What it takes to assemble Ikea: CEO Jesper Brodin talks culture, mistakes, and why he wants your old mattress

After Ikea CEO Jesper Brodin and I finished talking for the latest #ThisIsWorking, he pulled out one of the goofiest things I’ve seen in business: a fake ID card that allows the bearer to, in all caps, GO BANANAS. Ikea gives employees the license as a way to remind them that they need to try new ideas and that innovation often fails. And when it does, it’s time to lay your "bananas" card on the table. The goofiness is clearly part of the strategy: Fail and you’ve got people laughing with you, not at you. 

That self deprecating approach seems to be Jesper’s main way of operating. Now five years into his time as CEO, Jesper has managed IKEA through some of its toughest times: pandemic shutdowns that crippled the bricks-and-mortar company; clogged supply chains that meant furniture was difficult to stock up on; inflation that forced it to raise its famously low prices; and Russia’s invasion of Ukraine, which led it to exit a country where it had dozens of malls, stores, factories and 15,000 employees. 

But Jesper takes it all with a shrug. He and the team have done the best they can. “On one hand, it's been riddled with challenges we couldn't have imagined and at the same time it's been the most humbling and inspiring period in my life, seeing people show the best of qualities when times are tough,” he said.

He walked me through a few of those challenges as we caught up nearly three years after our last interview. In that first discussion, we talked about some of his goals as a new CEO. Now, he had results. The company has made critical progress on two of his major goals: e-commerce and sustainability. He shared fascinating stories about how the company built a global digital operation in eight weeks instead of the expected two years and why Ikea is now profitably running a mattress recycling factory. Plus, we talked about how to lead a company for the long-term when each day seems to have a new crisis.

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Here are some edited highlights of our conversation:

"There was no map." How the last three years have challenged him as CEO

Well, it's been exceptional times and remembering when we met last time, little did we know about some of the strife and challenges that we would experience. Of course, now I think we have to recognize that the amount of challenges has made this an exceptional period: Covid, inflation, economic challenges, supply chain challenges that we never experienced, I think, anyone in our generation, war in Europe, and on top of that, which is I think the most scary thing to be honest, is the accelerated climate change and how that's impacting people already today. And we're only in the beginning of a journey of trying to mitigate it. So I would say on one hand it's been riddled with challenges we couldn't have imagined and at the same time it's been the most humbling and inspiring, I think, period in my life, seeing people show the best of qualities when times are tough.

To be part of something that's not business as usual is humbling, I think. To see how you actually also, how you can show up as a community when times require you to do the right things. I'm thinking about how nothing we learned in school prepared us, basically choosing between business or the safety of people. Choosing between, you know, taking economic risks, leaning in to invest in transformation versus trying to protect the jobs.

So some of the challenges I think we had to basically skip, there was no map and it was more a need for us just to use a compass of values and togetherness, I think, in order to get through.

Why the company has had to "run on two speeds" over the last few years

Well, to start with, I think it's basically cherishing an old culture in Ikea where we are decentralized and people are empowered to make decisions. And that's been going on since the founder started to build that culture. So it was interesting to see how that culture actually enabled people to not get afraid of making mistakes in the moment when we needed to make decisions the most. But then from a technical perspective, we learn quickly to say some people need to be on the task force basically for mitigation of immediate crisis.

We had basically a part of our management running crisis management. The other part, we then disconnected from the crisis. We said, “We need to work on reprioritizing investments,” because as you know, we spoke, I think last time also, it's not only the here and now that we are experiencing, but also a deep transformation of our business.

So we said, How do we not get mixed up in this? And I would say it came at a cost because at times we've been tired and people have been in desperate need of vacation and such, but we managed to say, “Run the company on a twofold speed” which was interesting. Nothing we ever have done before. And we're still doing part of that today.

How Ikea made the “most lucky decision” towards digital transformation

We're still in that transformation, but we're doing fine I would say. And, here comes the interesting part, so basically we started the transformation. We were quite late, I would say. And part of that was our own success in the previous business model. We were making money. We were growing. So the incentive to drive and be a leader in the new omni channel reality wasn't there in the beginning. 

And then, I think I shared with you last time also, when I started this assignment, I had the opportunity to travel around the world. So I think I went to some 10, 12 markets. And wherever I came, people, customers told me, “We like Ikea. We love Ikea, the design, the prices, and we will go to Ikea, to the stores also in the future. But on a Tuesday night, when you come home after work, cook, put the kids to bed, and if you wanna buy something, if you don't show up in that reality in a modern way, you will be deselected.” So I heard that in Japan, in Poland, in Spain, in the U.S. So it was clear that our customers were requesting us to make a shift. 

So we decided back then, five years ago, to go full-blast into digital development. We didn't have e-commerce I think, on any market, by that time. And I've said many times it was maybe the most lucky decision we took. 

The ambition of a two year program had to be done in eight weeks... There was no space, room for second thoughts or postponing decisions. It was just bang on. You have to get it done. It was stressful, yes. But it was also refreshing to see how many good decisions could move us and mobilize us in a short time ... Before the pandemic we were running about 6% online, and now we are hovering around 25%, 30% online.

It was good timing, but what happened was actually when the pandemic hit us, and as you know, we had to close down stores — we had long periods of a 100% closure of stores — if we wouldn't have had the readiness from an online, we would've been in deep trouble. I mean, losses of jobs and massive red figures because, of course, we couldn't uphold the sales at the moment. But we were actually almost through rollout of e-commerce. And what happened was that the ambition of a two year program had to be done in eight weeks. So, sadly it was all hands on the deck and get it done.

And as some people said, what was your share of online? Well, it was a 100% at that moment. And if you look at it, in the first year, we only lost a few percentages of turnover to the year before. So we managed to almost uphold and then the year after we managed to accelerate and grow again.

So I would say, if you look at it, before the pandemic we were running about 6% online, and now we are hovering around 25%, 30% online and doing profit and doing well on it. So again, lots of things we want to do better but still the pandemic actually accelerated our omnichannel development in Ikea.”

How they achieved a two-year task of going digital in eight weeks 

It taught us a lot of things. [We were] more stuck, more slow, before. We would have pre-studies. We would reflect on things. We would be much more bureaucratic to be honest. And during these days there was no space, room for second thoughts or postponing decisions. It was just bang on. You have to get it done. And it was also refreshing, I think. It was stressful, yes. But it was also refreshing to see how many good decisions could move us and mobilize us in a short time.

How the pandemic impacted the company’s effort to become a climate positive company 

We need to be part of fixing this because the clock is ticking. We are halfway between the signatures on the paper of Paris agreement to 2030, where we need to be at half carbon and as a global community, we are not there yet. We are far from there.

It's super interesting to see our customers and coworkers expecting us to be a leader in this space. When we asked about 30,000 people around the globe, of our customers in 30 markets, it's up close to 80 [percent] of people that are deeply concerned about climate change. And I think probably last summer it even escalated further.

But there is a dangerous gap because only a few percent know how they can contribute. And even more, few people say that they can afford to pay extra for it. So basically the assignment that we have from people is that we need to fix this and fix it in a way so that everybody can afford it in the future.

A lot of people think this is an additional cost, but it's the opposite. So when you look at setting your climate plan into action, it's actually resource-smart is climate-smart is cost-smart. 

One example is we, a few years ago, started to invest in recycling of mattresses in the Netherlands. And the mathematics are fascinating. So, you have in the Netherlands, 17 million people. A mattress lasts for approximately 10 years, whether it's Ikea or somebody else's. So that means 1.7 million mattresses per year in waste. Used to be landfill, then you know, governments around the world subsidized incineration. So. at least a better alternative. 

Now, together with the government of the Netherlands, they removed the subsidies of incineration and supported legislation that customers need to bring old mattresses to a collection point. And we have now set up four factories in the Netherlands. So to take back every mattress in Netherlands … 1.5 million at the moment and we are very close to capacity actually now. 

We actually want to take back every mattress in Europe. And we are coming here [in the US] as well to see if we can set up the same successful story.

And the interesting thing is the material then going back is methyl foam and polyester and some other components. So it's a great business venture. The price of virgin is far higher today than the price of the recycling material. So, we are now actually offering to the EU and to other countries also to say if you work with us to remove some of the barriers, we actually want to take back every mattress in Europe. And we are coming here [in the US] as well to see if we can set up the same successful story. A few years ago, that might have been a little bit difficult, but now with the bandwidth of inflation and so on, we can operate and take some decisions easier.

On the economic transition to sustainability and the benefits of adopting this approach 

When I was growing up in Ikea, working in purchasing, the incentives were low cost of labor and low cost of raw material. Now, more and more, it's more important with low cost of renewable energy and low cost of re-material, if you like. 

It's probably the biggest economic transition that the world and humanity has ever experienced.

The risk you take as a CEO not to act is not only the brand health — where your consumers might basically cancel you if you're not trying your best to be part of this economy — but you're missing the economic benefits of it. You're missing the opportunities to actually get friends in society by establishing new ways of setting up the economy. So what we're experiencing is a few years only, maybe a decade or two, we are trying to shift an economic model that took 300 years to build and at least 50, 60 years to escalate. It's probably the biggest economic transition that the world and humanity has ever experienced.

Why encouraging mistakes helps to create a culture of innovation

To start with, we love to be self critical in Ikea. We always think we're not good enough. And I think certain days, I think we are a big organization, 177,000 people. We are part of an Ikea network with a lot of companies big and small. And on our worst days, we are bureaucratic, we’re slow and we have too many processes and too many people maybe blocked by where the process goes over the power of the decision.

But on our good days, I think we do have people who dare to take decisions and move with it. A recent initiative that I'm doing is to basically inviting all leaders to start with to be part of making mistakes. 

There's a very serious meaning behind it: In order for us to develop, we can't simply plan everything. We can't steer everything. We need to operate on ideas wherever we are.

Our founder used to say he had this idea that he would reward the best mistake of the year with $100,000. And then he actually looked at me and said, ‘No, you would win too often.’ So he canceled the idea. We are actually right now, we have created this like a driver's license to make mistakes and we're printing it with a personal name and I co-sign it in advance. So, if you make a mistake, then at least you have one friend to say that you're a part of it. It's a license to “go bananas” actually. So it's a bit of fun, right? But there's a very serious meaning behind it: in order for us to develop, we can't simply plan everything. We can't steer everything. We need to operate on ideas wherever we are. And of course that’s going to sometimes mean we double up on things and we do mistakes and there would be some costs.

But I would say my biggest worry would be at Ikea where we stop trying. So, I'm not so afraid of the mistakes, to be honest.

On what he looks for in new hires

Now I'm going to get my people and culture team after me, maybe, but I would say more and more of the years I look for the glow in the eyes, the passion. 

I'm going to get my people and culture team after me, maybe, but I would say more and more of the years I look for the glow in the eyes, the passion. 

Many, many years ago, I was in my youth, I was sailing across the Atlantic and I joined boats. And in the middle of the Atlantic I asked the captain — it was a small boat, about 20 meters or something — I asked him, “How come you accepted me as the crew when you didn't know if I could sail?” And he said a beautiful thing. He said, “Well, everybody learns how to sail,” he said. And it stayed with me, you know? So, I tried to look at the character of the person, the values and the glow in the eyes.

More and more, I start to look for people, who consciously add to their agenda, to contribute to people and planet. So, I think leaders of tomorrow need to be experienced in digital, in business and so forth. But they definitely need to understand: How do you operate on people and planetary topics, and how do you integrate that into your business in a successful way?

So, I would say my advice to people who are in the beginning of their career, except for doing mistakes and testing and trying would be, looking to how you actually integrate people and planetary topics into your CV and how you become successful in transformation of that, because these are the leadership qualities that we would need in the future.