How IKEA’s diversity and climate action boosted business

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JESPER BRODIN: Optimism is a choice. Sometimes I meet people who say we should be realistic, and I don’t think there is something called realism. Realism is pessimism. It’s not active, while optimists are active. They are on the playing field. They’re ready to get dirty knees and to fail. Optimism is about the curiosity of creating something better. It’s bigger than the fear of mistakes because it’s only dreamers, at the end of the day, who are going to create a better world for tomorrow.

BOB SAFIAN: That’s Jesper Brodin, CEO of Ingka Group, which operates home furnishing giant IKEA. Jesper recently announced that he’s passing the reins of the retailing icon after eight years at the helm, and I wanted to know why. His playful Swedish style was on full display as we talked about steering IKEA through a whirlwind of change. He shares real-world advice about what it takes to keep a global brand thriving in an era of rising tariffs, how business leaders can best navigate their relationship with governments, plus why sleep might be the most overlooked leadership tool. Whether you’re leading a conglomerate or a startup, Jesper’s mindset and experience provide an inspired perspective. So let’s get to it. I’m Bob Safian, and this is Rapid Response.

[THEME MUSIC]

I’m Bob Safian. I’m here with Jesper Brodin, CEO of Ingka Group, which operates IKEA stores all around the world. Jesper, thanks for being here.

BRODIN: Well, thanks for the opportunity.

Copy LinkWhy Jesper Brodin is moving on from his role as CEO

SAFIAN: Yeah. I know this isn’t an exit interview, but I have to start with the news that you’re stepping down as CEO in November after 30 years of the company. That must have been a tough decision.

BRODIN: I’m moving on, actually. I’m not stepping down, I’m moving on. 30 years in the company, eight years as CEO, and I think it’s been a decision that’s been in the making for a year or so on my side. I sometimes tell myself there is no such thing as perfect timing. Either you’re a little bit early or you could be too late, but I think, basically, the company is in a good place, we are performing, and the transformations that I was asked to lead, sustainability and digital transformation, we have come quite a long way, and I felt it’s a good time for me to hand over.

SAFIAN: And your deputy CEO is going to be stepping up, the company’s first non-Swedish CEO.

BRODIN: Right.

SAFIAN: Is that significant? Is there anything that we should read into that?

BRODIN: Well, I actually haven’t reflected on it, honestly. I think it’s really great because it shows, of course, that we are… First of all, it’s good to show that we have a succession plan in the company, that we basically breed leaders from within. And this, I think, is incredibly important that you have people who can both stay connected to the past and the legacy and who can lead into the future. Juvencio has been my deputy and CFO for seven years, so can you imagine a more patient person waiting for his turn to leave the government? So I wish him all the best of luck and I know he’s going to be amazing.

SAFIAN: Well, yeah. IKEA is a global business, so to have some representation that’s not just from one place, it’s not a bad thing.

BRODIN: I think, to be honest, it’s interesting. We started a journey of diversity in all dimensions back in 2001, I think. At that time we would’ve been a typically male and Scandinavian Swedish sort of company. The more north you travel in the organization, it would be male and it would be Swedish. And obviously, that was an issue at the end of the day, and our way of assuming understanding of our markets, our customers out there. And as much as I think it was a value-based decision, it’s also what is the right thing to do? That has opened up, of course, an enormous amount of talent that was already within the system. Today, we have 50/50 in gender balance across everything, and we have, I think, a good mix of people coming from all places around the world. So I think we will probably see more of a mix of that. The Swedish legacy and heritage is important for us, but when it comes to values and connecting to that, I think people across all the world can do that.

Copy LinkThe business case for sustainability transformation

SAFIAN: We’re recording this just before you come here to New York for Climate Week. I know, as you mentioned, sustainability is very important to you. The trends here in the U.S. seem to be moving kind of in the opposite direction. I’m curious what sort of Climate Week you think that’s going to lead to. Is there anything specific that you hope to get out of it?

BRODIN: Well, I think when it comes to climate transformation, it’s moving and it’s speeding up in all parts of the world, in the U.S. as well. So the truth is that the U.S. is now looking back to 2019 to ’23, actually, is minus seven on carbon footprint and doing well in business development, leading in many segments in the world as well. So I think the climate smart transformation is probably the biggest transformation that we’ve seen since industrialization started. Maybe AI would be right up there as well, or digital transformation, but there is no doubt as we speak today that the climate smart economy is not only good from a planetary perspective, but also good for business in its essence.

SAFIAN: But I mean, that is not necessarily the message that the current U.S. administration is proceeding in its policies on. Right? So when you come here to New York, is that something you will try to address publicly, privately with other business leaders? How do you manage that?

BRODIN: Well, it’s a good question. I think if I start by consumers or customers in IKEA, we do this research, or review, or survey across all our 34 countries. We ask, I think it’s in the end, something close to 40,000 people that are interviewed. We do that biannually, so we have a good, so to say, frequency of that.

The last years, across the globe, the topic that has sailed up as the biggest concern in the world is climate change for ordinary people out there. There’s nothing else. Geopolitics, AI, work, the pandemic was there a few years ago, as we all know, but nothing is actually up on the same level as climate change. So today, you ask IKEA’s consumers, 68% think that climate change is the biggest concern. There’s very little difference between Texas, Stockholm, Shanghai and so on. There are a few marginal percentages difference. The difference comes when you look at age groups, actually, across the world. So if you travel down in age groups, the awareness and the worry is much bigger.

The interesting thing, two more interesting data points on that is a few years ago most people did not act on it. They were worried, but they didn’t act. But lately, and I can’t fully explain it, but lately 64% actually say they do take action. Here comes an interesting thing. When you ask people, “Are you prepared to pay extra for something that is planet and people smart in that sense?” The answer is no. So 6% only of IKEA’s customers are prepared to pay more.

Now, interestingly enough, I started to meet some customers who told me, “It’s not that I don’t care, it’s just that I can’t afford. Inflation has hit my family’s wallet.” It was actually a single mother with two jobs in Serbia who made it very clear to me that it must be your job, Jesper, to present the solution so I can buy that bunk bed for my twins and afford it. Actually, I think they are right, because if you skin sustainability on the surface, it might cost more, but if you do a deep transformation, what actually climate smart is all about, being resource smart is also about being cost smart.

In IKEA today, we have about 36% of our value chain in raw material, and close to 40% in carbon. So if you address carbon, you actually address cost. And I do think more and more companies today are benefiting massively from reusing carbon economically. And I understand there are political issues and topics around it, but this is a pure economic fact, and that’s why we see today, when we ask in UNGC, the global network, 88% of all CEOs out there in companies worldwide are actually a more believer in the business case for sustainability today than five years ago. 99% are equally or more committed to go for the sustainability transformation. So again, with all the respect of political angles, it’s a proven fact that it’s a smart thing for business.

SAFIAN: The numbers you’re citing and what you’re hearing from other business leaders is that they sort of get this, they want this. It’s good for their business, it’s good for their customer, but it’s not moving in the same places everywhere. I know you started an organization called the B Team. You want business leaders to sort of step up and be leaders in not just doing this, but talking about it?

BRODIN: I think it’s all about action. I think we have, most of us corporate leaders, and I meet a lot of people out there from different industries, have long since left the station. And you could say that the ride is bumpy, but here’s the thing. We need collectively to come back to and start to take out carbon from the atmosphere. We need to be at approximately minus 50% carbon by 2030 compared to the Paris equivalent start, and then we need to go to the minus 90% by 2050 or thereabouts.

So I think we don’t have to have all the answers right now. Some we can continue to explore, innovate, invent. The tough thing is that we started late, so the impact of climate change before you see a turnaround, we see that, I think, all around us, that we’re paying the price of our ignorance, if you like, in the past. That is the tough thing, that we actually will continue to have decades of paying, even in the best scenario, have decades when we pay the brutal price of climate change.

Copy LinkHow IKEA is leveraging AI

SAFIAN: I mean, you mentioned AI earlier in passing. A lot of people are looking to AI as an accelerant in their business. I know you acquired Geomagical to build an AI feature in your app. When you look at solving the challenges of sustainability, how much weight do you put on AI as a tool? I mean, because right now, of course, it’s burning a lot of energy, but there are folks who say, “Oh, it’s going to come up with a solution.” Where do you sit with that?

BRODIN: You should not ask me, you should ask AI. No, joke aside… I think we all do, by the way. It’s interesting. I think we’re still fast-tracking learnings around it. On one side, you can say that the use of AI, as we all know, is also going to contribute to the use of energy in a massive way, so the equation of that is going up. Then we know that the next generation’s microchips and what not will be smarter and so forth.

When we look at the optimization of our value chain, of our supply chain, the imperfection in today’s IKEA when it comes to sales and supply, when it comes to material usage, when it comes to building circular value chains, these things will be massively supported by AI in the future. We’ve started to explore and implement, and we benefit from it massively. So I think it will be one of the great tools to actually offset its own additional burden to the world when it comes to energy. Hopefully. I don’t have the exact date on it, but I don’t think it’s going to be small. It’s going to be huge.

Copy LinkIKEA’s “Banana Card” policy

SAFIAN: Part of embracing AI for organizations is kind of shifting culture, which can be tricky at a big organization like IKEA. I heard that you recently used something called banana cards to encourage experimentation.

BRODIN: Yeah.

SAFIAN: What are banana cards?

BRODIN: It’s incredibly analog, too. The banana card is basically… So it refers to “go bananas.” It’s trying to take a little bit of a light approach on entrepreneurship and daring to make mistakes. We are, of course, a deep entrepreneurial culture and company. Sometimes you tend to forget that IKEA wasn’t just there. It was developed over decades and years, and it was always the, I think, the lust for making things better, the deep lust and celebration of great progress. But then this initiative, “How can we make this smart? How can we make this better? How can we take out cost? How can we improve?” And over time, of course, all the big organizations tend to, unfortunately, build solid structures and systems that sort of also resist change. And we suffer from that in IKEA as well. So sometimes there are too many no-sayers versus yes-sayers. Ideas are fragile, they are unproven, so they need protection or a place to grow.

So the banana card was basically a card that I created after meeting somebody who felt fearful about making mistakes. So I co-signed the mistake. I said, “Whatever your mistake is going to be, I already signed an apology, and you can just put your name next to mine, and at least then you have the CEO co-signing with you, and that might protect you to some extent.” And then it became a fun thing. So I think I’ve been handing out a couple of thousand banana cards on my odyssey in IKEA to people and encouraging them to try and test things. And that leads to all sorts of headaches sometimes, but it leads mostly to some incredible breakthroughs, to be honest.

Copy LinkChoosing optimism as a leader

SAFIAN: Your spirit, as you talk about all these things, is so upbeat and optimistic. There are a lot of folks who are pretty wary about the way the world is right now. How do you balance that for yourself? I mean, things like the tariff wars which have come, which sort of impact business. You don’t really know what’s going to happen tomorrow. How are you handling all of that?

BRODIN: First of all, I think it is difficult. It’s challenging times and there are moments of despair. And if I look back at my eight years as CEO, we have truly gone through one crisis after the other. War, economic turmoil, you’ve referenced the trade conflicts of the world, the pandemic and whatnot. So I think somehow the generation of leaders today who are still standing had to sort of accept those challenges and, indeed, find ways to reboot your energy, which I think is one of the most important things. Because if you get consumed by the challenges and your work, you might not be around to solve the real problem.

I think optimism is a choice, at the end of the day, as well. It’s a conscious choice to make because, as I see it, sometimes I meet people who say we should be realistic, and I don’t think there is something called realism. Realism is pessimism. If I say it like that, realism is still in the audience. It’s not active, while optimists are active, they are on the playing field. They’re ready to get dirty knees and to fail, as you said. But optimism is about that the curiosity of creating something better is bigger than the fear of mistakes.

There is a risk, I think, the truth around the challenges that we’re combating, whether it’s climate change, human centered issues and so on, that it wears you down. And if it does, it can lead to inaction. It can lead to, I think, even in the worst case, cynicism, that you start to protect yourself psychologically from the pains of that.

And I find we have to accept that we can both, so to say, have to lead with managing challenges, but that we embrace and lead from opportunities so that we don’t become a generation of challenge busters, but actually dreamers. Because it’s only dreamers, at the end of the day, who are going to create a better world for tomorrow. And then again, saying that, you expose yourself to sound a little bit naive or such, and that’s fine, but I still believe that pessimism or realism never created something better for humanity. At least that’s my view.

SAFIAN: I don’t think what Jesper is saying is particularly naive, but it does stand out in a world where risk aversion can dominate choices. So how is IKEA approaching the reality of today’s marketplace and what tools can we all use to stay optimistic despite the challenges? We’ll talk about that and more after the break. Stay with us.

[AD BREAK]

Before the break, IKEA’s Jesper Brodin shared how climate action and diversity have boosted IKEA’s business despite political winds that may be blowing in other directions. Now, he shares some heartfelt advice, from how to work with governments around the world, to the pros and cons of having a 200-year business plan. Let’s jump back in.

Copy LinkCollaborating with governments

There is a conversation that I’m hearing privately among CEOs about how they deal with their government. We had a bevy of tech CEOs recently met with President Trump in the White House, sort of lavishing praise, certainly not pushing back on things. And I wonder how much business leaders are struggling with deciding, when do you cooperate, when do you push back, when do you just hide, keep your head down, which seems to be the way a lot of folks want to operate. You’ve had to deal with governments all around the world. How do you think about that relationship, that challenge?

BRODIN: Well, I think to start with, I think when I look back at IKEA’s history and having actually worked as assistant to IKEA’s founder who passed away a few years ago, 91 years old, he was a master, in his early years, of development to working with everybody, collaborating with everybody, including government representatives and whatnot. I think we had a time when we became a bit too introverted and self-content in our system. As always, success can be your biggest enemy, and I think maybe that was a suffering for a certain time of our period.

For me and for my years as CEO, I sort of had to reach out and work much more externally, but also not only with peers in business, but also with politicians, for the reason that in combating climate change, providing jobs, surviving the pandemic required… I mean, IKEA was simply too small to resolve those issues. When I met left or right governments in the U.S., in France, in China, representatives from different authorities, the problem hasn’t been that we would, so to say, see differently on things necessarily, because typically it’s all common ground. Because any sort of direction, politicians would like to provide jobs, make sure that we as companies can pay taxes, et cetera.

So I think, then, there can be differences on how the recipe is best applied. For instance, if you talk about trade and such. But the interesting thing, if we only provide dialogue, we will actually find that we have more in common than the opposite. I recently had the pleasure to be together with several leaders in Brussels where we spoke directly to the commissioner of EU. And by doing that, bridging in the conversation to go straight to, “Here are the things we actually agree on, and here are the things that need to happen, and here are the asks that we have as corporate leaders. If you can help us to provide the pathway and the avenue for us, we will invest. We will be successful. And so let’s not work in silos, parallel.” This seems to me more important than ever before.

SAFIAN: And keeping those lines of dialogue open leads to benefits all the way through. Right?

BRODIN: It does, it does.

Copy LinkIKEA’s “200 year” vision

SAFIAN: Yeah. You mentioned you’re starting out at IKEA, working with the founder. Before he passed away, I saw that he advised you to think long-term, and he said 200 years.

BRODIN: Yes.

SAFIAN: I mean, I’ve talked to CEOs who say these days their plans can shift every couple of weeks. What does it mean to think out 200 years in times like this? Is it possible?

BRODIN: I simply can’t get rid of that thought. It pops up by and large, and it helps me when I’m stressed and so on. And again, it’s actually, I think, a rather healthy technique to zoom out, in particular when you’re in dire straits or a sudden issue. Zoom out, take a little bit of a long-term perspective, and I think you might find that you have confidence in the answer. Maybe it’s even the same answer, maybe it’s a different one. But if you zoom out, you will probably get more confidence that you’re on the right track. And then, of course, he was a master in communications. So the 200 years can seem exaggerated. But I remember when we had discussions about, “Will people even live in homes tomorrow? Will they sit around tables and sleep in beds?” And we said, “Yeah, probably, 200 years from now as well.” So some things changed rapidly and some maybe not.

SAFIAN: But it sounds like, also, it’s a tool, right? That in some ways is more valuable today, but it is always valuable to be able to sort of pull back that way?

BRODIN: Well, I think the long-term, I would say, also… So we are foundational. So our group, 170,000 people, 40 billion euro plus revenue per year. We are entirely owned by a foundation. About 15%, normally, of the profits would go as dividends to the foundation, and the only way the money can be spent is in the IKEA Foundation philanthropic purpose, I’d say. So that’s us. So that gives us, by nature, in the ownership structure, me, you can say a relief from the quarterlies, if you like, and the pressure that a lot of CEOs are confronted by.

But let’s also, to be honest, say that there is also healthiness in the quarterlies. There is a pressure to perform here and now. I think sometimes the long-termness in your vision is incredibly powerful, but don’t mistake that to be the approach for your actions. And I think sometimes, in IKEA, we make that mistake and think that we have endless time and we actually don’t. Like anybody else, we are part of movements and change in society, and I think that’s the thing. Think and vision long-term and place your confidence in the long-term direction, but take actions like you were having quarterly reports every week. Maybe that’s an exaggeration. Nobody wants that.

Copy LinkJesper Brodin’s advice for business leaders right now

SAFIAN: Any other advice for our listeners about how to navigate as a leader in these times?

BRODIN: Somebody said, “The only industry that is not disrupted right now are hairdressers.” I’m not sure if it’s true or not, but every system, basically, on the planet is disrupted. So I think maybe one advice is to make sure that you have balance in life, that you sleep well. Don’t believe the myth of sleeping four hours or five hours. Make sure you have a hobby. Make sure you prioritize your relationships because you’re going to need that stability as you move along.

As a leader, I think don’t take yourself too seriously. I think leaders today, if you lead in a bigger and bigger organization, you realize that you can’t manage your way or steer your way into the future, but you can inspire people and you can give people the space to explore and take leadership. And normally what I tend to see is that, sometimes, maybe there’s one or two times you have a disappointment or this didn’t really turn out as well as I thought, but most of the time it’s 200%, 300% better than you ever could imagine. So I think, in a way, you have to lead with providing people a direction and a light, and inspire people to do things, and then to celebrate and thank people afterwards.

SAFIAN: So as you move into your new role and you look at what you’re handing along, what’s at stake for IKEA right now?

BRODIN: I think what’s at stake for IKEA in general, regardless of who’s leading, is I think, as always, to know where you come from. Love the past, know your legacy, because there’s a lot of wisdom and answers if you look in the rear view mirrors. But never let the rear view mirrors be bigger than the front window. You have to, today, spend more time and curiosity about what’s around the corner. And if you start to get romantic or conservative in your business, and that is easy, because today I think there is almost no business that is not under cost pressure, it’s impacted by trade restrictions, additional costs, consumer confidence being on a quite low level in many places. It’s easy to take a defensive route. I think that would be the biggest risk in any business because the only thing you can be certain of is that, if you don’t move forward, somebody else will do it. So how to balance loving the past, but actually make sure that creating the future is a big part of your agenda going forward. I think that is maybe the most important advice.

SAFIAN: Well, yes, this was great. Thanks so much for doing it. Really appreciate it.

BRODIN: Thank you so much. Thanks for the opportunity.

SAFIAN: Sleep, don’t take yourself too seriously, celebrate wins, and thank people. Jesper’s formula for good leadership is clear and it’s spot on. Now, of course, he knows the details are complicated. There’s value in looking out 200 years, tapping into a long-term perspective, especially when things are chaotic. But he’s also very focused on the here and now. Never let the rear view be bigger than the front window, as he charmingly puts it.

What I find myself anchoring on most is his admonition against taking the defensive route. Not every business is owned by a foundation, and so not every CEO may have the freedom that Jesper has had, but still acting boldly, with passion, with optimism, that’s how we turn challenge into opportunity. I’m Bob Safian. Thanks for listening.