Book extract: How Billy bookcase shaped Ikea and our modern economy

CHANCES are you’ve owned one of these Ikea products. There are 60 million of them out there. And they’ve helped change our economy.

Ikea Billy bookcases come with glass doors as an option.

IT’S one of the most simple inventions in the world. There’s nothing special about it, and yet it helped make Ikea the behemoth it is today.

Tim Harford tells the extraordinary story of Ikea’s Billy bookcase in this extract from his new book Fifty Things That Made The Modern Economy.

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Denver Thornton hates the Billy bookcase.

He runs a company called unflatpack.com. If you buy flatpack furniture from somewhere like Ikea, but you’re terrified by dowels and allen keys and cryptic instruction leaflets featuring happy cartoon men, you can get someone like Mr Thornton to come to your house to build it for you.

And the Billy bookcase? It’s the archetypal Ikea product. It was dreamt up in 1978 by an Ikea designer called Gillis Lundgren — he sketched it on the back of a napkin, worried that he’d forget it.

Now there are 60-odd million in the world, nearly one for every hundred people. Not bad for a humble bookcase.

In fact, so ubiquitous are they, Bloomberg uses them to compare purchasing power across the world. According to the Bloomberg Billy Bookcase Index — yes, that’s a thing — they cost most in Egypt, just over a hundred US dollars; in Slovakia you can get them for less than forty.

A room full of Billy bookcases, with the standard white ones on the right, and Billy bookcases with glass doors on the left.

Every three seconds, another Billy bookcase rolls off the production line of the Gyllensvaans Mobler factory in Kattilstorp, a tiny village in southern Sweden. The factory’s couple of hundred employees never actually touch a bookshelf — their job is to tend to the machines, imported from Germany and Japan, which work 24 hours to cut and glue and drill and pack the various component parts of the Billy bookcase.

In goes particle board by the truck load, 600 tons a day; out come ready-boxed products, stacked six by three on pallets and ready for the trucks.

In the reception at the Gyllensvaans Mobler factory, in a frame on the wall, is a typewritten letter — the company’s very first furniture-making order from Ikea. The date of the letter: 1952.

Ikea was not, back then, the global behemoth it is today, with stores in dozens of countries and turnover in the tens of billions. Its founder, Ingvar Kamprad, was just seventeen when he started the business with a small gift of cash from his dad, a reward for trying hard at school despite dyslexia.

By 1952, aged twenty-six, young Ingvar had already got a hundred-page furniture catalogue, but hadn’t yet hit on the idea of flat-packing. That came a few years later, as he and his company’s fourth employee — one Gillis Lundgren — were packing a car with furniture for a catalogue photoshoot.

“This table takes up too much darn space”, Gillis said. “We should unscrew the legs”.

It was a light bulb moment. Kamprad was already obsessed with cutting prices — so obsessed that some manufacturers had started to boycott him. And one way keep prices low is to sell furniture in bits, rather than paying labourers to assemble it.

In that sense, it may seem perverse to get a Denver Thornton in to construct your Billy bookcase — it’s a bit like buying ingredients at a supermarket, and hiring a private chef to cook your dinner.

And that might be true if outsourcing the labour to the customer was the only thing that made flatpacks cheaper. But even bigger savings come from precisely the problem that

inspired Gillis Lundgren: transport.

In 2010, for example, Ikea rethought the design of its Ektorp sofa. It made the armrests detachable. That helped halve the size of the packaging, which halved the number of trucks you need to get the sofas from factory to warehouse, and from warehouse to store. And that lopped a seventh off the price — more than enough to cover Mr Thornton’s labour for screwing on the armrests.

The classic Ektorp sofa from Ikea.

It’s not just furniture that benefits from a constant questioning of product design. Consider another Ikea icon: the Bang mug. You’ve probably had a drink from one — with yearly sales reaching 25 million, there are plenty of them knocking around. Its design is distinctive — wide at the top, tapering downwards; a small handle, right by the rim — and it’s not motivated purely by aesthetics.

Ikea changed the height of the mug when it realised that it could make slightly better use of the space in its supplier’s kiln in Romania. And by tweaking the handle design, Ikea made them stack more compactly — more than doubling the number you could fit on a pallet, and more than halving the cost of getting them from the kiln in Romania to the shelves in the store.

It’s been a similar story with the Billy bookcase. It doesn’t look like it’s changed much since it was designed in the late 1970s, but it does cost 30 per cent less. That’s partly due to constant, tiny tweaks in both product and production method. But it’s also thanks to sheer economies of scale — the more of something you can commit to making, the cheaper you can get it made.

Look at Gyllensvaans Mobler: compared to the 1980s, it’s making 37 times as many bookcases, yet its number of employees has only doubled. Of course, that’s thanks to all those German and Japanese robots.

Yet a business needs confidence to sink so much money into machinery, especially when it has no other client: pretty much all Gyllensvaans Mobler does is make bookcases for Ikea.

Or consider, again, the Bang mug. Initially, Ikea asked a supplier to price up a million units in the first year. Then it said: what if we commit to five million a year for three years? That cut the cost by a tenth. Not much, perhaps, but every penny counts.

Just ask the famously penny-pinching Ingvar Kamprad: in a rare interview to mark his ninetieth birthday, Kamprad claimed to be wearing clothes he’d bought at a flea market. He is said to fly economy and drive an old Volvo.

This frugality may help to explain why he’s the world’s eighth-richest man — although the four decades he spent living in Switzerland to avoid Swedish taxes may also have something to do with it.

Still, penny-pinching isn’t all it takes to succeed. Anyone can make shoddy, ugly goods by cutting corners. And anyone can make elegant, sturdy products by throwing money at them.

To get as rich as Kamprad has, you have to make stuff that’s both cheap and acceptably good.

And that’s what seems to explain the enduring popularity of the Billy bookcase. “Simple, practical and timeless” is how Gillis Lundgren once described the designs he hoped to

create, and Billy is surprisingly well accepted by the type of people you might expect to be sniffy about mass-produced MDF.

Sophie Donelson, who edits the interiors magazine House Beautiful, told AdWeek that Billy is “unfussy” and “unfettered”, and “modern without trying too hard.” Furniture designer Matthew Hilton praises an interesting quality: anonymity.

A modern version of Ikea’s Billy bookcase with glass doors.

Interiors creative Mat Sanders agrees, declaring that Ikea is “a great place for basic you can really dress up to make feel high-end”. Billy is a bare-bones, functional bookshelf if that’s all you want from it, or it’s a blank canvas for creativity: on ikeahackers.net you’ll see it repurposed as everything from a wine rack to a room divider to a baby-changing station.

But business and supply chain nerds don’t admire the Billy bookcase for its modernity or flexibility. They admire it — and Ikea in general — for relentlessly finding ways to cutting costs and prices without reducing the quality of the product.

That is why Billy is a symbol of how innovation in the modern economy isn’t just about snazzy new technologies, but about boringly efficient systems.

The Billy bookcase isn’t innovative in the way that the iPhone is innovative. The innovations are about working within the limits of production and logistics — finding tiny ways to shave more off the cost, all while producing something that looks inoffensive and does the job.

And that annoys handyman Denver Thornton. “It’s just so easy and monotonous,” he says. “I prefer a challenge.”

Fifty Things That Made The Modern Economy by Tim Harford.

This is an extract from Fifty Things That Made the Modern Economy by Tim Harford (Hachette Australia) available from 11 July in paperback and ebook.

Tim Harford writes the ‘Undercover Economist’ column for the Financial Times.

Originally published as Book extract: How Billy bookcase shaped Ikea and our modern economy