From its iconic blue-and-yellow stores to its ubiquitous customer-assembled "Billy" bookcase, Ikea International Group is one of the most recognizable and admired companies in the world. With revenues of 27 billion euros [approximately USD35 billion] and more than 300 stores, the Swedish-based retailer has thrived by transforming the home furnishings market and making style affordable to young, urban consumers in more than 40 countries.
One thing it hasn't done, however, is "reinvent" itself.
Contrary to today's widely-held belief that companies must be prepared to fundamentally alter their strategies in response to a constantly changing global marketplace, leaders like Ikea prosper by doing the opposite: They focus on a simple core strategy and learn to replicate and adapt their early successes over and over again.
Bain & Co. research over the past decade demonstrates that simplicity, focus and continuous adaptation almost always trump strategies of radical change or reinvention. Enduring success comes not from choice of market or industry, but from the essential design of a company.
The recent book Repeatability, by the authors here, attempts to pinpoint the design principles that allow some companies to succeed even in tough and dynamic competitive arenas. Those companies are referred to as the "great repeatable models" because they do what they do best again and again, expanding into one market after another, learning as they go.
Since Ingvar Kamprad opened Ikea's first stores in Sweden during the 1950s, the company has encountered massive changes in its markets: new competitors, new technologies, Internet sales models and constant shifts in consumer wants and needs. Yet its repeatable model has adapted and endured. its core features have changed only incrementally over the years.
Since its beginning, the company has sold all of its wooden furniture in flat packs for self-assembly by the customer. Every store incorporates a flow that encourages cross-selling. Every product is designed to hit a target selling price.
Ikea has not attempted to diversify into businesses that would require a different model. Instead, it has focused on maintaining its differentiation. Over time, it has made its economics more efficient and improved product design. It has carefully selected new product categories and geographic regions where its model can work.
Early on Kamprad encouraged an egalitarian corporate culture where everyone within the company has internalized a long-held set of relatively simple, transparent rules and principles. As a result, decisions at every level of the organization tend to reinforce and improve the model.
Three Principals of Great Repeatable Models
For companies as diverse as Apple Inc. and Danaher Corp., repeatable models built on a set of core strategic and organizational principles have a stabilizing effect. That helps leaders adapt to change logically, while avoiding the complexity and distraction that often accompany efforts at reinvention.
In research for Repeatability, the authors examined more than 30 different factors for 200 high-performing companies. They focused on two questions: What do these great repeatable models have in common? and What...