The Role of Users in Legos Approach - Essay Example

Critically discuss the role of users in Lego’s approach to innovation and consider whether the strategy could be put to use in other organizations Contents Contents 2 Introduction 3 Role of users in Lego’s approach to innovation and whether the strategy could be put to use in other organizations 4 Conclusion 11 References 12 Introduction Lego is a Danish company and is one of the famous brands for children toys. It was founded in the year 1932 and since then it has grown into a global business. It was originated in Billund where a carpenter called Ole Kirk Christiansen who has a woodworking business and manufactured furniture’s for the local farmers. The business was shifted in the year 1930 and the children toys started being manufactured from 1934. The name Lego was derived from a Danish words which meant to ‘play well’. The early products that the company produced were cars, piggy banks, wooden pull toys, trucks, and cars. Later the product range shifted to a set of interlocking bricks which was launched in the market in 1953 but failed because of the consumer’s perception towards plastic toys was strong. By 1959 the company shifted completely to manufacturing plastic bricks and related products and stopped producing wooden toys. The company adopted a series of change with product innovations, segmenting and targeting markets, figures, adding wheels, switching to acrylonitrile butadiene styrene plastic rather than cellulose acetate, and addition of instruction manuals. Such changes helped Lego for further development and by 1988 there exist almost 50 elements in the toy system of Lego. It manufactured Duplo with large bricks for younger children and for the older ones it had Lego Technic Builders. The growth of Lego increased throughout the 20th century and it ranked in top ten toymakers in the world. Their product range diversified through models cars, train sets and robotics and even the diversification was seen in the architecture to include programmability and control in order to support these toys (Chesbrough , 2003, pp.76-77). In 1999 the fortune magazine stated that Lego is the ‘toy of century’. The Lego’s operations faced competition due to evolution of computer games which attracted the younger generation and even its costly toys in the high cost economy created pressure in its operations. The low cost toys caused a problem for Lego to remain competitive in the market. Role of users in Lego’s approach to innovation and whether the strategy could be put to use in other organizations As the potential configuration of a small number bricks were huge which involved the users more in the Lego concept. The Lego toys has been bought by the people to make house and cars who then reassemble the bricks in the own user created approach. From the year 2000 Lego has been keeping at the centre of its strategy the user linked approach. The company in order to improve the efficiency of production started developing digital models of the bricks and the other components which they manufactured. Such models helped Lego to explore new product line through the computer based designs. The digitalized manufacturing helped the company to reduce cost and time in manufacturing process. This even opened up a new customizable toy option in the market place. In 2000 Lego Mosaic was launched which enabled the users to upload pictures in the website of the company. The company would then calculate the bricks and digitize the picture in order to develop a multi colour wall hanging mosaic. Mosaic has served as a learning module for user configurable toys where the users could design and modify their toys from the scratch. The Lego factory offers online the users to submit the product designs and then Lego calculates the required components and bricks in order to generate the appropriate instructions for building. The users alternatively develop its own ideas with the help of the design tools made available by Lego on the site. Lego packages the required pieces and delivers to the user who has designed their own product, as a result Lego acts only as a service provider. Lego has seen growth down the years because of its innovation strategy. The users play a significant role and are the key driver to the innovation strategy adopted by Lego (Hienerth, Keinz and Lettl, 2011, pp.344-374). The company comprises of features where it made the design available to the outsiders. Lego even produced a sophisticated mind game in order to compete with the computer game which was called MindStorm. It was a programmable brick that was developed using a simple user friendly programming language. This allowed various users to develop different programmable models. The complexity in MindStorm was the complexity in the programming language which formed the backbone of the product (Franke and Piller, 2004, pp.401-415). As the maximum percentage of the users was adults there was a need to change a design specification in MindStorm NXT that was to restructure it with the help of a simpler programming language. The company used its open innovative strategy and approached the National Instruments firm located in Texas to help Lego with the programming structure for their product. This strategy helped the users to deploy a wide range of actuators and sensors to their phones and PCs by using a simple programming language, and this in turn resulted into creation of a more sophisticated user designed automated product range. In the early stage of developing MindStorm Lego had come across the factor that there were a wide range of users who were hacking their source code. The code was hacked by the users and extensions and applications were created to the code that was originally developed by the Billund team of Lego. The company did not take any security measures in order to stop the hacking process but recognized the fact that there are smart users and they cannot hire all of the smart people in their organization. Lego adopted an open innovation strategy on the basis that limiting creative approach was contrary to its mission of encouraging ingenuity and exploration. The company thought this strategy to be an effective tool to make their product range more exciting. The users do not get paid for the activity but they share their experience and give a totally different competitive edge to the business. The strategy of Lego was to identify the key developers and then use their expertise by engaging the user’s interest. It made the source code available to the outsiders, and it even put a right to hack option on the license of the MindStorm software. Through the following strategic initiative Lego was available to establish leverage on the original design. The user community had shown a growth, and began developing their websites. This led to the production of 40 recipe books and different software and hardware add-ons (Lettl, Hienerth and Keinz, 2012, pp.166-169). Lego while developing NXT had set up a MindStorm user panel, and recruited secretly some key developers to work with the company at the initial stage. Lego eventually selects four key developers from the 20 external top developers to form the MindStorm user panel. The strategy that the company initiated was more of involvement and lead user behaviour. This kind of lead user behaviour is not driven by any kind of financial rewards but is rather driven by involvement and interest of the users. Lego initiated more users by paying airfares to the users, and such a successful experience made Lego have a 100 citizen developers for their NXT project and even for the future product developments. The experience even spread across other communities. The community response had even provided information to the company that there exists a special community of users who purchase the original train toys produce by Lego and then create their own modifications and design on the original product. With the information provided by the community Lego was able to identify the key designers and users and increased their interest and encouraged the key designers to contribute their ideas for further product development (Burton, Obel and DeSanctis, 2011, pp.109-110). The result of this initiative was that it created a group of 20 lead users who produced almost 76 product designs which was then taken by Lego to manufacture such products and then sell them into the market. The Lego’s business has taken a turn from the time it started identifying and working with such a huge user base and communities. Though Lego still makes the bricks and toys that are sold and designed in the in the traditional way. On the other hand the open source software strategy has given a new edge to innovation within the company. This strategy was initiated for the key role of users. Where the users were engaged to co-create and design their own products. The users were the front end of the innovation strategy of Lego. The added advantage was that the design created by one user can be appealing to another which is not just a vanity publishing but also an effective and interesting extension of marketing and design into the world of open source. The new method of innovation adopted by Lego has made it engage its users into its own world rather than having a user base who exchange and design ideas external to the company. There even exist LUGNET which is an independent Lego user network. Lego universe an online war game has creatures and characters that are digital models which are designed by the children who play in Lego Universe. Lego through its innovative approach have not only developed by custom toys where the user’s design is not only the digital characters that appear in the virtual game but also has a physical entity in the real world to play the game (Füller, Matzler and Hoppe, 2008, pp.608-619). The company not only merges its traditional story telling form with brick making advantages but also enhances the imagination and creativity of its wide range of users to shape the virtual and real characters in the game. The users have enforced Lego to come forward with such an approach where the users lead the growth and development of the organization. The new innovation technology adopted by Lego for open source software has helped Lego to incorporate various ideas accumulated from its users worldwide and even gave birth to a community based model (Franke and Shah, 2003, pp.157-178). The community based model is totally different from the traditional approach and comprises of shared interest and knowledge, it focuses more on community sustainability and growth, and infrastructure and protocol that supports the collaboration. The open source strategy has evoked Lego to select some lead user entrepreneurs who are aligned more with the values and strategy of Lego. These users can then use the complementary assets such as brand, distribution systems and know-how of Lego in order to grab the various business opportunities. It even helps to leverage synergies and reduce risk both for the company and the user community, and continuous exploitation and identification of business opportunities with sustainability and growth. The company through its innovative strategy enhances the diverse knowledge of users in a process of continuous exploitation and recognition of opportunities. Lego has been able to leverage synergies through incorporating lead users into development of new products, identifying the users who will play a lead role in innovation through various contests, and developing trends through observation the design activities and communication of various user communities. Lego has been able for such a collaborative innovation with the help of collaborative infrastructure and developing process for shared vision, protocols and expandable commons. Lego’s new strategy for innovation and development has saved Lego at the time of global recession with almost 40% growth in profit. The company was almost at the stage of bankruptcy with the increase in the complexity of the supply chain activities due to production of new products such as programmable robots. The hacking of the software that contained the source code for such products by more than hundred of users for improvement and customization of the products led to evolution of such an open innovation strategy. The company through this strategy made the official software been available to all those users who shared their experience and ideas with the company for further research and development. Rather than to stop the production because of hacking of software the company embraced those adult users in order to help in further research and testing of product developments by Lego (Jeppesen and Molin, 2003, p.363). The adoption of a structured innovation strategy by having a hierarchy of volunteers to share their ideas changed the fortune of the company. This strategy helped the company to slash down the individual pieces used in the products developed earlier and initiated a change towards more creativity by the engineers of the company. Lego even launched a Cuusoo platform for further co-creations, it was a platform where individual project ideas could be shared and once it achieved certain benchmark for votes it would be reviewed by the company for transferring the ideas into real products. The user whose idea turned into developed projects would then be given a share of the total profit made by the company on the sale of that product. The open innovation strategy of the company works with a wide range of people who are individuals to a group, and the company establishes various platforms and programs to enable collaboration and co-creation. Such an approach made the licensed software available to the key users. The company did not consider the drawback of their software being hacked but exploited the hidden opportunity behind the scenario. The collaboration with the user community made the company use wide range of ideas from the people who actually use the product manufactured by the company and has specific plans for further improvement (Koners and Goffin, 2007, pp.242-258). The users were the key players who changed the threat faced by the company into an opportunity. The innovation model of Lego comprises of product and process modification in order to improve certain functions, reconfiguring the product to a different context in order to create added value, and creating a new product or different platform for customer communication. The users have driven the business for Lego and were even the consumers of the products manufactured by the company. The strategy adopted by Lego could be used only by those organizations that are open-minded to accept ideas from their users worldwide. The innovation strategy adopted by this is very effective in understanding the consumer’s mindset and then engaging their ideas for further development. The company engages the user’s interest through the strategy without any monetary compensation. This reduces the complexity in supply chain activities and the innovative ideas are then implemented by the company. This kind of strategy is useful for those companies that are not too large in size because implementation of the ideas from the users requires active participation from employees and willingness to accept such a lead user method strategy. The benefit of such an open source strategy is that the company can exploit the various ideas that different talented users have and then merge them to develop a new product. This even helps the company to reduce the cost on a particular research and development team and recruit some key talented users who can share their ideas for further product development online. The organization even gets to know the loopholes where they are lacking to satisfy the market demand. This strategy helps an organization to share a common platform with the users who could ultimately become their consumers. The major advantage is that the organization can capture more of market share and implement those ideas from the user’s perspective which would help in further growth and development of the company. An organization that uses a somewhat similar strategy is IBM; it has implemented a collaborative innovative community named Blade.org where it invites all the experts from outside the organization to contribute their innovative ideas towards further development of the company’s products (Lüthje and Herstatt, 2004, pp.553-568). Such strategy can be even implemented by other companies that are ready to give license to the external users for implementing their ideas. The risk associated with this strategy often contradictory ideas emerge which might not be beneficial for the company. If the organization can make sensible decision for adopting the best innovative idea from the wide range of users like Lego then the strategy can be easily adaptable by any organization. Conclusion Lego was one of the famous brands for producing toys. During the global recession period it faced a lot of difficulty in carrying out their expensive supply chain activities. The demand of the market was not well analyzed by the company. Lego’s official software was even hacked by many users for further improvements into the products being manufactured. The company did not attempt to restrict the hacking process but exploited the opportunity it saw within the occurrence of such an event. The users played a key role in driving the growth of the business. The users initiated the company to come up with an open source strategy where the official software was made available to the users for further developments. This enhanced the user’s interest in the company by implementing the innovative ideas that was put forward by the wide range of users worldwide. It gave a platform for the users to share their ideas, and their ideas gave an opportunity for the company to improve on their products and implement the necessary changes needed to sustain in the highly competitive market. Though the software hacking process is not a very beneficial idea for many firms which have much more complex activities but it proved to be advantageous for Lego. Lego could come out from its bankruptcy stage and design various innovative models at a cost effective research and development method. Such an open source software strategy adapted by the company even reduced the cost of purchasing software from any commercial vendors. The incorporation of various ideas from the users helped Lego to have a sustained growth over the years. References Burton, R. M., Obel, B., DeSanctis, G. 2011. Organizational Design: A Step-by-Step Approach. New York: Cambridge University Press. Chesbrough, H. 2003. Open Innovation: The New Imperative for Creating and Profiting from Technology. Boston: Harvard Business School Press. Franke, N., Piller, F. 2004. Value creation by toolkits for user innovation and design: The case Of the watch market. Journal of Product Innovation Management . Vol.21(6), pp. 401-415. Franke, N., Shah, S. 2003. How communities support innovative activities: An exploration of assistance and sharing among end-users. Research Policy.Vol. 32(1), pp. 157-178. Füller, J., Matzler, K., Hoppe, M . 2008. Brand community members as a source of innovation. Journal of Product Innovation Management.Vol. 25(6), pp. 608-619. Hienerth, C. , Keinz, P., Lettl ,C. 2011. Exploring the nature and implementation process of user centric business models. Long Range Planning. Vol. 44(5-6), pp. 344-374. Jeppesen, L. O., Molin, M. 2003. Consumers as co-developers: Learning and innovation outside the firm. Technology Analysis & Strategic Management. Vol. 15(3), p. 363. Koners, U., Goffin, K. 2007. Learning from postproject reviews: A cross-case analysis. Journal of Product Innovation Management.Vol. 24(3), pp. 242-258. Lettl, C., Hienerth, C. , Keinz, P. 2012. Exploring synergies amongst producer firms, lead users, and communities: The case of Lego. Working Paper. Vienna : Vienna University of Economics and Business. Lüthje, C., Herstatt, C. 2004. The lead user method: An outline of empirical findings and issues for future research. R&D Management. Vol. 34(5), pp. 553-568 Read More