Labor Leads to Love

This blog is based on the HBR Article written by Michael I. Norton as a part of "Breakthough Ideas for 2009". This following analysis and further ideation is done as a part of an Assignment in Innovation and Entrepreneurship. 


Lets first get a glimpse of the article: 
The IKEA Effect: When Labor Leads to Love by Michael I. Norton

Labor is not just a meaningful experience—it’s also a marketable one. When instant cake mixes were introduced, in the 1950s, housewives were initially resistant: The mixes were too easy, suggesting that their labor was undervalued. When manufacturers changed the recipe to require the addition of an egg, adoption rose dramatically.

Ironically, increasing the labor involved—making the task more arduous— led to greater liking. Research conducted with my colleagues Daniel Mochon, of Yale University, and Dan Ariely, of Duke University, shows that labor enhances affection for its results. When people construct  products themselves, from bookshelves to Build-a-Bears, they come to overvalue their (often poorly made) creations. We call this phenomenon the IKEA effect, in honor of the wildly successful Swedish manufacturer whose products typically arrive with some assembly required.

In one of our studies we asked people to fold origami and then to bid on their own creations along with other people’s. They were consistently willing to pay more for their own origami. In fact, they were so enamored of their amateurish creations that they valued them as highly as origami made by experts. We also investigated the limits of the IKEA effect, showing that labor leads to higher valuation only when the labor is fruitful: When participants failed to complete an effortful task, the IKEA effect dissipated.

Our research suggests that consumers may be willing to pay a premium for do-it-yourself projects, but there’s an important caveat: Companies hoping to persuade their customers to assume labor costs—for example, by nudging them to-ward self-service through internet channels—should be careful to create tasks difficult enough to lead to higher valuation but not so  difficult that customers can’t complete them.

Finally, the IKEA effect has broader implications for organizational dynamics: It contributes to the sunk cost effect, hereby managers continue to devote resources to (sometimes failing) projects in which they have invested their labor, and to the not-invented-here syndrome, whereby they discount good ideas developed elsewhere in favor of their (sometimes inferior) internally developed ideas. Managers should keep in mind that ideas they have come to love because they invested their own labor in them may not be as highly valued by their coworkers—or their customers.

Michael I. Norton is an assistant professor at Harvard Business School in Boston.

Product Idea

Why do companies look outside for Business/Product Ideas when they have thousands of brains within the organisation. Is it that they cant think in an innovative way or is it that the top management has just not explored that option? 

This can be due to 2 reasons - 1. The Organisation Structure, 2. Lack of interaction between management and rest of the employees. 


Let's take a break from these business talks and talk about something we all enjoy doing these days - Farming. This wonderful application on Facebook has over 3 lakh fans. Visitors are ploughing, watering their plants, harvesting, helping neighbours and what not. People are getting pleasure from the simple fact that they have grown fruits and now they sell them and earn coins. Perfect example of how labour leads to love.

Based on this Idea of Farm Ville, The Product Idea that strikes me (with help from some of my friends :) ) is of a similar application for business organisations. An application which revolves around day to day life in an organisation, where the management is supposed to solve business problems and come up with new product ideas. The difference in this application is every employee in the organisation would be allowed to have a say and do the same though this game. 


Lets call this game - "The Game Called Work"


Let's take a situation where one comes into office and logs into this business application for 15 minutes every morning. You know what is happening where in the company(All Virtual). You foresee a business crisis because of a wrong move by someone in the game. You immediately inform the "boss" about the problem also suggesting your own solution to the same. Immediately, rest of the employees can counter you or give better suggestions. The best suggestion gets selected, gets applied to the situation to avoid a huge business crisis. The one who identified the problem gets a bonus and also to the one who suggested a solution. All virtual ofcourse. 

Situation 2: The company has grown(in the game) and is now looking out for a new product idea. The choice is between looking out for a consultant(who is not from the company/players) or asking for ideas from employees. The player who comes up with the best product idea again earns a bonus. The idea is to put the employees through business simulations and see how they analyse and solve issues. 


All employees including the real CEO would start from Ground Zero and grow up the ladder. 


This way, one can grow up the virtual corporate ladder, and become a virtual Manager, VP, MD, CEO.. 


One can use his real name or a player name. 


The game would also teach you how to manage your money, how to earn salary, get an incentive, how to strategise, to work in teams and many more lessons of business and life which are difficult to be taught in class room sessions. 


How can the employees benefit out of this? 


By letting employees to spend some time on strategizing, solving business problems and getting them to work on product development, the organisation can improve employee productivity because research proves that when one gets distracted, his productivity towards his actual work increases. 

Let's get distracted a little by distraction



Distraction has a bad rap. It's seen as something that prevents you from achieving your goals. We get distracted. Focus, on the other hand, is seen as positive and active — something you do to achieve your goals.

But the skill of distraction is important now more than ever. We are living in an age of fear — swine flu, terrorism, global warming, child kidnappings, the economy — that reduces our productivity at best and destroys our health, relationships, and happiness at worst.

Unfortunately, the more we feel afraid, the more we read about the source of our fear as we try to protect ourselves. Afraid of losing your job or your nest egg? Chances are you're following the market closely and reading more articles about the economy than ever before. According to a recent poll released by the National Sleep Foundation, one third of Americans are losing sleep over personal financial concerns and the poor condition of the US economy.

The solution? Distraction. Read a great book. Watch a movie. Play with a 4 year old. Cook and eat a meal with good friends. Go for a walk. Throw yourself into work.

Distraction is, in fact, the same thing as focus. To distract yourself from X you need to focus on Y.

Recently the CEO of a midsized company complained to say, Sam about one of his direct reports, a senior leader we'll call John who was micromanaging his team.

"Does John have any particular passions you know about?" Sam asked.

"The environment," he responded.

Sam asked him if that issue was also important to the company and he said it was.

"Great," I said. "Start a task force to address environmental issues and opportunities at the company and ask John to lead the effort."

He looked worried. "Won't that distract him from his day-to-day responsibilities?"

Sam smiled. "I hope so."

Extract from How to Teach Yourself Restraint - Peter Bregman

Coming back to our product


How will this benefit the company and the employees

• The Management can identify hidden talent within the organisation. 
• The next manager can be identified and groomed. 
• In a crisis situation, these employees can be involved in problem solving. 
• Organisation becomes more open to hearing out employees. 
• Would help HR identify competencies. 
• Would help build integrity
• Dedication towards certain project will improve
• Mental barriers between people would reduce
• Would help employees in learning how to manage money
• Would lead employees towards strategic thinking
• Helps in grooming leaders. 
• Employees can realise what it is like to be in another department/management. 
• They can develop a liking towards a new role and think about domain shifts withing the organisation.
• Would reduce attrition.

Is there a need


India has a large resource gap of business leaders. And this stimulating game would help groom the future leaders of the country. The need I must say is definitely there. The next step would be to market this well and develop customised games for every industry. 

Do we have any takers here :)


This blog has trigerred the interest to write some more.. So, i should be back soon writing about another topic of interest.