IKEA's Innovation Strategy and Sustainable Business Development Report

This report provides a comprehensive analysis of IKEA's innovation and sustainable business development, focusing on its adoption of lean startup principles and its eco-friendly initiatives, particularly its recycled kitchen. The report examines IKEA's innovation strategy, organizational environment, and the impact of its innovation trend on its business performance. It utilizes the business model canvas to analyze opportunities and threats. Furthermore, the report offers recommendations on organizing innovation activities, developing additional innovation capabilities, and ensuring strategic alignment to create and capture value from innovation. The report highlights IKEA's success in achieving customer satisfaction through continuous innovation and adaptation to the changing market dynamics. The report emphasizes how IKEA has strategically positioned itself in the market by embracing eco-friendly practices and leveraging the lean startup methodology to improve its products, reduce risks, and meet the evolving needs of its customers.

Running head: INNOVATION AND SUSTAINABLE BUSINESS DEVELOPMENT
INNOVATION AND SUSTAINABLE BUSINESS DEVELOPMENT
Student’s Name
University Name
Author note

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Executive summary
The purpose of this assignment is to analyze the impact of lean start-up movement in the
selected company that is IKEA. It introduces the IKEA and provides brief description of the
innovation trend that was initiated by the company. It states the ways in which the company
has gained its competitive position in the market. It describes the selected innovation trend in
the organization that is its eco-friendly kitchen. It analyzes and describes the organizational
environment, the innovation trend in the organization, the innovation strategy of the
company, the innovation capabilities, the value creation and value capture techniques of the
company. Further, it analyzes the impact of the innovation trend on the company analyzing
its opportunity and threats with the use of business model canvas by Osterwalder and
Pigneur. It recommends the ways in which the company can organize its innovation
activities, the additional innovation capabilities that should be adopted by the company, the
required innovation initiative and the ways to ensure that it creates and captures value from
the innovation. it also recommends the ways in which the company can better ensure strategic
alignment with the innovation trend. Lastly, it concludes that the business organization has
been highly successful by its continuous innovation and achieving customer satisfaction.

2INNOVATION AND SUSTAINABLE BUSINESS DEVELOPMENT
Table of Contents
1. Impact of advances of the lean start-up business................................................................3
2. Introduction to IKEA and its innovation............................................................................3
3. Concept of innovation at IKEA..........................................................................................4
4. Importance of innovation strategy and alignment with organization.....................................5
5. Impact of innovation trend on IKEA.....................................................................................6
6. Recommendations how the organization’s innovation strategy responds innovation trend. .7
7. Recommendations to ensure strategic alignment to address the innovation trend.................9
Conclusion..................................................................................................................................9
References................................................................................................................................11

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1. Impact of advances of the lean start-up business
The lean approach reduces the constraints of the business operations and helps the new
start up business ventures to launch the products and services and by analyzing the wants and
needs of the customers at a faster rate rather than using the traditional methods. In other
words, it makes the business start-up and launching of new products less risky (Rasmussen &
Tanev, 2015). This methodology helps to break down the barriers of the start up formation or
launch a new product. The lean start-up is a paradigm shift and business development
strategy introduced by Steve Blank. The movement consists of many efficient ways and
techniques to reduce the risk of business failure and it is an approach to launch new products
in the market, and it is tested and validated by scientific experimentation (Patz, 2013). The
lean start up has impacted IKEA in establishing management practices that sustain innovation
in the organization. It has transformed the working culture of IKEA and has driven a long
term growth. It has impacted the organization in a positive way, it has helped the company to
prevent being struck on one idea and helped the company to implement new ideas and
innovation, and the risk has been reduced. It has helped the company to fend off risk in a
volatile market. Lean methodology has well worked with IKEA as it has continuous focus on
improving its products. The company is best known for its innovation purpose.
2. Introduction to IKEA and its innovation
IKEA is a Swedish company based in Netherlands; it is a multinational corporation that
pioneered the idea of selling affordable furniture’s. The company has around 400 stores all
across the world. IKEA introduces around 2500 new products every year for its customers.
Upon facing stiff competition from other online stores and retail company like Amazon,
Floyd, it has adapted to new technologies (Goffin, & Mitchell, 2016). The company has

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made use of various technologies such as AR app which enables its customers to see what
furniture’s might look like in their room. Recently the company has launched a kitchen that is
made from the recycled plastic bottles. It has been researched that the company has utilized
twenty five plastic bottles in the IKEA kitchen units (Bereznoi, 2015). The innovative idea
was designed by the Swedish studio to enhance sustainability. The units of the first kitchen of
IKEA cabinets are entirely made from the recycled plastic bottles and reclaimed industrial
woods. The main structure of the kitchen is formed by reclaimed wood, while the coating has
been made from the plastic bottles. The cabinets are modular and they are designed in such a
way that it fits into any space (Boons, & Lüdeke-Freund, 2013). Considering the fact that
sustainable products are expensive due to the amount of research and development required
the company developed any innovative idea to make the kitchen a viable alternative to the
ones present in the market currently. The company expects the product to last for 25 years.
The company innovatively overcame the price which has been considered a milestone in the
development process.
3. Concept of innovation at IKEA
The employees of the organization are empowered and encourage innovating and
bringing forth new ideas and creativity so that the products manufactured in the organization
are innovative and creative to meet the needs of the customers (Maglio & Spohrer, 2013).
The company research on various ways in which innovation by the organization can improve
the daily lifestyle of its customers. IKEA enables its business environment in such a way that
the entire organization is involved in the process of developing new ideas and are in search
for innovation (Edquist, 2013). IKEA is highly involved in extending its current digital
capabilities and engage themselves with the customers. This innovation strategy of the
company enables the business organization to build a strategic vision for their digital

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properties. The company has an innovation work stream which helps them to deliver the first
and most successful implementation of innovation ideas and creativity. The company
efficiently utilizes the digital technologies and platforms which help them to improve the
overall customer experience. The digital innovation work stream of the company helps to
develop a digital innovation work stream that is used to explore the new possibilities of latest
technology. The vision of the company that is creating better every day for everyone is there
competitive strategy (Ye, Jha & Desouza, 2015). It is combines with value based service
culture; the company uses value innovation to create more value for its customers. This has
enables the company to create innovation value. The company’s unique strategy operations
have helped them to create value service. The company’s strategy is supported by value
innovation for the company and its customers.
4. Importance of innovation strategy and alignment with organization
Creation of innovation strategy would ensure strategic alignment with the
organization by quality if planning and the managerial decision making techniques in the
organization (Liu, & Hou, 2015). To ensure successful alignment the company needs to
conduct sufficient research on the market and external environment and understand the needs
and requirements of the organization. This will enable the company to undertake successful
innovation strategy. The company needs to develop performance and cultural management
and identify the time of strategic change. The lack of alignment with the innovation strategy
with the organizational can result in unsatisfactory outcomes (Edvardsson, & Enquist, 2015).
IKEA has undertaken its innovation strategy with specific goals and objectives. However, the
company needs to match it with the company’s vision and strategic goals of the organization.
The focus of the company’s strategy is mostly, creating value and satisfying the needs and
requirements of the customers. It is important that the business innovation strategy and ideas

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must not be different from the overall business strategy and goals. The company needs to
create and innovation strategy which has the same attention and rigour while creating the
organizational strategy. The company needs to have a unified business strategy with the
innovation strategy. It is important because it helps the business organization to improve the
overall efficiency of the IKEA. The strategic development and the procedure for discovering
the opportunity for innovation are to be combined systematically.
5. Impact of innovation trend on IKEA
The innovation trend adapted by IKEA and the implementation of its appropriate
innovation strategy has impacted the product innovation performance of the company. The
impact of innovation trend and its strategy on the product innovation performance is also
reflected through the managerial activities and its learning efforts (Edquist, 2013). The effort
of the organization shapes the behaviour of the organizational members and impacts its
performance. The innovation trend that is its recycled kitchen and other product
improvements has made a huge opportunity for the business organization. It can attract its
customers to buy the products. Its innovative idea of developing kitchen with the use of
recycled plastic bottles have enabled the company to ideally attract the environmentally
conscious customers, as they are more likely to purchase products that are environment
friendly. The biggest opportunity faced by the company is the fact that t has cost leadership;
it has a single minded focus on the cost of the company (Liu, & Hou, 2015). The threats that
is faced by the company on implementation of this innovation idea is its low cost business
model, it can be easily imitated by the company’s competitors. Therefore, the company has to
further innovate its products to face the stiff competition. It faces threats from the online
retailers who offer products at lower costs.. The company would be delivering value to their

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customers (Maglio & Spohrer, 2013). This innovative product is targeted for all age groups
and especially the environment conscious customers.
Business model canvas of IKEA
Key
Partners
Branded
consortia
Strategic
alliances
Suppliers
T-mobile
Strategic
alliances
Design
agencies
Advertising
agencies
Key
Activities
Continuous
product
development
Cost control
Inventory
management
Manufacturin
g
Value
Propositions
To create a
better
everyday life
for its
customers,
To offer wide
range of well
designed
furniture,
Democratic
design
It has
launched
range of solar
panels and
home battery
pack
Customer
Relationships
Exclusive
product
design,
Special offers,
Alternative
design,
Customer
Segments
Family,
Business,
Massive
Key
Resources
Design,
Facilities,
Intellectual
property,
340 stores in
28 countries,
Channels
Retail
shopping
centre, Food
markets,
websites,
app store
Cost Structure
Advertising campaigns, stores,
infrastructure, R&D, legal, taxes
Revenue Streams
Product sales, flat pack house and
apartments, solar panel packages

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6. Recommendations how the organization’s innovation strategy responds innovation
trend
Organization of innovative activities
The organization can organize its innovation activities by creating an organized
structure; the structure of the organization helps to achieve the goals. The company needs to
define its objectives and well organize its resources for their fulfilment. Most importantly, the
company needs to divide its work among the employees and delegate proper responsibilities
and authority upon them. It needs to initiate a source of authority and maintain positive
relation with the employees (Edvardsson, Enquist, & Hay, 2016).
Additional innovative capabilities for organizational development
IKEA needs to evaluate its innovation readiness and have a benchmark against the
best practices. It needs to build a capability to define and launch the new growth in business.
It needs to create and renew its innovation culture in the organization along with a shared
vision. It needs to work on its committed leadership (Liu, & Hou, 2015).
Innovation initiative required
The company needs to get an authentic leader support for the implementing the
innovation support. It needs to maintain a reasonable expectations and goals of the
organization. Having an internal alignment in the organization will help the organization to
innovate its products successfully. Initiative must be taken to effectively and efficiently
utilize the technology and improve other aspects. Initiative must be taken too continuous
adapt itself to the changing business environment (Liu, & Hou, 2015).
Value creation from innovation

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The organization should focus on customer experience and interactive relationships.
Co-Creation and innovation in the organization needs to allow and encourage its customer’s
involvement in order to create value for its customers and have a rich experience.
7. Recommendations to ensure strategic alignment to address the innovation trend
For successful implementation of innovation in the organization it is important to
align it with the corporate strategy. The middle managers of the organization must take
charge of the innovation activities. The innovation process and idea generation must be
focused in order to align idea generation and hence innovation with strategy (Boons, &
Lüdeke-Freund, 2013). The company needs to focus on marketing communications,
packaging and pricing of the innovated product. The company needs to focus on generating
ideas and address the challenges in implementing the innovation. The innovation challenges
are needed to be addressed based on the needs of the corporate strategy. It is recommended
that the company focus on diversified team and putting in charge of addressing a particular
change. It is necessary for the company to invest the company’s resources for the creation of
research and development and encounter the innovation leaders (Maglio & Spohrer, 2013).
To incorporate so the company needs to have some connection between the innovation
strategy and business strategy. The alignment can be executed by a balanced scoreboard
approach. The impact of aligning the business strategy with innovation relates to creating
product enhancements and continuously improves its operations. By maintaining a
scoreboard the company can access to its financial goals and measure the targets of the
business organization and efficiently align it with the innovation strategy of the business (Ye,
Jha & Desouza, 2015). By jointly developing the technology and the products the company
can ensure long term success and raise the visibility of long term opportunities.

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Conclusion
Therefore, from the above analysis it can be concluded that IKEA has been highly
effective in aligning its business operating models with innovation. The company has
achieved growth and success by completely redefining the furniture industry. IKEA is
considered as the most innovative company. The company renews its strategies and grow
sustainability in the organization. The assignment has analyzed the concept of innovation at
IKEA. It has determined the importance of innovation strategy and its alignment with the
organizational strategy. It describes the impact of implementing innovation trend in IKEA
and has analyzed the opportunities and threats to the organization. Further, it has
recommended the ways in which the organizations innovation strategy responds to the
organizational trend, and has recommended the ways in which the organization can ensure
the strategic alignment and address the innovation trend.

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References
Anderson, N., Potočnik, K., & Zhou, J. (2014). Innovation and creativity in organizations: A
state-of-the-science review, prospective commentary, and guiding
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Bereznoi, A. (2015). Business model innovation in corporate competitive strategy. Problems
of Economic Transition, 57(8), 14-33.
Bettencourt, L. A., Brown, S. W., & Sirianni, N. J. (2013). The secret to true service
innovation. Business Horizons, 56(1), 13-22.
Boons, F., & Lüdeke-Freund, F. (2013). Business models for sustainable innovation: state-of-
the-art and steps towards a research agenda. Journal of Cleaner production, 45, 9-19.
Edquist, C. (2013). Systems of innovation: technologies, institutions and organizations.
Routledge.
Edvardsson, B., & Enquist, B. (2015). 'The IKEA Saga': How Service Culture Drives Service
Strategy. Service Industries Journal, 22(4), 153-186.
Edvardsson, B., Enquist, B., & Hay, M. (2016). Values-based service brands: narratives from
IKEA. Managing Service Quality: An International Journal, 16(3), 230-246.
Edvardsson, B., Enquist, B., & Hay, M. (2016). Values-based service brands: narratives from
IKEA. Managing Service Quality: An International Journal, 16(3), 230-246.
Goffin, K., & Mitchell, R. (2016). Innovation management: effective strategy and
implementation. Macmillan International Higher Education.