Last updated on May 25, 2020
In his book, “Predictably Irrational,” Dan Ariely describes what he calls the IKEA effect. This concept has been selected as one of Harvard Business Reviews’ Breakthrough Ideas for 2009.
The essence of this effect is to make us “love what we build.” It’s what you feel when you go to IKEA (or Home Depot, or whatever your favorite store is), buy some to-be-assembled furniture, drive back home, and spend the better part of the evening and night building it. The fact that you spent your time and effort building it makes it more precious to you than, let’s say, something that was already built at the store, or something that you paid someone to build for you. This is also why I think my blog is way better than any others that you may have seen out there. 🙂
In one of the posts in his blog, Ariely says:
Labor is not just a meaningful experience – it’s also a marketable one. When instant cake mixes were introduced, in the 1950s, housewives were initially resistant: The mixes were too easy, suggesting that their labor was undervalued. When manufacturers changed the recipe to require the addition of an egg, adoption rose dramatically. Ironically, increasing the labor involved – making the task more arduous – led to greater liking.
If you have ever gone to Build-A-Bear with your kid (or by yourself), and built one of the many variations of the stuffed toys, you would have felt a sense of attachment and pride towards your “creation.” After giving your “bear” a bath and printing its birth-certificate, you would feel very compelled to buy some nice dress from the big collection that you can’t miss. In the end, you would probably have spent $40 or more on “your own” new bear and all the accessories — even though you could have bought all that “ready-made” for much less.
Finally, the IKEA effect has broader implications for organizational dynamics: It contributes to the sunk cost effect, whereby managers continue to devote resources to (sometimes failing) projects in which they have invested their labor, and to the not-invented-here syndrome, whereby they discount good ideas developed elsewhere in favor of their (sometimes inferior) internally developed ideas. Managers should keep in mind that the ideas they have come to love, because they invested their own labor in them, may not be as highly valued by their coworkers – or their customers.
IKEA effect or not, I still maintain that my blog is really nice. 🙂