LEGO, the Danish company that makes the world’s most beloved toy bricks, has embraced open innovation as part of its strategy to stay relevant in an age where playtime is increasingly dominated by screen time.
LEGO Ideas: Inbound Innovation for New Products
Since 2014, the company has been running the LEGO Ideas as a crowdsourcing platform for proposals of new LEGO sets. If a submitted idea goes into production, the creator is rewarded with 1% royalty on global sales and credited inside the build instruction booklet as the designer of the set.
The company retains tight control over the entire process through the LEGO Review Board. Once an idea crosses the 10,000th support mark and joins the “10K Club”, it will be submitted for review sessions that are held 3 times per year in January, May, and September. Even after accepting the proposal, LEGO retains the right to modify the original design and produce subsequent sets following the same theme (“LEGO IDEAS – How It Works” 2018).
Spotting New Product Ideas
Open innovation platform like Lego Ideas serves as a tool for identifying innovation from external sources, conducting market research, and engaging end users (King, A., & Lakhani, K. R. 2013). Submissions from users have yielded unconventional hits like “Birds” or “Ship in a Bottle” that would otherwise never make it into the company’s internal product pipeline (Thompson, 2018). In addition, the online voting system serves as a tool for LEGO’s core fanbase to engage with the brand and allow the company to test for the financial viability of these ideas. Since 2007, LEGO Ideas has launched 23 products successfully on the LEGO Ideas platform.
Co-Creation with MIT Media Lab
The company also enjoyed a long and successful partnership with MIT Media Labs. The result is LEGO Mindstorms, a kit with a programmable computer that allowed LEGO to become a teaching and prototyping tool for robotics. More recently, the Women of NASA set became an Amazon bestseller within 24 hours after its debut on 1st Nov 2017 and earned wide praise for paying tribute to the contributions of women in STEM (Andrea Diaz, 2018).
Encourage Learning through Open Innovation
As the platform attracted more members, LEGO needs to go beyond the purely transactional model and encourage sharing of tacit knowledge. Designing completely new sets is a daunting task that requires significant technical skills and prior design experience, so improving the collective capabilities of the community is vital for maintaining the high quality of submissions.
One way is to encourage the formation of collaborative teams online, and leverage on the teams’ diverse skillsets and tacit knowledge. For example, SAP has created a platform to help software developers find help for their development projects. This encouraged the developers to form teams to engage in collaborative development efforts after they establish their reputation in the community as effective problem-solvers (“Open Innovation’s Next Challenge: Itself”, 2018).
Motivating LEGO’s Innovators
Over the medium term, the sustainability of the platform depends on whether LEGO can keep its external creators motivated. There is a fine balancing act between giving sufficient creative license so that the user-creators are motivated to create what they want, while ensuring that the process yields desirable opportunities for the business (Antorini 2012).
While the rigorous review process ensures that highest quality standards are met by the time user-contributed designs reach the production stage, it can diminish people’s motivation to contribute to the platform. A creator needs to diligently follow a long list of quality and submission standards and wait up to 6 months before hearing from the Review Committee. When a poor-quality photo of the design or an incorrect description of any digital file will guarantee an immediate rejection, the review process risks burying good ideas under its administrative burden.
As the innovations platform matures, its strategy should evolve over time to reflect the motivations of its creators and the nature of innovation (von Hippel, E., 2011). One possible way for LEGO to improve access to its platform is to provide tools for the creators to create customised sets for limited circulation. Instead of official box sets intended for a global market, the tool will allow creators to assemble their own kits using existing LEGO parts and distribute them on the platform. Similar to the iPhone app ecosystem, which only took off after Apple launched its “third-party development program”, LEGO Ideas could empower its external designers by facilitating the creation of their own custom kit.
As the most successful and innovative platform for open innovation in the toy industry, LEGO Ideas has a remarkable track record of launching successful products through a tightly managed open innovation process. Would this be sufficient for the company to stay ahead of competition from digital media? For now at least, everything seems to be awesome for LEGO.
“LEGO IDEAS – How It Works”. 2018. Ideas.Lego.Com. https://ideas.lego.com/howitworks.
King, A., & Lakhani, K. R. (2013). Using open innovation to identify the best ideas. MIT Sloan Management Review, 55(1), 41-48. Retrieved from http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/1438826527?accountid=11311
First Look: LEGO Unveils Latest Fan-Designed Set, ‘Ship In A Bottle’. (2018). Retrieved from https://www.forbes.com/sites/lukethompson/2018/01/10/first-look-lego-ideas-set-ship-in-a-bottle/#3e7a80c01d82
Open Innovation’s Next Challenge: Itself. (2018). Retrieved from https://hbr.org/2010/02/open-innovations-next-challeng.html
Andrea Diaz, C. (2018). Lego’s ‘Women of NASA’ sale lifts off, lands as best-selling toy. Retrieved from https://www.cnn.com/2017/11/02/health/women-of-nasa-lego-trnd/index.html
Antorini, Y. M., Muñiz, Jr, Albert,M., & Askildsen, T. (2012). Collaborating with customer communities: Lessons from the lego group. MIT Sloan Management Review, 53(3), 73-95. Retrieved from http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/963962186?accountid=11311
von Hippel, E., Ogawa, S., & de Jong, J.,P.J. (2011). The age of the consumer-innovator. MIT Sloan Management Review, 53(1), 27-35. Retrieved from http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/896570521?accountid=11311