Lego Success Built on Open Innovation

Published Feb-27-11

How open innovation and crowdsourcing helped to reinvent the construction toy.

Lego Group, Denmark

The Story:

 Lego Success Built on Open Innovation The ‘open’ in open innovation can reveal itself in a number of ways. For example, it can refer to overcoming the “not invented here” syndrome by welcoming external input.

Openness is “outside in” when it makes greater use of external brainpower for its innovations. There is also another kind of openness in which a company opens up its ideas and technologies to be used by other companies, even competitors.

Lego Mindstorms is a classic example of the “outside in” open innovation model where the company has allowed customers to create designs.

Programmable Construction Toys

In the 1990s Lego was facing bankruptcy. With the arrival of the video games age the plastic bricks were seen as passé and children were ignoring them in their droves. All that changed when the company started to pay more attention to its relationship with its customers and with the introduction of Lego Mindstorms – programmable Lego bricks equipped with sensors that allow consumers to create moveable Lego designs and robots.

The product took a number of years to develop and Lego worked in close association with software developers and engineers at MIT.

Within three weeks of Mindstorms being launched more than 1,000 advanced users - in a campaign coordinated on the web – had hacked into the software that came with the construction toys to make unauthorized modifications with new functions. These were designs that were completely original and unforeseen by the company. Within a short space of time the hackers had vastly improved the original product and this resulted in many more units being sold, particularly to customers over the age of 18, who were not Lego's target market.

Tapping the Innovation of Others

Initially Lego bosses were against these actions and even entertained the thought that the hacking might be illegal. However, in time Lego stopped fighting the hackers as they realized how beneficial their activities could be and therefore it opened up its software to see what customers would create.

The Innovations of Others

Rather than rely solely on its own R&D department Lego thought it would be advantageous to tap the innovations of others. It’s a case of simple math. Seven people from MIT worked on the original concept and they came up with a neat product. But that’s nothing compared to the brain power of thousands of specialist users.

This initiative was so successful that the next generation of Mindstorm products was developed with user-designed parts.

Open Innovation Reverses Downward Trajectory

By harnessing the creativity, imagination and intelligence of the crowd, Lego reversed its downward spiral. And such was the success of the Mindstorms open innovation experiment that the construction toy company took the collaboration with consumers a giant step further by launching Lego Design By Me (formerly called Lego Factory). The service allows users to design their own Lego models, upload them to the company’s website and order them for delivery. Users can even design their own boxes.

Far from being a toy that looked like it was going to go the way of the dinosaurs, Lego, thanks to crowdsourcing and open innovation is perhaps more relevant, cool and hip than it has ever been. And it’s doing the company’s bank balance no harm at all.

Mindstorms and Design by Me are as far from the “not invented here" syndrome as it is possible to be and the company’s successes are now built on a powerful, collaborative and open relationship with its consumers.

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