The IKEA Effect

Recently, Vistage speaker of the year, Dean Minuto, delivered a one-hour webinar to my Vistage groups. In that webinar, he introduced an idea that piqued my interest as it applies to the organizations that work with me. The IKEA effect is a cognitive bias in which consumers place a disproportionately high value on products they partially created. IKEA, a Swedish manufacturer and furniture retailer, sells furniture products requiring assembly.


A description of the IKEA effect follows: “The price is low for IKEA products mainly because they take labor out of the equation. With a Phillips screwdriver, an Allen wrench, and rubber mallet, IKEA customers can build an entire home’s worth of furniture on a very tight budget. But, what happens when they do?” They “fall in love with their IKEA creations. When parts are missing, and the items are assembled incorrectly, customers in the IKEA study still love the fruits of their labors.” Michael I. Norton of Harvard Business School, Daniel Mochon of Yale, and Dan Ariely of Duke identified and named the IKEA effect when publishing the results of three studies in 2011. Their study concluded that “labor alone could be sufficient to induce greater liking for the fruits of one’s labor; Even constructing a standardized bureau, an arduous, solitary task, can lead people to overvalue their (often poorly constructed) creations.” It is the participatory part of this equation that grabbed my attention. Would this same theory apply to a business equation? Do individuals who participate more closely in a process like strategic planning align more closely with the organization and its proposed outcomes?


Participative management is a “type of management in which employees at all levels are encouraged to contribute ideas towards identifying and setting organizational goals, problem-solving, and other decisions that may directly affect them.” This concept makes sense. Employees who participate and contribute are more aligned and connected with your company. As a leader, this seems simple—right? Unfortunately, many leaders fail to engage their colleagues in any significant way to shape the direction of their organization. Since each business is different I thought it might help to review some key areas where your employees can and should participate fully:

  1. Individuals should be involved in their learning and career development program.
  2. Employees should join in helping the company improve overall engagement.
  3. Employees need to participate in process improvement.
  4. Each person can play a role in developing diversity in your organization.
  5. Individuals should understand and participate in some manner in your planning process


Top-down leadership fails to engage employees and makes it much harder to gain their participation and alignment. Don’t be afraid to hand over the Allen wrench, Phillips screwdriver, and rubber mallet to your employees and let them build their masterpiece. They’ll love the result and take pride in what they created—even with imperfections and some warts.

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