{"id":34830,"date":"2018-11-13T18:28:56","date_gmt":"2018-11-13T23:28:56","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/the-missing-piece-how-lego-found-open-innovation-at-a-critical-time\/"},"modified":"2018-11-13T18:28:56","modified_gmt":"2018-11-13T23:28:56","slug":"the-missing-piece-how-lego-found-open-innovation-at-a-critical-time","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-missing-piece-how-lego-found-open-innovation-at-a-critical-time\/","title":{"rendered":"The Missing Piece: How Lego Found Open Innovation at a Critical Time"},"content":{"rendered":"

 <\/p>\n

Society tends to view open innovation as a novel tool to create incremental value specifically for growing organizations. Although this is often the case, open innovation, and crowdsourcing specifically, can also be used to turnaround organizations under financial and strategic distress. Since the 1930s, Lego has captured the hearts and minds of children and teenagers across the world with its unique building blocks. As the company grew, it expanded its operations and entered the theme park and video game industries [1]. By the mid-2000s, these initiatives were largely unsuccessful, and the company was left grappling with its precarious financial position [1]. Since then, the company has reversed course, in large part due to two open innovation programs: Mindstorms and Lego Ideas. This paper will focus on Lego Ideas as it is the most recent and current iteration of the company\u2019s crowdsourcing strategy.<\/p>\n

Lego Ideas is a program that invites users to interface with an online, proprietary Lego software platform to submit product design ideas to Lego [2]. These ideas are then voted on by the Lego user community. If a design reaches the threshold of 10,000 community votes, Lego initiates its internal processes of design evaluation and potentially product development. One design per year is selected for production, and the original user designer receives 1% of sales as a royalty. Lego Ideas, like many corporate crowdsourcing initiatives, directly connects with the customer, providing entertainment value and learning opportunities for children and adolescents. It uses information technology to augment the company\u2019s fundamental value proposition. Customers continue to build and learn, but also gain access to a community of fellow Lego builders which enhances the platform\u2019s attractiveness. Consumer products companies must understand the critical importance of being socially driven [3], and Lego Ideas is predicated on this strategy. Instead of conducting a market test after<\/em> the product has been developed and introduced to consumers, the demand hypothesis is partially validated by the user voting system prior to product development. This reverses the typical process of toy-making at Lego.<\/p>\n

\"\"<\/a>
Source: 100 Open, \u201cUnleashing Customer Innovation with LEGO Ideas,\u201d https:\/\/www.100open.com\/unleashing-customer-innovation-with-lego-ideas\/.<\/figcaption><\/figure>\n

The Lego Ideas platform faces issues with regards to its internal processes that take place after the users have evaluated their peers\u2019 designs. Prior to any involvement by the Lego team, users move through the generate, organize, clarify, and evaluate crowdsourcing collaboration patterns [4] by generating product designs, commenting on these, and finally voting on the best concepts. Only after this external process does Lego management begin reviewing the top community designs and communicating to the users whether a concept was greenlit. It is this internal process that leaves the company vulnerable to product development and customer satisfaction challenges.<\/p>\n

Crowdsourcing at Lego need not be a purely sequential process in which the company is at the mercy of the rate of outside innovation. Lego can start implementing certain stages of product development prior to the full review process of user designs has been completed. One of the first greenlit Lego Ideas concepts, a Minecraft toy, required Lego to haphazardly form a partnership with Mojang to use its Minecraft intellectual property [2]. This caused issues internally with the launch timeline. In the short term, the company should be more facile in using intelligence from voting trends to be ahead of potential required partnerships. Given its reliance on strategic partnerships, Lego must start conversations with outside firms before an idea is fully approved.<\/p>\n

By welcoming the Lego fan into the process of innovation, the Lego Ideas team must weigh the medium-term customer relationship implications of open innovation. Given that free labor is being provided by open innovation [5], it is plausible that customers could demand insight into the company\u2019s evaluation process. Management at Lego must find the appropriate balance between guarding trade secrets and inviting customers into the internal process. Perhaps this is done in a public forum after an idea is greenlit, with executives detailing the factors that went into the decision at a high level. Regardless of its execution, Lego needs to be balanced when responding to consumer requests given the sensitivity of its internal processes and the sanctity of its relationship with customers.<\/p>\n

\"\"<\/a>
Source: Lego, https:\/\/www.lego.com\/en-us\/ideasproducts\/explore\/doctor-who<\/figcaption><\/figure>\n

The combination of social media, powerful IT design tools, and a passionate fanbase created a truly unique opportunity for Lego to turnaround its fortunes. Beyond the primary concerns of process improvement and customer relationships, the company must also reflect on how the dynamic has changed within its own organization. Having historically been both a design and engineering focused firm, its recent embrace of open innovation has relegated the design teams. How does Lego plan to deal with potential dissent from its own designers? As the company moves forward with crowdsourcing, it must be cognizant of this and several other unintended consequences.<\/p>\n

(793 Words)<\/p>\n

Endnotes:<\/p>\n

    \n
  1. Johnny Davis, \u201cHow Lego clicked: the super brand that reinvented itself,\u201d The Guardian <\/em>(June 2017), 2, https:\/\/www.theguardian.com\/lifeandstyle\/2017\/jun\/04\/how-lego-clicked-the-super-brand-that-reinvented-itself<\/li>\n
  2. Daniel Schlagwein, \u201cOrganizational Learning with Crowdsourcing: The Revelatory Case of LEGO,\u201d Journal of the Association for Information Systems: Vol. 15 : Iss. 11 , Article 3 <\/em>(2014), 9-12.<\/li>\n
  3. Charlene Chu, \u201cLego Ideas: A Good Crowdsourcing Idea,\u201d Social Media for Business Performance at The University of Waterloo (<\/em>February 2016), http:\/\/smbp.uwaterloo.ca\/2016\/02\/lego-has-the-right-idea-when-it-comes-to-crowdsourcing\/.<\/li>\n
  4. Cuong Nguyen, \u201cCrowdsourcing as lego: Unpacking the building blocks of crowdsourcing collaboration processes,\u201d (January 2013), 8, https:\/\/www.researchgate.net\/publication\/286349887_Crowdsourcing_as_lego_Unpacking_the_building_blocks_of_crowdsourcing_collaboration_processes.<\/li>\n
  5. K. Lakhani and J. Panetta, \u201cThe principles of distributed innovation,\u201d Innovations: Technology, Governance, Globalization 2, no. 3<\/em> (Summer 2007),\u201d 97\u2013112.<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

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