Value Co-Creation at IKEA

“An example of making an ordinary product extraordinary…”

What is value co-creation? According to the Business Dictionary, it is a business strategy focusing on customer experience and interactive relationships. Co-creation allows and encourages a more active involvement from the customer to create a value rich experience. In recent years, consumers are increasingly have helped companies, whether by creating advertising content, informing companies on what products they are interested in or advising companies on how to improve their customer service. Many companies are not encouraging consumers to share their thoughts and one of those companies is the successful retail furniture company IKEA. Rich D’Amico, the deputy marketing director at IKEA USA, states that IKEA is a company built on clear values. The two values relevant for value co-creation are simplicity and working together. In addition, IKEA constantly asks itself the following question: What can we do better? To answer this question, IKEA focuses on the needs of people and try to find a solution for them. According to D’Amico, IKEA relies on consumer insights to drive marketing and product ideas. One of the ways in which IKEA tries to understand the needs of the people better was through a campaign titled IKEA Home Tour. A team of five American employees of IKEA were sent on a yearlong road trip across the United States to give families from diverse backgrounds a home makeover using products from the local IKEA store. The road trip was filmed and the episodes were published via the YouTube channel of IKEA USA. During the IKEA Home Tour, the five employees would help with the planning, decorating and assembling of the furniture for the makeover. The home owners were also asked to provide their input. The IKEA Home Tour provided the employees of IKEA with valuable insights into the needs of people and the way IKEA products could fulfill those needs. The IKEA Home Tour allowed for a unique, inside perspective which would not be possible to gain from in-store contact. Not only did the IKEA Home Tour provide IKEA with valuable insights into the needs of the people, it also increased IKEA’s brand awareness and increased goodwill as the IKEA Home Tour visited people from a multitude of backgrounds (e.g., a homosexual couple). While we in the Netherlands may not find this extraordinary, the United States is relatively prude and for IKEA to show do this shows courage and openness. The trailer for one of the episode of the IKEA Home Tour can be found below: In addition to the example of the IKEA Home Tour (which is also discussed in another blog post), another example of how IKEA increases the consumer experience is through the creation of IKEA experience rooms. In general, IKEA experience rooms are designed in a uniform way and most of the furniture comes from the same collection. However, some minor changes are made in the experience rooms to attract different target groups. All experience rooms portray the needs of everyday life (e.g., cooking, sleeping and entertaining).  The experience rooms allows the customer to gain some inspiration of what they can do with their homes. The value of the experience rooms lies in customers becoming involved in creating and assessing solutions to special needs or everyday problems at home in the true reality. Customers share ideas and suggestions during informal conversations with one another and IKEA employees. Customers are involved and that they create their own experiences and not predefined ones. IKEA also encourages customers to do their own assembly and thus selling the furniture at discounted prices. A consumer may decide to buy all the items in the experience room. However, it is more likely that consumers will mix-and-match the items of several experience rooms to design their own room at home. IKEA has simplified this process by digitalizing all of its products for their design stands. For instance, with the help of IKEA employees, consumers can pick the cupboards they want, the size and the color. IKEA goes one step further by allowing customers to mix and match cupboards. For example, a customer may like the internal designs of cupboard A but like the doors of cupboard B and the handles of cupboard C. With the help of IKEA employees, the consumer’s dream kitchen can be assembled digitally, purchased and delivered. The experience rooms are a clear example of IKEA’s principles related to value co-creation: simplification and collaboration. A standardized cupboard is just a cupboard. However, this same cupboard, disassembled and reassembled with customer input can become a unique cupboard. Therefore, IKEA has shown how simplification and collaboration can make an ordinary product extraordinary without having to ask a premium. Other companies should take a good look at the IKEA business model and find ways to adapt it in a unique way to their own context. In this day and age, mass production is OUT, mass customization is IN! Sources

IKEA & co-creation

IKEA, the Swedish furniture company calls itself the Life Improvement Store. They want to reach even more consumers with their different solutions and demonstrate the unique ideas they have to make everyday life at home better.

Talking openly about co-creation with customers is a main driver for product innovation and creativity. Values as a constant desire for renewal or providing solutions to problems are rooted in their history and how they have evolved as a brand and as a company. Those values have provided a perfect environment for IKEA to “dare” relying on consumer insights to drive marketing and product ideas.

With the Home Tour, which is an initiative to send five American employees on a yearlong road trip to provide families with makeovers that use merchandise from local IKEA stores. This experience will provide many conversations to understand participants needs and desires that can ignite new product developments. The campaign is being made in a documentary series to be produced by creative employees within the IKEA head office. It is published on a special YouTube channel.

This way IKEA is studying people, getting close to them, going into their homes, having conversations, and reading reports. They try to understand and fulfil the needs of consumers, dreams and desires. Through the Home Report they have the opportunity for consumers to tell what is going on in their life and how they can help them. All that information can feed back to communication, to product development, to a store, an online experience.

For me, it comes back to co-creation, collaborative effort between co-works, consumers and the brand” – Rich D’Amico, Deputy Marketing Director at IKEA USA

The fact that consumers are co-creating the value with IKEA through their involvement and work only seems to enhance the service experience, and thus make it easier to develop these relationships. It is in the successful management of these relationship building interactions and experiences that IKEA appears to excel.

I think IKEA is doing a good job by interacting with consumers to better understand their needs, dreams and desires. Especially when the company is visiting consumers’ home the company can understand the consumers and anticipate on it. Customers construct the furniture themselves, so it must be easy and practical to stay competitive to other furniture companies. With the inspiration of customers this can be accomplished, because other customers will also benefit from the improvements. A lot of what IKEA is doing drives marketing is co-created with consumers. And what they do in terms of product development is co-creation with consumers.


Controversial Yik Yak

It seems like a simple idea: create a platform which allows users to anonymously create posts which are linked to specific locations. Still, this idea from Tyler Droll and Brooks Buffington received investments equal to $73 million. These investments result in a company valuation between $300 million and $400 million, all within one year after launch. The whole idea is captured in a very interesting, but controversial app: Yik Yak.

The app Yik Yak was founded in 2013 by Tyler Droll and Brooks Buffington, who directly created the app after they graduated from Furman University in South Carolina. The app had a Facebook like start, since it used the networks as they exist on university and college campuses to spread the app across many students with the help of word of mouth. Soon after the Furman University was added to the app, other neighboring colleges picked up the app. In this way the app spread across the United States and within one year after launch, over 1500 colleges were on the app.

So what is it all about? Yik Yak allows users to anonymously create posts which can only be read by other users which are within a specific area. So based on your location the app divides you into a specific group of users which are within a specific distance from each other. All the users within that specific group can post, read and like the messages, which are called yaks. These yaks can be up-voted or down-voted by other users, so that the yaks get ranked according to popularity. Users can also comment on yaks, to enable the possibility of a conversation between different users. As I explained above, the app is mostly used on colleges across the United States. Tyler Droll, one of the founders of Yik Yak, described his app as follows: “it’s like a bulletin board for your local area.” But although the intentions for this app are well-meant, it turns out that the app is not always used in the way it is supposed to be…

Downside of Yik Yak
One of the negative aspects of the Yik Yak app is that it brings along cyber-bullying. Of course, due to the fact that everyone who is using the app is completely anonymous, users can say anything they want. All kind of forms of cyber-bullying occur through the app like violation threats, sexual assault and racism. Several counter measures were taken towards these negative features of the app. The two founders allowed to geo-fence the app, so that the app cannot be used in specific areas. Due to this measure, the app cannot be used in and around many primary and secondary schools in the United States. If students open the app in the geo-fenced areas, a message pops up saying that the app cannot be used in this area. Besides this, the founders increased the minimal age to download the app to 17 years. Finally, a lot of school across the United States took action to ban the app in and around their campuses.

I think this app is a very interesting example, since it shows two sides of a story. On the one hand, the app raises a lot of money through investments and gets an enormous valuation within a small time period. But on the other hand it struggles a lot with the social aspects of the app. This app is a good example of how users can create and destroy the value of an app. Some users create value for the app by creating interesting messages, while other users destroy value of the app by using it for cyber-bullying.