Matt Franz : Zealous For Knowledge

The Ikea Effect

Scott Norton brought up the Ikea Effect when he talked with Patrick O’Shaughnessy. The concept is that people are more attached to something they build it than if they buy it.

Michael Norton of Harvard Business School did an experiment in 2011 to show this. First he had a group of consumers build furniture from Ikea. Then, the consumers bid on furniture which included pieces they had built as well as pieces others built. The results showed the consumers were willing to pay 63% more for the furniture they built.

This phenomenon was first known as the “effort justification” effect. In the 1950’s researchers found the more invested a person is in activity, the more they valued its outcome.

For example, the first instant cake mixes struggled because they were too easy. Once the mixes were changed to require cracking an egg, sales picked up. Now it felt like baking.

Build-A-Bear is another example of the Ikea Effect in action. Customers design and build their own teddy bear, and in the process become attached to it. As a result, Build-A-Bear can charge higher prices than competitors.

This effect is not limited to physical products. One study had a group of females undergo “no initiation, mild initiation, or severe initiation” before entering a group. The women’s final appraisal of the group’s value was proportional to their effort to join the group.

The Ikea Effect seems to have its roots in the concept Matthew Crawford explored in Shop Class As Soulcraft. Crawford observed that humans have an innate desire to complete physical tasks and feel competent at those tasks. This is why toiling all day answering emails is much less satisfying than fixing a leaky pipe on your own.

The Ikea Effect could also be one of the root causes of other biases, like the sunk cost effect or “not invented here” syndrome, where managers prefer their own ideas to those brought to them.

The implications of the Ikea Effect for business are that allowing your customers the ability to customize their product could make them value it more and be more satisfied with it.

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