{"id":30623,"date":"2018-11-12T23:38:37","date_gmt":"2018-11-13T04:38:37","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/letting-go-at-lego-how-open-innovation-reinforces-product-creativity-and-design\/"},"modified":"2018-11-12T23:46:19","modified_gmt":"2018-11-13T04:46:19","slug":"letting-go-at-lego-how-open-innovation-reinforces-product-creativity-and-design","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/letting-go-at-lego-how-open-innovation-reinforces-product-creativity-and-design\/","title":{"rendered":"Letting Go at LEGO: How Open Innovation Reinforces Product Creativity and Design"},"content":{"rendered":"

In 2003, LEGO CEO J\u00f8rgen Vig Knudstorp declared that the company was \u201con a burning platform, losing money with negative cashflow,\u201d after years of losing touch with their core market [1]. Their product lineup had shifted from their core offering to an expansive push into branded apparel, theme parks, and adjacent products. By chance, only a few years earlier, Lego had launched a new product in 1998 called \u201cMindstorms\u201d that uncovered a new target market who would become critical to their new product innovation process \u2013 so called \u201cAFOLs,\u201d or Adult Fans of LEGO [2]. By shifting creation of ideals in part to AFOLs through crowdsourcing and contests, Lego built an expanded pipeline of new products and created an active online community that encouraged further engagement with the brand.<\/p>\n

In the competitive toy industry, innovation remains critical to success. Both Hasbro and Mattel, leaders in the global toy market, have faced declining sales recently in part due to poor product development choices. Hasbro, for example, blamed cooling interest in its Star Wars product line as a key driver in their revenue decline; with limited an additional new product in their pipeline, this decreased interest translated into a 21% sales drop [3]. This same trend is visible at Mattel, which has struggled for the past five years as it continued to rely on \u201ctraditional toys\u201d [4]. After 13 years of growth, LEGO must continue to drive open innovation to stay relevant to its customers.<\/p>\n

Today, LEGO runs an online community called \u201cLEGO Ideas,\u201d the successor to LEGO Cuusoo, a platform on which users submit ideas for new products, on which other users vote. This crowdsourcing and contest platform was LEGO\u2019s answer to the \u201cdeep knowledge and specialization issue,\u201d ensuring that products suggested by a dedicated set of users would still have mass appeal [5]. A total of 10,000 users must support a project within two years of submissions for it to be formally reviewed by the Lego Company [6]. The most recent product to be announced from this open innovation pipeline was a \u201cPop-Up Book,\u201d released in stores on November 1, 2018. In the short-term, Lego will likely continue to rely on this crowd-sourcing platform to generate new ideas to feed the top of their innovation funnel.<\/p>\n

\"\"<\/a>
Figure 1: LEGO IDEAS interface.<\/figcaption><\/figure>\n

In the medium-term, however, LEGO faces a significantly larger challenge. In March 2018, the company reported a 17% decline in operating profit. This signaled a need to begin rethinking how it interacts with users, especially as the traditional AFOL population begins to drop-off [7]. As such, LEGO has turned its eyes toward China, teaming up with Tencent to release new games targeted again at children. The first of these games, \u201cLEGO Cube\u201d is built on a \u201csandbox\u201d platform in which users have an opportunity to \u201cdevelop skills including: 3D design, construction, building, and coding\u201d [8]. By focusing on games rather than pure submission contest platforms like LEGO Ideas, LEGO is turning towards a \u201ccomplementor\u201d approach to open innovation rather than \u201ccontests\u201d or \u201ccollaborative communities\u201d [9]. Utilizing a core gaming product, LEGO hopes to harness the creative concepts of their young users to inspire the next generation of product ideas.<\/p>\n

Moving forward, LEGO should aim to target its open innovation practices not only at AFOLs and end-users, but also at parents. According to the Toy Industry Association, only one in ten toys is purchased by the child, making parents the ultimate decision makers [10]. Further, 40% of toy purchases involve both parents and children being equally enthusiastic about toy purchase. By sourcing new product ideas from parents, LEGO may be able to further expand the top of their product innovation funnel to better understand what products interest both parent and child. Further, the Toy Industry Association named \u201cMillennial Nostalgia\u201d among its 2018 trends, highlighting parents desire to engage with \u201cretro brands,\u201d signaling further parental interest in making the beloved LEGO relevant [11].<\/p>\n

Additionally, LEGO might consider capitalizing upon it\u2019s significant brick and mortar footprint to drive additional open innovation. While most energy and efforts are currently spent expanding digital engagement, LEGO can also utilize its nearly 150 retail stores and 8 LEGOLAND theme parks to create additional opportunities for creative input from its customer base. Through live contests, in-store customer surveys, and perhaps \u201cbuild-a-thons,\u201d LEGO can ensure that it is capturing data not only from its most active online users, but also from its more passive retail visitors to maximize innovation opportunities.<\/p>\n

Ultimately, LEGO will be forced to answer the same questions facing many toy-makers. How will they remain relevant in a world so focused on technology and media? Who is LEGO\u2019s core customer \u2013 the child, the parent, or the adult enthusiast? And ultimately, how can LEGO\u2019s legacy of open innovation help them to answer these questions?<\/p>\n

(Word Count: 791).<\/p>\n

 <\/p>\n

Endnotes<\/strong><\/p>\n

[1] Martin Lindstrom, \u201cHere\u2019s How an Old Pair of Sneakers Saved Lego,\u201d Forbes, March 13, 2016 [http:\/\/fortune.com\/2016\/03\/13\/heres-how-an-old-pair-of-sneakers-saved-lego\/], accessed November 12, 2018.<\/p>\n

[2] Nicolas Ind, \u201cHow participation is changing the practice of managing brands,\u201d Journal of Brand Management, Vol 21, 9, 734-732.<\/p>\n

[3] Paul Ziobro and Cara Lombardo, \u201cHasbro\u2019s Sales Fall as Star Wars Craze Cools,\u201d Wall Street Journal, February 7, 2018 [https:\/\/www.wsj.com\/articles\/hasbros-sales-top-mattels-for-the-first-time-in-more-than-two-decades-1518007982], accessed November 12, 2018.<\/p>\n

[4] Tonya Garcia, \u201cMattel earnings: Kids are turning away from traditional toys,\u201d MarketWatch, April 20, 2017 [https:\/\/www.marketwatch.com\/story\/mattel-earnings-kids-are-turning-away-from-traditional-toys-2017-04-18], accessed November 12, 2018.<\/p>\n

[5] Yun Mi Antorini, Albert M. Mun\u0303iz, Jr. \u201cThe Benefits and Challenges of Collaborating with User Communities,\u201d Research Technology Management (May-June 2013).<\/p>\n

[6] \u201cLego Ideas: How It Works\u201d [https:\/\/ideas.lego.com\/howitworks], accessed November 12, 2018.<\/p>\n

[7] Dominic Chopping and Saabira Chaudhuri, \u201cLego Struggles to Pick Itself Up,\u201d Wall Street Journal, March 6, 2018 [https:\/\/www.wsj.com\/articles\/lego-struggles-to-pick-itself-up-1520326252], accessed November 12, 2018.<\/p>\n

[8] \u201cLEGO Cube \u2013 The First LEGO Branded Mobile Game in China, Developed by Tencent Games,\u201d September 19, 2018 [https:\/\/www.lego.com\/en-gb\/aboutus\/news-room\/2018\/september\/lego-cube-tencent-2018], accessed November 12, 2018.<\/p>\n

[9] Kevin Boudreau and Karim Lakhani, \u201cUsing the crowd as an innovation partner,\u201d 性视界 Business Review 91, no. 4 (April 2013).<\/p>\n

[10] \u201cToy & Game Family and Decision Making Study,\u201d Toy Industry Association, July 2013.<\/p>\n

[11] \u201cThe Toy Association: Trend Spotting \u2013 2018 Trends,\u201d [https:\/\/www.toyassociation.org\/ta\/research\/reports\/trends\/toys\/research-and-data\/reports\/trend-spotting.aspx], accessed November 12, 2018.<\/p>\n","protected":false},"excerpt":{"rendered":"

Since 1998, LEGO has been leading the way in Open Innovation – finding success in sourcing new ideas from an active online community of dedicated LEGO fans. Twenty years later, how can the iconic brick behemoth continue to harness the excitement of their passionate consumers to stay successful in the competitive and challenging toy and games arena?<\/p>\n","protected":false},"author":11725,"featured_media":30668,"comment_status":"open","ping_status":"closed","template":"","categories":[1195,788,1960,168,4239,38],"class_list":["post-30623","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-crowdsourcing","category-digital","category-lego","category-marketing","category-open-innovation","category-toys","hck-taxonomy-organization-lego","hck-taxonomy-industry-consumer-products","hck-taxonomy-country-denmark"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2018\/","yoast_head":"\nLetting Go at LEGO: How Open Innovation Reinforces Product Creativity and Design - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/letting-go-at-lego-how-open-innovation-reinforces-product-creativity-and-design\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Letting Go at LEGO: How Open Innovation Reinforces Product Creativity and Design - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"Since 1998, LEGO has been leading the way in Open Innovation - finding success in sourcing new ideas from an active online community of dedicated LEGO fans. 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