How Open Innovation drives Denmark’s LEGO
David Nikel from Arctic Startup reports from InnoTown 2013.
Embracing innovation and entrepreneurship not only saved LEGO, but rocketed yearly profit growth to 40% for five years running during the global recession.
But it was almost a very different story as innovation spiralled out of control in the 1990s. The complexity within the supply chain, due to new products such as the Mindstorms programmable robot, took the company to the brink of bankruptcy. However, the adult user community that sprung up around Mindstorms ultimately led to the company saving and reinventing itself.
After its first release in 1998, Mindstorms was hacked by hundreds of people around the world who wanted to customise and improve the product. Rather than lock down the product, LEGO embraced their adult user communities, putting in place a hierarchy of volunteers to help with research and testing. By the time the second Mindstorms product was released, LEGO had adopted a structured approach to innovation that quickly turned around the company’s fortunes. The approach slashed the number of individual pieces used across their products, encouraging its engineers to think creatively.
Around the same time, Adam Reed Tucker pitched an idea to release Lego sets of world landmarks such as the Empire State Building. Bosses at LEGO felt the market wasn’t big enough, but rather than file away the idea in a dusty cabinet, they supported the entrepreneur to develop the product through his own business, Brickstructures Inc. It was a win-win for LEGO with no added complexity to the supply chain and little risk if things went wrong.
As it turned out, Lego Architecture was a massive success.
To inspire more co-creations, LEGO has launched its Cuusoo platform in beta. Anyone can submit a project idea and those that reach 10,000 votes will be reviewed by LEGO and potentially turned into real products. If the project reaches production, the person who submitted the idea will receive 1% of the total net sales of the product.
It’s a fascinating approach to research and development, spearheaded by Erik Hansen, LEGO’s Senior Director for Technology & Open Innovation.
“We work with a broad spectrum of people, from talented individuals to “the crowd” and are constantly evolving our programs and platforms to enable co-creation and various forms of collaboration”, says Hansen.
“One of our programs, the LEGO Certified Professionals, is targeting talented individuals who are interested in running their own business based on the LEGO Brick as a creative medium. An experience like LEGO Cuusoo is both inviting talented individuals to propose new LEGO products and allowing the crowd to cast their votes at the ideas they prefer”.
Read the original article posted on www.ArcticStartup.com