Story:
Are the Principles of War applicable to corporate management?

Principles of war

IKEA’s Way

(Testament of a furniture dealer)

ENEL - Endesa

Clearly defined Objective:

“No one starts a war without first being clear in his mind what he intends to achieve by that war”.

The product range – Our identity:

"We shall offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them".

Conquer Endesa

Offensive:

“Seize, retain, and exploit the initiative. Offensive action is the key to achieving decisive results. It is the essence of successful operations…and react to rapidly changing situations”.

Reaching good results with small means:
“Wasting resources is a mortal sin at IKEA. It is not all that difficult to reach set targets if you do not have to count the cost. Use your resources the IKEA Way. Then you will achieve good results with small means”.

20/02/07 Summit Spain – Italy in Mallorca;

27/02/07 Enel announced the ownership of 9,99% of Endesa

Mass:

“Concentrate the effects of combat power at the decisive place and time. Commanders mass the effects of combat power to overwhelm enemies or gain control of the situation. They mass combat power in time and space to achieve both destructive and constructive results”.

Concentration – important to our success:

“The general who divides his resources will invariably be defeated. For us too, it is a matter of concentration – focusing our resources.  We can never do everything, everywhere, all at the same time”.

All the economic resources were diverted to the operation

Economy of forces:

“Economy of force involves the discriminating employment and distribution of forces. Commanders never

Concentration – important to our success:

“Our range cannot be allowed to overflow. We will never be able to satisfy all tastes anyway. We must concentrate on our own profile. We can never promote the whole of our range at once. We must concentrate. We cannot conquer every market at once. We must concentrate for maximum impact, often with small means”.

All the economic resources were diverted to the operation

Morale:

“High morale is the quality which makes men keep going in the most difficult conditions or show outstanding courage in times of fatigue and danger…morale is enhanced by comradeship and a sense of group loyalty which the commander must foster in his unit’s esprit de corps”.

The IKEA spirit – a Strong and living reality – A glorious future:

“The true IKEA spirit is still built on our enthusiasm, from our constant striving for renewal, from our cost-consciousness, from our readiness to take responsibility and help out, from our humbleness in approaching our task and from the simplicity of our way of doing things. We must look after each other and inspire each other. Those who cannot or will not join us are to be pitied”.

Very High – Fulvio Conti was personally convinced to be successful

Unity of Command:

“For every objective, ensure unity of effort under one responsible commander”.

Taking responsibility – a privilege:

“Exercise your privilege – your right and your duty to make decisions and take responsibility”.

Fulvio Conti, the Enel President and CEO, was personally leading the operation

Security:

“Never permit the enemy to acquire an unexpected advantage. It does not involve excessive caution. Calculated risk is inherent in conflict”.

Profits give us resources:

“To achieve our aim, we must have resources – especially in the area of finance. We do not believe in waiting for ripe plums to fall into our mouths. We believe in hard, committed work that brings results”.

A consortium of Banks was formed to provide means for the operation

Surprise:

“Strike the enemy at a time or place or in a manner for which he is unprepared. Surprise results from taking actions for which an enemy or adversary is unprepared”.

Doing it a different way:

“Our protest against convention is not protest for its own sake: it is a deliberate expression of our constant search for development and improvement”.

Withering: the battle for the control of Endesa started the 5/07/05. The name of Enel never went out as a possible buyer until the 27/02/07

Simplicity:

“Prepare clear, uncomplicated plans and clear, concise order to ensure thorough understanding”.

Simplicity is a virtue:

“The more complicated the rules are, the harder they are to comply with. Complicated rules paralyse”!

75% of control by Enel – 25% of control by Acciona (with a Spanish President)