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• Research Article
• Company Description and Market Analysis
• Innovation Framework, Policies, and Strategies
• Generic Model of Innovation Process
• Recommendations
• Recommendations for Enhancing Innovation
• Lessons for Other Organizations
• References

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Company Description and Market Analysis

Ingvar Kamprad the founder of the worldwide known Swedish furniture shop IKEA that was established in 1943. The company is well known for its ready-to-assemble and affordable furniture, home décor, and kitchen equipment. By 2024, IKEA will operate in more than 50 countries and have 445 shops globally with more than 217,000 employees worldwide. IKEA offers a massive range of options for diverse clients to beautify their homes, ranging from reasonably priced furniture to home design goods and snacks. The decentralized architecture of the company’s management structure facilitates prompt decision-making at the local level. With so many businesses throughout the globe and the centuries’ differences according to IKEA website, the brand unites thousands of co-workers and hundreds of companies with different owners around the world (About Ikea – our story 2024) [1]. ‘’

Being able to offer IKEA products to as many people as possible is a challenge we love’’ (How we work – ikea global 2024) [2]. IKEA is regularly viewed as the market leader in inexpensive home furnishings and enjoys a strong position in the furniture retail sector in terms of market share. Some of IKEA’s main competitors in the United State are Rooms to Go and Wayfair as well as Home Centre and Danube Home in the United Arab Emirates. With all the innovation and development IKEA went through, their vision and mission remind the same. Which is “To create a better everyday life for the many people” (About Ikea – our story 2024) [1]. that can be achieved by providing stylish, useful, and reasonably priced home furnishings. IKEA’s mission statement specifically mentions innovation, as the firm strives to continually improve its operations and product lines to satisfy the shifting demands and tastes of its clientele and the world trends. Moreover, driven by one of IKEA values they are committed to encourage innovation and fresh ideas. As proved by the fact that it employs dedicated managers for different innovations and tasks. It is the duty of this innovation manager to supervise the creation of new goods, procedures, and services that complement IKEA’s goals and objectives. Furthermore, IKEA is a major player in the retail furniture market because of its decentralized management structure and commitment to continual development and providing a large selection of sustainable products to improve the daily lives of its consumers..

Innovation Framework, Policies, and Strategies

According to IKEA (2024) [3] “We want to enable and inspire people to live more sustainably, so we are focusing on money-saving, affordable, resource and energy-efficient products. With our energy-saving solutions, we are paving the way for more sustainable homes for the many”. Moreover, the three main pillars of IKEA’s innovation framework are customer-centric design, affordability, and sustainability. With a strong focus on sustainability, IKEA hopes to improve both the environment and human well-being, by utilizing recycled and renewable resources, cutting waste, and encouraging energy efficiency at all part of IKEA’s worldwide sustainability plan. On the other hand, policies-wise, IKEA suppliers are required to abide by a strict code of conduct that guarantees moral and sustainable business practices throughout the supply chain (IKEA, 2024) [4]. After intense research and observation, the group has linked a few theories discussed in the Innovation Strategies course to how IKEA generates innovations, here are the key points:

Generic Model of Innovation Process

IKEA is a good example of a generic model of the innovation process. For starters, they generate ideas of products that are affordable, functional, sustainable, and easy for customers to put together and install. They built on this idea and introduced their sustainable buy and resell innovation, which ensures no furniture goes to waste and all customers can find items at a reasonable price. IKEA has a team of designers, and highly skilled developers handling the development and design process to ensure that the products produced meet customer expectations as they are very customer centric as mentioned previously in this paper. Hence, they considered creating a new market space for reselling furniture. In the development and design phases, IKEA looks closely at market trends and customer behavior to understand how these products will positively enhance users’ lives and household functions. These phases also play a big role in the market evaluation stage, as IKEA expands into new markets and regions, they do intense market research, demand, customer expectations, what competitors are doing, how to leverage the affordability of their products, and create value to attract new buyers. As customers become more environmentally aware IKEA has built a positive reputation for their affordable, reusable, sustainable furniture, it’s vital to provide a solution to furniture waste and give items a new life at a new home.

For the production engineering phase, it’s been stated on IKEA’s official website that their highly skilled production team ensures and inspects the production process and has quality control to always meet manufacturing requirements, and safety standards. In addition, to produce affordable products that are suitably made. This phase is very critical as IKEA expands in buy and resell; the products need to always be up to standards and can be maintained in good condition after being used in a household. IKEA’s buy and resell doesn’t include all household items sold by IKEA such as beds and mattresses. However, they are market piloting on items that can be resold such as bookshelves, storage cabinets etc. For the final phase, IKEA has done a full-scale manufacture and launch, by introducing buy and resell through their official website, IKEA stores, and an online forum to share details of the sold item and its condition. Another concept we observed used by IKEA is the value capture model. This could be observed in how IKEA saw a gap in the market and solved the burden of customers selling their used furniture to possible buyers who might not be able to move the items and reinstall them or disagree on the price of the used furniture. By capturing the value of creating a space to accept used IKEA furniture, examine the used items, collecting them from customers, and profiting from reselling items, saving material and giving another life for used items to solve the waste of used furniture and build a new habit for customers to be responsible and not throwing furniture away.

In summary, the business model of IKEA’s resells and buy concept was based on creating a market for reselling items that are in good condition. As well, as solve the issue of furniture waste, and improve the resell and buy experience without any hassle, extra expense, or time wasted for buyers and sellers. IKEA captured the value of providing a space for reselling items, to support families who would like to purchase IKEA furniture at even lower prices, or who are trying to lower their carbon footprints by purchasing used furniture and items to help the environment. Lastly, IKEA has profited from reselling and buying ideas, created a positive perception of the company, and attracted new customers from lower-income families who love the style and design of IKEA products. The foundation of IKEA’s innovation strategy is collaborative, inventive, and inquisitive culture. Where all employees are encouraged by the organization to think creatively and try out novel concepts. In addition, IKEA works with other partners such as their co-workers, communities, and customers, to be able to obtain novel technology and concepts from various sources using its open innovation model. They believe that it is important to develop strong and meaningful work relationships with others to fulfil their sustainability commitments ‘’When we work together, we can drive and support change, learn, and inspire each other and find the best solutions. (IKEA,2024) [4].

Furthermore, IKEA uses an organized approach that includes brainstorming, prototyping, testing, and scaling to generate innovations. Through funding, coaching, and training programs, the company supports innovators. The organization’s decentralized innovation management enables regional teams to create products that are specific to their markets. They prioritize scaling breakthroughs that have the potential to generate substantial value for both the firm and its consumers when it comes to commercialization. According to John Dudovskiy [5], IKEA was able to promot innovation through a range of business strategies, by taking back used furniture from consumers and reselling it at a discount, is one important of IKEA’s business strategies. Along with cutting waste it enables clients to inexpensively replace their furnishings and provides clients with significant value propositions through its revolutionary line of goods and services, which include modular furniture and home assembly services. IKEA’s success is largely attributed to its buy and resell tactics and environmental innovation in offering lower prices. The brand is positioned to lead the way in eco-friendly and reasonably priced furniture solutions by carrying on with its innovation and teamwork.

Recommendations

Commendable Aspects of IKEA’s Innovation Approach

IKEA’s innovation strategy is highly commendable for several reasons. First, its design philosophy is centric to the customer and, therefore, assures that the products will be able to address real-life needs, requirements, and preferences to contribute substantially to the leadership standing in the market. Second, IKEA’s sustainability is both an ethical and normative issue in line with the increasing consumer demands for products friendly to the environment. Efforts such as recycled and renewable resources used by the company are totally a corporate responsibility in practice. Besides, the decentralized management structure of IKEA leads to agility and responsiveness, where the company quickly adapts to the trends and preferences in the local market.

Recommendations for Enhancing Innovation

Embracing Innovation in Material Sourcing

IKEA can increase its commitment to sustainability by exploring progressive materials to manufacture products. The idea of creating furniture from waste date seeds is a great example. This method now not only diverts waste from landfills but also introduces a unique, sustainable substance into the furniture production system Strömstedt & Vaagenes Rehmberg [6]. By working with innovators in the field of sustainable materials, IKEA can lead the way in developing furniture that is not always the most eco-friendly but also tells a story of caring for the environment.

Extending the Circular Economy Model

IKEA’s buy-back and resale initiative is a step in the right direction towards a circular financial system. The agency should also approach this initiative by exploring partnerships with upcycling and recycling startups Dimitrova [7]. The above form of cooperation can lead to the improvement of recent strains of products derived exclusively from recycled or upcycled substances, thereby reducing waste and making sales sustainable.

Leveraging Technology to Better Engage Customers

While IKEA has made strides in integrating technology into its business model, there may be room for improvement in the current era’s use of technology to drive innovation. Even though IKEA has an app to showcase furniture in a customer’s room, they do not have it in Augmented reality. Augmented reality (AR) apps that allow customers to visualize their home’s furniture before purchase may be more beneficial because they include features to customize fixtures based on sustainability alternatives or material choices Strömstedt & Vaagenes Rehmberg [6]. This could deepen client engagement and promote sales of sustainable products.

Linking Recommendations with Analysis and Theoretical Concepts

The guidelines are based on a general innovation process model that emphasizes concept creation, development, and implementation. By adopting revolutionary materials such as date seed waste, IKEA can create a conceptual era section focusing on sustainability. The extension of the circular economy system model refers to the levels of development and design where IKEA can create new sustainable types of products. Generation use aligns with market evaluation and improvement levels, enabling IKEA to fulfill clients’ wishes through revolutionary digital equipment Dimitrova [7]. In addition, these proposals are rooted in the theory of open innovation, which inspires corporations to deliver ideas and innovations beyond their barriers. By participating in sustainability initiatives with startups and innovators, IKEA can incorporate external enhancements into its product services and strengthen its competitive advantage.

Lessons for Other Organizations

Sustainability as a key business strategy

IKEA’s success shows that sustainability can be a major driver of innovation and competitive advantage. Organizations need to incorporate sustainability into their business models, now not just as a corporate commitment initiative, but as a strategic element that could drive growth and innovation Dimitrova [7].

The importance of a decentralized innovation management structure

IKEA’s decentralized technique enables agility and the ability to respond to neighboring market tendencies. Other organizations can study this by strengthening local teams, fostering a culture of innovation at any scale, and ensuring that decision-making processes are flexible and responsive.

Leveraging external innovation

IKEA’s ability to collaborate with startups on sustainable materials and circular economy initiatives illustrates the open innovation charge Strömstedt & Vaagenes Rehmberg [6]. Organizations must remain open to external sources of innovation, as these can offer pure insights and technologies that embellish product services and sustainability efforts.

Customer-cantered innovation

Finally, IKEA’s recognition of buyer-centered design underscores the importance of aligning product development with consumer needs and alternatives. Organizations must deeply prioritize their clients’ knowledge and use it to drive innovation. Ultimately, IKEA’s innovation strategy provides valuable lessons in sustainability, patron engagement, and open innovation. By adopting these classes, various companies can enhance their innovation talent and respond extremely successfully to the challenging situations and opportunities of today’s commercial enterprise environment.

References

1. About Ikea (2024)– our story (no date) – our story - IKEA CA.
2. How we work – ikea global (no date) IKEA.
3. IKEA (2024) A more sustainable every day. Hej! Welcome to IKEA Global.
4. IKEA (2024) Stakeholder engagement.
5. Dudovskiy J (2022) IKEA business strategy and competitive advantage: Capitalising on IKEA concept. Research-Methodology.
6. Strömstedt, L, Vaagenes Rehmberg, E (2021) Facilitating Radical Collaboration in Open Innovation: A case study in collaboration with IKEA.
7. Dimitrova M (2022) IKEA’s Social Innovation Strategy at H22: Understanding the Narrative of Social Innovation in Cities Through Living Laboratories and Communicating CSR.