How Ikea shows the power of a 15-word strategy statement

Published 16 February 2014 16:53, Updated 21 February 2014 09:12

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How Ikea shows the power of a 15-word strategy statement

In my consulting work, I ask my clients to summarise their strategies in fewer than 15 words. Each statement must identify the target customer, the value proposition and how the latter fits two requirements:

FOCUS: What you want to offer the target customer and what you don’t.

DIFFERENCE: Why your value proposition is different from your competitors.

Sounds simple. But it’s more difficult than it seems. Forcing companies to stick to the 15-word limit often reveals a profound lack of alignment among managers. In a 100-page strategy document you can state anything and everything you want, which makes everyone in the organisation feel comfortable. The trouble is that managers then interpret those 100 pages according to their own views of the company’s strategy. The result: one planning document, many different strategies.

All great business strategies can be summarised in a short headline conveying clarity of purpose to the customer. IKEA is a company that exemplifies the power of such strategic clarity, with the following 15-word strategy:

At IKEA our vision is to create a better everyday life for the many people.

Most businesses try to build their market around what they offer. What’s intriguing about IKEA is that it has designed its value proposition and brand identity around clear contrasts: a set of negatives (things it doesn’t offer) and a few positives (things it does offer).

Initially, specialty furniture retailers thought that IKEA’s value proposition was absurd. It offered minimal variety. Stores were designed to propel customers through labyrinthine spaces without sales support. And the company offered no product delivery or help with assembly. What IKEA did do was replace the warehouse atmosphere associated with most discount furniture retailers with a cheerful, innovative look and feel. It also offered items other than furniture (housewares, toys), and customers could drop their children off at brightly designed, company-operated daycare centres.

IKEA’s value proposition is focused - it clearly states what it does and doesn’t do - which in turn makes it clear to consumers how IKEA is like no other furniture retailer. This case and other great business strategies underscore how critical it is to achieve this level of clarity and differentiation. Keeping your strategy to just 15 words can help you get there. Practise it during your next strategic workshop and see what happens.

Alessandro Di Fiore is the CEO of the European Centre for Strategic Innovation, based in Milan.

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