The IKEA Foundation: designing for life

Homeware giant IKEA shook up the furniture business with its fresh approach to design and innovation. Now, says Per Heggenes, CEO of the IKEA Foundation, it’s taking aim at the aid industry

The earth is red, barren and flat. Amid the dust and mud, bare branches poke listlessly out of the rocky ground, but not much else grows here. Yet Dollo Ado, in southeast Ethiopia, supports life and plenty of it: around 200,000 Somali refugees live in the five camps under these bright blue skies.

In the past year, the stark camps on Ethiopia’s border have given life to something new: a shelter that could improve the everyday lives of millions. It is here that the IKEA Foundation – the philanthropic arm of the eponymous company – and its partners tested a prototype shelter for refugees.

“The best comment came from a man in Iraq. ‘The tent was not home; I would not have welcomed you in a tent. I am able to welcome you in my shelter’,” recalls Olivier Delarue of UNHCR Innovation, which aided in the shelter’s development.

Per Heggenes, the thoughtful, measured CEO of IKEA Foundation, has visited the camps many times. “Can you imagine the hardship of living in a tent for some 17 years?” he asks, alluding to the fact that many refugees stay in camps for more than a decade. “That’s when we said we will invest in an innovation process to look for a way to develop a better product to meet requirements, provide a better quality of living for people, and save money.”

“I tried to find a niche for the IKEA Foundation that wasn’t just a copy of everyone else” It’s hard to mention IKEA and not think ‘flatpack’. The home furnishings giant has built its reputation on quirky, affordable designs, neatly packaged to assemble where needed. This ethos – of fresh thinking and accessibility for the masses – is what defines IKEA. It is also what drives its foundation.

The foundation was born in 1982 to support developments in architecture and design, 39 years after the company was founded. IKEA’s philanthropy has matured alongside the business, taking a broader social focus since 2009. Now, the foundation is famously generous. It gave €101m ($124m) to charities and aid organisations in 2013, up 21 per cent on the previous year, and it is the largest corporate donor to the UN High Commissioner for Refugees (UNHCR). It has pledged $95m over recent years to the aid agency.

Like its sister company, the foundation has sought to do more than business as usual. “One of the things I did was to take a good look at what was being done in philanthropy,” explains Heggenes, who took over the reins in the 2009 shake-up. “I tried to find a niche for the IKEA Foundation that wasn’t just a copy of everyone else.”

That niche, as it turns out, is innovation. The foundation funds both pioneering schemes, such as Water.org’s microloan system to increase access to water and sanitation, and invests in kickstarting new ideas.

The foundation was the founding sponsor of UNHCR Innovation in 2012, injecting $1m over two years into a small unit dedicated to developing better aid delivery for refugees. “Aid organisations need, in many ways, to think like companies: corporates have to innovate constantly or else they die,” Heggenes explains. “The structure in the development world is different, but that doesn’t mean they can’t drive efficiency and increase the quality of what they do.”

More than the start-up cash, the foundation lent the unit its expertise, explains Delarue. The unit takes a crowdsourcing approach, where ideas bubble up from UNHCR field staff. One such idea is a tablet app to help children learn a second language – ideally the primary language used in the camp. IKEA Foundation has put up a grant of €2.5m ($3m) to develop the idea.

Heggenes himself is a graduate of the grassroots approach. With no prior experience in the philanthropic sector before the foundation, getting out of the Netherlands-based headquarters at least one week each month has been a priority.

“The way I learn best is by going into the field, interacting with the people we’re trying to help and talking to people on the ground,” he says.

The prototype shelter is classic IKEA. It combines the company’s business savvy, the foundation’s financial and collaborative clout, and its partners’ on-the-ground experience. The foundation, UNHCR and a not-for-profit design agency called Refugee Housing Unit have been working on the cabin-like shelter since 2010, and plan to put it into production in early 2015. The lightweight, clip-together unit comes – of course – flatpacked to save on transportation costs. At $1,150 each, the shelters cost twice as much as a tent; but boast six times the longevity. With a solar panel energy source, insulation, and designed with privacy in mind, they are a vast improvement on their predecessor.

Most of the components are being honed after field tests in UNHCR camps in Dollo Ado, Ethiopia and northern Iraq. Crucially, the new shelter is fire retardant and equipped with an anchoring system. “People were very happy about this aspect because too often tents have a tendency to take off when it’s very windy,” says Delarue. “A lot of accidents happen when a candle blows over because the whole shelter starts moving and they catch fire.”

IKEA Foundation invested more than $4m in the development of the shelters and its specialists helped find and negotiate contracts with suppliers, according to Heggenes. Tellingly, the foundation put as much thought into product viability as the idea itself, investing some $6m to set up Refugee Housing Unit AB, the social enterprise that will handle manufacturing – sourcing parts from 10 different countries – and sale of the shelters. Any profit will be ploughed back into research and development on further designs.

“If it’s a not-for-profit, then you can’t scale it,” Heggenes insists. “If you depend on charitable giving to produce each shelter, then the charitable giving would limit the number of shelters you can produce.”

The social enterprise, owned by a separate foundation called Housing For All, will pay back the capital to IKEA Foundation, but on a longer-term payment schedule than a commercial loan.

Heggenes is matter-of-fact about the risks the foundation has taken to get this far – he sees it simply as their duty. “We were willing to go into a multi-year process of trying to develop something that might not have come to anything,” he says. “It requires a combination of long-term investment and being ready to make mistakes. But we can only do this if we have good relationships to collaborate with different organisations. That is what makes it a success.”

Investing for the long-term is what the foundation does – a legacy of its progenitor, IKEA. IKEA’s founder, Ingvar Kamprad, gave the company to the Netherlands-based Stitchting INGKA Foundation in 1982 – all profits are reinvested in the business or go to philanthropy. In 2013, 3 per cent of company profits went to the foundation.

“The important thing, as IKEA’s founder said, was to secure the eternal life of the company,” Heggenes pauses, then adds, “We’re not exposed to the next quarter-type of income generation you typically have if you’re owned by outside shareholders.

“[The company’s] social responsibility activities will not go away because they have a bad year,” he continues. “It is an integrated part of the business strategy.”

The company has its own social responsibility (SR) drive and attempts to source materials – wood, cotton, water – sustainably. Its focus now is the result of a lesson learned 15 years ago, when the company found child labour was being used in its supply chain. That jolt spurred the firm to find ways to address the root of the problem, particularly in India.

“That was the basis for why we decided to work with children and families in the poorest communities today,” says Heggenes.

Since 2009, the foundation has supported Save the Children. The foundation claims to have helped 156,000 children out of the cotton growing industry in India and in to school in five years.

Heggenes is careful not to criticise other companies, but points to IKEA’s ownership structure as part of the reason the company is committed to living up to its social responsibilities. Another factor is the values – “You can be as smart as you like; if you don’t have the right value-set you won’t get hired” – that permeate the organisation.

“We’re always talking about money, but very few are talking about creating savings from an efficiency and cost perspective”  If IKEA’s ethos is making the best products for people, then its SR efforts and the foundation are natural extensions of the business. “An important part of IKEA strategy is to make sure they minimise the impact they have on the communities in which they operate,” explains Heggenes. “What we do through the foundation is, on a larger scale, develop programmes that will permanently help create a better standard of living for people who are part of those communities.”

One way to do this is to play to IKEA’s strengths, spurring innovation in process, not just products. One indisputable asset is the company’s logistics expertise. In 2012, the foundation piloted a series of workshops with supply chain specialists from UNHCR and IKEA to swap best practice in sourcing, quality control and design, among others. The knowledge partnership is part of the foundation’s goal to “make a difference and use our resources – including the company – in a sensible way,” says Heggenes.

One outcome is the redesign of UNHCR’s kitchen sets – a kit of pots, plates and cutlery distributed to each newly displaced family – to bring down price and increase quality and ease of production. “This was where the science of IKEA came into play,” says Delarue.

The savings that can be made from exploiting companies’ expertise is a source of real potential and has been untapped until now, according to Delarue. “We’re always talking about money, but very few are talking about creating savings from an efficiency and cost perspective,” he adds. “That’s the new frontier for us.”

While IKEA foundation has had limited programmes in the Middle East so far, the crisis in Syria and the foundation’s close relationship with UNHCR could see this work ramp up in future. The foundation has already helped the UN agency and medical aid charity Médecins Sans Frontières provide emergency relief for Syrian refugees, including in-kind donations of IKEA mattresses and blankets – which are factored into IKEA’s production line. The foundation gifted 50,000 mattresses to UNHCR in 2013.

The foundation is currently plotting what it could do to alleviate the strains put on host countries such as Jordan and Lebanon by the influx of refugees, particularly in access to water, schools and jobs.

Among Heggenes’ proudest achievements is the foundation’s collaboration with UNHCR and local authorities in Ethiopia to integrate Somali refugees with their host communities and creating opportunities so the refugees are not seen as a burden. It is perhaps a lesson that can be applied to other refugee situations, too. Seen through its corporate lens, IKEA is innovating again – but this time bringing its brand of innovative, cost-saving solutions to truly improve the lives of millions.

Photo credit: IKEA Foundation