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Can IKEA and the Instant Pot Teach Us About Competition? MIT Sloan Thinks So

People purchase IKEA furniture because it’s easy to put together. They don’t want to have to buy a drill; they want holes and pieces that easily fit together like Legos. In fact, according to Harvard professor Theodore Levitt, when someone buys a drill, what they want is what the drill can do.

That’s just one reason why MIT professor Sanjay Sarma believes that IKEA is on the cutting edge of business. While other companies are trying to sell solutions to outdated problems, IKEA has figured out how to solve a core problem.

“That’s what I call inversion,” Sarma said. “You’ve got to wrap yourself around the need and think outwards, rather than limit yourself to your product.”

So, what can IKEA and other companies teach about competition? Sarma provides insight from three recognizable brands who are mastering the art of inversion, and one that failed.

Amazon

When Amazon first got its start, they only sold books. Then, in 2007 when they came out with the Kindle e-reader, they had to compete with both Apple and Google rolling out similar products. But Amazon stayed ahead of the competition by creating a Kindle reading app that could be used on any device. They also unveiled products such as Audible (for audiobooks and podcasts) and the Amazon Echo smart speaker.

They identified the need bigger than books—reading—and fulfilled it.

Instant Pot

In 2009, Robert Wang created the Instant Pot, a do-everything cooking appliance that connected to Bluetooth. It changed the cooking experience, allowing users to remotely monitor their cooking and do everything from slow cook to pressure cook to steam and bake. “It’s stunning,” Sarma said.

Nestlé

Unfortunately for Nestlé, they missed the mark with their smartphone-connected espresso machine. They had an idea that people were in the business of coffee, but instead, it’s actually about the morning experience and taking a few minutes to prepare for the day. They missed the point because they missed what people were after.

Ford Motor Company

Ford tried the inverted approach in 2016 with the purchase of Chariot, a van shuttle service. The idea was to compete with rideshare companies. And while it didn’t work out, it still was a smart move because it indicated that Ford recognized that a need for transportation outweighed the need for a car. Now, Ford has announced the purchase of Spin, a scooter company that uses cell phones to locate available rides—and it shows that they are learning.

Read the full MIT Sloan story here.

Posted in: Feature Small, News

Schools: MIT Sloan

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