Cost reduction isn’t a strategy, but rather a way for companies to take better advantage of their strategies. When a business confuses reducing cost with undercutting its value proposition, it’s making a critical mistake. Ikea, however, gets difference right. In “Ikea’s Path to Selling 150 Million Meatballs” published on the Wall Street Journal, Jens Hensegard illustrates how the company’s low-profile food department has grown to rival full fledge restaurant chains. The key is in making innovation and cost reduction work together.

Despite being a quirky idea at first, Ikea’s rational is very straight-forward: hungry costumers will stay longer in its stores if they have food. In essence, the strategy involves introducing a brand new value proposition to its furniture business. A nuisance PoD like this that enhances customer relationships and purchasing experience is very powerful since the actual furniture sold by different stores varies relatively little .

But a great idea alone isn’t enough. Ikea follows up implementation with cost reduction techniques: selecting a small standard menu to increase inventory velocity, outsourcing production, and developing dishes that offer the most “fullness” for the price. Although Ikea’s food outlet has the potential to become an independent revenue stream, it’s probably more profitable if it remains a cheap complimentary service to help capturing lucrative furniture sales.