The IKEA effect – overestimating the enthusiasm?

The IKEA effect – overestimating the enthusiasm?

by mnewman, June 2, 2016

The IKEA effect: an equal threat to change as “not invented here” but surprisingly little addressed in IT transformation. Why?

 

Beauty is in the eye of the beholder?

Beauty is in the eye of the beholder?

 

Change Practitioners, Business Analysts, leaders and project teams are aware of “not invented here” – an effect where people reject, resist or dismiss a good idea because it wasn’t grown in their neck of the woods. There’s a lot of research and practical approaches on dealing with this. But what of its cousin, the IKEA effect? Never heard of it? You’re not the only one.

The IKEA effect is very common, as anyone who has ever looked at eBay (or local equivalent) will testify. For those who haven’t, it’s worth a scroll through to see the effect in action. You’ll come across plenty of average products, usually a bit rough round the edges, with quite incredible prices attached. In keeping with the name of the effect you can indeed find examples of IKEA furniture, often tattered or well used, with an astounding premium. So what’s going on?

In 2011 Michael I. Norton of Harvard Business School, Daniel Mochon of Yale University, and Dan Ariely of Duke University published The IKEA Effect: When Labor Leads to Love. In the paper they observed that when they assembled IKEA furniture, created an origami figure or built a Lego creation people tended to value it far more highly than an impartial outsider would. In other words: their effort resulted in them attaching a value premium. This wasn’t just a personal attachment, they believed that others would be prepared to pay the price they assessed.

As an example, two groups of origami novices were given challenging models to make. One group with good instructions turned out amateurish models; the other group had poor instructions and their models were worse still. Both groups rated the monetary value of their ham-fisted creations far above that given by impartial observers. Astoundingly, those with the tough instructions valued their product higher than the superior product of the other group. The graph here shows this disparity.

 

origami

 

This disparity is strengthened further with the Endowment Effect, where the ownership relationship between the individual and an object leads to inflated valuation. Naturally the “buyer” has none of this attachment, and only sees a bewilderingly high valuation. The combination of attachment to a product and having had a hand in making it leads to quite inappropriate valuations.

 

So what does this mean for change management?

There is a very high chance that anyone who has put in effort on a change will bestow the outcome with more value than an impartial business recipient might perceive. This schism between the “self-evident” value of the change and the value we should expect from impartial observers can lead to massively misjudging the change effort required. If our starting assumption is that the change has self-evident value that really isn’t there, we will overplay the desirability of the future state on a colossal scale.

The more challenging the project becomes and therefore – to that impartial observer – the less convincing the sell, the more likely we are to see it as a “no-brainer”. This chimes with experience: I’ve been on projects that have been a hair’s breadth from cancellation where the project team is screaming “it’s obvious the change is a good idea”. Clearly not.

On a portfolio management level it can lead to absolute pigs of ideas being funded, though this is often reinforced by chasing sunk costs.

There is a greater risk of all the above when an ‘ownership’ connection starts to form between a team member and the outcome/change. It’s not simply loss aversion or avoiding reputational damage; the individual will truly believe that the delivered product is self-evidently good. If the Change Manager begins to exhibit such biases, the risk of poorly judged communications, missed interventions and disbelief at ‘irrational’ resistance will be great.

So what are we to do? Stay objective. The easiest way to do this is to leverage you network. Ask your change agents, get them to ask uninvolved people. Form the “What’s in it for me” by listening not telling. Check yourself and check your team. In particular check your sponsor and project managers. Is the IKEA effect in action here?

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