“Digital Transformation By IKEA”

Table of Contents

INTRODUCTION.............................................................................................................................. 3

TASK 1 – THE CASE FOR CHANGE.................................................................................................... 3

TASK 2 – GAINING DIGITAL BUSINESS AGILITY................................................................................ 4

TASK 3 – CREATING DIGITAL READY CULTURE.................................................................................6

TASK 4 – STEER COLLABORATION................................................................................................... 8

TASK 5 – DEVELOPMENT OF LEADERS............................................................................................. 9

CONCLUSION.................................................................................................................................. 9

REFERENCES LIST.......................................................................................................................... 11
Introduction
Business transformation is referred to that change management strategy which can be defined
as any kind of shift, or fundamental changes in business operations of the company.
According to Waddock (2020), a company that transforms its business, makes fundamental
changes in business strategy in order to cope up with the emerging change in market.
Focusing on digital transformation, Li (2020) stated that nowadays companies are using
digital technologies in order to evolve themselves and create new business processes. Under
digital transformation, companies are found incorporating computer-based and internet-based
technologies into the company’ processes, strategies and products.

There are several companies that have digital transformed their business operations and
changed the lives of their customers and clients forever. With the help of digital
transformation, the companies are still adapting as well as unfolding new possibilities to
become ever more connected. Such companies are Lego, Accenture, Genpact, IKEA etc. The
report aims at analysing the reason behind the IKEA’s digital transformation and also
proposes certain strategies for further transformation.

Task 1 – The Case for Change

IKEA is a Sweden-based company that deals in ready to assemble furniture. The company
designs and manufacture kitchen appliances, home accessories, goods and home services. It
operates its business in more than 52 countries and recognised as the largest furniture retailer
in the world. There are more than 225,000 employees employed in the company across the
world (IKEA, 2022) It generated its annual revenue worth 39.6 billion Euros in the year 2020
which shows a a decrease in revenue by 41.3 billion Euros in comparison to the year 2019
(IKEA, 2022). Despite witnessing a consistent growth, the company’s sales has been
significantly affected due the rise of Covid-19 pandemic. The digital disruption in the
business environment and decrease in sales pressured the company to transform its business
model and change its way of operating in the competitive market. The company aimed at
building technological infrastructure, convert its shops into order processing centres. By
adopting and implementing data models and developing a multi-channel strategy, IKEA
decided to enhance its customers’ experiences (The Agility Affect, 2022). Under digital
transformation, the company started deploying new digital tools like geolocation system for
in-store products, “Shop and Go” payment services (IKEA, 2022).

Task 2 – Gaining Digital Business Agility

Digital business agility is recognised as a key to digital. Business agility is referred to an
emergent property exhibiting the four essential capabilities of an organisation (Hendriyani
and Raharja, 2019). Such four capabilities are – 1. Delivery agility i.e., delivering fast and
responsively, 2. Product innovation i.e., innovating and disrupting the market, 3. Organisation
adaptability i.e., adapting new organisational culture, and 4. Leadership effectiveness i.e.,
leading through complexity (Prikladnicki et al, 2019; Waty et al, 2022). It has become
evident that adaption and integration of new and advanced technologies into business
operation is not enough to thrive the digital revolution, but the company is required to make
change in its business culture, identify the emerging threats and capture new market
opportunities. In this context the “Global Center for Digital Business Transformation” uses
this capacity in order to bring about changes referred as “digital business agility” (Lin et al,
2020). The digital business agility is based on 3 pillars such as “Hyperawareness”, “Informed
Decision-Making”, and “Fast Execution”.

In the context of IKEA, the company is provided with certain recommended initiatives using
the above-mentioned 3 pillars of “digital business agility” that could further help it in digital
transformation:

Fig 1: Digital Business Agility

(Source: Lin et al, 2020)

 Hyperawareness – It is referred to how well an organisation detects, monitors, as well
as understands the implications of changes to its business environment (Udovita,
2020). In terms of practical perspective, it is not easy for organisations to acquired in-
depth knowledge about the business environment. In such situations, in order to gain
deep insight into their own operation, organisations are required to use mobile
devices, ubiquitous connectivity, sensors, data collection tools. Thereafter, the
organisations are required to assess both the quantity as well as quality of the data
collected. These initiatives would allow companies to achieve hyperawareness.
In view of IKEA, it can be stated that connectivity is essential for data sharing. Hence,
the company is suggested to use edge network to generate their own contextual
information and deliver the company’s efficiency, safety and productivity. For this
purpose, it can utilise Artificial Intelligence (AI) in cloud management so as to
heighten their entire interaction (Chen et al, 2019). Further, it can use AI-based
monitoring and hyper-automation to avoid data breaches and complete the task faster.
IKEA’s competitors like Walmart Inc. uses AI-powered monitoring system that help
the store associates to know where and when to re-stock products (Walmart Inc,
2022).
 Informed Decision-Making –Informed decision-making is all about what the
companies are required to do with that collected data. According to Dalcher (2021),
this pillar of “digital business agility” is associated with company’s capability of
making informed decisions. Despite having all the relevant and necessary
information, most of the companies fail in the decision-making process due to lack of
testing and strategic assumptions. In this context, decision-making be based on
insights gained with the help of data analysis.
In view of IKEA, the company is required make its strategic decision on the basis of
adequate informed opinion of senior executive as well as use data analytics that assess
inclusive business environment. In terms of data analytics, IKEA is suggested to use
Business Intelligence, ERP solution to assist the performance quality checks (Wang et
al, 2022). It can use SAP BI to improve its decision-making processes as well as
enhance data visualisation. It would further allow integration with other systems and
applications. IKEA’s competitors like Walmart Inc. uses SAP BI to identify trends
and insights and gain real-time analytics to make smarter decisions.
 Fast Execution – Under fast execution, an organisation puts its plans into action
quickly, efficiently as well as effectively. To cut through the complexities and
 accelerate the pace of execution, the organisations are required to use its best
decisions into practices as well as mobilise the available resources in order to measure
the progress against organisational objectives. They are further required to automate
their workflows in order to reach the execution stage more quickly.
In the context of IKEA, the company is suggested to use virtual learning machine in
order to facilitate innovation as well as launch its high-quality and innovative
furniture. This company needs to use Zoom, or ProProfs Virtual Classroom Software
in order to customize and personalize employees’ learning. Its competitors like
Walmart Inc. revolutionise its training and development with virtual reality and
upgrades its training programs.

Task 3 – Creating Digital Ready Culture

“Digital Ready Culture” is an organisational culture adopted and implemented by companies
to embrace the abilities to leverage digital and technological-based channels to interact with
brands and services. In accordance with Romero-Ivanova et al (2020), Digital ready culture
involves utilisation of mobile devices for connection and interaction. With the usage of new
and advanced technologies, there is an increased pressure on organisation to deliver digital
initiatives. Çöteli (2019) argued that it is associated with the level of readiness of companies’
workforce adapting digitised workflows and use new software and technologies. Under
digital ready culture companies’ workforce are confident enough in utilising and leveraging
the new and advanced technologies (Hemerling et al, 2018). It further provides a roadmap
that guides the managers to take advantage of the key digital technologies.

A digitally ready organisation adopts certain of practices and values in order to perform in
services of innovation and execute its digitised business operation in a digitised business
environment. In view of the IKEA digital transformation, it is suggested to emphasise and
become digitally ready. The term “digital ready culture” is based on four core factors such as
“giving first priority to the customer”, “creating collaboration within the working
environment”, “instilling innovation”, and “becoming leading digital company”. Following is
the proposed recommendation for IKEA to adopt and implement digital ready culture:

 Giving first priority to the customer – Digital transformation enable organisations to

change their business operations and models so as to adopt new market reality
(Hemerling et al, 2018). Digital transformation is being driven by the customer and
therefore, it the foremost responsibility of the company to make their customers their
 first priority. With respect to the IKEA, the company is required to keep up with
“always-connected” customers and embrace technologies to deliver them unmatched
customer experiences. For this purpose, IKEA can use 360 views so that customers
can examine and analyse their products via online by relying on 3D visualisation
technologies. 360 spin views would provide an opportunity to the customers to
examine the product in detail with the help of high-quality imagery (Bertola and
Teunissen, 2018). EQ3, a Canadian furniture uses this technology in order to enhance
its customers online shopping experiences (EQ3, 2022).
 Creating collaboration within the working environment – In digital transformation,
it is important for companies to keep the information flow within the working
environment. In accordance with Halpern et al (2021), delivering digital
transformation projects is dependent of effective collaboration as well as business
communication. Digital workplace breaks down the hierarchies and silos in order to
develop a culture of sharing and openness. The culture of sharing and ongoing
collaboration drives the digital transformation. With respect to the IKEA, the
company can emphasise on fostering a working environment that supports
collaboration among workers. The leaders of the company need to provide their
workers an environment where they are not hesitated of afraid to share their opinion
and ideas. Furthermore, the company need to provide training and ongoing learning
opportunities to its employees so that they can update their knowledge from time to
time. In addition to this, the company is required to clarify role and set expectations
so that employees work collaboratively in order to meet the set goals and
expectations.
 Instilling innovation – According to Appio et al (2021), digital transformation is not
only about disruption and technology, but also about changes in values, people,
innovation culture, ability to adapt changes etc. Along with customer-centric strategy,
and collaborative culture, operational flexibility and innovative culture is also
important for the companies as it leads the company towards business model
transformation as well as new forms of digital business processes (Nambisan et al,
2019). With respect to the IKEA, the company is required to articulate a clear vision
behind its initiative to develop an innovative culture. Further, it requires to make
changes and modification in its products as it can also drive culture of innovation.
 Becoming leading digital company – Digital champion company that embraces
digital transformation and start using digital technologies in order to cope up with
 changing business. With respect to the IKEA, the company needs to have a clear
digital vision and ideas of its impact on business strategies. Thereafter, the company
is required to cultivate customer-centric business model, also it requires to improves
return on investment and customer retention by focusing cross-functional teams. It
should also emphasise on leveraging the use of digital tools and technologies for
continuing business operation.

Task 4 – Steer Collaboration

Collaboration is considered as one of the four motivational drives within the organisation.
Collaboration between workers, managers give rise to teamwork, and employee engagement
(Schneider and Kokshagina, 2021). Steer collaboration reduces the impact of organisational
silos on resilience. Silo is referred to the part of organisation, or company, or system that
does not communicate, understand, as well as work well with others. Organisational silos in
the workplace lead to separation of employees and creation of several small groups. In such
situation, the firm starts operating independently and avoid sharing information. Steer
collaboration create a unified vision of team collaboration (Schneider and Kokshagina, 2021).

For adopting and implementing the collaborative culture, within the workplace, organisations
are required to appoint CCO (Chief Collaboration Officer). He is the one responsible for the
programmatic initiatives within organisation, as well as build and manages a multi-
disciplinary team. Chief Collaboration Officer focuses on three core lines of business –
multiple strategy and policy, strategic project support, and leadership training. Also, he
designs and monitors the business processes that the organisation. Companies like Unites
States of Care has a post of for Chief Collaboration Officer (CCO) in order to drive the
branding, positioning, and unique growth of the business.

In the context of IKEA, it is suggested to appoint a Chief Collaboration Officer (CCO) so that
he or she could successfully manage employees and consultants in order to make sure there is
efficient and effective project delivery. Appointing a CCO will substantially help the
company in bringing an engaged and empowering management style within the working
environment. With the help of a CCO, IKEA will get opportunities to educate, motivate, as
well as guide its workforce to apply best practices. He or she will further translate the
organisation’s mission into an impactful message that will encourage the entire workforce to
work towards the achievement of the organisational goals and objectives collaboratively.
Task 5 – Development of Leaders
Leadership is referred to the art of motivating or leading a group of people within an
organisation. A strong leader with his or her effective leadership style improves the morale of
the employees, boosts the employee engagement, build connectedness, as well as create a
positive organisational culture (Kazim, 2019). In accordance with Goleman leadership
theory, there are 6 different type of leadership style that creates resonance and boost
employees’ performances – Affiliative leadership, Democratic leadership, Commanding
leadership, Pace-setting leadership, Coaching leadership, and Visionary leadership (Iqbal et
al, 2020). Affiliative leaders strive towards teams’ well-being. Democratic leaders works
along with the group of people through dialogues and seeking consensus (Ekaterini, 2010).
Commanding leaders always inform its sub-ordinates about what to do and when to do it.
Coaching leaders tries to develop their sub-ordinates so that they enhance and strengthen
their work performance and become better professionals. Visionary leaders inspire and
motivate employees to pursue a long-term vision. Pace-setting leaders emphasises on
improving performance and act as a role model for their followers.

With respect to IKEA, the leader of the company is suggested to adopt and implement pace-
setting leadership style, in which the entire focus of the leaders is on performance and expect
excellence from its employees and team members. In addition to this, the leader of the
company is suggested to adopt and implement GROW model, which would help in
structuring the coaching and mentoring session for the entire workforce. It is a four-step
model which include fixing goals, reality, option and can be used in conversations, meetings
and everyday leadership in order to unlock possibilities. With the help of GROW model, the
company is required to set its SMART goals in regards with the mentoring session, and
examine how the mentoring session helping the workforce in their daily basis work schedule
for example – how the employees solving day-to-day complexions and work collaboratively.
This would help IKEA in analysing the progression of the employees through mentoring
session. Next, the company can provide its workforce with best possible options to reach their
organisational goals. These processes further increase the will of the employees to stay
committed toward the organisational goals.
Conclusion
Digital transformation is necessary as it re-defines the companies’ business operation and
improve the customer experiences. This report covers the digital transformation of IKEA that
aimed at deploying digital tools in order to fulfil its customers’ needs and cope up with the
competitive business environment. The report further proposed recommendations to the
company and suggested it to use AI-based monitoring and hyper-automation to avoid data
breaches, SAP BI to improve its decision-making processes, and ProProfs Virtual Classroom
Software to personalize employees’ learning, It further suggested company to focus on
embedding digital ready culture and adopt and implement GROW model to enhance the
mentoring of employees.
References List
Appio, F.P., Frattini, F., Petruzzelli, A.M. and Neirotti, P., 2021. Digital transformation and
innovation management: A synthesis of existing research and an agenda for future
studies. Journal of Product Innovation Management, 38(1), pp.4-20.

Bertola, P. and Teunissen, J., 2018. Fashion 4.0. Innovating fashion industry through digital
transformation. Research Journal of Textile and Apparel.

Chen, Y.Y., Lin, Y.H., Kung, C.C., Chung, M.H. and Yen, I.H., 2019. Design and
implementation of cloud analytics-assisted smart power meters considering advanced
artificial intelligence as edge analytics in demand-side management for smart
homes. Sensors, 19(9), p.2047.

Çöteli, S., 2019. The impact of new media on the forms of culture: digital identity and digital
culture. Online Journal of communication and media technologies, 9(2), p.e201911.

Dalcher, D., 2021. Scaling up to business agility. PM World Journal, 10(5).

Ekaterini, G., 2010. The impact of leadership styles on four variables of executives
workforce. International Journal of Business and Management, 5(6), p.3.

EQ3, 2022. About us. [online] Available at: https://www.eq3.com/us/en/aboutus/who-we-

are[Accessed 5 June 2022]

Halpern, N., Mwesiumo, D., Suau-Sanchez, P., Budd, T. and Bråthen, S., 2021. Ready for
digital transformation? The effect of organisational readiness, innovation, airport size and
ownership on digital change at airports. Journal of Air Transport Management, 90, p.101949.

Hemerling, J., Kilmann, J., Danoesastro, M., Stutts, L. and Ahern, C., 2018. It’s not a digital
transformation without a digital culture. Boston Consulting Group, pp.1-11.

Hendriyani, C. and Raharja, S.U.J., 2019. Business agility strategy: peer-to-peer lending of
Fintech startup in the era of digital finance in Indonesia. Review of Integrative Business and
Economics Research, 8, pp.239-246.

IKEA, 2022. About us. [online] Available at: https://about.ikea.com/en/about-us [Accessed 5

June 2022]
Iqbal, A., Javed, Z. and Muhammad, N., 2020. The impact of school heads’ demographic
characteristics on their leadership styles. Competitive Social Science Research Journal, 1(2),
pp.19-30.

Kazim, F.A., 2019. Digital Transformation and Leadership Style: A Multiple Case
Study. ISM Journal of International business, 3(1).

Li, F., 2020. The digital transformation of business models in the creative industries: A
holistic framework and emerging trends. Technovation, 92, p.102012.

Lin, J., Li, L., Luo, X.R. and Benitez, J., 2020. How do agribusinesses thrive through
complexity? The pivotal role of e-commerce capability and business agility. Decision
Support Systems, 135, p.113342.

Nambisan, S., Wright, M. and Feldman, M., 2019. The digital transformation of innovation
and entrepreneurship: Progress, challenges and key themes. Research Policy, 48(8),
p.103773.

Prikladnicki, R., Lassenius, C. and Carver, J.C., 2019. Trends in agile: Business agility. IEEE
Software, 37(1), pp.78-80.

Romero-Ivanova, C., Shaughnessy, M., Otto, L., Taylor, E. and Watson, E., 2020. Digital
practices & applications in a COVID-19 culture. Higher Education Studies, 10(3), pp.80-87.

Schneider, S. and Kokshagina, O., 2021. Digital transformation: What we have learned (thus
far) and what is next. Creativity and innovation management, 30(2), pp.384-411.

The Agility Affect, 2022. How IKEA is stepping up its digital transformation. [online]
Available at: https://www.theagilityeffect.com/en/case/how-ikea-is-stepping-up-its-digital-
transformation/ [Accessed 5 June 2022]

Udovita, P.V.M.V.D., 2020. Conceptual review on dimensions of digital transformation in

modern era. International Journal of Scientific and Research Publications, 10(2), pp.520-
529.

Waddock, S., 2020. Achieving sustainability requires systemic business

transformation. Global Sustainability, 3.

Walmart Inc, 2022. About us. [online] Available at:https://www.walmart.com/ [Accessed 5

June 2022]
Wang, L., Guan, S., Deng, W. and Lu, P., 2022. ERP System Design for Hydrogen
Equipment Manufacturing Industry Based on Low Code Technology. Mobile Information
Systems, 2022.

Waty, E., So, I.G., Indrajit, R.E. and Abdinagoro, S.B., 2022, February. The effect of
business ecosystem and government regulation toward business agility: the role mediating of
business model innovation in SMEs. In Proceeding of the International Conference on
Family Business and Entrepreneurship (Vol. 2, No. 1).