The IKEA Effect: Why Founders Struggle to Pivot

Entrepreneurs are often praised for their passion, perseverance, and commitment to their vision. But what happens when that dedication turns into stubbornness? I became fascinated by our cognitive biases ever since reading the book Thinking Fast and Slow by Daniel Kahneman. The IKEA Effect—a cognitive bias where people overvalue things they have had a hand in creating—explains why founders struggle to pivot, iterate, or abandon failing ideas. It might also explain why I have difficulty hearing anything negative about a meal I prepare.

The Attachment to Creation

The IKEA Effect occurs when individuals place disproportionate value on their own creations. In the startup world, founders may become emotionally invested in their original idea, even when market signals suggest a shift is necessary. They see their product as an extension of themselves, making it harder to admit its flaws or inefficiencies.

This bias can be particularly dangerous when founders mistake their emotional attachment for actual market demand. They might see early traction as proof of concept rather than an indication that further refinement is necessary.

How It Hinders Business Adaptability

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 feedback suggests a different direction. One of the most infamous examples of this is?Quibi, the short-form video streaming platform that launched in 2020 with high-profile backing but refused to pivot even when early data showed users were not engaging. By the time they admitted fault, it was too late.
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 is?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.?Blackberry?serves as a case study in 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 of their market share.

Startups That Got It Right

While some companies fall victim to the IKEA Effect, others successfully recognize when a pivot is necessary.?Netflix?is a prime example of a company that iterated at the right time. Initially a DVD rental service, Netflix realized that streaming was the future and radically shifted its business model, even at the risk of alienating its existing customer base. That decision positioned it as a dominant force in entertainment.

Another 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.

Overcoming the IKEA Effect

To build a business that thrives rather than one that simply survives, founders must:

• Detach Ego from Product?– A great entrepreneur focuses on solving problems, not just executing their initial vision. The best ideas evolve over time.
• Test and Iterate Constantly?– Instead of defending an original idea, founders should embrace iteration as an opportunity for growth.
• Listen to the Market?– If customers aren’t responding to a product, it’s not a sign to work harder on the same solution; it’s a sign to adapt.

The Bottom Line

The most successful startup founders know that iteration is not failure—it’s evolution. The IKEA Effect can lead entrepreneurs to overvalue their original ideas at the cost of true business success. By recognizing and counteracting this bias, founders can make smarter decisions, pivot when necessary, and ultimately build something that truly resonates with their market.

In the end, what matters isn’t just the idea you started with—it’s the solution that actually works. Learning when to let go of an idea, even one you built with your own hands, can be the difference between success and failure.