ikea journey by Renate Tromp

the Journey

from a great past to a better future

Contents

Foreword

Starting IT auditing

Anders Jakobsson

The best and cheapest 'number cruncher' in Älmhult

4 Sharing IT knowledge

Jan Johnsson

Richard Verschuren

Timeline 1943 - 1976

No exeptions to the rule

Marcel van Loo

Walking the IKEA Way

Stig Nilsson

Always be one step ahead

A family company based on Småland values

Erik Åstrøm

Timeline 2007 - 2012

Corporate governance in family businesses

Coen Boogaart

Ingvar Ganestam

A fresh perspective on a continuing journey

Oscar Jonker

Timeline 1977 - 1999

Timeline 2012 ...

Working together like family

Front runner in corporate responsibility

Martin van Dam

Contributing to a unique company

Jan Peter Balkenende

Ruben de Jong

Timeline 2000 - 2006

2 | CONTINUING THE JOURNEY TOGETHER

Many thanks to

Foreword

One morning, more than 50 years ago, our journey together started when Jan Johnsson picked up the phone and called Ingvar Kamprad asking him to appoint us as IKEA’s first auditor. Ingvar did and since then we have built a strong relationship with you, a relationship which is based on trust and mutual respect. We have come a long way together and we have reached many milestones over the years. We are proud of our joint accomplishments, and how far we have travelled together. To reflect this, we have collected some of the many milestones in this history book ’The Journey”. Many of our colleagues and ex-colleagues share their experiences of working with IKEA. I am proud to be one of them. We have been ‘bold’ enough to take a sneak preview into the near future and highlighted a number of the milestones still to come! The journey continues.

Oscar Jonker

Ernst & Young | 3

"Even since my retirement I still feel very connected to Ingvar and IKEAâ&#x20AC;&#x2122;s development."

4 | CONTINUING THE JOURNEY TOGETHER

The best and cheapest 'number cruncher' in Älmhult Jan Johnsson (76)

n 1957 I picked up the phone and called Ingvar Kamprad, “I've heard that you’re looking for an accountant, and I just wanted to let you know that you don’t have to go to Stockholm to find one, the best and cheapest 'number cruncher' you can imagine is right here in Älmhult”. I knew that Ingvar's strategy was based on Småland economics, where people are cost conscious and look after the pennies! Ingvar used and shared this strategy with his co-workers and customers, and it was evidenced by his preference to engage local suppliers. I also did many of the local suppliers’ bookkeeping. My ‘sales pitch’ fitted perfectly with his strategy and Ingvar picked this up! Since then I was controller for IKEA to 1965. From 1965 up to my retirement in 1999, I was the signing group auditor, a role I initially shared with Eric W. Orreby and later with Sigurd Löfgren. Ingvar was born a salesman, he could have sold anything he wanted, but he chose to sell furniture to the many for a number of obvious reasons. For starters there were a lot of furniture manufacturers in Småland, many of which were familiar to him. Also at that time the Swedish government had instigated a project to build one million houses for all the young people who were moving to the cities to find work. Ingvar has the gift of being able to predict what people want and like, and then he produces these items for a very reasonable price. His approach was an instant hit, as most of the furniture at that time was too expensive for many people.

"People all over the world still appreciate Ingvar’s ideas, ideas that are rooted in Småland."

When I started working for IKEA I was still studying to become a certified accountant. Originally I wanted to become an art director, but when my father unexpectedly became ill, I took over his accounting firm. This learning on the job fitted in with IKEA perfectly. Ingvar was well known for his preference of employing people who were not academically trained. He loved sending fresh young people straight from high school all over the world to acquire new ideas and products or to open new stores. At that time, IKEA also organised holidays for their co-workers and partners. I remember when me and my wife Eivor, who taught at a secondary school in Älmhult, were invited to go to Capri, Italy. We ended up in Ingvar’s group. It was during this holiday that Ingvar met his wife Margaret; she was a tourist guide. When we arrived at the hotel it turned out that there were only two double rooms and the rest of the rooms were for three or four people. Ingvar explained to his group that he and his elderly father were going to take one of the double rooms and that me and my wife were getting the second double room as we were 'newlyweds!’ 23 billion When you are an auditor working in the countryside, you operate in a similar way to the local doctor, in other words; you know a bit about everything. IKEA was run as a large ‘small business’, but steadily the administrative burden increased to enormous proportions. We had to run the gauntlet to continue to meet IKEA’s requirements and to keep up with their unprecedented growth. When my office was acquired firstly by a Swedish company and later by Ernst & Young, it turned out to be very useful and necessary for us to be able to retain IKEA as our client. I can honestly say that I have been privileged to witness the incomprehensible and remarkable growth of IKEA. I remember when I did an audit in the mid-sixties, which involved 23 billion SEK, that I said, "I wonder if IKEA will be able to turn that into 23 billion Deutschmarks before I retire". It was unbelievable but IKEA managed to do it in the mid eighties! I remember someone at IKEA saying to me 'John, we already reached 23 billion Deutschmarks and you’re not retiring for another 15 years.’ Of course I miss working for IKEA since I retired, but I play a lot of tennis and golf which are perfect pastimes for pensioners! I have always been a business man and like all business men I love competition. I found it fascinating and inspiring to be part of IKEA’s constant growth and increasing turnover, both of which happened without a single dip! Even since my retirement I still feel very connected to Ingvar and IKEA’s development.’

Humbleness IKEA’s focus on flatpacks and mail order furniture completely changed the furniture industry in Småland, especially from a logistical standpoint. And although the region had been a major hub for chic furniture for a very long time, IKEA quickly dominated the market with high-quality design at low prices. People all over the world still appreciate Ingvar’s ideas, ideas that are rooted in Småland. IKEA’s humble origins continue to make IKEA feel like a small family company, and many people prefer to deal with them instead of large faceless corporations.

Ernst & Young | 5

The journey started 1956 - Desiging furniture for flat packs

1943 - IKEA is founded! When Ingvar Kamprad is 17 he establishes his own business. The name IKEA is formed from the founder’s initials (I.K.) plus the first letters of Elmtaryd (E) and Agunnaryd (A), the farm and village where he grew up. IKEA originally sells pens, wallets, picture frames, table runners, watches, jewellery and nylon stocking – meeting needs with products at reduced prices.

The exploration of flat packing begins when one of IKEA’s first co-workers removes the legs of the LÖVET table so that it will fit into a car and avoid damages during transit.

1953 - First showroom opens in Älmhult, Sweden

1958 - The First IKEA store opens in Sweden The first IKEA store in Älmhult has 6,700 square metres of home furnishings.

1943 1957 - Jan Johsson calls Ingvar Kamprad Jan picked up the phone and called Ingvar: “I've heard that you’re looking for an accountant, and I just want to let you know that you don’t have to go to Stockholm to one. The best and cheapest 'number cruncher' you can imagine is right here in Älmhult”. This is how our journey together, and the friendship between Jan and Ingvar started.

6 | CONTINUING THE JOURNEY TOGETHER

1976 - The Testament of a Furniture Dealer “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. This is an objective that carries obligations.” Ingvar Kamprad wrote these words in 1976 and they still have a strong influence on the development and vitality of IKEA's culture. IKEA inspired many co-workers to work along the same lines. Humbleness, doing it a different way and simplicity are important in Ingvar’s vision and are the constitution of the strong IKEA culture. This enables IKEA to run their business in a successful way and create a better everyday life for the many people.

1959 - 100 co-workers

In 2011 Mikael Ohlsson referred to the testament in his Christmas greetings: “I often say that of all the good things Ingvar has given us, the wording of the vision is his greatest gift of all. And with time, it just becomes more and more relevant. And it lays the foundation for our actions in large and in small.”

1976 Håkan: 'If you are born in Älmhult it's easier to have a career within IKEA, no matter what you studied. The day IKEA leaves Småland, it will be a company like every company. So the heart of IKEA being cost minded to lower the prices, and sell affordable furniture to the many people needs to be linked to Småland forever.’

First Ernst & Young office in Älmhult The first Ernst & Young office were Jan Johnsson both worked and lived. Jan’s company was acquired firstly by a Swedish company and later by Ernst & Young. This was very important to retain IKEA as their client, otherwise the client would have been served from the Ernst & Young office in Stockholm. One can imagine that people from Småland understand IKEA’s roots like nobody else. Jan’s house at the Knutsgatan 22 in Älmhult turned an Ernst & Young office in 1988. Currently all Swedish stores and companies are still being audited from our Älmhult office. For 4 years Håkan

Persson was the underwriting auditor for this. He succeeded Anders Krona who succeeded Jan Johnsson. Håkan is born in Älmhult and still lives there.

Ernst & Young | 7

No exceptions to the rule Marcel van Loo (49)

y IKEA adventure started in 1989, when I was sent to our office in Brussels to assist with the audit of the IKEA stores in Belgium. These days we sent our young people to Brazil or Australia, but back then, Brussels was already a really big step for me. It was evident right from the start that IKEA was different. The first thing I noticed was that nobody wore a suit! In the 90s the IKEA Service Centre in Brussels was established. The idea was that the stores would no longer have to deal with managing currency risk and ensuring return on available capital. At that time Søren Hansen was in charge of the centre. I was closely involved with the audit of the centre and got to know Søren very well in both a business and personal capacity. We had a lot of fun both together and with our teams and occasionally engaged in sports. While we audited IKEA Service Centre and the other IKEA Treasury units, in size equivalent to an average bank, Søren constantly asked me and others of the audit team: Do you understand? I mean do you really understand? There was a great culture of openness, where questions could be asked, people could learn, and mistakes could be made. I have never experienced this culture, to this extent, outside IKEA. I can truly say that I learned the banking business through my experiences working for IKEA. I am sure that without IKEA I would not have been able to fulfil my current roles.

"I can truly say that I learned the banking business through my experiences working for IKEA." Full responsibility in high risk situations IKEA’s uniqueness goes even further. For example, there was a lot of commotion in Europe during the transition to the Euro. Even the largest banks, which have numerous financial experts in-house, were cautious and asked us for help. IKEA didn’t. They made someone within IKEA responsible so it would be properly handled. And IKEA successfully transitioned to the Euro without any problems. This particular way of working, giving people full responsibility, even in high risk situations, extending confidence and challenges to your people has made a big impact on me. In 1994 I returned to Amsterdam, where I continued to be heavily involved with IKEA. During this time I was involved with the audit of INGKA Holding and the stores in The Netherlands. I also coordinated the audit of the IKEA Treasury Units. When promoted partner in 1999, I started to work for one of our other large accounts, ABN Amro. In 2004, I relocated to the US to work solely for ABN Amro. I found it very difficult to say goodbye to all my friends and colleagues at IKEA. I know the importance IKEA attaches to loyalty and how they like to work with a small circle of confidants. My personal relationship with Søren made it even more difficult to leave. Fortunately, we still keep in touch.

8 | CONTINUING THE JOURNEY TOGETHER

The IKEA way is an exceptional corporate story I remember a nice anecdote. A senior person within IKEA asked one of the co-workers in Brussels to book a flight to the Far East for him and requested a seat in business class, as he was very tall and had to attend various meetings immediately upon his arrival. However, IKEA’s policy requires everyone to fly economy class. That person told the co-worker that he would personally pay the additional costs for the upgrade. To my astonishment the young co-worker refused to book a seat in business class, explaining to the senior person that ‘there are no exceptions to the rule. Nobody will know that you are paying the difference yourself’. The IKEA culture runs deep. Together we have our challenges IKEA has grown into an international, truly global organisation, but still ‘feels’ like a small family business. Maintaining the IKEA culture is a balancing act, which we understand. IKEA is a down to earth organisation, a culture which is very similar to ours. Through the decades our relationship has evolved and we have been able to take on the role of a good friend, in that good friends tell each other the truth, have truthful discussions and trust each other. And because we, unlike the other accounting firms, are also truly 'globally integrated', we can extend this friendship across many countries. The challenge of working together with IKEA is to connect with their culture of trust, to grasp why they do things the way they do, and to understand that decisions are made around their vision of ‘creating a better everyday life for the many people’. At the same time it is our duty to make sure that IKEA stays out of trouble and adheres to accounting rules and regulations during their continuous global expansion. Ernst & Young and IKEA share the same idea 'Think global, act local’. So it would be fantastic to continue the journey together. We are already present in many countries which IKEA would like to enter in the future, and we have lots of very good local people ready to advise them. IKEA is an incredibly strong company, we know that our contribution to the overall growth of IKEA over the years has been modest, but it has been great to even be just a small part of the success.’

"We have been able to take on the role of a good friend, in that good friends tell each other the truth."

Ernst & Young | 9

Walking the IKEA Way Stig Nilsson (74)

IKEA is also very unique in that they have kept to their business idea for sixty years. Not many companies, including Ernst & Young, have managed to do that. IKEA was able to do this because they focused on people. They only spend the money they earn on the same original goal, which is making affordable furniture for the many people. In 2000, CEO Anders Dahlvig, came up with a strategy known as ‘10 jobs in 10 years’, I incorporated this strategy into the audit plan we use internally at Ernst & Young. I not only integrated their figures but also their strategy so that my colleagues could really understand IKEA. I did this because I believed both then and now, that there should also be culture in the audit. A culture you could never copy Seeing how the people who work for IKEA really care about their colleagues and my personal experiences during those years have changed my view of people. I brought this experience with me to Ernst & Young and shared it with my colleagues, without trying to make a new IKEA. The IKEA culture is a special culture you could never copy. Let me give an example of one strong cultural value; it is okay to make mistakes. When I was the group auditor for IKEA we reported ofcourse some faults and we also made some ourselves, and do you know what Ingvar Kamprad said? “Let’s use this to improve our way of working in the future. I can accept one mistake but I can’t accept us making the same mistake twice”.

"You can’t imagine how much you learn from just walking through these stores."

started working for IKEA in 1992 as coordinating partner. Together with the internal auditor of IKEA I organised a meeting in Älmhult with the responsible auditors in the various countries. We talked about how Ernst & Young would work in the future and how we would co-operate going forward. Together we decided that Ernst & Young needed to work as one firm worldwide to serve IKEA in the best way. From then on, I ‘walked the IKEA way’ in approximately 100 stores. You can’t imagine how much you learn from just walking through these stores and talking to all the managers. The managers were really open and shared so much information with me concerning sales, working with Sweden, my colleagues and the audit. Over a period of nine years I managed to visit all of these stores. As I was the responsible coordinator, I had to make time for everything related to IKEA. Almost every day I had questions relating to IKEA on my desk - questions from both IKEA people and my colleagues at Ernst & Young and other cooperating firms. Maybe because of all these visits I worked slightly different as an auditor. I really believe that being an auditor is not only about ‘doing the books’ but also about business. You really have to understand IKEA’s business to advise them properly.

10 | CONTINUING THE JOURNEY TOGETHER

Measuring the temperature During my time IKEA grew enormously, and the risk grew accordingly. One year after my retirement Søren Hansen asked me personally to work with him on risk management. He wanted me to measure the temperature by asking questions like: “To what extend is our management aware of risks?” By measuring the temperature I learned how clever and strong the key IKEA managers were. All of them had already been working for IKEA for a long time, and were taking care of the business and IKEA’s culture. It is this culture thats keeps these managers working so long at IKEA. The IKEA family is not only made up of IKEA co-workers, it also includes their suppliers. We are part of IKEA’s family. I remember telling Ingvar that I was born into a retail family, he was really interested and often asked me questions like: “How did you serve your customers?” My family business also sold Swedish snus and this interested Ingvar as he used it himself. He asked me things about how it was packed and how I used to deliver it to our customers when I was a young boy. I have very fond memories of all conversations with Ingvar. When I left IKEA and Ernst & Young as a retired partner Ingvar said to me: “Stig, you will always stay part of the IKEA family”.’

Always be one step ahead Ingvar Ganestam (62)

hen I succeeded Stig Nilsson, IKEA's headquarters was in Denmark. Stig lived only 20 minutes by ferry from Denmark, so when I came on board, we still audited IKEA from Sweden. In the meantime IKEA had decided to move their headquarters to the Netherlands. So moving the audit to the Dutch Ernst & Young team was a very natural thing to do. Right from the start I worked closely with both Marcel van Loo and Martin van Dam. The IKEA spirit is a very important aspect in explaining ‘the IKEA way’. It survived all over the world and the Swedish roots are a big part of it. All management go through internal training to keep them and their culture as Swedish as possible. When a company expands in the way IKEA did, it is difficult to find the right people for your management. Once you have found them you need to keep them. Although working at IKEA is not very glamorous, not even at the top level, the non-hierarchical culture might be an advantage; it is easier to go to work if you don’t have enemies around. Do we really need this? As an auditor you see a lot of companies, but they all operate differently. Working for IKEA changed my view on how to run a company. They are very relaxed; quite different from other companies I worked for. So I learned that one size does not fit all. I really admire IKEA’s costconsciousness at all levels. They constantly ask themselves: Do we really need this? Can we do it cheaper? In my years, IKEA doubled in size. Anders Dahlvig was the CEO and he made the plan ‘10 jobs, 10 years’. IKEA managed this fast and enormous growth by entering China, Russia, Japan and Portugal. Because of the importance of their logistics, IKEA carefully chooses which markets they enter. They do not go everywhere. Once they have opened their first store and the support and logistics are up and running, they prefer to open additional stores rather than running off to the next country. Still, it has not always been up-up-up for IKEA. Ingvar Kamprad always says: ‘No one has made so many mistakes as I have.’ But he is a quick learner and he takes failure as a good lesson. The same rule applied to us. On one occasion we faced some problems but I took full responsibility and managed the situation. Instead of punishment we received congratulations afterwards on how we handled things. You can’t control everything Of course we will maintain a proactive approach in reporting probable surprises or risks like we have done before. Still we must continue to realise this is IKEA. Ingvar always says: ‘If you want to expand quickly in high volumes you must take risks. You can’t control everything’. It is our job to tell them what the risks might be without expecting them to avoid these risks at all costs. IKEA likes to keep control of its own company. So they always have to be one step ahead. Nowadays, IKEA is already one step ahead by having a strong financial position but you never know what will happen in ten years. If they continue to grow, accounting will be more important to them. To make our service fit for the future it will remain our biggest challenge to keep on making it more efficient. We can combine our deep knowledge of IKEA with our expertise on accounting and taxes and also be a part of this journey in the future.’

"If they continue to grow, accounting will be more important to them."

Ernst & Young | 11

New faces join 1979 - BILLY Bookcase is born Gillis Lundgren designed Billy in 1979, but had actually joined IKEA as the fourth employee back in 1953. He doesn’t even necessarily see Billy as his masterpiece. Instead, he considers the Tore drawer unit he designed in 1958 as the design he’s most proud of.

1986 - Søren Hansen joins IKEA After spending three years with Citibank, Søren joins IKEA in 1987.

1986 - Ingvar Kamprad becomes Senior Advisor and Anders Moberg becomes President and CEO of the IKEA Group

1982 - IKEA Group is formed 1979 - Mikael Ohlsson joins IKEA Mikael started in the carpet department in the Linkoping store.

The Stichting INGKA Foundation was established in 1982 by the founder of IKEA, Ingvar Kamprad, to create an ownership structure and organization that stand for independence and taking a long-term approach. It has two purposes – to reinvest in the IKEA Group and to fund charity through the Stichting IKEA Foundation.

1977 1986 - Oscar Jonker joins Ernst & Young 1985 - Coen Boogaart joins Ernst & Young

1992 - Stig Nilsson becomes Group Auditor Stig succeeds Jan Johnsson who was the signing auditor together with Eric W. Orreby en later Sigurd Löfgren.

1996 - Ruben de Jong joins Ernst & Young 1989 - Martin van Dam joins Ernst & Young

12 | CONTINUING THE JOURNEY TOGETHER

1999 - Erik Öster Pedersen joins IKEA Erik becomes responsible for Foreign Exchange, Cash Management and Asset and Liability Management. Prior to joining IKEA he worked at Citibank for more than 16 years. Erik has been involved in the Foreign Exchange market since 1978.

1991 - Swedwood, IKEA’s industrial group IKEA acquires its own sawmills and production plants and establishes the industrial group Swedwood to produce wood-based furniture and wooden components.

1999 - Anders Dahlvig becomes President and CEO of the IKEA Group

1999 - Søren becomes Chief Finance Officer After developing the treasury function for the IKEA group in Brussels Søren becomes Chief Financial Officer of IKEA Group and member of IKEA Executive Management Group.

1997 - Children’s IKEA is launched IKEA offers furnishings for the entire family, but because kids are the most important people in the world, IKEA decides to develop a range specifically for them.

1999 - 50,000 co-workers

1999 1999 - Jan Johnsson retires Ingvar Kamprad about Jan: "So, Jan was also our accountant? Oh, I am fully aware of that, after so many easy-to-understand reports throughout the years. However, for me Jan is first and foremost a friend/advisor to whom I have turned to with my headaches on numerous occasions. That is a role I hope he will keep for many years to come, at heart, he is still a young boy. Tripping on a chain after a merry night in Paris is evidence of how young he is at heart! The first auditing report of our personnel foundation was signed by Jan on March 15, 1958."

Ernst & Young | 13

"Once I started working, I literally got lost in the store and its warehouse. It was overwhelming but very exciting"

14 | CONTINUING THE JOURNEY TOGETHER

Working together like family Martin van Dam (45)

y first Ernst & Young job at IKEA was internal control testing and stock taking in the store in Amsterdam for their finance manager Albert-Jan Schnell. The sheer size of the store impressed me. At that time, there was absolutely nothing along the highway A9 except the huge blue IKEA box. Once I started working, I literally got lost in the store and its warehouse. It was overwhelming but very exciting. You notice very quickly that IKEA’s concept is unique. As an integrated retailer, IKEA is in control of design, production, trading, transport, distribution centers right through to retail. It became obvious to me that everything has been clearly thought out, and I was very impressed with the welloiled machine known as Retail. The store just went on and on, and it really felt as if there was no point in counting all the stock. Afterwards I became more involved with IKEA and the various audits that Ernst & Young did for them. The two biggest challenges were trying to grasp the size of the company and continuing to manage our own audit procedures. From their strong financial position and the peace of mind this provides, IKEA could afford to have a long term view. They focused entirely on retail. Auditing and bookkeeping was less important than the real business. As auditors we were actually only getting in the way. Of course it felt good that we did look at the books each year independently, and provided them with a second opinion on their state of affairs. We were the padlock on the door! I have always enjoyed doing the audit in their informal and pleasant working environment. Humlebaek hotel I also spent time in Humlebaek, Denmark, when IKEA’s headquarters were there. Now I use the word ‘headquarters’ in the broadest sense of the word! The headquarters were in fact located in a former hotel which Ingvar had bombarded into an office. The first time I saw it, I couldn’t believe what I was seeing! The reception area had a fireplace and upstairs they had knocked down bedroom walls to make room for offices. There were also rooms to play table tennis and pool, it felt like a nice family day out! There was really such a homely atmosphere that it felt like you were going to a sleepover with your friends. I met a lot of people while working in Humlebaek, people I now work with, such as Michael Nielsen, Hans Gydell and Søren Hansen. Since I started working for IKEA, it has become clear to me that working in Humlebaek at the start of my career, really helped me in that I feel like I have been part of this team since the late eighties!

Busy man IKEA continued to grow. In the meantime Søren Hansen had become CFO and Vice President. I noticed that he was too busy and every year I noted in my reports: ‘The finances are in order, the audit gives a fair viewpoint, but IKEA shows a deficit when it comes to attention for structure and documentation. What I was referring to was the management processes, decision-making structures and the control environment.’ At the same time I noticed that in the 20 years I had been practicing accountancy, the job had changed. I felt that these changes meant that I had less freedom in my role and it felt more like I was ‘ticking boxes’ and impacting real business less. I wanted an adventure. So it was perfect timing when Søren asked me if I was interested in working for IKEA. Being a partner at Ernst & Young, it did not seem like the obvious step to make, and Ernst & Young did not want me to leave. But there was an attraction to work for IKEA, it promised to be an adventure and I already felt like I belonged there. All in all, I knew this was the right move for me. My current role as Chief Risk Officer at IKEA is exactly what I wanted; a free role to design future structures and to impact the way IKEA controls the business.

"We always said: It will be alright, we will solve this together." Kitchen table decision making Sometimes it is quite difficult to not get lost in an organisation of our size. I have learned to be become more patient and recognise that ideas need some time grow. Our informal, non-hierarchical culture has the challenge that it can take longer for decisions to take effect. However, I do see that we are constantly moving our organisation forward. We recognise that today we are a very large company, and that everything we pick up brings enormous complexity with it. Deep down we love to make decisions sitting down at the ‘kitchen table’, but we also know that we need to respect our size and impact.'

I served IKEA for Ernst & Young until 2010, except for a two year period which I spent in Australia. During this time my responsibilities continued to grow until I ultimately became Ernst & Young’s Global Client Service Partner for IKEA. At that stage I had to travel a lot to make sure that the relationship between IKEA and Ernst & Young’s auditors in all the different countries was optimal. I wanted to share what we thought were important issues for IKEA, and to discuss with them how we could increase the profile and value of the audit for them. I pushed really hard to work closely with IKEA on this matter. We didn’t say ‘You’ve got a problem here, which you need to resolve’; we said, ‘It will be alright, we will solve this together’. Because IKEA also works like this with their own suppliers, they really appreciated our approach. This is how you treat your family.

Ernst & Young | 15

Contributing to a unique company Ruben de Jong (39)

‘I

got involved with IKEA halfway through my career with Ernst & Young, when I worked with Marcel van Loo on a number of financial services clients. At that time Marcel was responsible for IKEA within Ernst & Young, and he needed someone to assist him with the audit of IKEA’s Treasury activities. It was very important for IKEA that everyone involved was well informed and understood the how’s and why’s of the process. We also made it our goal to simplify this complex matter so that everyone in the audit teams would understand it. The thing that struck me most, was how involved everyone was, and the warm relationship between them. While I worked at Ernst & Young, IKEA treated me in a similar way. I also noticed the great commitment the people had towards IKEA, and the sense of responsibility this brought with it.

Work-life balance The most remarkable part of my job in the last five years must be how my job title has remained the same, while the work is constantly changing. You never know what to expect when you make a new career move. But one thing is sure, working together and coming to a mutual agreement are very important within IKEA. But don’t forget a good work-life balance is part of IKEA’s culture, and that is admirable. Just imagine, a couple of weeks ago I had to attend a meeting in the office, when I was actually meant to be at home. When I said I had to go to the office, my four year old daughter said she wanted to join me to Leiden. So there I was, in a meeting with the CFO and the HR manager, while my daughter sat at the same table colouring. Does this sound like any other company you know?

Working in different worlds Slowly but surely I was given more and more responsibility for the IKEA group audit. At a certain point I was mainly working for two clients: IKEA and ABN AMRO. The cultures of these two companies are on opposite ends of the spectrum, but I knew I would learn a lot from both of these companies and that my experience would also be useful to both. I didn’t have any problems working in these totally different worlds, in fact I really enjoyed it! At Ernst & Young we continued to focus on the professionalization and centralization of the audit processes, and finding new ways of presenting our results in a simple way. IKEA doesn’t like complicated reporting. This sounds easy but it is more difficult than you would think. I was given the responsibility of making sure that every country reported appropriately and IKEA’s wishes were met. I did this gladly, why? Because the "IKEA way" not only rubs off on its people, it also rubs off on its suppliers! This is why it was never difficult for Ernst & Young to recruit people internally to work on the IKEA audit teams, everyone knows IKEA and wants to add their own contribution to such an unique client.

One of our top priorities for the next five years, is to find alternative resources for the wood and cotton that we use. We want to continue being sustainable, so things will have to change. As an example , we are also working on making our packaging even more efficient. New technicians recently joined IKEA and they are working on an important question: How can we make our flatpacks even flatter? Because the volume of our sales is so large, a more efficiently wrapped sofa can significantly reduce the amount of trucks we use every year. The entire finance team, including myself will have to support our goal to double our revenue to 50 billion in the most efficient way possible. So right now, some of the most important questions we are dealing with are: How do we get the right financial information, at the right time, in the right place while taking all the various laws and regulations into consideration and remaining compliant? Our present support systems are still too scattered to support this goal, so we really have to work on centralizing our systems. In short ‘There’s plenty to do’.'

Doing it ‘my way’ Ernst & Young Sweden had a very strong and respectful relationship with IKEA, and one of the things I am most proud of is, how Marcel and myself – and later Martin and myself- were also able to build a same strong and trusted relationship with IKEA from the Netherlands. I think it was easier back then, IKEA was smaller and I had a flexible role within Ernst & Young, I could put my own stamp on things. However, more and more laws and regulations were introduced, and this changed the role of the accountant, and more specifically my own role. It became more difficult to do things ‘my way’. I felt more and more attracted to IKEA. I remember saying to my wife ‘If there’s one client I’d like to work for it’s IKEA’. Three weeks later I got a call in which I was asked if I was interested in becoming IKEA’s Group Finance Manager. Unbelievable! Of course it was a difficult decision to make, I was already in the process of becoming a partner at Ernst & Young, but I couldn’t resist the challenge, it was just too attractive! Later on I realized just how much insight an accountant acquires during his career. Accountants get to see so many different companies from the inside out. I am convinced that the experience I gained as an accountant has helped me in my current position.

16 | CONTINUING THE JOURNEY TOGETHER

"The IKEA way" not only rubs off on its people, it also rubs off on its suppliers!"

Ernst & Young | 17

The bigger the company... 2000 - IKEA survives Millenium challenge

2000 - The IKEA Way is launched The code of conduct called “The IKEA Way on Purchasing Home Furnishing Products” (IWAY) is launched. IWAY ensures fair and decent conditions for workers are practiced and that our supply chain has as little environmental impact as possible. IKEA is constantly developing new methods for sustainability and environmental responsibility. IKEA focuses (together with partners such as WWF, UNICEF,UNDP and Save the Children) on responsible forestry, water treatment, cotton grown in a more sustainable way and improving the lives of many of the poorest children in the world.

2000 - IKEA opens first store in Russia

2001 - Carl Wilhelm Ros becomes member of the Supervisory Board of INGKA Holding

2001 - Concept “10 jobs in 10 years” is launched

2000 2000 - Anders Jakobsson assisted IKEA in Millennium challenge

2004 - Ingvar Kamprad: “Entrepreneur of the Century” Ingvar Kamprad was named “Entrepreneur of the 20th Century” by Ernst & Young Sweden. Ingvar said that he wanted to "share the prize with all of the clever entrepreneurs in the country."

2001 - Ingvar Ganestam succeeds Stig Nilsson as Group Auditor

18 | CONTINUING THE JOURNEY TOGETHER

... the greater the responsibility 2001 - A new head office The head office moved from Humlebaek in Denmark to the Netherlands.

Martin van Dam: "There was such a homely atmosphere that it felt like you were going to a sleepover with your friends. The first time I saw it, I couldn't believe what I was seeing! The reception area had a fireplace."

2006 - 100,000 co-workers

2004 - The 200th IKEA store opens

2006 - One Wholesaler Concept was born IKEA started with their One Wholesaler strategy, centralizing their supply, in 2006. ISAG, the headquaters of IKEA supply in Switzerland, is legally the first buyer of IKEA goods and resells them to all the different countries. Although IKEA did not develop this wholesaler concept, they were one of the first to role this out globally.

2006 2006 - Local stores can focus on selling products René Buchmann: ‘Of course this was a journey in itself. First they integrated what we refer to as the low hanging fruit. After that countries with larger markets and more complex regulations were dealt with. However from the start it was apparent that this worldwide platform would be of great importance to IKEA’. Martin Gröli: ‘The One Wholesaler Strategy was a logical move for IKEA so that they could become more efficient and diminish pressure on their margins. Today we can really see the success of this concept. With ISAG focussing on supply, the local stores can focus on their core business, selling products.’

René: ‘IKEA is very good in capitalizing on their experience, as well as being on top of local issues. When auditing ISAG, we continue to give them relevant feedback on their inventory while keeping them informed about their level of compliance.’ Martin: ‘Compliance is a big challenge for IKEA and I believe they really do appreciate our insights and helicopter view on this matter. Looking to the future, I know that IKEA will continue to try to be more cost-efficient in both current and new markets. For us this remains a great opportunity to show IKEA that our efforts and insights will strengthen them in realizing their future goals.’

René Buchmann en Martin Gröli, Ernst & Young Switserland

Ernst & Young | 19

Starting IT auditing Anders Jakobsson (68)

Since then I have worked on different IT projects to strengthen IKEA’s internal controlling systems and to make sure the systems keep up with the considerable growth and increased risk this brings with it. I worked together with Christer Burman, the internal auditor for IKEA, in Brussels on a new system we called Restoc. This system really helped all of IKEA’s auditors worldwide in that they no longer had to go to Älmhult to verify their information with the centralised system there. I believe that all of these projects were very important first steps to the centralisation and professionalisation of IT auditing within IKEA during their enormous growth.

"It is my experience that everyone at IKEA is very open-minded." IT Adventure In 1997 Stig Nilsson asked me if I could consult with IKEA on their ‘year 2000’ compliance. It was my job to make an evaluation every four months for IKEA to see if they were preparing correctly for this IT adventure. They did a very good job and managed everything very well. It is my experience that everyone at IKEA is very open-minded and helpful and working there has always been very enjoyable for me. In other companies, people might try to make things look better than they really are, but at IKEA everybody had a keen interest in getting the correct information so we could identify possible problems in the systems. In 1999 I started working on a project called Compass, which was an application to centralise invoice control and to help reduce the amount of financial tasks that had to be carried out by the stores. By that time Compass had already produced 100 copies for all responsible auditors. The most challenging thing for me was making sure that I dug deep enough in all the available systems to be sure that I was fully informed and this new system covered it all. I worked on this with Bob Lindsten. At that stage, Bob had already worked for 30 years at IKEA, and he put me in contact with the right people who could verify specific kinds of information. Due to this I could avoid surprises, and was able to draw the right conclusions, and that was crucial as these systems play a huge part in the overall audit.

have always been fond of IKEA as a client, mostly because of the simplicity of their business idea. It started for me in 1985 when I worked for an accountancy firm which later merged with Ernst & Young. The responsible auditor for IKEA in Stockholm knew my background, and asked me if I would go to Älmhult to help IKEA with some problems they were having with their accounting system. A year later they asked me to do their very first IT audit, so I guess they were happy with the results from my initial assignment. Then the following year they asked me to audit an application system which tracked all of IKEA’s products, both incoming and outgoing worldwide. I really felt like this was a huge responsibility as the stock evaluation was crucial for the total audit of IKEA.

20 | CONTINUING THE JOURNEY TOGETHER

Helicopter view I remember while discussing costs with the first internal auditor he told me ‘Don’t forget that you are working for IKEA!’ So I knew straight away that I would have to provide services in a cost-efficient way, which I did. After a while I knew so much about IKEA, mapping all applications together gave me a helicopter view of all their systems and processes. I was able to use this view and my experience to IKEA’s advantage and make the IT auditing even more efficient. I know that this fits into IKEA’s strategy and I strongly believe that IKEA, being a cost-efficient company, really appreciated this. In 2007 I retired having worked for this amazing company for 22 years.'

Sharing IT knowledge Richard Verschuren (35)

n early 2000, me and Peter Paul Schellekens worked together with Martin van Dam for many telecom companies. Before Peter Paul left Ernst & Young, he showed me a sketch of IKEA’s application landscape. I was really impressed with what I saw. I realised that there was a lot more to IKEA than ‘just’ stores! Two weeks later, Martin asked me if I would spend a couple of hours working on the IT audit for IKEA, as Anders Jakobsson, who was responsible for the IT audit, was going to retire. Needless to say I said yes, and during that year Anders transferred his responsibilities to me. When I started working with Anders the only thing we had was the diagrammatic sketch, so this was the first thing we picked up together. Anders taught me a lot. He gladly shared his knowledge of IKEA and their application landscape with me, knowledge I have since passed on to other colleagues. Working closely with Martin, Ola Troedsson and later Paolo Cinelli, we continued to professionalise the IT audit.

Sometimes we see short term benefits that we would normally propose to our clients; however, experience has taught me that IKEA thinks long term. For that reason we have adapted our role as the 'formal' auditor, to make sure we bring value to the table by focusing on the issues and solutions that really matter to IKEA, and contribute to the realisation of IKEA’s goals and vision. In other words, we work closely with IKEA and make sure we choose people within Ernst & Young who have the necessary skills, but perhaps even more importantly, are the right fit for IKEA. When somebody new starts, I always take the time to personally explain to them the values and principles of the IKEA culture. Time and time again I see how much this culture appeals and inspires the new members of our team.'

Keep it simple I always had to laugh with Martin when he said "Richard, it has to fit on one A4, otherwise it’s just too much." So right from the start I took this message with me, but this is easier said than done! I know just how difficult but necessary keeping things simple and short can be! IKEA’s IT landscape is large and complex. Retail’s IT environment is different than Finance’s IT environment, and they are both different than Industry’s IT environment. The IT audit has to advise IKEA, and now this has to be done in close collaboration with Information Security. I have to admit that how IKEA conducts business and relates to their co-workers has also influenced me. In many corporations there is a culture of ‘up or out’; if you’re not good enough, you have to leave. IKEA thinks differently about this and is an example for other companies. They give their people, but also our people at Ernst & Young, the opportunity to learn and gain experience in an international environment. If someone is not the most likely candidate for the job, that is okay. Why? Because IKEA believes that everyone has to learn, and the best way for people to learn is to simply put your trust in them and let them grow!

"The best way for people to learn is to simply put your trust in them and let them grow!" Capitalise the word trust Presenting our findings I made a comment about how broad the authorisations were. I remember Bosse Mansson saying to me "Richard, your observation is correct, but like the word IKEA, we capitalise the word trust!” Through my experiences working for IKEA, I realised that in our society we generally do not trust people. At IKEA, people think differently about each other and about trust, this is something quite unusual in such a large company. I am now much more aware of this and try to take this way of thinking with me wherever I go.

Ernst & Young | 21

"All Swedes are proud of IKEA as am I."

22 | CONTINUING THE JOURNEY TOGETHER

A family company based on Småland values Erik Åström (54)

have always experienced IKEA as a unique company, operating in their own unique way. The business concept is still the same as it was years ago. Right from the start IKEA was strong on design but kept their prices low. The whole flatpack concept is extremely smart and well thought out. Everyday they try to make it more efficient, in every detail, they never stop! For example recently I heard that IKEA changed the format of their catalogue slightly to adapt to the size of the pallets so that they could increase the number of issues that could be held in each pallet. IKEA’s roots in Småland are very important to them, and I strongly believe they will never leave this region. This is obvious in many ways, for instance how they bring many of their managers from all over the world to Småland, so they can experience IKEA’s core values in person, and so they literally see where it all started. IKEA’s heart lies in Älmhult, this is where all of IKEA’s products are designed. Every year they come together to display and discuss the products they want to include in their yearly catalogue.

"I remember when I started working for IKEA, Ingvar Ganestam, said to me: At least take off your tie, you don’t want to be overdressed!" Take off your tie Working for IKEA has not really changed me as a person as I am Swedish, and I share many of their values and their culture is very familiar to me. For example, in Sweden we do not believe in hierarchy and we value humbleness. IKEA may be more extreme when it comes to these values, but this difference is more visible to foreigners.

Family business Ernst & Young Sweden has a long history of working with family led companies like IKEA. We also work for H&M and Tetra Pak, which are both Swedish family majority owned companies with worldwide operations. These family companies have a strong tradition of staying with the same auditor while they grow and dealing with the many changes this brings. These businesses all have very strong and capable owners, and that is quite different from many other large corporations. When something important has to be decided, everybody knows that the absolute authority is still with the majority owner of the company. For example, the top 100 IKEA people know and respect this culture. Most of the people who have a lot of influence at IKEA have already worked there for a long time and know what Ingvar wants; this means that Ingvar’s vision will be embedded in future decisions. Besides our experience with family owned businesses, Ernst & Young has a lot of experience working with entrepreneurial businesses such as IKEA. I really do believe there is a strong cultural fit between our two companies. We can anticipate what IKEA wants before they tell us. As accountants we have to provide assurance. IKEA does not want to deal with surprises. But when you enter new markets, many things are different including rules and regulations, and this is where we can help IKEA. When it comes to making decisions related to their core business IKEA has all the knowledge and expertise in-house, our role is to support them, for example, helping them to adapt to more sustainable processes. Even though IKEA is already highly sustainable, the world’s view on the importance of sustainability continues to evolve and IKEA also has to evolve its approach to meet people’s expectations. Room to grow I know that IKEA will continue to grow country-by-country and store-by-store as they have done in the past. There is definitely still room to grow in many countries, including those in the western world, using this concept. IKEA adapts this strategy to meet each country’s needs, while staying true to their values; however, to remain cost-efficient they cannot adapt too much. They need high volumes to keep lowering their prices. Millions of people are attracted to IKEA and their range of products. IKEA’s products are accessible to all classes. All Swedes are proud of IKEA as am I. As they continue to enter new markets I am sure that they will attract all kinds of people from all classes, and I am confident that IKEA’s success will be tremendous no matter where they go!’

When you work for IKEA you also have to get used to the informal working environment. I remember when I started working for IKEA, Ingvar Ganestam, said to me “At least take off your tie, you don’t want to be overdressed!” I had to get used to wearing jeans at work, which is not the most common outfit for an auditor!

Ernst & Young | 23

Growing together 2007 - From 6 to 1 IT center The capacity of the 6 data rooms was fully utilized, IKEA decided to build new centers. The facilities are located in Osby and Älmhult, about 20km apart. The facility was ready for IT production in 2008.

2007 - Ruben de Jong joins IKEA as Group Finance Manager

2009 - Søren becomes Vice President of the IKEA Group and Erik becomes CFO

2009 - Mikael Ohlsson becomes President and CEO of the IKEA Group

2009 - 30th Anniversary for BILLY bookcase The BILLY bookcase, the most versatile of IKEA bookcases, is turning 30 years old! Over 41 million BILLYs have been sold worldwide since its introduction in 1979 – enough to circle the globe twice. To celebrate, IKEA has introduced limited editions of the BILLY bookcase, BILLY BJÄSTA and some new BILLY accessories.

2007 2007 - A fresh IT focus Before FY07, IT audit activities were performed by country auditors for many years. Besides, Anders Jakobsson, our IT auditor from Sweden, issued ‘audit certificates’ on application controls for a set of key systems. These certificates were jointly created and signed with IKEA. As of FY07 we changed this setup and started coordinating the IT audit activities centrally from The Netherlands. IKEA had evolved to a global company with global processes and

24 | CONTINUING THE JOURNEY TOGETHER

global systems and IT had become extremely important for the company. We started with a small and dedicated central IT audit team headed by Richard Verschuren. With support from the CIO and IT Manager at that moment (respectively Ola Troedsson and Sven Henriksson), we visited all key business and IT locations for IKEA, including Treasury, in a relatively short time.

2009 - Paolo Cinelli becomes CIO of the IKEA Group

2012 - 131,000 co-workers 2010 - Martin joins IKEA as Chief Risk Officier

2011 - Mikael Ohlsson visits India

People from 48 different nationalities work at IKEA. Of the top 200 managers, about 40% are women – and IKEA is striving for at least 50% here.

2011 - A new industry division is formed 2010 - “Growing IKEA Together” is launched

By bringing the IKEA owned industries closer to the other IKEA processes IKEA can ensure even more integrated ways of working together, as well as efficient industrial operations. Leif Huffman becomes the IKEA Group Industry Manager.

2012 2007 - Martin van Dam becomes Group Auditor Martin succeeds Ingvar Ganestam.

2009 - Ernst & Young starts working with Business Service Centre in India

2010 - Oscar Jonker becomes Group Auditor Oscar succeeds Martin van Dam.

2011 - Pinaki and Mikael discuss growth in India Pinaki Mishra: ‘‘I believe that India offers IKEA many great opportunities. Our economy is growing very quickly and people in India are very priceconscious. We are seeing the growth of a middle class group of young people in our country, and these young people are now buying up

many of the new apartments which have been built in the last couple of years. IKEA will be the first company to offer affordable furniture to them. Everyone is really anxious for IKEA to come to India and open their first store. A lot of our young people travel abroad and are familiar with IKEA and IKEA products. It is my experience that everyone likes IKEA!

Ernst & Young | 25

26 | CONTINUING THE JOURNEY TOGETHER

Corporate governance in family businesses Coen Boogaart (51)

got involved with IKEA through Martin van Dam’s direct involvement. Martin and me were colleagues at Ernst & Young but we also had a strong personal relationship. At a certain point it became clear to me that Martin wanted a senior partner who he could spar with and help him with the transition from Ernst & Young Sweden to Ernst & Young the Netherlands. IKEA’s management was more and more operating from Leiden, and from an efficiency standpoint it would make sense to move the responsibility for the audit to the Netherlands. But it was an emotional time for everyone, because Sweden is in IKEA’s DNA, and IKEA is part of every Swede! It was a difficult step to make. The role Martin had in mind for me was perfect and needless to say, we teamed up. It was a very courageous move from Martin, by allowing a senior partner to take his side, he put himself in a vulnerable position, but that didn’t bother him. He only had one goal, to make sure that the transition went smoothly and that everyone at IKEA and Ernst & Young understood why the decision was made and supported it.

"What I really learned from IKEA? Do what you’re good at and nothing else!" Another important issue for IKEA is corporate governance. This is an area where I have a lot of experience and more specifically assisting family companies where this issue has its own dynamics. Martin felt that the professionalization of corporate governance was a crucial point on IKEA’s agenda. We discussed corporate governance extensively with Ingvar, Peter his son and various board members. We also discussed that for a company like IKEA damage to its reputation is the biggest risk. If IKEA makes the news, it’s big news that spreads all over the world because everybody knows IKEA. The world we live in is becoming increasingly complex, and it is increasingly difficult to meet international regulations and to ensure compliancy. At the same time compliance is critical to protecting your reputation, for example in sustainability.

"It was an emotional time for everyone, because Sweden is in IKEA’s DNA, and IKEA is part of every Swede!" Perfect fit In 2010 I had to travel to New York in my capacity as chairman of Ernst & Young’s Global Advisory Council for a conference. When I arrived I noticed that Martin had been trying to reach me urgently on my mobile and via the mail. But because I was chairing the meetings, I couldn’t call him back until much later. When we spoke he suggested picking me up at the airport and driving me home, he said ‘I’m in the neighbourhood anyway’. It soon became clear that Martin wanted to pick me up from Schiphol because he wanted to discuss something very important with me face to face. IKEA had made him a wonderful proposition and Martin wanted to accept this. Even though this is an unusual development for a partner, I have to say it didn’t really surprise me. Martin and IKEA were a perfect fit, as has been the case with more of my colleagues in the past. IKEA is a very large and important client. When the man who knows everything about IKEA decides to make the switch, this has a big impact on us and our service delivery. IKEA understood this, and Søren Hansen assured us that we would be given all support we needed to find a suitable successor. Thankfully, we were able to resolve this issue relatively quickly. Oscar Jonker had extensive experience in retail and he had worked with many international companies. When I worked in our Rotterdam office, I had worked with Oscar, so I knew him personally. But there was one problem, the entire IKEA team was located in Amsterdam and he was in Rotterdam. I introduced him informally to IKEA, and he was very well received. Oscar was ready to take on the challenge and immediately prepared to switch offices. Oscar started just as IKEA’s financial year had ended, and it was truly a challenging start for him. But he beat the challenge and is now fully up-to-speed and operational. He knows and understands ‘The IKEA way’ like no other. In the meantime we have enjoyed many discussions around this beautifully unique company! ‘What I really learned from IKEA? Do what you’re good at and nothing else!’

Ernst & Young | 27

A fresh perspective on a continuing journey Oscar Jonker (49)

hen my predecessor Martin van Dam left Ernst & Young to join IKEA, it marked the start of my adventure with IKEA. Coen Boogaart was directly involved in finding a suitable successor for Martin. I knew Coen personally as we had worked together in Rotterdam, so as soon as I heard that Martin would be making the switch, I contacted Coen and told him that I was really interested in the position. I had a feeling that I would fit into the IKEA culture. At the time I made my request I did not know what kind of impact this would have on my career. I had to move office (not house, as I live close to IKEA) from Rotterdam to Amsterdam, and basically had to leave everything behind including the internal management functions I had. But I did this gladly. I really wanted to be able to focus on one client so that I could explore their issues in detail. IKEA has a great reputation and is a very appealing brand, and I just knew that IKEA was the client that could offer me the adventure I was looking for! The fact that I succeeded Martin, someone whom IKEA appreciated so much that they hired him, left me with some big shoes to fill. That motivated me to dive straight in to really understanding IKEA. So I cleared my desk and started talking to a lot of people there, including CW Ros, Søren Hansen, Erik Öster Pedersen, Ruben de Jong, Michael Nielsen and Peter Thommen. I also visited many of the IKEA stores worldwide. Everyone I spoke to was open and willingly shared their knowledge with me; these experiences taught me the unique ‘IKEA way’. IKEA’s culture is very informal and people are valued for who they are and not just what they are. I noticed straight away that everyone was glad to meet me, this was a very nice welcome to IKEA. I really believe that the foundation of a ‘good’ audit is open and honest communication, it is critical that we speak the same language. More than blue boxes In the beginning I was amazed by the size and diversity of IKEA. Everyone is familiar with the IKEA stores, ‘the blue boxes’, but it goes much further than that; IKEA’s restaurants make up one of the largest restaurant chains in the world, IKEA owns more than 30 factories and 12 mega shopping malls in Russia! Nevertheless, IKEA is still managed by a small team that works from a modest office in Leiden – when I explain to new colleagues how to get to IKEA’s office - I always say 'the entrance is next to the Multicopy’, how ironic is that! For me, it is still amazing to see how this company operates, and every day I continue to marvel at how they manage to get it all done.

"Martin left some big shoes to fill due to his great knowledge of IKEA and the strong relationships he had built."

28 | CONTINUING THE JOURNEY TOGETHER

What also intrigued me is how they have managed to build the truly unique IKEA brand and reputation by continuing to lower their prices without compromising quality. And they are able to realise growth this way. I personally really like IKEA’s view on growth; it is not about making profit for personal welfare. It is about making money to re-invest in IKEA in order to be there for more of the many people. This view and these values appeal to me on a personal level, as I believe we should ‘give back’ to society, something I try to do myself through various board roles. The uniqueness of IKEA is also reflected in how seriously they take their own social responsibility, and how modest they are about what they contribute to societies worldwide. IKEA is very down-to-earth and sees themselves as the ‘biggest small company’ in the world. I am convinced that my fresh perspective can be valuable for IKEA. Based on the experience I have gained over the last 18 months, I now have the opportunity to put my own stamp on our approach and team, and on how we will continue to work together in the future. For example, I have created a new team and reporting structure that maps directly to IKEA’s new structure on a one-to-one basis. As a result of IKEA’s continuous growth, the number of co-workers has increased significantly, and many new support functions have been created in Leiden. In the past and in Martin’s time, we were able to work with a small team; however, due to IKEA’s growth and future goals, there is now a clear need for a broader team structure with defined responsibilities and the right specialists. IKEA’s eyes and ears IKEA likes to keep things simple, so we have followed this approach to make changes on our side. The main and central question was: How can we make it more efficient and add more value? I strongly believe that we have achieved this in our new approach. We know that we can do a number of things better, in a more centralised manner and more frequently throughout the year, so that we can identify and solve any issues that may arrive as early as possible. I also feel it is important to provide management with relevant information on a more regular basis. To make sure that all our people around the world have the same vision and understanding of what IKEA expects and needs from us, we will organise an annual meeting for all of our IKEA teams worldwide. During this meeting we will discuss our refreshed service delivery in detail. One of my messages to them is for us to act as IKEA’s eyes and ears on the ground as this will allow us to continue to provide significant insight to IKEA.

Ernst & Young | 29

Let's continue the journey together 2015 - Risk Management priorities achieved

2012 - Søren Hansen takes on a new challenge Sören becomes CEO of the Inter IKEA group. He will replace Hans Gydell, who will retire.

2013 - IKEA Group Finance starts the implementation of SAP financials

2015 - IKEA opens first stores in South Korea and Mexico

2014 - IT sourcing successfully completed

2012 ... 2014 - A cultural experience at the heart of the IKEA world

2013 -New Treasury IT improves audit efficiency IKEA Global Treasury and Ernst & Young have committed each other to work side-by-side in achieving the necessary improvements in the Treasury IT environment during FY11 and further. One of the key objectives was the outsourcing of the IT

30 | CONTINUING THE JOURNEY TOGETHER

hosting and operations of the Treasury systems to an external supplier. Last week Birgitte, Henrik, Rob and Reto celebrated the hand-over of the 'IT Operations' key to the selected external supplier in Prattlen.

Oscar thanked all colleagues for attending the third annual global Ernst & Young meeting at IKEA Tillsammans, IKEA's corporate culture center in Älmhult. The meeting objective is to share the values of IKEA and audit need-to-knows. Ruben, Group Finance, explained: "Our strong financial position and that we are not listed enables long term actions and implementation of our plans almost regardless of the economic".

2018 - IKEA opens first store in Brazil

2017 - IKEA opens first store in India

2020 - New strategy succeeds “Growing IKEA - Together”

2019 - IKEA announces "Lower prices – same quality"

2016 - Ernst & Young assists IKEA with their challenges in Brazil Oscar Jonker: "The variety in growth percentages between IKEA countries is increasing whereby the BRIC-countries are clearly realising the highest, double digit growth. After opening up in India, Brazil is the last one of the BRIC-countries for IKEA to enter and is their stepping stone to South America. Although logistically challenging, it opens growth opportunities in a new continent where they can be for the many people!"

2021 - Ernst & Young's Audit approach aligned with new IKEA strategy

2018 - Mikael Ohlsson “Entrepreneur of the year” in India

Ernst & Young | 31

32 | CONTINUING THE JOURNEY TOGETHER

Front runner in corporate responsibility Jan Peter Balkenende (55)

f course I knew IKEA. Also, when I was Prime Minister, I bought furniture from IKEA for my daughter's bedroom. My favourite IKEA product is the Billy bookcase. We have an architecturally remarkable house, with unusual dimensions. The handy thing about the Billy bookcase is that you can construct it exactly how you need it, with corner cabinets in various sizes and additional build-on options. Working for Ernst & Young, I got to know IKEA from another perspective and had the opportunity to get more insights into their policies, business processes, corporate governance and - my personal driver - sustainability. What impressed me immediately was the fact that IKEA has consistently incorporated sustainability throughout their business, and how modest they are about this. Family businesses such as IKEA are particularly strong when it comes to sustainability, or in other words, long-term thinking. Sustainability is in IKEA’s genes At the foundation of sustainable thinking lie the values of a company. At IKEA, these values are embedded in their culture and policies. I believe that we, as auditors of many (international) family businesses, share these values with them. Sustainability means more to IKEA than just the environment. It is their ambition to not only be CO2 neutral in their business processes but to be resource neutral as well. The types of questions IKEA asks itself include: How should we handle sustainable raw materials such as wood and cotton that are important for IKEA? They also think about corporate responsibility and their employees; do they feel the same, do they share the same values? How do we deal with our suppliers? IKEA also likes to help people directly, for example together with UNICEF, they help hundreds of thousands of children in India to have a better life. I was really impressed when my colleagues explained to me just how far IKEA managed to integrate this way of thinking nto their way of working. From that moment on and in consultation with Mikael, I have frequently used IKEA as an example of ‘best practice’ in my public appearances. IKEA demonstrates that it is possible to be profitable, take your corporate responsibility seriously and stay true to your values. For me, IKEA is a perfect example of a successful company that contributes greatly to society.

"Together with UNICEF IKEA helps hundreds of thousands of children in India to have a better life."

New kind of leadership I have spoken extensively with Mikael Ohlsson and discussed IKEA’s unique position and culture. Mikael, just like IKEA’s founder Ingvar Kamprad, is a wonderful role model for the new kind of leadership we need right now. I see in him a deeply felt belief that you have to contribute to the wellbeing of people. We discussed questions that are now being posed with respect to the climate, overpopulation, water and poverty. More and more leaders in business feel that these issues can no longer be ignored and have to be addressed now and on another level than how they are being addressed in the world of politics. We need new alliances and governments, companies and non-governmental organisations to work together so that we can successfully resolve these economic and social issues. IKEA already does this. Of course IKEA wants to be profitable; every company has to make a profit to guarantee their future. But IKEA shows us an alternative way of doing business, in which companies do not hide behind their competitors or governments, but step up to the challenge in a down-to-earth and pragmatic way.

"The accountant in the future will actively exchange and discuss ideas with the CEO."

I started working at Ernst & Young because I really believe they are significantly contributing to this process. Analysing financial reporting will remain our core business, but I am convinced that the accountant of the future needs to have a broader view and understanding of organisations. He will continue as sparring partner to the CFO, but he will actively exchange and discuss ideas with the CEO. In the future he will take a more active role in helping companies to achieve their goals in relation to corporate responsibility and help the company to be more transparent in this area as well. I think it is wonderful that together with IKEA, we are able to move towards what we call, integrated reporting. Actions speak louder than words, and that is exactly why IKEA is a front runner in the area of corporate responsibility.'

Ernst & Young | 33

Many thanks to

Interviewees (alphabetic order) Erik Åström Jan Peter Balkenende Coen Boogaart René Buchmann Ruben de Jong Ingvar Ganestam Martin Gröli Anders Jakobsson Jan Johnsson Oscar Jonker Pinaki Mishra Stig Nilsson Håkan Persson Martin van Dam Marcel van Loo Richard Verschuren Interviewers Renate Tromp, Scrub the Mind Jonas Rehnberg, Jonas Rehnberg Information Translators Rosemary Egan-Kop Gerri Meredith Creative Designers Arthur van Oosterhout Eduard Plaat Chad Edwards Olga Draisma, OntwerpKeuken

34 | CONTINUING THE JOURNEY TOGETHER

Photographers Chris Hoefsmit, Chris Hoefsmit Fotografie Jurrian Hoefsmit, Chris Hoefsmit Fotografie Markus Marcetic, Markus Marcetic Photography Coordinators Amanda Lans Camilla Palmqvist Yvonne Ruigt, IKEA Group Editor Richard Verschuren Printer De Resolutie We would like to thank the IKEA Group for permission to use and providing images and information.

Ernst & Young | 35