When Pride in Work Kills Productivity

Word Count: 1,625 Estimated Read Time: 6½ Min.

The IKEA Effect is a cognitive bias where people overvalue things they have had a hand in creating. Being invested in their work and taking ownership of it is generally seen as a good thing in business.  It is an emotional investment that is monumental, an intense proprietary love.  In fact, for entrepreneurs, it is an essential mindset so that they persevere despite the naysayers.  Case in point.  When Netflix pitched their mail-order DVD business to Blockbuster, they were laughed out of the room. But Marc Randolph and Reed Hastings didn’t fold.  They doubled down. They believed in their idea and demonstrated conviction under pressure.

But this can be extremely detrimental for business owners, inventors and leaders, who have poured themselves into creating a company from scratch.  While pride of ownership and conviction are positives, that cognitive bias also has a serious downside for anyone who becomes too attached to their own ideas and ways of doing things.  It can blind a founder to crucial flaws, market shifts, and the necessary, sometimes painful, needto pivot, innovate, or evolve.

According to Stephen Joseph, a Venture Catalyst, Tech Leader, IT Consultant and Blockchain Optimist, the IKEA Effect has a potential negative business implication.  He explains that “founders can become too emotionally invested in their original creations, blinding them to necessary changes.”  It can hinder the business’ adaptability in three main ways. 

1. Resistance to Pivoting – Many startups fail not because they lack a good idea, but because they refuse to adapt when the market demands it. Founders often struggle to let go of an initial vision, even when customer opinions, internal staff views or even Board of Directors’ feedback suggest a different direction.  An infamous example of this was Quibi, a short-form video streaming platform that launched in 2020 with high-profile backing.  The founder refused to pivot even when early data showed users were not engaging. By the time they admitted fault, it was too late.  There are many more examples of stubborn resistance to changing direction, innovating design, or updating processes.  More about that later.
   
   
2. Over-engineering Products – Startups sometimes build overly complex solutions because the team loves their intricate design. Unfortunately, customers may not share the same enthusiasm for unnecessary features. A great example was Google Glass, a product with immense engineering prowess but little consumer appeal. Google invested heavily in the product, but because they were enamored with its capabilities rather than its actual utility, they failed to gain traction in the mainstream market.
   
   
3. Ignoring External Feedback – When founders overvalue their own work, they may downplay critical feedback from investors, advisors, or customers, leading to stagnation or failure. Criticism from customers, investors, or employees is often dismissed as a misunderstanding of the product’s “true value” rather than a signal for change.  Blackberry is a classic example of this issue. The company refused to pivot away from its physical keyboard-centric design, even as touchscreen devices took over the market. By the time they recognized their mistake, competitors had captured nearly all their market share.
   
   
4. Sunk Cost Fallacy –Founders cling to a failing product because of the vast time, money, and effort already invested, refusing to “waste” the effort by starting over, even when a clean break is the only rational path.
   
   
5. Market Myopia – Founders and leaders can become so focused on perfecting their original creation that they fail to see or respond to disruptive external forces or emerging competitors offering a superior solution. The world moves on, but the founder’s vision remains static.
   
   
6. Inability to Delegate the Vision – The business creator comes to believe that he/she is the only person who can truly execute the perfect version of the original idea, leading to burnout, slow decision-making, and an inability to scale the company.

The Business Graveyard Filled with IKEA Effect Failures

The graveyard of business is filled with companies that were so enamored of their initial successful formula that they failed to recognize the changing tides, sealing their fate.  These are companies that started well and thrived but ended because their collective brains had a blind spot.

Case in Point 1 – Eastman Kodak

Kodak was synonymous with photography for over a century. The company’s entire business model—selling cameras cheaply and making immense profit on film, chemicals, and paper—was hugely successful. Kodak was emotionally and financially attached to its lucrative chemical film business.  Ironically, a Kodak engineer invented the first digital camera in 1975. However, management—fearing a threat to the core film-based business—chose to shelve the innovation, treating it as a marginal threat rather than the future.  By the time Kodak finally entered the digital market in earnest, it was too late. Sony, Canon, and others had dominated the consumer space. The company filed for bankruptcy in 2012.

Case in Point 2 – Nokia

Before the iPhone era, Nokia was the undisputed king of mobile phones, admired for its sturdy, well-engineered hardware and massive brand loyalty.  Nokia was convinced that the quality of its physical phone hardware and its own proprietary Symbian operating system were its core, unshakeable advantages.  So the company missed the shift from phones as communication tools (hardware-centric) to phones as pocket computers (software-centric).  Seems incredible that they missed it, but that’s how powerful the IKEA Effect can be. While rivals invested heavily in user-friendly operating systems (iOS and Android), Nokia’s management was hesitant to commit fully, fearing alienating their existing user base and clinging to their legacy OS.  Their late and disjointed attempts to compete in the smartphone market, including partnering with Microsoft, failed. Nokia’s mobile division was eventually sold off, a monumental fall from dominance.

Case in Point 3 – Toys “R” Us

Toys “R” Us built an empire on the concept of a massive, physical warehouse dedicated solely to toys—a “category killer” retail experience.  The company’s leadership strongly believed in the superior experience of its physical retail stores as the primary sales channel.  As e-commerce rose, Toys “R” Us failed to develop a robust and competitive online presence. In a disastrous move, they even signed an agreement to be the exclusive toy vendor on Amazon for a decade, effectively outsourcing their e-commerce learning and customer data to their future main competitor.  (Somehow they failed to see what that same move did to Borders Books!)  They failed to invest in a seamless, modern, omnichannel experience.  Unable to compete with both the convenience of Amazon and the pricing of big-box retailers, the company was burdened by debt and ultimately liquidated its U.S. operations in 2018.

Startups That Got It Right

While some companies fall victim to the IKEA Effect, others successfully recognize when a pivot is necessary. A great example is Slack, which originally started as a gaming company called Tiny Speck. When their game failed to gain traction, the founders recognized the value of their internal communication tool and pivoted to build Slack as a standalone enterprise messaging platform—an adjustment that ultimately led to its acquisition by Salesforce for $27.7 billion.  But there are many others.

Case in Point 1 – Starbucks

Founded in 1971, the original Starbucks was primarily a retailer of high-quality, whole coffee beans and brewing equipment. They offered brewed coffee only as free samples.  After a trip to Italy, future CEO Howard Schultz realized the power of the social ritual of the Italian espresso bar. He recognized that people didn’t just want coffee; they wanted a “third place” between home and work.  Starbucks pivoted to the coffeehouse model, focusing on selling individual, high-quality prepared espresso drinks and fostering a cozy, social atmosphere. This strategic shift from a wholesale/retail bean supplier to a high-volume, global service provider (coffee shop chain) turned them into the world-dominating company it is today.

Case in Point 2:  Shopify

Shopify was born out of frustration. Its founders created an online store called Snowdevil to sell snowboards, but they were deeply unhappy with the existing e-commerce software available to build the site.  They realized their core competency wasn’t selling snowboards; it was the superior, user-friendly, custom-built e-commerce platform they had created for themselves.  They abandoned the highly seasonal, niche retail business of Snowdevil entirely and rebranded the underlying technology as Shopify, becoming the infrastructure provider for millions of other small businesses. They successfully pivoted from a B2C retailer to a B2B software-as-a-service (SaaS) provider, completely changing their customer segment, revenue model, and market potential.  (Zappos had a similar evolution, starting as an online shoe vendor and realizing that their expertise was not in shoes but in the online selling experience.  It expanded into many other types of attire and eventually sold to Amazon for $940 Million in 2009).

Case in Point 3:  Nintendo

Before becoming a video game giant, Nintendo had been in business since 1889.  Nintendo’s longevity is a masterclass in repeated pivoting. It started as a manufacturer of traditional Japanese playing cards (Hanafuda). As the card game market matured, the company diversified into various ventures, including toys, an instant rice business, and other products.  Through this relentless experimentation, Nintendo found its niche in electronic entertainment, eventually moving into video games. The core asset was always the business of play, not any specific product. By consistently being willing to shed legacy products and chase new methods of delivering entertainment, the company survived over a century of profound technological and cultural change.

An openness to new ideas, better processes, and trying a completely different business plan—even if it means destroying the original creation—is not a betrayal of the founder’s vision; it is the ultimate act of corporate survival and evolution.  It ensures that a successful start of a business does not lead to a terrible stop of a business due to a cognitive bias that highjacks sound thinking.

Quote of the Week
“Famous pivot stories are often failures but you don’t need to fail before you pivot. All a pivot is is a change is strategy without a change in vision. Whenever entrepreneurs see a new way to achieve their vision – a way to be more successful – they have to remain nimble and open enough to take it.” Eric Ries

© 2025, Keren Peters-Atkinson. All rights reserved.