How Facebook Is Like Ikea

How Facebook Is Like Ikea

They get their customers to do the work—and to enjoy doing it.

Ikea. Click image to expand.

five years after Internet users caught on, the bookshops are suddenly
full of books about the user-generated content that "Web 2.0" makes
possible: blogs, Wikipedia, Facebook, and the rest. Well, you can
forget them, because easily the world’s most profitable enabler of
user-generated content opened the doors of its first superstore 50
years ago, in Almhult, Sweden.

It is now hard to imagine life without Ikea.
A folk statistic would have you believe that one in 10 Europeans is
conceived in an Ikea bed. But isn’t it pushing it a little to compare
Ikea to Facebook?

I’ll admit that the similarities are not apparent at first sight. But a defining idea behind Wikipedia, Facebook, and blogging platforms such as WordPress
is that if you give people the right tools, they’ll use them to create
wonderful things in collaboration with each other or with the
organization that provides the catalyst.

Ikea’s success is not so very different. Ikea keeps its costs and
prices low by enlisting its customers—their time, their cars, their
ambitions as interior designers, and their inflated ideas of their
carpentry skills.

Management experts Rafael Ramirez and Richard Normann pointed this out in the Harvard Business Review
back in 1993. Ikea, they argued, was a success because it enabled
"value co-production." This infelicitous term partly refers to offering
consumers a discount to build their own furniture. But it means much
more: Ikea recruited its customers to the idea that they could not only
put up shelves, but also design their own stylish living spaces,
equipping them with tape measures and printing almost 200 million
catalogs that also serve as design manuals. It also devoted huge
energies to helping its suppliers and designers play their part.
Ramirez and Normann explain that rather than passively buying what the
suppliers offered and reselling it, Ikea provided suppliers with
technical assistance, equipment, guidance on standards, and even a kind
of dating service that introduced them to new business partners.

all know that the formula works. But most successful formulas are easy
to copy; this one is not, and that is the genius of it. In many ways,
Ikea seems to be offering yesterday’s business model: Surely we have
less time than we did 20 years ago, while having more money to spend on
our homes. When a typical London home costs $600,000, why are cheap
sofas to put in it still such a tempting offer?

Yet Ikea
continues to thrive, proving how hard it is for competitors to muscle
in on a business that has placed itself at the center of a web of
economic actors, all striving for the same goal: a funky living room
for Steve and Alice.

Not many technology companies have succeeded
in mobilizing an army of "value co-producers" in the same way.
Microsoft is the most important exception, creating a platform that
supports—and is supported by—the efforts of countless other software
companies. Game-console manufacturers live or die with the companies
that produce the games. And eBay is an old-school dot-com company that
has created a near-unassailable position: The buyers go there because
the sellers go there, and vice versa.

Facebook, like Ikea—and
like Microsoft—has mobilized an army of independent suppliers. In
Facebook’s case, they are developers who produce applications that can
be plugged into the Facebook platform. In all these cases, the idea is
the same: If Facebook (or Ikea) can woo the customers, independent
suppliers will be queuing up to help, and if the independent suppliers
are queuing up, Facebook (or Ikea) should be able to woo the customers.

Such a market position brings inevitable temptation to exploit
it. Microsoft’s tangles with the competition authorities are notorious.
Facebook’s new advertising system, "Beacon," tells your friends about
commercial sites you’ve visited: The project triggered a mini-rebellion among Facebook users.
Ikea is an old hand at herding customers through a labyrinthine store
layout. Customers don’t like it, but, lacking a good enough
alternative, we tolerate it. Or we tolerate it up to a point. My love
affair with Facebook was brief and bland. And Ikea? Let’s just say that
my children were not conceived in an Ikea bed, and leave it at that.


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