One of the great entrepreneurs of the 20th century, Ingvar Kamprad, the founder of IKEA, passed away today. As Reuters pointed out in its short biography, Kamprad created a store — as a teenager mind you — that today has more than 400 locations, revenues of $62 billion, and a cultural ubiquity that very few consumer products could ever hope to attain.
Having read the IKEA story over the years and in various forms, there are just so many lessons to take from the one-time startup turned corporate behemoth.
The biggest innovation that Kamprad discovered was that consumer inconvenience could be massively lucrative. As Youngme Moon, a business professor at Harvard Business School, wrote in her book Different (my TechCrunch review here): “Most global brands build their reputations around a set of positives—the good things they do for their customers. What’s intriguing about IKEA is that it has consciously built its reputation around a set of negatives—the service elements it has deliberately chosen to withhold from its customers.”
IKEA is quite literally the antithesis of the view that the consumer is always right.
Kamprad realized that furniture could be “flat-packed” to massively reduce the cost of shipping and transportation, which at the time were among the product’s largest cost drivers. Table legs are unwieldy, so why not just take them off?
Except, now every consumer buying furniture would have to assemble it. In the case of complicated furniture items like armoires, there can easily be fifty or more steps involved in the construction of the piece, with an instruction guide that remains as confusing as ever at all the key steps.
Yet consumers love it, so much so that researchers have actually studied the effect of consumers investing their own labor into a product as The Ikea Effect. What researchers have found is that consumers love products far more when they complete the assembly themselves, because the labor we invest makes it seem as though the product is ours. Irrational, yes, but that predictable love ensured that consumers repeatedly flocked to IKEA stores.
Indeed, that investment of labor is so key to the brand that IKEA has famously resisted building out a delivery and installation crew à la Geek Squad to continue to force customers to build their furniture (or at least switch to TaskRabbit).