Strategic Management: Discontinuous innovation - Essay Example

At LEGO they have started this with the launch of LEGO Factory, where consumers can design, share and buy their own models - or models designed by other consumers. This is a key to understanding what consumers really want as well as a key to offering a much greater variety in our assortment than what is feasible at a retail shelf. Another great example of consumer involvement is our recent LEGO MINDSTORMS NXT. They have had a lead user program where originally three, then 10, then 100 lead users participated actively in the development of the new product, which launched this August.

I think one of the key challenges is the diversified retail landscape. The fact that we are interacting with multiple retailers makes it difficult to create the ideal in-sync collaboration. However, I do believe that increased focus on understanding each other's business reality makes it a lot easier to cooperate and to tap into potential synergies to optimize the business opportunity. A concept that has worked really well for us in the past has been the creation of "customer wheels" within the manufacturer's business.

Participants "on the wheel" have been from all parts of the value chain (sales, marketing, planning, supply chain) and thus we have been able to make quick decisions to respond to market needs. We have also ensured that the respective functions from the retailer side have been connected to similar functions at the manufacturer - all the way from top-to-top through sales to planners and merchandisers. A very tangible example of cooperation is what we call "all hands on the deck," where key people from the manufacturer have helped in the stores during high season - a great win/win situation as manufacturers learn (very rapidly and "hands on") about the retailer reality, while the retailer has an extra pair of hands and access to lots of brand and product knowledge at a peak sales period.

How do toy and game manufacturers gain consumer insight in their market where the products are used by children but purchased by parents or adults This is the biggest challenges in our industry.To gain these insights, we do a lot of research with children and with parents. Often, we will conduct research when the parents watch us interact with their children; we try to discern what the parents see and how they react to what their children like. One design that links the design potential of the computer to hands-on building is the LEGO programmable brick, developed by MIT's Media Lab.

In this system, the brick can be programmed while connected to the computer, but then be detached to carry out its programmed function while built into a child's LEGO design. Newer bricks, called "Crickets" are under development. This concept allows building blocks to become robots or a LEGO building to have lights that turn on when a doll comes in a door. From Karen Hewitt's point of view, these designs encourage children to explore an interface between computers and the child-built environment without loosing the experience of hands-on building and rebuilding.

Looking to the future, Karen believes that as long as children have hands, they will build with blocks. Our task, as adults, is to make sure that imaginative materials are available and that time is allocated for this important work on the part of children. To do this, we have to limit passive entertainment such as television and minimally interactive computer