OPINION: A small group of managers taking decisions in a centralized way no longer works

The Innovation@Work Global Week aims to inform and inspire businesses to innovate in today’s workplace. At the event, Potenza presented a keynote speech about Ingka Group’s new concept of leadership.

“We are exploring what it means to develop a leadership by all movements grounded in inclusion and IKEA values,” she said. “We are challenging the mindset that the leader is the one who manages the team.”

Read the entire speech about Ingka Group’s new “leadership by all” concept

This story starts with a little book, written in 1976, by IKEA’s founder Ingvar Kamprad. Ingvar founded IKEA in a tiny village surrounded by forest in southern Sweden in 1943. But by the 70’s the company was growing, and Ingvar needed to find a way to talk to co-workers about the IKEA approach to work when they were far away from each other physically.

So in 1976 he put down a few words in a little pamphlet. It’s called the Testament of a Furniture Dealer. In it, Ingvar defines the IKEA culture and spirit. It was unique then and it’s unique today.

There you’ll find words like simplicity, humbleness, togetherness, daring to do things differently, leading by example, taking responsibility.

Ingvar said that “responsibility has nothing to do with education, financial position or rank”. He said “responsibility takers can be found everywhere.” That they are “necessary in every system”, “essential for progress”, “that they keep the wheels turning”, and that they are found in all parts of the business. In other words, Ingvar described his democratic approach on people and leadership and his expectations that every co-worker makes a difference at IKEA.

Fast forward to 2022 and the vastly different world we’re now in. But I still want to talk about this little book. Because today we’re taking a step with leadership that may sound radical, but I think it’s a natural development for us that is rooted in our unique culture and values that Ingvar laid out so many years ago.

It’s called Leadership by all. Today, we’re saying that we can all lead. All 174,00 co-workers. It’s the idea that a small group of managers taking decisions in a centralized way no longer works. It is the idea that every individual has the potential to lead and develop the business together.

To achieve this, managers are going to have to let go of control and empower others to lead. This may mean asking co-workers to take decisions, delegating responsibility for tasks – but also supporting them, asking more questions and listening, rather than providing answers. This is about bringing inclusive, values-based and shared leadership to IKEA. It’s the idea that leadership is no longer a position, but a mindset that all can adopt.

But is this a pipedream? Is it just words? We really don’t think so.

To explain where we are now on our leadership journey, we first have to look back briefly at what happened at the beginning of Covid. By May of 2020, 75% of our stores were closed. We needed to protect our company while staying true to our vision to create a better everyday life for the many people. We had to show leadership in a total unknown and frightening situation.

First, we moved quickly to secure income stability for co-workers even if they couldn’t perform their tasks. We safeguarded basics like medical insurance and pensions. And we set up hardship funds where co-workers could get help during the pandemic to pay for rent or put food on the table.

We also began initiatives to provide a sense of psychological safety as stress increased and mental health suffered. We launched a training early in the Covid pandemic for our entire workforce that focused on health and wellbeing, how to cope with stress, including mindfulness.

We started our ’Are you OK?’ campaign focusing on creating​ awareness around the importance of mental wellbeing.  And we began a leadership development program for 21,000 managers specifically for leading during challenging times.

We reskilled and upskilled thousands of co-workers as we converted stores to fulfilment units, rolled out click & collect, and changed other ways of working. In Poland, for example, within five days, we organized 200 customer service co-workers to work from home with remote selling. Today, we have 6,000 customer service co-workers globally transforming from call center operators to remote home furnishing design specialists.

Throughout this all, we learned about how important it was to care for people, to be there as an employer.

And it’ paid off. Despite the pandemic, our business grew by 6.3% to reach 37.4 billion euros in sales in FY21. Our investments and new ways of working led to an increase in online sales from 18 to 30%. We also opened 25 new IKEA locations, with new types of store formats.

This achievement is something to be proud of, but more than numbers and results, we learned to work in a different way and really lead in the unknown. We were all vulnerable when the pandemic hit us – including those of us in management positions. We moved fast and together; we had no time to go through committees and boards to approve initiatives to support our people and our business. It showed us the potential we have when we release the decision making closer to where it is needed. And the potential everyone has to lead.

We continue to face enormous challenges as humans and as a business. It is not business as usual. As we look to the future, we are asking one main question right now. During this decade, what will it mean to be human at work and how will we enable people to thrive in a meaningful workplace? We want to continue to build an IKEA for generations to come by ensuring co-workers can thrive, feel included and learn. And leadership runs through every single one of these areas.  

So, here’s our plan for the ‘Leadership by all’ movement, where we’re moving decision making even closer to the co-workers who are working closer to the customer.

There are two main elements to the idea. The first is the mindset shift around what leadership is. We are creating a long-term movement introducing this new concept across our global organisation. We have just started. And we know if will take time. 

We are challenging the mindset that the leader is the one who manages the team. Instead, we’re saying to lead is to be a good example through actions rather than just words, to live our values every day, to take ownership, to make decisions and to contribute to our business.

Trust is a key element to make this happen. We cannot be afraid of taking certain decisions and failing. Mistakes are part of the learning. As I mentioned before, managers have a key role to make this movement successful, since they are the ones empowering others to lead.

We’re saying that leadership sits with each of us. I’m saying leadership starts with me.

I can say that being in managerial positions for decades, I also have to rethink some of my behaviours and reflect on my leadership style. What can I do different, so my team acts in a different way? How far can we go with delegating responsibility and what will be my role moving forward? We don´t have all the answers, but those are some of the questions that I am reflecting upon to enable this change within my sphere of responsibility.

For this first element, this mindset shift, we’re going to need dialogue, involvement, and support. So, it is very important that, as a company, we provide the tools and the structure to enable the movement.  

That leads us to the second main element to the new leadership idea. New people processes. 

We need to put new people processes in place. We have defined 7 new leadership expectations that will be valid for all. Every co-worker will be responsible to ensure that behaviours at work are aligned with these expectations, as we will all be evaluated on them.

A new People Performance Concept is being introduced based on the new leadership idea, where co-workers drive their own development, supported and coached by managers.

All of the people processes are being updated according to the new leadership idea. Our annual engagement survey questions have been reviewed; the feedback tools will be updated to reflect the new expectations; our succession approach also follows the leadership by all idea, in the sense that everyone is encouraged to play an active part in their development and succession.  This all is being introduced supported by a complete learning offer and a lot of communication.

So how will this look in reality? Here’s a story from a store in Norway. One of our department managers, Andy, is a participant in one of our new programs called Bloom. Bloom is a great example of how we’re reskilling and upskilling with equality, diversity and inclusion in focus. We’re taking 100 participants from a diversity of backgrounds, and fast tracking them to become market managers in 3 years.

Andy has been developing a new and diverse team in a store there since October. Half of his 21 reports are new. One of the challenges he faced was that the team had an unbalanced workload. This was affecting performance and engagement.

Andy heard about the leadership by all idea and develop a new structure to support the idea. No longer would there be one co-worker for each role. Instead, one co-worker takes the responsibility of being a coordinator of the work each day, and this changes day to day. The team meets every morning to distribute activities and balance them according to the needs. It’s flexible and it’s changed the team dynamic. Everyone gets to share in the leadership, and everyone gets a better understanding of the business.

As you can see from Andy´s example, one of the most important elements in leadership by all is that managers need to let go of control and empower others to lead. We are preparing our managers for a different role in the future, in which they will emphasize their role as facilitators, coaches, and mentors, so that they support and empower everyone to lead. The manager will set the direction, coach, and listen and help co-workers perform at the top of their potential.

Another important aspect of leadership by all is that it’s inclusive. We are proud to say that 50 percent of our managers are women, women now account for 48% of our country management boards, and we have gender balance on the Ingka Group management team.

We’re on a journey towards more inclusion. I already mentioned Bloom, an incubator for market managers. We’re also gathering more data on diversity and inclusion across the entire company so we can better understand where we have gaps and address them. We’ve stopped asking for a job applicant’s previous salary to avoid replicating pay gaps of unrepresented groups who far too often are paid less by previous employers. And through our skills for employment program, we’ve so far targeted 775 refugees in 21 countries, with 60 percent getting a job at IKEA or elsewhere.

All of these initiatives and this democratic approach to leadership I’ve mentioned have one thing in common – to give everyone the opportunity to lead, and they allow for real entrepreneurship – which is in the DNA of IKEA.

Looking back to 1976 and Ingvar’s testament of the furniture dealer: He wrote, “We have decided once and for all to side with the many. What is good for our customers is also, in the long run, good for us.”

We are taking this with us into the future. We’re bringing the decision making closer to the customer. The idea is that IKEA, for generations to come, will continue to be values-based, and that we will be even more inclusive and led by all.