CASE STUDY

 

In my search for an appropriate case study, I pondered the type of organization that is most resistant to failure, but which would stand to gain the most from it. This led me to think, which companies have the most to lose from failure? I recalled reading an article estimating that 40% of Fortune 500 companies would not survive a decade (Ioannou, 2014). As much as established companies benefit from name recognition, extensive resources and economies of scale, scale also works against them by slowing them down, presenting an obvious target and magnifying their blind spot (Harford, 2011). It seems logical that those who have the most, also have the most to lose. Having determined scale to be an interesting criteria which might impact a company’s ability to learn from it’s mistakes, I first connected with small businesses to learn what systems they utilize. I now shift my interest to the other end of the spectrum, to understand what problems large and established companies face in terms of learning from failure, and to determine if there are any practices they might be able to borrow from smaller and less structured operations.

 

'The fear of making mistakes is the root of bureaucracy 
and the enemy of development' – Ingvar Kamprad (1976, p.15)

 

IKEA is recognized worldwide for its low prices, big box stores, unpronounceable product names, incomprehensible assembly instructions and the opportunity to experience Swedish meatballs wherever in the world you happen to be. Ingvar Kamprad’s journey is a storybook tale of entrepreneurial spirit that grew from small village roots to achieve global recognition. Over its more than 75 years, IKEA has introduced many notable innovations including flat-pack furniture, an annual catalog shipped to millions of customers (just recently cancelled as of Dec 2020), the shopping maze concept and the ubiquitous blue bag. Today's marketplace is of course vastly different from that which the company achieved worldwide success, and it now faces the same threat as all other traditional retailers – e-commerce. As online shopping undermines the once innovative cash & carry warehouse concept they popularized, a web platform was resisted until 2007, and they have been playing catch up ever since. When I worked briefly for IKEA, a phrase I frequently heard in the hallways and meeting rooms was how things had ‘fallen between the chairs’, the Swedish version of getting lost in the cracks. On both Cannon and Edmondson’s (2005) and Sitkin’s (1992) scale of fail worthiness, forgetting stuff falls on the low end of the spectrum, as preventable or repeated errors show that little has been learned. Despite their depth of experience, rigorous procedures, deep resources and the fact that they are privately owned and not beholden to shareholders' demands, they regularly experience product recalls, inaccurate projections, shortages of products and a low customer approval. Once a disruptor, IKEA is now at risk of disruption, making them an ideal candidate to start learning from failure. 

 

Understanding IKEA

My initial meeting with 7 IKEA employees is to define the company’s attitude and towards failure. I wish to learn how and when they analyze mistakes, how findings are shared company wide, what methods of feedback they employ and to rate their effectiveness. Participants are asked to describe significant and or persistent problems they face as a result of error and how the company analyzes them to uncover root causes. For feedback, I asked what methods are currently employed, the level of trust within teams and how cultural tendencies come into play. The disparity between departments working under the same roof illuminates difficulties in maintaining a singular collective culture and highlights the need for improving inter office communication, to consider new methods for how knowledge is shared. For the purposes of confidentiality, names are excluded from participant feedback. 

 

To begin, I asked for concrete examples of issues the company faces stemming from error, and received an earful. Fear of failure was the first example provided: 'Inside IKEA people are very afraid of making mistakes, because it's a massive company, and you will probably get more spotlight if you make failure as compared to success'. Other frustrations stemmed from complexity: 'There's too many different projects going on at once and so many different product teams. Not everyone follows the same process and I think that's where things fall through the cracks'. Not surprisingly, maintaining a global presence leads to unexpected errors with 'so many different and changing legislations and rules around the world, making them quite hard to stay on top of'. Slow decision making is seen to impact the speed of progress: 'We are still deciding about things that other companies adopted 15 years ago'. Errors seem ubiquitous, occurring at all company levels. An example provided of strategic error is investing in a new idea that flops. Inaccurate demand forecasting for Covid-19 is an instance of technical error, and product recalls and violations of working conditions within factories are the result of operational error. But despite what seems to me like unlimited opportunities for failure, respondents were not of the opinion that IKEA is particularly prone: 'Honestly, IKEA delivers a higher percentage of success and has the ability to sustain better than other companies'. Universal recognition plays a factor in the perception that IKEA has a poor track record: 'I’d say the failure rate is pretty normal, but due to ikea’s large scale, everything is magnified'. Given the company’s stature, even minor mistakes can have worldwide repercussions: 'the biggest issue IKEA faces is the magnitude of the consequences'. 

 

IKEA participants contend that risk taking is part of the culture: 'On paper, failure is in the DNA, written into the company code'. IKEA's values extoll being different which 'gives you a possibility to explore, experiment and dare to make mistakes'. The founder was a big proponent of experimentation, and it is said that 'Ingvar loved fiasco'. Indeed, he stated that 'Only while sleeping one makes no mistakes. Making mistakes is the privilege of the active — of those who can correct their mistakes and put them right' (Kamprad, 1976). These words exemplify an environment where 'failure is seen as ok', where the company stance is essentially 'try to do better next time'. Unlike American culture, occasional failure is less likely to diminish career prospects in Sweden, where employees have permanent contracts, and this appears to be the case even moreson within IKEA: 'almost nobody gets fired'. Not all in the case study sees this as beneficial: 'You can just fail and fail, but ultimately, but because of the way that we are structured to support each other, the team simply agrees that it's not a failure'. Tillsammans, which translates to togetherness, is another quintessentially IKEA value, exhibited by the emphasis on teamwork over individualism. That said, in a highly structured organization, the idea of togetherness may be more aspirational. Inclusion within teams is likely to strengthen relationships and build trust between members, but departments sitting right next to each seem to work in silos, maintaining little if any contact: 'There's so many different IKEA units all working for the same brand and it's just amazing how much we don't actually work together'. A recent employee finds the rigidity counterproductive: 'There's something around about lack of inclusion. Say I'm a specialist, I still can't share all these ideas I have, unless I'm invited on the project to contribute'. 

 

Despite IKEA’s tolerance for error, there appears to be considerable hesitation in terms of sharing, in order to learn from them. This may be influenced in part by Scandinavian culture which eschews conflict (Daun, 1996). 'Unlike the US, which is more about individualism, Swedish culture values togetherness, so you tend not to have direct or negative feedback'. Working closely within teams is generally seen as supporting a safe environment which encourages the trust needed between members to breech difficult topics (Edmondson, 1999), but inasmuch as IKEA has shifted to project based assignments and implemented hot-desking, staff move freely between teams which no longer share physical space. The move towards distance work is likely to further alienate teammates who used to take coffee breaks and lunch together. Without sufficient trust built from familiarity, there is the question of how truthful people may be: 'I think it would be quite difficult to get people to be completely honest, especially if you're setting up groups that don't know each other very well'. IKEA employees are more straightforward when feedback is indirect, such as in The Voice, an anonymous annual survey that turns up plenty of sincere feedback. Other barriers present within highly structured organizations is upward flow of communication: 'it's very layered, and so we really have no access to the hierarchies'. Rigidity in large organizations can be highly inefficient: 'it is completely frustrating when you can't fix errors that are outside of the responsibility of that project you are on to solve'. Furthermore, inflexibility smothers creativity: 'There's too much emphasis on making sure that your time is billable'. Strict adherence to process squelches innovative thinking: 'one of the things that holds back innovation at IKEA for you can't be spontaneous, whereas within a small business, you could just try stuff out'. 

 

The aha! moment came when I asked about systems to analyze and share learning from failure, to which the answer was 'none'. In my attempt to understand how mistakes are analyzed, more cracks began to get exposed. While governance structures are said to consider company error within strategic planning, routine analysis seems less apparent at lower levels: 'I have no knowledge or proof that they are analyzed' said one manager. Others assumed that learning from prior failures were probably incorporated within guidelines: 'There should be guidelines, but in general, little time to check them, we fly by the seat of our pants'. Becoming apparent is a lack of urgency in determining the root cause of issues: 'most people don’t take the time for reflection, research or analysis needed to learn from mistakes'. Where analysis exists, it's not clear how this is operationalized: 'A common phrase I hear is that something has been “a learning” and I always challenge it by asking what exactly is it we have learnt? Seeing an opportunity is not the same as taking it'. Analysis not fed back into the process may be more symbolic than purposeful: 'there is plenty of data collected and presented, but not always any plans to implement it' 

 

When asked how important lessons may be accessed and applied in future projects, there was an audible silence. '...That's a good...how to access? Results of previous analysis? Yeah... I'm not aware of that. I don't know if that does or does not happen. In many projects I don't see that analysis being presented'. Another frankly admitted: 'This never happens'. A third countered that she does not trust the glowing corporate communication: 'in e-learning they share some cases, however I don’t sure if it's a modified story or a true story'. One suggested someone might know: 'I suppose if you participated in a similar project, or have that awareness of similar things, you can then suggest these are the deviations that we should make'. Back when the company was considerably smaller, before corporate headquarters in Älmhult was massively expanded, that may have been the case, but in an ever expanding global operation, this method for retaining knowledge seems random and unreliable. Set in what had been their original store, IKEA’s museum does a formidable job of maintaining the company culture, but by and large, only the highlights are showcased. The learning from failures is  'Those types of unsuccessful examples, I don't think that we have a good systematic approach to document'. Despite an experimental rhetoric where mistakes are normalized, failure is absent in the company story.

 

Unlike many other multinational companies that locate corporate headquarters in a major city, IKEA has centralized the bulk of operations in the small village of Almhult where the store opened in 1958. It was explained to me that 'the strength of IKEA has been that locals work here for life, many of them following their parents into it. This means that a lot of information is passed on between families, friends and generations'. I found it hard to conceive that such a successful company relies on these informal systems. Considering that at the age of the company, many of the old guard have either retired or passed on, taking with them a wealth of knowledge from the last three quarters of a century. I inquired about the methods in place to documentation the culture in the aftermath of the founder's recent death, it seemed that I had stumbled on a known, but unsolved issue: 'over time, we are losing the stories of the old guys who used to model learning and talked openly about our mistakes'. At last, I had uncovered the unmet need I would try to solve.

 

Summary 

My case study with IKEA revealed eight key observations, providing a more informed understanding of issues that impact learning from error.

 

• IKEA is a traditional hierarchical organization, where learning uncovered on the shop floor has difficulty reaching its way up to upper management.

• Departments work independently from one another with little sharing of knowledge of what the others are up to.

• Lessons from failure are absent on IKEA’s online learning portal, which reads like propaganda and lacks any critique.

• There is no company wide forum for discussing internal problems.

• Many employees spend their entire career at IKEA, encouraging a ‘way things are done around here’ attitude, as well as a shortage of fresh eyes and new ideas.

• IKEA maintains its presence in the small town where it was founded, and while the company operates internationally, there is a small village mentality.

• Swedish culture discourages making waves, and adherence to this tradition inhibits individuals from speaking up, limiting discussion of unpopular topics.

• In an otherwise structured company, valuable lessons from 75 years of experience do not appear well documented, and are not easily available when needed. 

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