Everything is Awesome: Product Innovation at LEGO

Student comments on Everything is Awesome: Product Innovation at LEGO

1. November 13, 2018 Jonathan Mason says:

   Th move to a teaching pro type tool was brilliant!
2. November 13, 2018 Marybeth Egan says:

   Fame, glory and royalties! This package has been successful in motivating external innovators for more than a decade and I believe it should be sufficient to keep the ball rolling.

   I like your idea of allowing creators to make their own kits to drive engagement. By restricting the kits to existing parts, I’d imagine the incremental cost of producing a custom kit would be related only to sorting/packaging and would not be too onerous.

   In addition to Lego’s traditional product line, the company has built a toy line focused on teaching kids basic coding skills. I’d suspect an open innovation contest around this product line might also yield interesting and marketable ideas.
3. November 13, 2018 AW says:

   I tend to agree with your solutions towards the end of the post. While the influx of ideas from digital media may result in chaos, it still generates faster creative content that Lego’s current open innovation process. As a result, I believe that Lego needs to open up its current process to invite more ideas. There’s a chance, though, that Lego can keep its current control over the innovation process but change the financial structure (i.e., higher royalties or a longer payout). Lego could also create a higher tier of public creators whose ideas they tend to like most, and solicit more ideas from that group. While everything may be awesome for Lego now, it needs to be careful about how it manages its future.
4. November 14, 2018 Tom_Challenger says:

   An interesting idea on open source innovation! Some of the comments already described the idea of opening up this open innovation platform to more products other than the existing kits. Why not take this notion further and extend the platform to new business models, beyond just the building of toys? As consumers move more and more toward digital entertainment, it might be worthwhile for Lego to explore new ways to monetize its IP beyond its core business. The risk here is that you are likely to receive more ideas that are not viable; however, as is usually the case with innovation, casting a wide net in the hopes of striking gold is never a bad idea.
5. November 14, 2018 GM says:

   I never knew Lego was so far ahead of the curve in seeking ideas from its user base. In addition to LEGO Ideas, Lego launched an effort, years ago, called Designbyme which allowed users to use a Lego app to design their own model, upload it to an online gallery, and order a custom kit of physical parts from Lego that would allow users to build that model they had designed[1]. In 2012, they canceled the service because of the complexity of designing digital models and because the comparatively high price of the custom kits was prohibitive.

   Your piece is timely because Lego has not performed well–financially–in recent history[2]. Interestingly, poor performance has been attributed to bloat in the workforce and not fundamental product weakness. As such, I propose that the company’s model of employing master builders (viewed as artists within Lego) who generate product ideas in coordination with marketers[3] has worked well, and open innovation could be a distraction. This said, I do think technology offers unique ways to make legos come alive, and Lego is slowly adopting these technologies[4], for example, by creating an app that projects finished lego models into VR worlds.

   Ultimately, I do think LEGO Ideas is a nice way to engage a devoted user base, but too much focus on digital may be distracting. The company has an iconic product, and Lego manages to stay relevant by licensing rights to produce toys based off stories and images in pop culture. If the company manages itself conservatively for cash flow and sticks with the strategy that has allowed it to weather almost 90 years as a company[5], I suggest it will do well in the future.

   [1] Lego, “Designbyme – LDD Lego.com,” https://www.lego.com/en-us/ldd/designbyme, accessed November 2018.

   [2] Richard Milne, “Lego suffers first drop in revenues in a decade,” Financial Times, September 5, 2017, https://www.ft.com/content/d5e0b6b0-9211-11e7-a9e6-11d2f0ebb7f0, accessed November 2018.

   [3] Lego, “How we design Lego sets,” https://www.lego.com/en-us/service/help/fun-for-fans/more-about-us/how-we-design-lego-sets-408100000008835, accessed November 2018.

   [4] Andy Robertson, “New Lego Augmented Reality App Is The Best Open-World Lego Video Game,” Forbes, December 1, 2017, https://www.forbes.com/sites/andyrobertson/2017/12/01/new-lego-augmented-reality-app-is-the-best-open-world-lego-video-game/#12b38e0e498a, accessed November 2018.

   [5] Lego, “The LEGO History,” https://www.lego.com/en-us/aboutus/lego-group/the_lego_history, accessed November 2018.
   1. November 15, 2018 LxHuang says:

      I definitely thought about how the customised kit could work. The possible reason for shutting down Designbyme is that picking out bricks for customers and packing them into a box set may be too expensive from a labour utilization standpoint. I envision the new system as a combination of a digital tool to parse how many and what type of bricks are needed, and a link to LEGO’s Pick a Brick ordering platform. Essentially, the platform will churn out a “recipe” for custom sets that anyone can buy, with a portion of sales going to the creator as commission. The platform works more like sites sharing opensource codes than a tightly controlled toy distribution channel.

      You are right about the workforce issue! If reading cases doesn’t occupy whatever little time you have left, you can take a look at the design process LEGO’s internal teams use: https://www.designcouncil.org.uk/sites/default/files/asset/document/ElevenLessons_Design_Council%20(2).pdf

      Yikes! So many forms and admin work. They need to take a page out of Agile development process in software engineering and cut down overhead in their design process.
6. November 14, 2018 RH says:

   One of the barriers you note is diminished motivation to contribute to the platform due to the rigorous parameters set forth in the design process. This has the potential to stifle creative ideas on the basis of inexperience or limited technical knowledge.

   As you stated, there have been platforms created to help software developers find others to improve and refine on their designs; however, I think that this could be further promoted and formalized by LEGO itself. Under their Lego Ideas umbrella, LEGO could facilitate a message board of sorts that pairs creators with doers. I would expect that this would result in an increased number of submissions at a superior level of design.

   Another idea could be creating a competition at college campuses around the world. LEGO hopes to innovate for the next generation of users to differentiate itself from its digital media competition, so what better way than by reaching the people who are closest to its target market.
7. November 14, 2018 AEG91 says:

   Very cool topic and very well written! I absolutely love this use of open innovation by LEGO. Not only does it help the company generate new ideas, but it also creates an initial customer set to ensure the product will be commercially feasible. I see the major issue with this program as the administrative burdens (the long list of quality standards) and timing delays in hearing back, as you have mentioned. Personally, I think it would be best if LEGO actually let the voting happen before the company made sure all the rules were followed in the submitted design. I think this for two major reason: 1) As you mentioned, immediate rejection (i.e. poor photo quality, incorrect description, etc.) can lead to great ideas never getting a chance when certain issues can be fixed, and 2) even if certain ideas are not feasible for LEGO to produce, it is still tremendously helpful for the company and the LEGO Ideas community to see what people are drawn too (and potentially use certain aspects of the design in more feasible ways). To more directly answer your question, yes, I do think the LEGO Ideas is sufficient to stay ahead of competitors, but I think you have to keep that community happy! I believe immediate voting would help energize the community and continue the flow of great ideas!
8. November 14, 2018 bry says:

   Fun and interesting topic! I never realized how LEGO was utilizing open innovation to source new ideas, but I think this is a great idea. In doing so, the company can make sure to continue staying relevant and keep up to date with changing pop culture trends with its new products. There are additional benefits to this as well that I would consider, such as reducing the need for a comprehensive internal design team–instead, LEGO is only paying 1% of royalties to external sources!

   In response to your question, I think this type of innovation will definitely help LEGO retain share of free time spent by children versus digital media and smartphone usage. As children increase digital media usage, the company could perhaps incorporate an interactive media component to its products. Ways to do so could include putting assembly instructions and ideas in online interactive videos on the LEGO website, or creating an open innovation gallery online where children can submit pictures of their own creations.
9. November 14, 2018 clcorcoran says:

   Awesome article! Very well written, and a great subject. I wonder if there is an opportunity to create a competitor firm that is more responsive to user ideas, with a tighter turnaround time (less time, maybe with less volume). Lego obviously has enormous brand value, is a trusted children’s toy manufacturer, and produces innovative block-sets. But, maybe a start-up could crowdsource lego-compatible ideas, and produce them in a faster timeframe. This distributed design creation coupled with 3D printing could make de-scaled, small-batch specialty designs much faster than the Lego process. This brings up lots of legal questions: to what extent is the size and shape of Lego blocks protected intellectual property? What are the regulations and liabilities surrounding the production of children’s toys?
   1. November 15, 2018 LxHuang says:

      You are on point about a lean competitor building speciality designs! In fact, the company’s CEO is a 9-year-old (now 13) LEGO diehard fan: https://www.brickloot.com/pages/how-it-works
      One of the papers referenced in the article describes the phases of user-innovator cycle (von Hippel), and the next phase after a market for innovation develops is that user-innovators will develop their own products based on the original technology. I don’t think LEGO can sue for IP infringement if someone develops an original set using Lego bricks, pack the right quantities of each brick type and then ship it off. That is also why keeping users engaged on the platform is very important. If compliance is too onerous, users will leave the platform and independent ventures to pursue their ideas. Definitely going to be LEGO’s loss!
10. November 14, 2018 Melissa Serfaty says:

    Loved the article ! I had no idea lego was so forward thinking and innovative. I really like the idea of open source innovation however I understand your concern regarding maintaining competitive advantage.
    In fact, my concern with lego from what you describe is that their main competitive advantage, product creativity, comes from open source innovation which somehow worries me because it is too easy to copy, other brands such as Mattel could easily do the same thing.
    I find open innovation to be a great tool to complement a competitive advantage (as you mentionned, Apple platform) rather than it being your main competitive advantage.
11. November 15, 2018 AgTechTOM says:

    Love it! A couple of thoughts:

    First, I completely agree that motivating contributors is critical. The royalties definitely play some role in this, but a recent study suggested that for open innovation it’s often the combination of monetary and non-monetary incentives that is the most effective in motivating contributors (http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.628.9113&rep=rep1&type=pdf). At LEGO, this appears to be happening through credit on the box, as well as through recognition within the online community. Additional brainstorming could focus on whether there are other non-monetary forms of compensation that might be effective (and cheaper for LEGO). This could include some kind of gamification element, or access to additional LEGO events/inside information.

    Second, I’m a big proponent of the third party limited edition circulation similar to the Iphone developers model. Decentralization does carry some risk, as you lose a certain amount of control over the process. However, there is a tremendous benefit that comes from the more engaged developer base. As long as there are some limits around what can be created (quality standards should still be maintained to protect the LEGO brand), this could be the future of open innovation at LEGO.
12. November 15, 2018 DeWalt Watson says:

    Great article! While screen time is becoming an increasingly in child entertainment, I am a big believer that there will always be a market for a suite of products that allow children to physically build and play with a tangible item. My biggest concern with this open innovation platform is the challenges with integrating ideas from Lego’s core consumers – the kids themselves. Complexities around design, the required expertise, and the administratrive challenges discussed in the article (such as long waiting times and rigorous technical standards) are significant burdnes for even accomplished designers, and there is not a clear path to integrating kids’ ideas onto the platform.

    In an ideal scenario, Lego could produce a software module that would allow kids to contribute their designs to a distinct platform (i.e. “Lego Ideas for Kids”). Perhaps a more realistic scenario, however, is to create a forum through which kids can be matched with designers capable of bringing their ideas to life and of navigating Lego’s review process.

    While kids may get excited by the idea of new designs, I can only imagine the excitement that would accompany sets created by themselves or their peers (would even go as far as displaying an image of the child who came up with the design concept. I think buy-in from the kids themselves will enhance chances that they will choose Lego over digital / screen-based competition; otherwise, these competitive pressure may prove increasingly challenging for Lego.
13. November 15, 2018 HG TOM says:

    Very interesting read. I am curious how LEGO plans to compete with an increasing number of educational building toys entering the market, specifically around coding. Many early stage companies, and as of recently some more established players, have introduced a flurry of products into the market focused on “gamifying” the STEM education process. The educational toys seem to have a competitive advantage in my mind because they cater more to the key decision maker — the parent.

    Look at the award winning electronic building blocks company Little Bits for example. This company manufactures highly engaging building sets that not only create extremely exciting, automated finished products such as electric guitars, R2D2 (Star Wars), race cars, etc. they also teach kids the skills needed to code and foster a mindset of creativity and problem solving, which are increasingly important in modern society.

    https://littlebits.com/about/
14. November 15, 2018 Buang says:

    I do not think that this is sufficient for the company to stay ahead of competition from digital media as mobile penetration rate continues to rise globally. Digital disruption has killed several traditional businesses, so I would encourage LEGO to ride the trend and, instead of competing against digital media, incorporating digital content into its toys just like the way traditional media companies are adding digital content to complement their existing business model. I do not have a specific idea on how LEGO should do that exactly, but I would like to see more interactive toys from LEGO.
15. November 15, 2018 Mark T says:

    This concept brings me back to my entrepreneurial days when I was designing an app for the Apple App Store. The process is rigorous. If your screenshots don’t look good, they reject you. If your app doesn’t meet the incredibly vague community guidelines, they reject you.

    After one or two rejections, the developer becomes increasingly discouraged. I’m worried that this will happen to idea-creators in LEGOs open innovation platform. Why does it matter if the idea isn’t accompanied by perfect photos? By having such a restricted process such as the 10k requirement, the barrier to review is most likely preventing good ideas from entering the system.

    Finally, I can’t see this really paying off for the idea-creators. The 1% royalty seems a little low. If LEGO expects me to spend several days developing a concept and generating metadata for the concept, I would hope to be compensated. The small “potential” return is not very motivating.
16. November 15, 2018 MAO says:

    I commend LEGO for seeking ideas beyond those of its employees and for rewarding external parties that provide successful ideas. However, you mentioned that designing sets “requires significant technical skills and prior design experience.” I wonder if the existing requirements of their open innovation process are doing the opposite of what is intended: limiting the amount of ideas submitted due to the high level of requirements. I agree that one way to increase the amount of ideas is to improve the skills contributors. However, LEGO might also want to consider changing the requirements tied to submissions and subsequently refining the design themselves through internal capabilities. In this way, more people could contribute to their open innovation initiatives.
17. November 15, 2018 John Keck says:

    While I find the Ideas project very interesting, it seems to be a bit more of a marketing tool than a successful open innovation platform. Launching only 23 products in the 11 years signifies an extremely slow process and constitutes a small chunk of the many products LEGO launches per year. Also, are there any copyright protections for contributors that have significant traction but are not selected? If not, LEGO could be setting the 10,000 likes goal higher than is required so they can actually produce a similar design without paying the 1% royalty. With these numbers, I absolutely agree that focusing on free, digital content is the best way to make this a truly collaborative effort. Building an online community of builders with open-source designs would be much better than giving 23 people (or less) some monetary incentive.
18. November 15, 2018 Shannon says:

    This was so fun and interesting to read! You mentioned that one way to encourage knowledge-sharing is allow people to form collaborative teams. I think that’s a great idea – naybe LEGO can also partner with MOOC’s to create instructional videos. I do, however, have some concerns about the collaborative model. First, I’m not sure if designing a LEGO set requires a diverse set of skills like software – it doesn’t seem very technical at all — anyone can figure out how LEGO’s work, and the main skill required is really just the design part. I do agree that it would certainly be more fun, and the ideas produced MIGHT be higher quality. Next, would a collaborative model result in fewer overall ideas submitted, and would the potential increase in quality offset the decrease in quantity, or is quality found in a large quantity of diverse ideas, as we see with design thinking? Third, team members might need to split the already paltry prize money / commission, which might lower incentives to participate.

    I completely agree that the rigorous review process heightens barriers to submissions. Minted.com is a platform that crowdsources graphic design from a community of designers. The community votes on the best designs, and the winning designs are then printed onto a variety of mediums, such as greeting cards and even curtains. Minted, however, does not actually internally review these designs because they believe in the power of the crowd, which is, in essence, the spirit behind crowdsourcing. I wonder if LEGO can eliminate its internal review process completely and, like Minted and many other crowdsourcing platforms, believe in the power of the crowd.

    Finally, I’m SO excited about what LEGO is doing with MIT Media Lab! Sounds like a project I would love to work on over the summer!
19. November 15, 2018 heart04 says:

    It’s a great article to elaborate how LEGO successfully leveraged its open innovation ecosystem to get product innovation ideas from customers. It seems like LEGO has tapped into almost all aspects of open innovation from its customers. As ‘GM’ mentioned in the one of comments above, LEGO even launched Design byME program that you can design your own LEGO products using LEGO Digital Designer (LDD), a freeware computer program to allows users to build models using virtual Lego bricks in a computer-aided environment – the program was closed, though. One thing that LEGO can do more would be to let people revise their ideas based on others’ comments. For now, it looks like there are little effort to make the idea continuously better once an idea is submitted to LEGO Idea website. Instead of just waiting for 6 months to get more than 10,000 votes, if people can make submitted ideas better so that they can go over the hurdle easily, it will make the open platform more productive.

    Also, LEGO may need to rethink what is the best platform to get ideas from young users who may not currently actively use LEGO Idea website. When I see the ideas in the website, there seem many ideas submitted by adults on old/retro things. I wonder whether LEGO can get a good number of product ideas from its target users, kids, given that now it actually sells more lines of products (e.g., video, game) for kids.

    Lastly, LEGO may explore broader players in open innovation ecosystem such as suppliers, employees, and strategic partners in order to seek ideas from different perspectives. There may be suppliers that can provide new product ideas based on their working relationships with LEGO over 60 years. Employees in non-R&D functions may have good product ideas. LEGO can also seek more collaboration with strategic partners other than MIT Media Lab. Limiting open innovation to just consumers is limiting sources for innovation.
20. November 15, 2018 Chris Hartnoll says:

    Dear LxHuang,
    Thank you for the fun and interesting article on innovation at Lego!

    You have raised some interesting recommendations on improving the quality and quantity (of successful) innovation on Lego’s open innovation platform. However, I think another avenue for Lego to pursue is innovate with the teams and collaborators. Successful innovation is often a mix of different ideas developed by different people at different stages. Perhaps some of the most successful developers (who have the most skill and knowledge of how to create a product) are not the best idea generators. Why not promote collaboration between developers and idea generators? Lego’s current model up-votes ideas and then rewards the author if they are successful. How about creating an environment that is more collaborative and allows people to come onboard at different times?
21. November 15, 2018 TOM Student 41279 says:

    I love Lego’s approach to creating new sets by crowdsourcing ideas from their biggest fans that receive the most support. As a purchaser of several of Lego’s Star Wars-themed sets, I am also a huge fan. However, I’m also actually deeply saddened by the direction Lego has gone.

    When I was a kid, there were no sets. There was just a giant box with 500+ pieces and it was up to you to build whatever you wanted. Nowadays, the only things you see in Lego stores are shelves and shelves of sets. These sets have specific pieces and can only be assembled in one way — to create the design pictured on the outside of the box. Where is the creativity in that? There is none in the building process and as an engineer — that’s where I want to be able to be creative!

    So while I am a fan of these sets and love how engaged Lego has been with their customers, I think they also need to innovate and find a way to get back to a place where kids see Legos not as finite, discrete sets but boxes of endless, boundless opportunities to create.
22. November 15, 2018 SSS says:

    I very much enjoyed reading this post. Lego as a product company with a living, changing and diverse product range is a perfect candidate for open innovation because its users can be source for originality and novelty. It is hard to think of a company better suited for this match between users willing to participate in the life of the product and a company in need of and able to utilize this creative resource. Furthermore, Lego is not in need of providing large monetary rewards because reward for participating for many participants is primarily a form of personal satisfaction. At the same time, Legos use of royalty to the inventor is a creative and interesting way of signaling that the participants are part of the Lego community.
    The post also discusses an important aspect which is how Lego manages this process in a way that enhances the commercial value of their product mix while also garnering sufficient interest in their open innovation initiatives.
23. November 15, 2018 soonerfan says:

    I looooooove legos. Thanks for inspiring the nostalgia trip 🙂

    Re the issues on admin overhead for the idea vetting process, it seems like Lego has an opportunity to outsource the idea vetting process too: why not let users vote up stuff? I imagine a lot of people (myself in cluded) might find it fun to flip through a randomized set of submissions and give it a thumbs up or down (or swipe left/right, if they created a simple Tinderized web app). Ideas above some threshold could then be forwarded to the Lego team.
24. November 15, 2018 RCTomUser555 says:

    Open innovation for a consumer product such as LEGO is a brilliant idea, not only for creation and innovation on the product front, but also as a marketing tool and way to engage consumers through the belief that their ideas and dreams for legos can turn into reality, and the additional engagement that they have a say in voting or supporting their favorite creations online. The additional benefit of adding a teaching component through a partnership with MIT to me allows the company to expand the age-range of their consumer base that would be interested in staying engaged with LEGO. To address your question, I think LEGO should continue to innovate, through thinking about the ways differing age ranges of consumers interact with media. For example, a younger consumer is not as active on social media, but is incredibly creative. Including a pamphlet with each set for them to vote on new ideas will leave them loyal to the brand at a young age, and likely eager to contribute later on. For those older than the prime contributing market, I wonder if LEGO can parter with an engineering school to open source creations for electronic legos. This can enhance the learning and engagement from older (high school and beyond) students who have an interest in engineering or programming broadly.