You should apply the IKEA Effect to your business
As published on Switch & Shift on April 6, 2016. When was the last time you put together an IKEA furniture unit? Chances are it was not that long ago, as no fewer than 545 million people visited an IKEA store and 217 million copies of their catalog were distributed globally last year. IKEA became the largest furniture retailer by teaching the world how to self-assemble furniture instead of buying it pre-assembled.
While there are many different reasons behind IKEA’s global success, the so-called IKEA effect is definitely one of them. In their 2012 Journal of Consumer Psychology article, researchers Michael Norton, Daniel Mochon and Dan Ariely demonstrated people were willing to pay 63% more for furniture they assembled themselves as opposed to pre-assembled furniture. The IKEA effect is a cognitive bias of people to value something more if they put effort and labor into it. It’s a genius business model for IKEA: customers are finishing off the job themselves and value it more for having done just that!
Given the generally recognized poor state of employee engagement in organizations, pursuing a similar IKEA effect in corporate life would imply that employees derive more value from what they create at work, leading to more happiness and engagement. What lessons can you learn from the experiences IKEA has built over the last 73 years to benefit maximally from an IKEA effect in your business?
You don’t put together a piece of furniture just because you want to experience the resulting IKEA effect. You do it because you want a table to eat at, a bed to sleep in or a desk to work at. Likewise, organizations need to start from a clear set of needs should they wish to engage their employees and have them value their contributions at work. As organizations are dependent on group problem-solving, corporate and personal needs should be integrated creatively, with culture being the invisible operating system at the basis of goal congruence.
Ann Badillo, Entrepreneur in Residence, applies The Rainforest Scorecard to ask the 7 critical and sequential questions in order to better understand how need- and innovation-driven one’s company culture actually is: Who are you? What do you want? Do you have the will? Is it possible? How specifically? How do you build it? How do you use it?
For the many people
IKEA’s overall purpose is to “make everyday life better for the many people“. In a similar vein, it is important for organizations to be inclusive and to tap into the collective wisdom of anyone, irrespective of function or hierarchy. Dorel Juvenile, leader in high quality, safe and fashionable juvenile products, recently applied this for the many people principle.
Given important changes in the market, Dorel is on a mission to move from a product-oriented company toward a more service-oriented company. Instead of just asking its innovation team to come up with solutions for the future, Dorel launched the Dorel Insight Activation Studio, connecting all of Dorel’s employees across their 13 offices to better understand consumer needs and to share interesting ideas and thoughts on the future.
If you’ve ever had the experience of assembling IKEA furniture, you know it does not always come easy. Clear instructions are vital to preventing frustration, and getting the job done rapidly and error-free. In fact, researchers at the University of Tromsø in Norway recently published a study showing that men and women only performed equally well in assembling IKEA furniture when instruction manuals were available.
Adobe knows the importance of clear instructions. In an effort to democratize innovation, any employee can ask for a Kickbox at the reception desk. This red innovation-in-a-box contains a US $1,000 pre-paid credit card, quick reference cards containing a checklist of actions innovators must complete to advance to the next level of six in total, materials such as scorecards, frameworks, exercises to develop ideas, a Starbucks gift card and a candy bar to keep the creative juices flowing.
Or take a look at how Brewdog shares the details of each of its beer recipes with the outside world so anyone can start brewing their beer at home.
If there is one thing people don’t like about IKEA, it is the fact that everything is so awfully standardized. Everywhere you look, you see the same IKEA interior. It explains why initiatives such as Mykea are emerging. With their slogan “Say NO to NAKED furniture“, they encourage people to give their favorite IKEA products a personal and creative touch.
Think about this when you are trying to reach the IKEA effect within your company. While the tools you offer employees to share ideas and co-create are preferably standardized and scalable, make sure employees have the necessary freedom to develop an end product that is personalized and truly unique.
Ready for others to see
A piece of furniture does not go unnoticed. It takes a profound place in our daily lives and is there to be seen, touched and used by family members and guests. Make sure employee contributions are shared, noticed and celebrated so as to benefit from the IKEA effect. After all, we are all social animals wanting others around us to respect and appreciate us.
Patient Opinion understood this very well. This not-for-profit organization provides a safe, simple and effective tool for patients and care-givers to give feedback to health service providers. It works because the health service providers are equally empowered by openly sharing, acting on and responding to patient stories, cultivating trust and understanding over time.
The IKEA effect in business life can be very powerful, leading employees to attribute a higher value to what they have created for the company they work for. Keep in mind what IKEA has learned throughout its long history to make it count!