MSc Management: Leading Through Digital Disruption - Ikea Case Study

This report presents a case study on Ikea's digital transformation journey, examining the company's strategies for navigating digital disruption. The analysis covers various aspects, including the drivers for change, capturing insights through competitor analysis and data utilization, making fast decisions, acquiring and engaging talents, creating a digital-ready culture, and fostering collaboration. The report highlights Ikea's approach to embracing new technologies, adapting its organizational culture, and empowering its employees to drive innovation and maintain its competitive edge in a rapidly evolving market. It delves into specific initiatives such as adopting mobile technology, building an employer brand, and using social media to engage customers and gather insights. The report concludes by emphasizing the importance of aligning culture with digital transformation goals and the role of leadership in driving these changes. The report offers valuable insights into how a large, traditional company can successfully undergo digital transformation and adapt to the changing demands of the modern consumer.

BPP Coursework Cover Sheet
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Programme MSc management with data analytics
Module name Leading through Digital Disruption
Schedule Term 1st
Student Reference Number (SRN) BP0248922
Report/Assignment Title Leading through Digital Disruption – A case study of Ikea
Date of Submission
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extension received)
26/08/2021
Declaration of Original Work:
I hereby declare that I have read and understood BPP’s regulations on plagiarism and that this is my
original work, researched, undertaken, completed and submitted in accordance with the
requirements of BPP School of Business and Technology.
The word count, excluding contents table, bibliography and appendices, is 2353 words.
Student Reference Number: BP0248922 Date: 26/08/2021
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Contents
Introduction...............................................................................................................................1
1. The Case of change................................................................................................................1
2. Capture insights.....................................................................................................................2
Competitors’ moves..........................................................................................................................2
Work with Consulting firms...............................................................................................................2
Use Data............................................................................................................................................2
Use Social media...............................................................................................................................2
3. Make fast decisions................................................................................................................3
Focus on main goals..........................................................................................................................3
Improve collaboration.......................................................................................................................3
The power of process........................................................................................................................3
Real empowerment...........................................................................................................................3
4. Acquire and engage talents...................................................................................................4
Develop an employer brand..............................................................................................................4
Adopt mobile technology..................................................................................................................4
Create a community..........................................................................................................................4
Maintain an active conversation.......................................................................................................4
5. Create a digital-ready culture................................................................................................5
Connect with its own culture............................................................................................................5
Employees’ support..........................................................................................................................5
Build digital practices........................................................................................................................5
6. Steer collaboration.................................................................................................................6
Workplace.........................................................................................................................................6
Google’s G Suite................................................................................................................................6
Office 365..........................................................................................................................................6
7. Select your leaders.................................................................................................................7
Customer focused.............................................................................................................................7
Data-driven.......................................................................................................................................7
Consider the outcomes.....................................................................................................................7
Concluding remarks...................................................................................................................7
References..................................................................................................................................8

Introduction
Digitalisation has transformed the society and people’s lives in many ways. It has reshaped
how people live life as well as how business operate. Ikea is one of them that decided to
make the change and embrace digital transformation. This report will demonstrate what
urges Ikea to change and digitalised.
1. The Case of change
The Swedish retailer Ikea is a global behemoth with operations in over 38 countries and
over 200,000 employees. It has been in the analogue business of selling its distinctive brand
of home goods to people for nearly 80 years. The brand, which is almost $20 billion, has a
pioneering and innovative spirit that can be seen in many of their business activities and
practices (Barbour, 2020).
Ikea embraced technology trends from its products to promotion. Ikea consistently improve
the products’ function and quality by adopting new materials and technologies, such as
offering smart speakers and plugs to build a smart home (Marr, 2018).
On the promotion side, Ikea utilizes digital technologies such as social media platforms,
augmented reality, and virtual reality (Singh, et al., 2021). Ikea acquired a tech company
TaskRabbit and enabled its customers to connect to people who can assemble their
furniture. With the Ikea Place app and its augmented reality, customers can "try out"
different pieces of furniture in their home before deciding what to buy (Marr, 2018).
These transformational moves show Ikea’s commitment to keep relevant and competitive in
the future. However, changes also bring risks to a large cooperate with long history.
Traditional companies have a strong organizational culture and it might face resistance to
changes. Also, Ikea highly relies on its retail stores. The store experience is a vital selling
point to Ikea. It would be unknown if customers would have the same excitement and
inspiration without walking through the beautifully designed rooms in Ikea physical stores.
Customers cannot see and touch Ikea’s products, how to encourage online sales is another
problem for Ikea. Ikea has to keep the company fundamentally the same while doing almost
everything differently.
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2. Capture insights
New technology, globalization, and pandemic has made a significant impact on society. Ikea
need to detect these changes and follow up to stay ahead of the competition. It is essential
for any business to capture insights in its own market in a world full of uncertainty.
Government/ Industry report, data analytics, customers survey, and market research can
help Ikea to understand what its customers are looking for and what are the current market
changes (DemandJump, 2020).
Competitors’ moves
It is important to keep an eye on what competitors are doing and their performance. Ikea
can look at the content its competitors publish on social media platforms, public business
report, recent news and campaigns. Using online competitor analysis tools or templets will
give Ikea a comprehensive evaluation of its competitors and itself. Compared with them can
help Ikea critically identify its own similarities, differences, and uniqueness to stand out in
the market (DemandJump, 2020).
Work with Consulting firms
Working with third parties like consulting companies can help Ikea gather information about
its competitors, partners, macroeconomic and market trends. These firms would use
different models to illustrate the current opportunities, challenges, strengths, weaknesses,
among others that Ikea faces, and give Ikea professional suggestions on next strategic steps.
Ikea can use analysis tools or models in-house to do the research as well to gain different
perspectives.
Use Data
Digital and physical data can provide a large amount of information. For example, Ikea
members’ data can help Ikea recognize customers’ preferences, persona, shopping habits,
etc. Ikea can offer customized service to them like product recommendations, promotion,
market campaign that they are interested in. This will build a relationship with its customers
and make them feel connected. Reviewing customers’ feedback is another useful technique
to understand Ikea’s or its competitor/partners’ products and services and where to
improve.
Use Social media
With massive amounts of data being generated every second, social media is a veritable
fountain of consumer knowledge, and market trends. Social media analytics, enabled by the
widespread use of smartphones and the creation of various online communities on
platforms such as Facebook, Twitter, Instagram, and, more recently, TikTok, enables Ikea to
collect a large amount of data, generating valuable insights on its audience (James, 2021).
Ikea can use social media analytic tools to gather information as well as analyse it from
these platforms. Ikea can find popular topics and associate with the brand to create
conversation or launch campaigns.
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3. Make fast decisions
In this fast-changing world, information and insights are coming at businesses with rapid
pace, Ikea must have quick action and be more agile in order to stay ahead of the game.
Although organizations feel pressure to make fast decision as they worry that it may have
poor results, there are some strategies that can help faster decision making in the future
(Hart, 2018).
Focus on main goals
Asking about what option would help Ikea build trust and achieve its goals could be a
decision-making guide when it comes to make big decisions. Negotiate, approve, provide
guardrails, and delegate are the four segments that will assist top management in being
more effective throughout their decision-making process (Laurin & Fantazy, 2017). High-
quality interaction and healthy debate are vital factors of a good, fast and big decision-
making (Mckinsey, 2019).
Improve collaboration
Ikea can use communities or collaboration tools to hear employees’ opinions. Break down
decision-making into small group meetings while also involving a larger group of employees
from across Ikea. It allows Ikea to hear out new ideas from those who work in the area or
problem on a daily basis. Also, when the decision is made, it will have better
implementation as its employees are involved (Hart, 2018).
The power of process
According to Mckinsey, when making cross-cutting decisions, like sales, pricing, operations
planning process, or new product launches, not many companies make good and timely
decisions. To make this kind of decisions, Ikea should begin with a commitment to a well-
coordinated process that clarifies objectives, measures, targets, and roles (Mckinsey, 2019).
There might be some meetings to discuss the details, while some unrelated or less
important meetings can be replaced with written materials to share with the participants.
Real empowerment
Delegated decisions are usually relevant to day-to-day management. Putting responsibility
for these decisions in the hands of people closest to the work, will have quicker, better and
more efficient execution, while also increasing engagement and accountability. Employees
who are empowered to make decisions at their company and receive adequate coaching
from leaders are 3.2 times more likely to make better and faster decisions (Mckinsey, 2019).
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4. Acquire and engage talents
Talents is key to achieving digital transformation and business goals no matter in small start-
up or big company. Ikea need to put efforts to provide a work environment and culture to
attract and maintain talents.
Develop an employer brand
Ikea must consider how to deliver a consistent brand message both internally and
externally. This contains workplace policies and culture, benefits, Ikea’s mission and values,
and corporate social responsibility (CSR), etc. An authentic and impressive employer brand
will help Ikea stand out. It can also increase employee loyalty and motivation at work (Seth,
2019). Like-minded talents will understand and perform well in Ikea’s digital transformation.
Adopt mobile technology
Many candidates search job on their phones nowadays. Adopting mobile tools enables
Ikea’s recruiters find talents and engage with them instantly around the world. Candidates
are consumers who are used to working in always-on mobile environment with their mobile
devices. These talents are Ikea wants as they are familiar with the digital world. Ikea can
choose many apps or platforms which are easy to navigate and collaborative on every hiring
step (Zippia, 2016).
Create a community
Research shows that today's talent values teamwork and working in a group. Hence, it is
critical to foster an inclusive and diverse workplace culture that creates a sense of belonging
(Seth, 2019). Having a social platform for Ikea’s employees can make them learn more
about the company. Ikea can provide them resources, insights of the company or the
industry, and encourage peer-to-peer interaction. It is a good way to bring everyone closer
and it is easy to measure employee engagement through the platform (Zippia, 2016).
Maintain an active conversation
One thing that today’s talents value highly is to have constant feedback and discussion. Ikea
needs young generation in its digital transformation as they are the future and main users of
new technologies. Research shows that Gen Z employees want face-to-face interaction with
their managers, and prefer continuous and personal dialogue from their bosses. Another
survey found that not only do most Millennials feel "in the dark" about their performance,
but they also dislike not being able to talk about their concerns during performance reviews.
Workforce desires to keep an active conversation with their managers and leaders in order
to better understand how they can improve. As a result, Ikea needs to align communication,
workforce management, and performance evaluation policies to make sure that
communication platforms are accessible and operational (Seth, 2019).
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5. Create a digital-ready culture
A strong digital culture is essential during the process of digital transformation and
innovation, because it facilitates team members' acquisition of new digital skills to improve
the digital environment in which they work (Obbi, 2021).
Connect with its own culture
Ikea’s vision is to "make every day better for the many people." Aligning its culture, mission,
and values can drive Ikea constantly improve and innovate its business. Taking risks is a
natural part of Ikea’s entrepreneurial spirit. Ikea has introduced many concepts, designs,
and ideas over the years. A customer-focused culture in Ikea makes its employees
understand the transition and take the responsibility to create a new Ikea to meet
customers’ needs (Barbour, 2020). Leaders of Ikea need to connect its cultures with the new
mission to create a digital-ready culture because they are alike.
Employees’ support
Having the employees’ support is important during the digital transformation. Once they
recognise the importance of serving customers through a variety of physical and digital
touchpoints, they will work hard on new projects that help Ikea stay current with
technology (Barbour, 2020). Leaders of Ikea need to encourage its employees that
everything is possible, with this positive mindset, they will tackle problems proactively
during the transformation. Openness is critical in this process, leaders should encourage
employees to talk about their concerns, difficulties, or requirements. Also, training
employees can help them gain and develop the right skill set, to keep up with new
technologies.
Build digital practices
Digital companies are good at rapidly experimenting, self-organizing, and making decisions
with data. Ikea’s leaders need to encourage its employees to conduct experiments fast and
often. These practices can drive self-reported growth and innovation. Ikea can experiment
effectively with data to measure change (Westerman, 2020). Building digital resources can
make Ikea’s employees collaborate and access data easily and securely. Furthermore, using
the same information can ensure accountability and track results for their work (Soule,
2020).
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6. Steer collaboration
A successful digital transformation project requires efficient collaboration and business
communication. Communicating the transformation goals and processes to as many
employees as possible and be transparent can help the information flow in Ikea at every
level (Brown, 2021). There are some collaboration tools can help the communication easier
and faster.
Workplace
Workplace is owned by Facebook. Employees can set up closed groups to discuss projects,
share documents, and it can integrate with project management tools like Trello and Jira
Cloud. People can keep up to date with the project by open groups or Workplace’s News
feed, or customising alerts for different people or groups. They can also draft post in
advance to cover routine process. Admins can use data to gain insights about how people
use groups or news feed to report back to the team. Posts’ engagement and interaction give
managers ideas of how people in Ikea react to the transformation, or any obstacles they
face. Once employees get used to this tool, flexible and remote working is available by using
live video and workplace chat to keep collaborating, to reduce cost and touch a wider talent
pool (Brown, 2021).
Google’s G Suite
Google's G Suite includes several well-known digital transformation tools, such as Gmail,
Docs, Drive, and Calendar. Employees at Ikea can share information in a minute and have
access to a comprehensive set of tools for improved workplace communication and
collaboration (Lumapps, 2021).
Office 365
Office 365 is a collaboration suite provided by Microsoft that enables corporate
communication, exchange, information storage, and business activity management. Word,
Excel, Teams, Outlook, and OneDrive are essential productivity tools for all Ikea’s employees
(Lumapps, 2021). Teams, Skype, or Zoom’s video conference make communication easier
especially during the pandemic.
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7. Select your leaders
Customer focused
Customers today have not only higher expectations, but also a much broader range of
products, services, companies, and brands from which to choose. Good customer service is
no longer a differentiator for a company – it is a necessity. Meeting customer’s needs is a
crucial business goal for Ikea during transforming, even before increasing profit. Digital
leaders who put customers first, think about customer experience and then apply digital
technologies would be an asset for Ikea. They also need to have the ability to bring a
customer centric strategy across the company, not just in customer-facing roles (Little,
2020).
Data-driven
Data is a strategic asset. It is beneficial for efficiency, cost-saving, and customer experience.
Large companies like Ikea need to learn from data to move forward. Ikea can use historical
customer purchase and search data to more effectively target them with relevant products.
A leader who can use data to optimize operations, to gather insights and boost innovation is
more likely to succeed in digital transformation (Little, 2020).
Consider the outcomes
Digital is just a tool to an end. Leaders need to define and articulate the reason for
digitization. Without a clear hard-edged goal in mind, Ikea may end up in a bad place. For
example, many people dislike online shopping because they prefer to browse the shelves,
find it inconvenient to have to click on every single item, or prefer to be surprised by
something they hadn't considered and make an impulse purchase. Having a leader who
does the work not just for “being digital”, understand what the desired outcomes are can
prevent Ikea going the wrong direction (Bryan, 2020).
Concluding remarks
Digital transformation is fundamentally altering the way businesses manufacture, sell, and
reach customers. Having a digitally advanced market is important for Ikea to create revenue
and be competitive. Ikea is a large, well-established company, which need to transform
internally and externally. It is essential to evaluate the opportunities and challenges they
would face, and come up with the right strategies to embrace digitalization with its leaders
and talents working together.
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References
Barbour, H., 2020. Culture & Digital Transformation: building a culture of transformation at
IKEA. [Online] Available at:
https://www.thedigitaltransformationpeople.com/channels/people-and-change/culture-
digital-transformation-building-a-culture-of-transformation-at-ikea/ [Accessed 23 August
2021].
Brown, R., 2021. The role of collaboration tools in digital transformation. [Online] Available
at: https://www.workplace.com/blog/digital-transformation [Accessed 25 August 2021].
Bryan, J., 2020. 7 Traits of Highly Successful Digital Leaders. [Online] Available at:
https://www.gartner.com/smarterwithgartner/7-traits-of-highly-successful-digital-leaders/
[Accessed 25 August 2021].
DemandJump, 2020. How to Research Industry and Consumer Trends - With Ease. [Online]
Available at: https://www.demandjump.com/blog/how-to-research-industry-and-consumer-
trends-with-ease [Accessed 23 August 2021].
Hart, L., 2018. Tips for making faster decisions. [Online] Available at: https://www.fm-
magazine.com/news/2018/oct/how-to-make-faster-decisions-201819671.html [Accessed 24
August 2021].
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habits-of-digital-transformation-leaders#chapter1908704173 [Accessed 25 August 2021].
Lumapps, 2021. 10 Essential Tools to Support Your Digital Transformation. [Online] Available
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tools/ [Accessed 25 August 2021].
Marr, B., 2018. The Digital Transformation To Keep IKEA Relevant: Virtual Reality, Apps And
Self-Driving Cars. [Online] Available at:
https://www.forbes.com/sites/bernardmarr/2018/10/19/the-amazing-digital-
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August 2021].
Mckinsey, 2019. Three keys to faster, better decisions. [Online] Available at:
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faster-better-decisions [Accessed 24 August 2021].
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Obbi, 2021. 3 steps to perfect your digital ready culture for digital transformation. [Online]
Available at: https://www.obbisolutions.com/2021/06/08/3-steps-to-perfect-your-digital-
ready-culture-for-digital-transformation/ [Accessed 25 August 2021].
Seth, M., 2019. 5 strategies to hire and engage top talent. [Online] Available at:
https://www.peoplemattersglobal.com/article/employee-engagement/5-strategies-to-hire-
and-engage-top-talent-23834 [Accessed 24 August 2021].
Singh, P. et al., 2021. Key Determinants of International Retail Success: A Case of IKEA Retail.
International journal of Tourism and hospitality in Asia Pasific, 4(1), pp. 18-33.
Soule, D., 2020. Cultivating a “Digital-Ready” Culture to Support Digital Transformation.
[Online] Available at: https://www.dataversity.net/cultivating-a-digital-ready-culture-to-
support-digital-transformation/# [Accessed 25 August 2021].
Westerman, G., 2020. Digital transformation: 3 steps to build a digital-ready culture.[Online]
Available at: https://enterprisersproject.com/article/2020/9/digital-transformation-how-
build-digital-ready-culture [Accessed 25 August 2021].
Zippia, 2016. 7 WAYS TO ENGAGE TOP TALENT. [Online] Available at:
https://www.zippia.com/employer/7-ways-to-engage-top-talent/ [Accessed 24 August
2021].
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