The Ikea Effect and Democracy

When people use their own labor to construct a particular product, they value it more than if they didn’t put any effort into its creation, even if it is done poorly.

This is known as the ‘Ikea Effect’.

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Photo of flat packed furniture from IKEA (courtesy of Kawanet)

The ‘Ikea Effect’ was an experiment published by Michael I. Norton, Daniel Mochon and Dan Ariely in 2011.

“The Ikea Effect is a cognitive bias that occurs when consumers place a disproportionally high value on products they partially created. The name derives Swedish manufacturer retailer, IKEA, which sells many funiture products that require assembly” — Wikipedia

This reminds me of what it’s like to work in a democratic company.

I’ve been working in a democratic company, NixonMcInnes (NM), for over three years now. It means I get to voice my opinion and make decisions about how the business runs.

Ultimately, as an employee at NM, I get to help construct the business and add value to the development of it.

As a result, I feel a deeper connection to the company than a traditionally run company. And in turn, I place a higher value on it – I believe in the success, I believe in the decisions made and I am extremely engaged in what I do.

The opportunity for business owners is to think about how they can leverage the Ikea Effect, to deepen the connection with the company for customers and employees.

As the experiment suggest, customers will not only pay more for your products, but they will also become more loyal. And I reckon its the same for employees to.

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