Lego turned to the internet to save itself from oblivion
Lego made an online version of its toy to save the company from the brink of bankruptcy in the digital age.
Lego Group's senior innovation director David Gram shared his success story of reinventing the traditional block building toy at the better by design CEO Summit in Auckland last week.
When Gram joined the drowning Danish toy company in 2010 it was staring down bankruptcy because children were asking Father Christmas for an iPad or an Xbox.
Gram helped implement a strategy to turn the company around that focused on consumer needs, its core capabilities and the product development process.
"The company decided to innovate itself out of the crisis," Gram said.
Gram introduced the Lego Future Lab to foster these new ideas that could pull them out of its slump.
"Did it work? Yes, incredibly well," Gram said. "All revenue each year comes from new products."
Lego returned to profit by leveraging digitalisation to enhance its product, not replace it.
It created an online platform that allowed customers to invent its own dream Lego set.
Some hit the shop shelves and became hugely successful. The set creator received 1 per cent of the sales income.
Gram said the best way to approach innovation was by understanding the world around us.
Lego put a huge focus on understanding the future of play with in-house observation to see how children and their families lived.
"If you want to understand how the lion hunts, don't go to the zoo, go to the Savannah," Gram said.
Lego found that worldwide children today have less time to play.
Grams innovation upheaval also changed Lego's company structure.
Some parts of the company was making incremental innovation steps while other workers were exploring what they could achieve in the future.
"Think big but start really, really small," Gram said.
Small internal teams in charge of different Lego innovation projects were created to act like start-up businesses.
After trends are identified from their in-house tests, the teams develop a concept and defective prototype, named a pre-totype, within a month.
Their pre-totype is validated by the market immediately through small pilot tests.
Gram said the learning process was a race.
"It's about getting there fast to test and validate their assumption … Launch the bloody thing," he said.
"It's about disrupting yourself before somebody else does."
David Gram's other innovation tips for business leaders:
- Be a rebel in your organisation - challenge the status quo, but, be democratic about it.
- Do not have financial goals - if money is your measure of exploration success you will make safe bets.
- Too much cash thrown at an idea is a problem - with money comes more stakeholders until you suddenly you have a project that is too big to fail.
- A core purpose and mission will drive innovation and passion across your organisation.