While it might sound more like some sort of strange addiction to Scandinavian flatpack furniture than anything to do with business strategy, The Ikea Effect is actually a pretty interesting psychological principle which the world’s smartest business leaders have been using to great effect for many years.
If you’ve read our blog at all over the last few months, you’ll probably know a bit about Behavioural Economics.
In a nutshell, Behavioural Economics is the study of how people actually make decisions, why we often do things which are counter-intuitive and - most importantly - how you can influence the decisions people make in your own strategic business plan.
In other articles, we’ve spoken about experiments in hotels with towels, tricks the mind plays on us when we drink wine and how the word New can impact your sales and marketing strategy immensely.
In this piece, we’re going to talk about The Ikea Effect, explaining what it is and how you can use it for success in your business’ strategy.
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Firstly, What is The Ikea Effect?
In a 2012 study by three American psychologists, two groups of people were given various items of Ikea furniture: one group were given it pre-made, the other flat packed and in need of building.
Anyone who has wrestled with an Ikea product in the past would think the first option is much, much more valuable.
However, after building their furniture (probably getting it wrong, shouting at planks of wood and sighing heavily in a passive-aggressive manner a few times along the way), both groups were asked to secretly price the items they had in their possession according to how much they thought they were worth.
Interestingly enough, the group who had built their own furniture priced each item significantly higher than their counterparts who were given the objects pre-made.
When people put some effort, time and even a bit of pain and emotion into creating something - even if it’s just a small amount - they feel more attached to it.
Back in the 1950s, American food company General Mills wanted ideas on how to sell more of its Betty Crocker brand of instant cake mixes, hiring psychologist Ernest Dichter to find ways of boosting the product’s popularity.
After running focus groups, Dichter’s advice to the company was simple: remove the powdered eggs and have people add one fresh egg instead.
He found that the all-instant cake mix just made things too easy for people.
Where’s the fun in having everything done for you?
For me, this principle could also be called The Lego Effect.
Having spent thousands of hours as a kid building things with Lego bricks, I know for a fact that simply being given a pre-made Lego toy would’ve been pretty boring compared to receiving it in a box with the instructions and having to build it myself.
So How Can You Use the Ikea Effect in Your Business Strategy?
Usually marketing agencies like us are hired to help clients generate more interest in their services from the outside in to generate more leads and sales, but we also work with businesses to solve their internal problems and challenges, too.
With that in mind, The Ikea Effect should act as proof to any director or business leader reading this that giving people in your team input into decisions - even just the small ones - will get them involved in the process of building your business and have them feel more attached to your company as a result.
If your style of leadership is too controlling, in which you always have the last say in order to retain power or make decisions completely in silo, it stands a chance that you alienate people somewhat and don’t necessarily inspire the loyalty in your business that you could.
"Of course, we’re not saying you should let an intern create the entire cake mix, but ensuring that others throw an egg into the mix from time to time creates an environment in which people feel genuinely valued and attached to your business."
If one of your challenges is hiring the right people and keeping hold of great staff you already have, consider how much freedom you give the people below and around you in influencing decisions.
Even giving people a voice in small, office culture-type decisions like how the office should be laid out, can make an entire team feel incredibly valued.
Another common challenge in many businesses is innovation. A great way the Ikea Principle can be applied here is by speaking directly to new hires to get their opinions on things; even if no good ideas come to fruition, you’ll make them feel valued and more dedicated to the cause just by asking and listening.
In a piece I previously wrote for Thrive Global, I mentioned the fact that in some Japanese companies, the meetings are held in reverse, with the interns and lower pay grade employees voicing their opinions before the directors and managers in order to ensure everyone’s voice is heard.
Famously, customer loyalty is another key challenge many businesses want to solve in order to increase repeat orders.
Personally getting in touch to ask customers for their feedback, input and ideas can be a great way to get them involved in your business beyond the sale in an incredibly personal way.
As end-users of your product or service who have likely looked at or worked with your competitors in the past, they may have some interesting ideas you’d never thought of before and - at worst - will feel more of a connection to your business than before.
No matter your business or the challenges you face, the key here is to get more people who are important to your business - both internal and external - involved in your processes than ever before.
By simply showing key people that you’re willing to listen and allow them to play their part in building your business strategy, you’ll create a much greater dedication to the cause and overall loyalty through your business strategy than you ever have before.
Sitting in your room angrily grunting while you try to piece key parts of your business together alone, however, will have the opposite effect.
Ready to create a business strategy that aligns all of your departments and smooths out your operations processes? Catalyst can help. Fill out the form below to book a call with me today to learn how.