{"id":29444,"date":"2018-11-13T13:53:58","date_gmt":"2018-11-13T18:53:58","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/lego-leveraging-the-building-blocks-of-open-innovation\/"},"modified":"2018-11-13T16:32:43","modified_gmt":"2018-11-13T21:32:43","slug":"lego-leveraging-the-building-blocks-of-open-innovation","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/lego-leveraging-the-building-blocks-of-open-innovation\/","title":{"rendered":"LEGO: Leveraging the Building Blocks of Open Innovation"},"content":{"rendered":"
\"\"
Image Source: Jay’s Brick Blog [1]<\/figcaption><\/figure>\n

\u201cSome are born Master Builders, some achieve it, and some have it thrust upon them<\/em><\/strong> [1].\u201d<\/p>\n

– Jay, Lego Super-Fan<\/em><\/p>\n

 <\/p>\n

A Nostalgic Childhood. <\/em><\/strong>To our generation, LEGO is often linked to far-away childhood memories. However, as we all know, the times have changed. Today, children are growing up in a sophisticated digital landscape brimming with toys that easily outshine LEGO\u2019s traditional and iconic building blocks. In alignment with these technological advances, the toy industry has been rapidly evolving toward \u201cfad toys,\u201d and consequently, very short product life cycles [2]. In a race to cater to these new consumer demands, LEGO\u2019s product development process has become a high-stakes game of staying relevant.<\/p>\n

So, how has LEGO approached these increasing market pressures? Enter: Open innovation.<\/p>\n

A Legion of Super Fans<\/em><\/strong>. Within the toy market, there are thousands of competitors but only a handful have truly led the market (think: Mattel, Fisher-Price, Hasbro etc.) [2]. Luckily, LEGO is an undisputed member of this select group and, as a result, is backed by legions of loyal, LEGO-obsessed fans. As an example, consider the super-fan run \u201cBeyond the Brick\u201d YouTube channel which features innovative LEGO creations from around the world. This channel, in existence since 2011, has over 400,000 active subscribers and over 150 million video views [3]. \u201cBeyond the Brick\u201d is one of many such channels that signal the strength of LEGO’s brand equity.<\/p>\n

Crowd-Fueled Transformation<\/em><\/strong>. In the last decade, open innovation has been a critical tool in helping LEGO create popular products while also building a meaningful connection to their fanbase. Through their platform, LEGO Ideas<\/a><\/em>, the company has activated the creative mindshare of super-fans around the world. As a direct result, LEGO’s product development process has been accelerated: what used to take 2-3-years, can now be accomplished in just 12 months [4]. In addition to process improvements, LEGO\u2019s use of open innovation has created a sticky consumer-driven value-stream.<\/p>\n

What Now?<\/em><\/strong> In the short-term, LEGO continues to invest in their LEGO Ideas<\/a><\/em> platform geared toward adults and teens (13+). The platform enables users to design new models, share ideas and most importantly, vote for their favorite creations. Once an idea reaches 10,000 votes it is\u00a0funneled to the product development team [5]. In celebrating its 10-year anniversary, LEGO reported that the platform has over 1 million members who have contributed 26,000 ideas, resulting in 23 official LEGO sets created [5]. Further, in February of 2018, LEGO introduced a mobile app \u2013 LEGO Life<\/em> \u2013 which creates a small-scale (and highly controlled) social network for younger LEGO-enthusiasts to share their ideas [6]. Since launch, the app has attracted nearly 6 million children from 26 countries [7]. Continuous investments in such products demonstrate LEGO\u2019s commitment to leveraging open innovation as a platform to remain competitive in the near-term.<\/p>\n

A Digital Future.<\/em><\/strong> While LEGO\u2019s detailed medium-term approach to open innovation has not been clearly laid out, the company has unquestionably signaled their commitment to digital. Facing weaker sales and lower profits for the first half of 2018, LEGO recently named a new CEO, Niels Christiansen, who is known for his digital transformation of Danish company Danfoss [8]. LEGO is looking to Christiansen as a digital beacon, and a portion of his strategy is reported to be the online engagement of consumers [6]. It is likely that this online engagement will continue to leverage and build upon existing open innovation platforms.<\/p>\n

The Strength to Stick It Out<\/em><\/strong>.<\/strong> As LEGO continues their year-long turnaround and restructuring [6], I would encourage the team to continue to invest in their open innovation platforms \u2013 LEGO Ideas<\/em> and LEGO Life<\/em>. While the short-term returns of such investments may pale in comparison to other cost-cutting maneuvers, LEGO\u2019s longevity could be dependent on tapping into a highly-engaged and inspired consumer-base.<\/p>\n

In the longer-term, as LEGO continues to rollout new products like LEGO Boost<\/em> \u2013 “a hardware \/ software product that enables consumers (7+) to use a simple, app-based coding language to program the personality and behaviors of their models [7]” \u2013 I would further encourage the team to consider investing in a controlled API and curated ecosystem of third-party developers. Given LEGO\u2019s iconic brand, management could likely attract external developers who are dedicated to creating the next generation of child development and educational products. \u00a0While tactically, this would require a significant dedication of resources to build and maintain, this developer ecosystem could become a critical competitive advantage in the future, further differentiating LEGO from its peers.<\/p>\n

Blocks for Thought. <\/em><\/strong>\u00a0In the face of never-ending privacy violations, do the competitive benefits of open innovation outweigh the potential risks of tarnishing LEGO\u2019s brand-reputation? As LEGO continues to leverage open innovation, who should their target segment be? Adult super-fans, children, both?<\/p>\n

 <\/p>\n

(Word Count: 780)<\/p>\n

 <\/p>\n

[1] Jay, \u201cReview: The LEGO Movie Minifigures Part 1,\u201d Jay\u2019s Brick Blog (blog), January 16, 2014, http:\/\/jaysbrickblog.com\/2014\/01\/16\/review-the-lego-movie-minifigures-part-1\/<\/a>, accessed November 2018.<\/p>\n

[2] Jan W. Rivkin, Stefan H. Thomke and Daniela Beyersdorfer, \u201cLEGO,\u201d HBS No. 9-613-004 (Boston: 性视界 Business School Publishing, 2012), p. 2.<\/p>\n

[3] Joshua Hanlon, \u201cBeyond the Brick,\u201d YouTube, published November 2011, https:\/\/www.youtube.com\/user\/BeyondTheBrickTV<\/a>, accessed November 2018.<\/p>\n

[4] Jesus Diaz, \u201cEverything You Always Wanted to Know About Lego,\u201d Gizmodo (blog), June 26, 2008, https:\/\/gizmodo.com\/5019797\/everything-you-always-wanted-to-know-about-lego<\/a>, accessed November 2018.<\/p>\n

[5] \u201cCelebrating 10 Years of Crowdsourcing and Co-Creation with LEGO Fans,\u201d press release, November 08, 2018, on LEGO website, https:\/\/www.lego.com\/en-us\/aboutus\/news-room\/2018\/november\/ideas-10th-anniversary<\/a>, accessed November 2018.<\/p>\n

[6] Saabira Chaudhuri, \u201cLego Turns to Digitally-Savvy Dane as Its New CEO.\u201d Wall Street Journal, August 10 2017, https:\/\/www.wsj.com\/articles\/lego-replaces-ceo-after-eight-months-to-further-digital-ambitions-1502351909?mod=article_inline<\/a>, accessed November 2018.<\/p>\n

[7] \u201cFast Company Announces Most Innovative Companies for 2018,\u201d press release, February 20 2018, on LEGO website, https:\/\/www.lego.com\/en-us\/aboutus\/news-room\/2018\/february\/lego-group-and-fast-company<\/a>, accessed November 2018.<\/p>\n

[8] Thumbnail Image Source, “LegoBlocks.jpg,”\u00a0https:\/\/commons.wikimedia.org\/wiki\/File:Lego_blocks.jpg<\/a>, accessed November 2018.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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