The Strategist: Be the Leader Your Business Needs. Cynthia Montgomery

this envelope farther, hiring first-class talent who could design for both style and for frugal manufacturing techniques. Perhaps IKEA’s greatest design achievement has been to make its furniture look and feel more expensive than it is. A turning point came in 1964 when a respected Swedish furniture magazine compared IKEA furniture with more highly regarded brands. IKEA’s, it found, was often as good or better. That shocked the industry and helped to persuade consumers that they had nothing to lose—either financially or in terms of status—by shopping at IKEA.

      Unlike so many discount retail stores, IKEA’s are anything but dark and dingy. The company’s vibrant colors (mostly blue and yellow, the colors of the Swedish flag) are everywhere, and except for the weekend crowds, the stores are pleasant places to visit. You can make a day of it: Come with the family, try out the sofas, use the computerized tools to design your own kitchen, and have a full-fledged Swedish meal at the restaurant. If, at the end of the day, you’ve bought too much to load onto your car, you can rent an IKEA van to drive it all home, or even pay to have things delivered, assembled, and set up.

      So, what is it that is special about IKEA? I ask you. Low price? Design? Flat pack? Swedish meatballs? What? The answer, of course, is “all of the above.” The centerpiece is low cost—without that, nothing else works—but everything else not only supports low cost but adds its own distinctive attraction.

      At this point, you, like many managers, may feel like, “Okay, we’re done—we’ve cracked the case. We know the answer, time to move on.” Maybe so. But what is the real lesson here? What do you take with you to apply to your company? That low cost with some added distinctive features is a winning combination?

      Often it is.

      But what if I tell you there is a deeper insight here, an insight that applies to all businesses whether you’ve decided to compete on low price or with differentiated, specialty products. It’s something else that was behind everything IKEA did.