The IKEA effect

The IKEA effect is a cognitive bias which refers to the tendency for people to value things they create themselves as qualitatively higher than identical things created by someone else.

The name IKEA derives from the Swedish furniture manufacturer and relates to their business model that allows the consumer to compile and build their furniture themselves at home, based on instructions. A working paper by Harvard Business School points out that traditional economic thinking would suggest a consumer or customer would subtract their own labor from the overall final cost of the product. In fact, the opposite effect can readily be observed and the perceived value of the product is increased the more individual labor is put into it, suggesting there is love in our own labor. 

This relates well to a similar story about cakes. Since 1931, Betty Crocker had been espousing speed and ease in the kitchen to facilitate the life of women living in the city. Part of that was to also invent the famous cake mixture which allowed a person to promptly bake a fresh cake themselves by adding a couple of ingredients. Having to go to the bakery or confectionery to buy a cake was too simple and certainly did not impress the dinner guests. The initial cake mixture required the customer to only add water to the mix and put it in the oven. Betty Crocker struggled to get traction with their new product, even though it ticked off all the economic boxes. It was self-made, could be baked on demand, was very easy, and little could go wrong. Experimenting with variations, Betty Crocker eventually discovered that taking away the milk and the eggs from the mix, effectively asking the customers to put more effort into the baking, made the product a hit. This is where they discovered that people wanted to put their own personal touch to the cake they baked, effectively increasing the home-made authenticity of what they made.

This story shows two things where a clear link can be drawn between cake mixture and self-service BI:

  • Firstly, there is also the presence of a cognitive bias in self-service BI, which allows the user to perceive their own reports they build as being qualitatively higher than they are in reality. This bias is a powerful aspect of successful adoption and plays a significant role in promoting self-service BI within the organization. Users will be keener to sell and promote the analytics work they create and will naturally be keen to share all insights they discover. This can eventually lead to having the self-service BI tool promoting itself, almost going viral.
  • Secondly, the approach Betty Crocker eventually took is not just designing for ease and speed but focusing on designing an entire user experience. This is important in self-service BI as the architect or developer should not only focus on delivering results but put equal focus on the fashion in which the results and insights are delivered to the end user.

The fact is that with self-service BI and the close involvement of the end user in the development process, new psychological dynamics are introduced to the classic IT development process which need to be taken into account. It also reiterates the importance of forgetting some best practices in IT development in order be able to harness the new possibilities and the new approach to data analytics which come with self-service BI.

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