The IKEA Effect

Photo by Semen Borisov on Unsplash

The Ikea effect is a cognitive bias where we place greater value on those things we’ve created ourselves. 

There’s value in this idea when you’re a business and you’re providing customization options to your customer. The more they can personalize the product even partially, on their own, the more they will value it. Makes sense. 

But we need to be wary of this bias when it comes to ourselves. 

Just like the case of the customer, we tend to overvalue those products (or product elements) that we’ve created internally - even when similar, higher quality versions of the same product element are available externally. 

At times, we rationalize this on the basis of cost (as in it’s cheaper to do it ourselves). Other times (more often), it’s because we think we know more about our needs, and so it simply isn’t possible nor feasible to rely elsewhere. 

Sometimes, this is right. The other options may be unproven, they may result in a lack of congruence in terms of how we work and our culture, they may represent an area where we need to maintain strength in terms of our service offering. 

But frankly, that’s not the case most of the time. 

Most of the time, we tend to revert to a more parochial approach. That is, that we need to create this ourselves for it to be worthwhile. 

The problem is, though, that the world is far more complex, far more specialized than ever before. The idea of an end-to-end, fully internally developed provider is giving way to an approach that favors - requires - ecosystem based thinking. Best of breed is the path forward, even within organizations that favor an end to end service approach. 

So it’s worth asking ourselves, what matters, what our customers value and where we should be spending our time. The real path to value creation.