationally.