Sunday, January 20, 2008

Ikea and Web 2.0

Tim Harford at Slate argues that Facebook and Ikea have similar business models: while Facebook benefits by allowing its users to do most of the work—creating and populating profiles which the company can then monetize—Ikea does the same by having shoppers assemble their own bookshelves. Additionally, just like Facebook cultivates both developers (of Facebook apps) and users, Ikea does the same for their suppliers and shoppers.

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.

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