Building the Worlds You Want To See: Lego Calls on You To Co-create
In an increasingly digital world, Lego, the famous plastic construction toy company, continues to generate interest in physical toys and to build brand loyalty by leveraging crowdsourcing and user co-creation for popular product innovations.
Background: The Lego World
Founded in 1932, the LEGO group, is a privately held Danish company that has grown from a carpenter’s workshop to one of the world’s largest toy manufacturers. Central to the LEGO group’s enterprise was the foundational, iconic LEGO brick that was developed and re-engineered throughout the 1950s.[1] Deemed the “Toy of the Century” twice, the LEGO brick, with its interlocking principle properties allowed children throughout the decades to build unlimited castles, worlds, and playgrounds and helped make LEGO one of the largest, most recognizable brands in the world.[2]
Despite widespread awareness of the brand, LEGO faced a crisis in sales and suffered record losses in the 2000s as the Internet revolution and changing trends toward physical toys jarringly hit the company.[3] Recognizing this new reality and the impending changes in customer behavior, the LEGO group became one of the first large global corporations to turn to content co-creation to drive awareness, interest, and engagement within their customer base. By 2013, LEGO had revenue of US$4.7 billion, a profit of US$1.1 billion, and 12,000 employees.[4] The Lego Group recognized that open innovation could be the answer to renewed consumer engagement and dynamic product innovation.
Game Change and Game Plan: Lego Crowdsources
While traditionally veering away from taking consumer inputs into product innovation pipelines[3], LEGO’s declining revenues and stagnating innovations led the company to work with the CUUSOO system in Japan in 2008 to test the viability of crowdsourcing from consumers[4]. The success in Japan led to a global beta test in 2011 and a subsequent global in-house program in 2014 that was named Lego Ideas.
Lego Ideas functions by allowing users to submit images and contents regarding potential ideas for Lego products. Once an idea receives over 10,000 views, it enters the Review Process, where it qualifies for a review by Lego’s design, product management and manufacturing staff members. This process includes the viability of consumers playing with the toy idea, any logistical licensing for the idea, and market potential. Pending completion of this phase, successful ideas are announced on the website, and then the co-created ideas will enter the Production Phase, where Lego will perfect and re-engineer the design, build instructions, and handle marketing and manufacturing of all ideas. The consumers who have had their ideas crowdsourced by Lego are given 1% of the product’s revenues and credited on the packaging[4].
Lego’s use of crowdsourcing and co-creation is critical to their ability to stay relevant in a rapidly changing digital landscape and to their competitive advantage of adding value to consumers. By crowdsourcing, Lego builds excitement and news for the brand, easily gains access to a much larger funnel of design ideas it can refine to create truly unique products, and gauges interest, demand, and market potential for product ideas in question. More importantly, Lego allows users to be actively engaged with the brand, working towards ideas that will attract individual recognition, perhaps even monetary rewards if selected, and will realize their imaginations. In a world where people are turning away from physical entertainment, such as toys, to the Internet, Lego is leveraging the Internet and consumer engagement to innovate exciting product ideas and having those who engaged in the innovation process buy those physical products.
Recommendations
While the crowdsourcing strategy has proven effective and lucrative for Lego, it is important they focus on encouraging continued interest in Lego Ideas, ensure product quality and demand, and are strategically planning the company’s future innovation pipeline.
Continued Interest: There is a risk that crowdsourcing as they currently are doing may get tiresome for consumers if added incentives or challenges are not added in a way that continues to drive engagement.[5]
Product Quality and Demand: It is important for Lego to have a holistic process to vet ideas to ensure that product innovations fit into the brand, to avoid creations like Shaun of the Dead, that may alienate younger users, who are the target consumer of a toys manufacturer.[6]
Future Innovation Pipeline: With most of the crowdsourced innovators being adult Lego fans who have always been engaged with the brand, it is vital that Lego manages to make crowdsoured innovations and regular innovations relevant to young consumers who will similarly build love for the brand and associate with their childhood. Alternatively, it is also important for Lego to cater its content co-creation streams to younger consumers.
Questions:
Can this form of an innovation pipeline be sustainable in terms of driving interest and generating product ideas?
Is this crowdsourcing idea lucrative for the long term success of Lego as a brand or just a fad for adult Lego fans?
(Words: 776)
[1] Lego. “About Us: The LEGO Brand”. Lego.com
[2] Lego. “Lego History Timeline”. Lego.com
[3] SCHLAGWEIN, D.; BJØRN-ANDERSEN, N. Organizational Learning with Crowdsourcing: The Revelatory Case of LEGO. Journal of the Association for Information Systems, nov. 2014. v. 15, n. 11, p. 754–778
[4]Yoo, Andrew. “Lego Ideas: Crowdsourcing the next big hit.” HBS Digital Initiative. https://d3.harvard.edu/platform-digit/submission/lego-ideas-crowdsourcing-the-next-big-hit/
[5] Nagle, F., Harvard Business School, & Harvard University, degree granting institution. (2015). The Digital Commons: Tragedy or Opportunity? The Effect of Crowdsourced Digital Goods on Innovation and Economic Growth.
[6] GUSTAFSSON, K. Who Ya Gonna Call? Lego Dials Fans. Bloomberg Businessweek, 7 abr. 2014. n. 4373, p. 27–28
Thanks for the thoughtful submission! I was a huge, huge Lego fan growing up — I literally visited the LegoLand at the Mall of America as a kid — so this article made my eyes light up.
I really agreed with your recommendations. Additionally, has Lego ever considered how they can transfer the Lego Ideas platform to social media? I imagine expecting younger generations to visit a Lego Ideas website would be a difficult proposition. However, there could be innovative ways for Lego to reach their young fans where they are — social media. There may be creative ways to launch #LegoIdeas campaigns celebrating the top submissions and soliciting new entrees. AI could even be used to crawl social media and engage with fans that have new ideas for Lego creations.
This is a really cool initiative, and a great example of successful crowd sourcing. I wish it was around when I was a kid!
Echoing Melcolm here with love for this topic; I have an embarrassing number of LEGO sets safely tucked away in storage. I think the LEGO Ideas submission program is a great example of how to keep children and teens engaged with a youth-oriented brand and its products as they age. This gets at your question regarding the sustainability of the innovation pipeline. I think the answer is yes, because designers who stop interacting with the platform will be replaced by childhood users as they grow up! I am curious if LEGO ever leverages it as a way to identify potential hiring candidates.
Same as Melcolm and Hunter, I absolutely loved the topic! Children are increasingly turning away from physical toys to Internet games, which makes me really sad, as I believe playing Lego can significantly increase kid’s creativity and has a strong social component (I loved doing “Lego sessions” with my friend when I was a kid). I really hope that the initiative will continue to driving interest in Lego. There are two things I would recommend management: 1. To diversify incentive structure for the competition with much more people (not only #1 place) receiving recognition or financial remuneration. 2. To design a special tool which will make easier and funnier for people to present their ideas and share with the company and public (e.g a web application, a physical kit of templates to work, etc.).
Thanks for the post! I agree with your recommendations with a particular emphasis on the “continued interest” piece. While this crowdsourcing ideas helps them with product development, it also serves as a great marketing tool. However, there is a risk that over time this type of activity becomes stale. I think the key for LEGO will be to drive strong brand engagement with their target consumers. Can they form partnerships with schools (and use schools as a source of crowdsourcing)? Another more radical strategy would be to try to embrace the internet trend: although LEGO has always been a physical toy, perhaps they could allow kids to build virtual LEGO sets. This could create some cannibalization issues, but something to consider given the increasing shift away from physical toys.
I see how the open innovation strategy that LEGO seems disconnected from its younger users who are moving more into online play. This trend of moving away from physical toys would certainly seem to threaten the future of the company- however, it is not the full picture. As an educator, I have used LEGO Robotics in my classroom to help students reap the benefits of playing both in the physical and digital world. I think that the company is missing an opportunity to gather the innovative ideas that children come up with since they don’t collect as much data from the classroom. Perhaps, rather than looking at how to connect with students in their social time, LEGO open innovation could look at how to collect data from the prototypes that students draw and extending the viewing and review process to students’ work. The incentives process would also have to be tailored to become child and family-friendly to ensure that parents would consent to their children’s work being used in this process. I’d love to get your thoughts on whether this innovation funnel could work in a classroom setting.
It is very interesting to see how the culture of secrecy was previously perceived as a source of competitive advantage and how there is a drastic shift towards more transparency and openness. While Lego’s design are known, there is something about the company that creates customers’ loyalty. I actually believe that crowdsourcing is one of the root cause to that success because it has a double benefit: (1) by essence the designs and the products will be relevant and will meet market success because they answer to customer needs (because co-produced with customers) (2) it creates a sense of community where customers feel connected to the brand and share the brand’s success when one of there product is launched. In an era of gadgets and tablets, it is very impressive to see an iconic company that was founded in 1932 still be relevant and appealing!
Thanks for the interesting article! I actually wasnt surprised to see the crowdsourcing approach coming from a Scandinavian country – I believe it is in their DNA to share and develop as a society. I really like the fact that they engage fans and incentivize them to be creative and share their ideas. On the other hand it seems that Lego still manages the rest of the funnel itself and inform the idea owners at the end. I would also integrate the owners of most promising ideas back into the funnel at some steps to be able to diverge again (like IDEO) and assess and co-develop the product together. In addition, Lego could organize events, e.g. “Legothon”s, to have fans come together and compete in creative designs. This can increase engagement and also serve as a nice marketing campaign.
To address your question, I believe crowdsourcing cannot be the only input for product development, it should be a supporting tool. Therefore Lego still needs creative, innovative and local teams to be present.
With the rise of digital entertainment, it makes total sense to me that Lego is one of the first firms to turn to content co-creation to drive customer awareness and engagement. In my view physical entertainment has a future as I expect customers to pivot back to toys like Lego once the drawbacks of the current overexposure to digital entertainment become more prevalent.
With regards to the sustainability of Lego’s innovation platform, I would bifurcate between the innovation pipeline and customer engagement. The funnel appears very big and only few ideas will make it through all the approval phases. As a consequence, I believe that consumers will initially engage with the platform and then lose interest over time. Further, the strong economics will attract professional or hobby designers who will not necessarily be brand advocators or drive revenues. As a consequence, I believe that the innovation pipeline is sustainable but the customer engagement is not.
As a previous consumer of Lego back as a child, this is one of my personal favorite uses of crowd sourcing that I have seen so far. Using their dedicated fan-base to design some Lego models of the future not only re-invigorates their older fan-base, but it provides thousands of ideas that the Lego Model Master Builders and designers may never have come up with. My only concern is that they may be missing out on an important segment of their customer base by continuing to push focus toward only the younger consumers (even with these crow-sourced ideas). The people who are on the site, designing the new products on Lego Ideas are likely older fans of the brand. While obviously steering away from provocative or problematic directions – I think that they should not only accept ideas that cater to the children who are their current target market, but there is room to possibly connect further with those older fans by specifically accepting some ideas that are proposed that may cater more toward them. not only will this further spur the creative fans to produce in the crowd-sourcing, but it will keep them connected to the brand that they love.