Excellence

IKEA's strategy is an effective way to coordinate policies, but it is hardly secret.

The excellence achieved by a well managed chain link system is difficult to replicate.  Consider IKEA.   The company designs ready-to-assemble furniture it sells through special IKEA-owned stores, advertised by its own catalogs.   Giant retail stores located in the suburbs allow huge selections and ample parking for customers.  In stores the catalogs essentially substitute for a sales force.  It's flat-pack designs not only reduce shipping and storage costs; they also help keep the stores in stock and let the customers pull their own stock out of inventory and take their purchases home, eliminating long waits for delivery.  The company designs much of the furniture it sells, contracting out manufacturing, but managing its own worldwide logistics system.

IKEA's strategy is an effective way to coordinate policies, but it is hardly secret.  Won't other companies see how it works and copy it, perhaps even improve it?  The explanation for its continued excellence and the lack of any effective me-too competition is that its strategy builds on chain-link logic.  Because IKEA's policies are different from the norm and because they fit together in a coherent design IKEA's system has a chain-link logic.  That means that adopting only one of these policies does no good--it adds expense to the competitor's business without providing any real competition to IKEA.  Minor adjustments just won't do--to compete effectively with IKEA, an existing rival would have to virtually start fresh and, in effect, compete with its own existing business.  No one did.  Today, more than fifty years after IKEA pioneered its new strategy in the furniture industry, no one has really replicated it.

ACTION POINT: Is there a pioneering chain-link strategy in your business that would be difficult for the competition to replicate?