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The Economics of IKEA: Why Does Labor Lead to Love?

Loved (or loathed) by millions, IKEA is the worlds largest furniture retailer with a unique business model. Their brilliantly designed flat-pack furniture means the customer does the work, and IKEA has a low-cost, high-profit outcome.

One of the secrets of IKEA’s success has been identified as ‘the IKEA Effect’, which states that people are more engaged and love an item more when they have put effort into creating that item or outcome.

Simply put, when you help build something, you are more attached to it.

“Counterintuitive though it may seem, part of furniture giant IKEA’s success stems from its policy requiring its customers to build its products.”

The Economics of IKEA: Why Does Labor Lead to Love? – The Wall Street Journal.

This do-it-yourself effect is also evident in instant cake mixes. Originally, low-selling, instant cake mixes were complete, and you only had to add water. Success came when research showed that ‘add one egg’ gave the cook more engagement, ownership and pride in the outcome.

Leading teams today is very different.

Generational change, distributed working, and digital transformation delivers a unique combination – something we have never before experienced. And there’s no one size fits all solution!

While leaders establish a new way of work, a new culture and simply try to bring their teams together, one solution is to have teams do the work themselves. Well designed do-it-yourself tools based on solid research will generate your own ‘IKEA effect’, engaging teams and delivering improved employee experience.

Where do you start?

As a community, our goal is to help our members – leaders, teams and organisations – embed innovation culture and build healthy collaboration.

Explore our free DIY tools and resources developed through collaboration with leaders, partners, members and experts.

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