lego open innovation case study

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Assignment: RC TOM Challenge 2018

The Missing Piece: How Lego Found Open Innovation at a Critical Time

Lego was facing financial distress in the mid-2000s. In this time of turmoil, it turned to open innovation to restart its business.

Society tends to view open innovation as a novel tool to create incremental value specifically for growing organizations. Although this is often the case, open innovation, and crowdsourcing specifically, can also be used to turnaround organizations under financial and strategic distress. Since the 1930s, Lego has captured the hearts and minds of children and teenagers across the world with its unique building blocks. As the company grew, it expanded its operations and entered the theme park and video game industries [1]. By the mid-2000s, these initiatives were largely unsuccessful, and the company was left grappling with its precarious financial position [1]. Since then, the company has reversed course, in large part due to two open innovation programs: Mindstorms and Lego Ideas. This paper will focus on Lego Ideas as it is the most recent and current iteration of the company’s crowdsourcing strategy.

Lego Ideas is a program that invites users to interface with an online, proprietary Lego software platform to submit product design ideas to Lego [2]. These ideas are then voted on by the Lego user community. If a design reaches the threshold of 10,000 community votes, Lego initiates its internal processes of design evaluation and potentially product development. One design per year is selected for production, and the original user designer receives 1% of sales as a royalty. Lego Ideas, like many corporate crowdsourcing initiatives, directly connects with the customer, providing entertainment value and learning opportunities for children and adolescents. It uses information technology to augment the company’s fundamental value proposition. Customers continue to build and learn, but also gain access to a community of fellow Lego builders which enhances the platform’s attractiveness. Consumer products companies must understand the critical importance of being socially driven [3], and Lego Ideas is predicated on this strategy. Instead of conducting a market test after the product has been developed and introduced to consumers, the demand hypothesis is partially validated by the user voting system prior to product development. This reverses the typical process of toy-making at Lego.

The Lego Ideas platform faces issues with regards to its internal processes that take place after the users have evaluated their peers’ designs. Prior to any involvement by the Lego team, users move through the generate, organize, clarify, and evaluate crowdsourcing collaboration patterns [4] by generating product designs, commenting on these, and finally voting on the best concepts. Only after this external process does Lego management begin reviewing the top community designs and communicating to the users whether a concept was greenlit. It is this internal process that leaves the company vulnerable to product development and customer satisfaction challenges.

Crowdsourcing at Lego need not be a purely sequential process in which the company is at the mercy of the rate of outside innovation. Lego can start implementing certain stages of product development prior to the full review process of user designs has been completed. One of the first greenlit Lego Ideas concepts, a Minecraft toy, required Lego to haphazardly form a partnership with Mojang to use its Minecraft intellectual property [2]. This caused issues internally with the launch timeline. In the short term, the company should be more facile in using intelligence from voting trends to be ahead of potential required partnerships. Given its reliance on strategic partnerships, Lego must start conversations with outside firms before an idea is fully approved.

Pathways to Just Digital Future

By welcoming the Lego fan into the process of innovation, the Lego Ideas team must weigh the medium-term customer relationship implications of open innovation. Given that free labor is being provided by open innovation [5], it is plausible that customers could demand insight into the company’s evaluation process. Management at Lego must find the appropriate balance between guarding trade secrets and inviting customers into the internal process. Perhaps this is done in a public forum after an idea is greenlit, with executives detailing the factors that went into the decision at a high level. Regardless of its execution, Lego needs to be balanced when responding to consumer requests given the sensitivity of its internal processes and the sanctity of its relationship with customers.

The combination of social media, powerful IT design tools, and a passionate fanbase created a truly unique opportunity for Lego to turnaround its fortunes. Beyond the primary concerns of process improvement and customer relationships, the company must also reflect on how the dynamic has changed within its own organization. Having historically been both a design and engineering focused firm, its recent embrace of open innovation has relegated the design teams. How does Lego plan to deal with potential dissent from its own designers? As the company moves forward with crowdsourcing, it must be cognizant of this and several other unintended consequences.

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Student comments on The Missing Piece: How Lego Found Open Innovation at a Critical Time

The inner kid in me loves this idea from Lego, but I also share many of your concerns about the product development process and timeline. I see that Lego only produces one project per year right now, but what if multiple projects warrant development – can Lego do this? I fear that the more that they open themselves up to crowdsourced innovation, the more that they are restricting their design team, shrinking the potential “greenspace” for new design, and providing opportunities for people to sue them for “stealing their ideas” if it is used in any potential shape or form. I wonder if it would be valuable for Lego to separate out the crowdsourced designs into a different brand or workstream so that people can keep those product ideas separate from the traditional Lego products. Another option could be to offer less of a reward for good ideas and just provide a social reinforcement system which enables Lego to move forward with more than one product a year but without sacrificing 1% of royalties per product. Moreover, should there be restrictions on what ideas people can put forward – what if a product moves far within the process but it has no potential real viability or feasibility or legal rights? I appreciate Lego changing with the times, but I am not sure if the open innovation will be its ultimate savior in the long run.

Very cool to see this from Lego! In principle, it makes a ton of sense – what better way to engage an eager and creative customer base than to involve them in the very development of the products they will use. To the point regarding potential dissent from the company’s design team, I think I’m not quite so worried. Given that only 1 idea is brought to market each year, it’s not as though designers are competing for work with the broader public. Further, I would think a tremendous amount of design and engineering occurs between the steps of conceptualization and market launch. That said, I do agree that running an open innovation funnel such as this does command certain degree of transparency, as to avoid the problem mentioned above of Lego potentially receiving criticism for stealing ideas from the public.

This is so cool. As a Lego lover, I would have loved to have the opportunity to present the ideas I had as a kid to them. Anyway, I see this type of initiatives (at least in this case) as a marketing strategy to attract more kids into Lego, given that the effort to design and manufacture different sets is probably difficult. I wonder if this initiative could be complemented with 3D printing technologies, automating the process even more.

On balancing external vs. internal product ideation, I do think that if the open innovation process proves fruitful and effective, there is space for Lego to reduce the size of its in-house design team. However, once the redundancy is removed, Lego should put the remaining inhouse team in charge of evaluating externally sourced ideas and overseeing the production process. This arrangement could help ensure 1) seamless transition between open innovation and inhouse processes, 2) buy-in from inhouse design team, and 3) ownership of follow-up steps.

Regarding your concern of dissent from Lego’s internal designers, I fully agree that it is ludicrous to only allow the R&D process to begin after 10,000 votes are received. There must be other options to keep everyone engaged while continuing to benefit from open innovation.

For example, designers can be given more freedom prior to the 10,000 vote threshold. Only one design per year is being selected for production; this should not take too much time in aggregate. Why not allow designers to browse the concepts at an earlier stage, find some which they like, and advocate for production while completing some of the groundwork? Self-managed teams could even be introduced for this fun, extracurricular process, in order to empower employees. Other options are surely available and would add value to the current structure.

Thank you for a really interesting article! It is very exciting to see Lego, a company that many of us grew up with, still being successful in the market through continuing to innovate in such a creative way through crowdsourcing.

However, I think you are very right in many of the potential risks that you assert the company should be aware of. The example that you provide about Lego having trouble partnering with Mojang in order to create a Minecraft toy and its implications on the timeline of the product made me also think about the strategically vulnerable position that Lego is putting itself in through the way that this program is set up. When Lego goes to Mojang after already having raised customer expectations that a Minecraft toy would be produced (after communicating to users that the project received the green-light), Lego is in a much weaker contractual negotiating position than had they approached Mojang with the potential desire of considering a partnership given Lego’s increased need to consummate the partnership or else disappoint, and potentially alienate, the many customers following Lego Ideas.

This is illustrative of the lesson that empowering the consumer can make them feel more connected and engaged with your brand, a generally positive result; however, if consumer expectations are built up too high and too specifically through this empowerment, a company can be placed in a difficult spot strategically given the subsequent pressures on the company to deliver on its promises.

This is a really great article – thanks! Open innovation at Lego makes a huge amount of sense, both from the perspective of reducing internal R&D costs as well as increasing customer engagement. I would view the open innovation platform as a kind of inbound marketing, building customer interest in the product, which should eventually lead to sales. I suspect that the issue of public disclosure of decision-making process will only become important when teen and adult submitters of ideas are involved – children may be happy to just send their ideas in.

Interesting read! Awesome that they’ve taken to using open innovation to design new products. I’m wondering how this move could be combined with machine learning down the road, to mitigate some of those risks of open innovation. For example, can Lego use data about the commonalities of the top-voted products over the years to be able to design new winners of its own again? I think those two tactics in combination could give Lego the advantage its again seeking. Thanks for sharing!

This is a very neat idea from Lego to reverse the typical product design process and to have partial market testing/data before it moves into the production phase. If Lego leans into this open innovation concept even further, I wonder what sort of organizational or cultural changes the company will need to make in order to fully support this process? One area of concern that I have is the ability for the company to manage the strategic partnerships while simultaneously progressing the design, which may not even be validated at all. How can the company balance between starting the conversation early with partners to minimize lead time versus starting conversations too early for products that end up failing?

I love Lego! It is interesting to see how a traditional company is embracing this new trend to deliver more value to customers. Regarding your question, I think that several industries are perceiving this tension between its traditional workforce and the rising product development trends. However, I definitely believe this can be a win-win situation for the designers and for the company. The way I see it, Lego fans are contributing to the pipeline of ideas, giving more possibilities to de designers to develop. I believe this trend will allow designers to develop more successful products.

We have learned in marketing that customers often don’t know what they really want. Henry Ford is famous for saying that if he had asked his customers what they wanted, they would have said a faster horse. By inviting customers into the LEGO product development process and relying on their design votes, i wonder if the company risks missing true innovation that makes a difference.

Instead of creating an open source platform of ideas and an internal LEGO member choosing a winner, I think this competition would be best set up as a social media voting system. That way there is no one offering an idea and accusing LEGO of “stealing” it to make a bunch of money. People would be incentivized to present their ideas more clearly. I actually think this use of open innovation may be more about launching a marketing campaign, than it is about gathering more “outside-the-box” ideas. There’s really no harm, no foul for LEGO to give this a try!

Thanks for the sharing — very cool topic.

I think Lego is very smart to take the move of collecting innovative ideas from their customers. First of all, the platform can be used as consumer research, giving the company the confidence that the product is worth investing in. Second, this is also a good way to strengthen customer relationship and build up higher customer loyalty as they feel like they are a part of the product development, and will be more related to the company. They have brought the meaning of open platform to a new level.

As for the concern over product design team, I believe that this is a good opportunity for them to stay close to the market and to get inspirations. Also, I believe that this is a good method to keep them alert, as now they need to compete with all kinds of people in the market. This might leads to better performance and better quality in internal innovation.

Very interesting read, and a cool foil to the Amazon Studios crowdsourcing story.

I love the idea of Lego using crowdsourced designs because the value proposition and use case of legos was to design and build your own creations, and this created a platform for users to share those creations. It’s interesting that they took the input from the community to drive partnerships with Minecraft and others – it sounds like a great way for them to create lasting bonds with those consumers while tapping deeper into pop culture.

Regarding the question around their design team, I think there’s still value they drive – they can create entire worlds around a single idea pitched from the crowd and still have the ability to develop their own ideas and pieces to be used in new creations.

November 15, 2018 User deleted this comment on November 16, 2018

Excellent article – very interesting read.

As a personal contributor to open innovation (LEGO Ideas) for LEGO [1], I dont think designers have a diminished role. In my mind, they serve a very complimentary role – that is, to ensure that ideas that are filtered and green lit, as you mention in your article, through the open innovation process. From my point of view, the designers role is really scaling an “idea” into a product – that is, making tweaks to the “buildability” and “marketability” of the product such that the end user will want to buy the product, will find it easy to use, and can enjoy it for a future period of time.

One of the biggest personal challenges I found as a crowd sourced innovator contributing to LEGO is that what I originally thought of as a good idea needed to go through several design changes through the process described above, before the end result was something that LEGO could market! However, the designer is uniquely qualified to do this within the organization, as they always have been.

[1] https://medhatch.org/pilot

As a Lego fan, this article is very interesting! I think it’s important for Lego to make open innovation into a way to help its designers team. The consumers ideas could be used as a source of inspiration for the designers, who still should have the freedom of creating new things and combining different ideas. The consumers ideas should not be the only source of innovation, but instead a complement to the designers’ job.

I loved Lego, and it was a crucial part of my childhood, so the article captured my attention immediately. I didn´t even know they struggled at some point, but the way they overcome that difficulty brought me back in time even more! I’d have loved to be able to comment on the ideas to be launched or to propose new ideas that i wanted to see in future Legos. Still i’d love to know more about the process of how they captured those ideas and brought them to life, as not every famous character can easily be reproduced into a Lego.

LEGO – Powered by the Customers’ Inventiveness

It all starts with one small, unassuming plastic brick. It is 31.8 mm long and 15.8 mm wide, with eight studs in two rows of four each. Add an identical brick. And another brick. And another. Add to that the imagination of a person, and nothing seems impossible! Of course, I am talking about Lego- A perfect story of innovation strategy.

On 10th August 2020, LEGO celebrated its 88th birthday. As a middle-class kid in India in the 90s, I did not have access to LEGO kits. But I definitely had the notional sense that they existed and played often with local knockoffs. I realized the extent of popularity of the kits and their sheer versatility only when I attended the exhibition The Art of the Brick by American artist Nathan Sawaya in Paris.

With the simple foundation of plastic bricks, LEGO has not only become the largest toymaker in the world (revenues of approx. $4.4B in 2019) but has also captivated the imaginations of kids and adults alike throughout the world in the process with its story of innovation.

But for Lego that now sells 7 toy sets every second, owns eight amusement parks, and has released four blockbuster movies in the past six years, the story was NOT awesome in the early 2000s. The company was on the verge of bankruptcy, with dissatisfied consumers and rising costs.

What followed is the story of one of the most successful open innovation strategies ever executed by a global brand.

The Complex Journey to Open Innovation. What is Lego’s Innovation Strategy Story ?

Founded in 1932 by Ole Kirk Kristiansen, LEGO started with a small collection of wooden toys in Denmark. The company has always been innovative, moving to plastics as early as 1946 and patenting the ‘stud-and-tube’ self-locking system in 1958.

Another one in its series of innovations, a project created with help from MIT, LEGO Mindstorms was launched in 1998. It is a combination of a hardware and software structure that enables enthusiasts to develop programmable robots based on LEGO building blocks.

Within weeks of the launch, over a thousand users had hacked into the software that came with the kit in a coordinated campaign to make unauthorized modifications with new functions.

lego mindstorms, another example of innovation story

The company initially considered legal action against these hackers, but then they realized one simple fact – when a small group of researchers from MIT could come up with such an amazingly innovative product, what could be achieved with the imagination of thousands of users!

Instead of suing the hackers, LEGO chose to work with them and created an ecosystem around the product. They encouraged these fans to interact with its internal innovation team and generate new ideas for the product. Read our story on Digital Transformation of Domino’s that made it a technology company.

The result – LEGO Mindstorms NXT, released in 2006, became one of the company’s biggest commercial successes.

The reason for this success – it was co-created with customers.

LEGO Mindstorms has become a classic example of open innovation strategy, in which a company makes use of a mix of internal and external brainpower to drive innovation. These external ideas and technologies could come from its customers, suppliers, and even sometimes its competitors.

Building on Success

The success of co-creation for Mindstorms was an extremely valuable lesson for LEGO. Since then, LEGO has accepted customer outreach and feedback mechanisms as core tenets in the company’s operation.

There is the LEGO Ambassador Program, that enables the company and its fans to engage in conversations around the kits. This company gets exposure to new ideas, technology, and partnerships, and the fans become a part of the decisions made by their favorite toy manufacturer. There have also been instances of LEGO investing in businesses for products related to existing product lines.

LEGO also started a crowdsourcing platform in collaboration with a Japanese website called Cuusoo (meaning ‘imagination’ or ‘wish’ in Japanese), which later transformed into LEGO Ideas. The company invites users to post their ideas for LEGO products and campaigns for them.

Ideas that get 10,000 votes within a year qualify for a review by LEGO. If accepted, these ideas are transformed into commercially available products, with the creators getting 1% of the product’s revenues. Creators of successful kits have been featured on CNN and Mentalfloss , and are treated like rock stars within the community.

LEGO is a perfect Innovation Story. How?

Customer outreach and co-creation initiatives by LEGO have created some of the most vibrant and active online communities in the world. In the process, they also discovered that the blend of enthusiasm, creativity, and passion that the kits generate in kids never really disappears. As per estimations adult fans account for roughly 5-10% of LEGO sales. This popularity has even led to LEGO kits being a serious alternative investment. Second-hand kits are sometimes listed for as high as $10,000!

Fun Fact : Irrfan Khan is the only Indian to get his own ‘minifig’ by playing a character in Jurassic World.

Today, due to its open innovation strategy, LEGO is everywhere. In the past two decades, the brand has become more relevant than ever before. It is again seen as cool among its customers across the world. Bank balance has soared. And the LEGO name has become synonymous with creativity, imagination, and endless possibilities.

Everything is Awesome!

People don’t have to work for us to work with us LEGO philosophy

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Aditya is a project manager with experience in technology and consulting. He received his MBA from HEC Paris with a focus on strategy. He reads, travels, writes, and works, in that order. His career aspirations include becoming a Chief Meme Officer and gathering enough free time to finally write that book he’s always thinking about!

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Nov 15, 2021

Lego Ideas - Case Study of Open Innovation to Drive Business Growth

Lego is already known as the world's leading toy company. The company initially produced furniture and small objects, such as ladders, ironing boards, and wooden toys. The manufacture of this wooden toy then changed into plastic material based. Now, Lego is leading the market with their innovative breakthroughs.

To face the digital competition, Lego implemented Open Innovation to their business innovation strategy. Previously in 2003, Lego had implemented Open Innovation successfully to align their innovative products with consumer demands. This allowed Lego to lead the toy manufacturing industry.

Innovation is always needed to maintain market and create new strategies in order to adapt. Again, Lego implemented Open Innovation for their business strategies by creating Lego Ideas , a platform to innovate and open publicly to crowdsource solutions. Public is invited to participate by giving suggestions, designing, or building a new product on the platform. Public is also asked to vote for products they like the most.

Lego Ideas also held competitions for certain themes, such as Lego Technic and Lego House. Lego invited several related stakeholder to participate giving ideas. The design ideas in this competition might have a chance to be produced in the future by relying on the voting results from the public on the platform.

By adopting this Open Innovation strategy, Lego managed to attract more consumers and made them feel involved in the product innovation process. In addition, Lego could also understand and provided directly what consumers want.

Are you interested to this concept of gathering innovation ideas? Stay tuned on OiHub Website www.openinnovationhub.co ! We're going to launch an open innovation platform for public. Contact Open Innovation Hub to help solving complex problems in your company or organization.

Open Innovation

HBS Cases: LEGO

Although it isn't part of the admissions criteria, experience playing with LEGOs can come in handy at Harvard Business School.

When Stefan H. Thomke teaches his new case about the iconic toy company, he gives students eight-studded LEGO building bricks to figure out how many different ways they can be combined. Thomke's experience goes back a long way—as a kid growing up in Germany he participated in a LEGO competition. As an adult, though, his interests lie more in the business behind the bricks. "When you've written many cases you have a gut feeling that one like this could be really great," he says.

Thomke, the William Barclay Harding Professor of Business Administration, wrote the case with Harvard Business School's Jan W. Rivkin, the Bruce V. Rauner Professor of Business Administration, and Daniela Beyersdorfer, associate director of the HBS Europe Research Center.

LEGO explores how the company-one of the most profitable toymakers in the world-grew to global dominance from humble beginnings; the mistakes that led it near bankruptcy; and why one turnaround attempt failed while a second succeeded. LEGO executives were unusually supportive about the case-writing process, Thomke says. "We had access to everybody; they wanted the story to be told truthfully, with all the good and the bad."

Building At The Start

Part of that access included a visit to a wood craftsman's workshop in the small town of Billund, Denmark, where LEGO began, in 1916. Carpenter Ole Kirk Kristiansen eventually shifted the business from making houses and furniture to crafting wooden toys. He based the name of his new venture on the Danish words for "play well" (and, as it turned out, the Latin words for "to assemble"). His motto "Only the best is good enough" would later be carved into a wooden plaque and hung in the workshop. These themes of good play and quality products were both bedrocks and touchstones for future generations of LEGO toy makers.

Godtfred Kirk Kristiansen represented the second generation, working alongside his father at age 12. The LEGO brick played with by kids and adults around the globe came into being during Godtfred's tenure. He considered it a unique, sturdy, simple product—a system—that offered endless opportunities for creative fun, and drew up a list of product characteristics including "long hours of play" and "quality in every detail" that was distributed to everyone in the company.

Like his father, Godtfred paid careful attention to every aspect of the business, applying, for example, his knowledge of material science and production technology to the brick-manufacturing process. It's because of these precise specifications that bricks made under his watch are interchangeable with those available today. Godtfred's cautious nature extended all the way to the profit margins: he championed slow, steady growth. Because of this, it could take years for a new product to go to market. Green bricks, for instance, appeared in play sets only after a decadelong decision-making process-and the idea to include them came from Godtfred's son (and third-generation toymaker), Kjeld.

The snail's pace served the company well, as did the grandson of its founder. Under Kjeld's management, product demand was so high at times that executives actually found themselves discussing ways to slow sales.

A Shock To The System

That all changed in the early 1990s as seismic shifts pounded the toy market. Big Box toy discounters trampled mom-and-pops and lowered prices dramatically. Meanwhile, birth rates declined, children had less time to play and not much interest in toys that didn't offer instant gratification. "These changes did not play well to our strengths," observed current CEO Jørgen Vig Knudstorp in the case.

Serious jolts were also taking place in the LEGO Group. Out of work for a year following a serious illness in 1993, Kjeld appointed a five-person management team to help him run the company when he returned. The group focused mainly on driving growth. When a benchmarking study revealed LEGO's global name recognition was on par with industry giants like Disney, the team started churning out new products and ideas to leverage the brand's untapped value. A line of LEGO-branded children's wear was created and a division of the LEGO Group was charged with pitching book, movie, and TV ideas. LEGO building sets became increasingly complex with more unique components.

While the number of LEGO-branded items grew, sales did not, and in 1998 the company suffered its first financial loss. "Their top-line growth was slowing down but their cost was accelerating, so they were starting to lose some significant money," says Thomke.

Danish turnaround expert Poul Plougmann was hired to reassemble LEGO and staunch the red ink. "He comes in and … does things by the book," says Thomke. "He lays people off, he streamlines some things, he globalizes." And yet the financial picture grew worse. "He's basically going by the turnaround book, but it doesn't work."

One continuing problem: the company's growing complexity was choking it. Adding more bricks made products harder to assemble, forecasts harder to determine, and inventory harder to manage. Depending on the kit, there was either too much inventory, or no inventory at all, and restocking could take months.

"You had this multiplier effect of added complexity that went through the entire supply chain," Thomke says.

LEGO has built one of the most profitable toy companies in the world.

The LEGO Group had also gotten too far away from the core values it had been building on for the better part of a century. The toymaker found itself needing to turn around its turnaround.

Outside The Family

Enter Jørgen Knudstorp. He was just 35 years old when Kjeld promoted him from director of strategic development to CEO in 2004. (Kjeld retired that same year.)

Like Plougmann, he had no family ties to the company. Unlike Plougmann, his turnaround attempt succeeded. Knudstorp's slow-it-down approach of careful cash management, focusing on core products, and reducing product complexity certainly contributed to that success. It would also take re-engaging with customers, many of whom passed a love of LEGOs to their children while still connecting with the toys themselves. "One of the insights Jørgen had when he became CEO was that he needed to reconnect with the community [of loyal LEGO fans], one of the most powerful assets the company had," says Thomke. "It was a huge part of the comeback."

Knudstorp worked hard to define the core business of the company. "How you work with, and experiment outside of, the core of your business is part of that balance," explains Thomke.

Knudstorp recognized that innovation was part of that core, but he'd also seen the result of unconstrained creativity, so new product design began to be informed by market research, user feedback, and how well the toys matched the vision of quality creative play laid out by its founding fathers. Putting parameters on how people innovate had the paradoxical effect of making them better at it.

Reining in the creative process was part of a larger push by Knudstorp to reduce overall complexity within the organization. On the supply chain side, he did away with many of the unique brick components added during Plougmann's tenure, and eventually decided to bring brick manufacturing back in-house to ensure quality control.

Finally, Knudstorp made big changes to the management team, firing five of seven manufacturing executives and appointing a new leader for the team. A psychoanalyst was brought in to teach the management team how to identify decision-making made by logic versus emotion.

Sustainable And Balanced

It turns out that LEGOs promote lifelong learning. While the bricks themselves teach children the fundamentals of construction and creativity, the company's almost century-old history of management change has important lessons for businesspeople. "Managing sustainable growth is also about managing a balanced business system," says Thomke. "Complexity is something you need to watch very closely."

Controlling complexity, clarifying the core of its business, and engaging the larger community helped save the LEGO Group. Although he was not a Kristiansen by birth, Knudstorp's management style and business ideals closely mirrored those of its founding fathers. Only the best was, and is, good enough.

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Innovating a Turnaround at LEGO

David Robertson and Per Hjuler

Five years ago, the LEGO Group was near bankruptcy. Many of its innovation efforts—theme parks, Clikits craft sets (marketed to girls), an action figure called Galidor supported by a television show—were unprofitable or had failed outright. Today, as the overall toy market declines, LEGO’s revenues and profits are climbing, up 19% and 30% respectively in […]

Reprint: F0909B

Though the overall toy market is declining, LEGO’s revenues and profits are climbing—largely because the company revamped its innovation efforts to align with strategy.

How LEGO Organizes Innovation

The company splits its innovation efforts into eight distinct types, from product development to business-model innovation. It divides responsibility for them across four areas of the firm: the functional groups, the Concept Lab, Product and Marketing Development, and a unit called Community, Education, and Direct. The areas’ expected innovativeness ranges from incremental (“low”) to groundbreaking (“high”).

Central to LEGO’s turnaround is a new structure for strategically coordinating innovation activities, led by a cross-functional team: the Executive Innovation Governance Group. LEGO managers take a broad view of innovation that includes not only new products but pricing plans, community building, business processes, and channels to market, all of which can be powerful business drivers. The company distributes responsibilities for innovation in all areas across four groups and expects different degrees of innovativeness from each of them.

LEGO Games: How LEGO Developed Its Newest Product Line

LEGO games are board games that players construct from classic LEGO bricks. They can be built in innumerable ways, and players can change the rules to, for example, emphasize strategy over luck. The product launched in the UK and Germany in August 2009 and will be marketed globally in 2010.

DR David Robertson ( [email protected] ) is a professor of innovation and technology management at IMD. Per Hjuler ( [email protected] ) is the LEGO Group vice president of product and marketing development. For more, visit www.innovationgovernance.net.

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Open Innovation: 9 Benefits, 12 Case Studies and 12 Books

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Today we hear a lot Open Innovation , but there are a lot of people who are not sure what it means exactly. As this topic is important nowadays, we decided to write an article about it to clarify all your doubts.

What is Open innovation?

Open innovation is about combining internal resources with external ones to boost innovation culture in the company .1 For example, big companies like GE, Cisco or Microsoft , etc. tend to have 8-12 different value pools, for instance, think suppliers , startups, customers or universities, etc. to consider for their open innovation efforts.

In other words, open innovation is a business model that encourages you to connect with outside sources so you can profit from exciting new startups and product opportunities, get a broader pool of talent, collaborate with others to come up with innovation that you could never do just by yourself.

Now, large multinationals including Kraft, KLM, Pfizer, and Siemens actively and openly participate in collaborative, online innovation communities where seekers and solution providers work together. Much the way tech companies use hackathons to get outsiders to contribute to their goals, OI-committed businesses announce proudly that they’re taking full advantage of the global innovation community. That transparency demonstrates to the market that they have a clear strategy for the future and they’re aggressively pursuing it out in the open.

Open innovation may seem to be for big business. But it is an approach that can be used by all companies, especially start-ups and small businesses. It may be as simple as inviting a trusted supplier to help you develop ideas or launching a website , etc.

So, find the right collaborators! One of the most visible open innovation actions these days are suggested websites or special places on the web that invite customers and the general public to submit ideas on how to improve a company’s products and services. And then, on these websites companies publish a hackathon info to find the right partner with the most brilliant idea.

9 Benefits of Open Innovation

1. creating new products and services.

Especially when you’re a startup, there’s nothing more exciting than getting your first product out on the market. But it’s easy to get stuck, focusing all your efforts on selling your first product rather than thinking of what else you could provide for your customers. It can be scary to invest time and resources into creating a new product, especially taking into account that startups have a limited budget. Yet, by investing your resources and the resources of the third parties into creating something new, that you know will bring value to your community. This move may help you increase your profits and create buzz around you.

2. Innovating old products and services

Sometimes, you don’t need to create new products. Sometimes, your older service has a potential to be better, has potential to attract a lot of clients. This is when you need to get a creative team together to improve your idea. One of the benefits of open innovation is that the process never ends. You’re always thinking about how you can make your organisation better.

3. Building a strong community

Lego is a great example of how a company can engage their fans on a wide scale by using open innovation. No matter the size of your organisation , a great benefit of open innovation is taking the time to get in touch with your fans and your soulmates, news talents. Get to know what your community wants, and then give it to them. In the process, you will find that enthusiastic community members are willing to dedicate their time and ideas to help you create something better. These relationships are key and will help your company build a strong community dedicated to your project.

4. Keeping your employees engaged

One of the main sources of employee dissatisfaction is a lack of feeling of ownership on the projects they work on. Sometimes, your team may have some great ideas but might not feel comfortable bringing them forward. By bringing an open innovation initiative to your workplace, your team can get involved in big picture planning, make it their project. When people feel more invested in the bigger goals of the organisation, it makes them more excited to come to work in the morning and put their heart and their soul in it.

5. Staying ahead of the competition

By keeping your team and your community engaged and on the lookout for new ideas, you make sure that your organisation stays helpful and relevant to your community. Using open innovation can help you find your niche that makes your organisation uniquely valuable to the community.

6. Costs reduction

When you work with other companies, you split the costs. Moreover, you become more efficient because of each company; each member works on what he is good at.

7. Time-to-market acceleration

Instead of figuring out how to make the desired product, train your people, buy equipment, etc., you just start a collaboration with a company that already has all this, that allows you to bring a product to market faster.

8. New revenue streams

Did you know that some businesses get more revenue from secondary products rather than from the primary ones? Working with other companies will allow you to enter a new market with an idea and product you have.

9. Innovation risk reduction

Any innovation has risks, but if you work with experts, you minimise your risk of failure, especially if you agile and get feedback from your target on a regular basis.

Let’s look at open innovation case studies

For example the Unimpossible Missions: The University Edition challenge is targeted for students that are creative, have a certain level of technical skills and a clear recruitment motivation. Through the challenge, GE aims to get three smart and creative students to have their internship at GE.

Another example is GE’s project “ First Build, a co-create collaboration platform, which connects designers, engineers, and thinkers to share ideas with other members who can discuss it together. It is one of the open innovation models that aims to provide a platform that can help both external and internal individuals to collaborate in terms of ideas sharing and manufacturing to reach innovative ideas for products and services.

Open innovation was also adopted by NASA to build a mathematical algorithm that can determine the optimal content of medical kits for NASA’s future manned missions. To reach an innovative software who can solve this problem, NASA collaborated with TopCoder, Harvard Business School, and London Business School. The application of open innovation created a cost-effective and time-effective solution that could not be reached using the internal team alone.

Another open innovation model presented by Coca-Cola is the Freestyle dispenser machine that allows users from around the world to mix their flavors and suggest a new flavour for Coca-Cola products. The new product records the consumer flavour so they can get it from other Freestyle machines located around the world using the Coca-Cola mobile application. This model of open innovation puts the consumers in the heart of the production process as the company uses the suggested flavours as part the external ideas that can be evaluated and processed as a new product line.

The new LEGO strategy aimed to focus on the consumer by linking both business and creativity. This strategy was known as, LEGO’s Shared Vision. To innovative new LEGO sets that can achieve success in the market, LEGO started the LEGO Ideas, an initiative based on a co-create open innovation model. In this online website, LEGO consumers can design their own LEGO sets either using LEGO bricks or computer 3D applications. Other users start to discuss the idea and vote for it, once the idea reaches a targeted vote, LEGO can consider it as a new product with giving a small part of the revenues to the creator of the set. This model contributes putting the consumer at the heart of the innovation process and help the team to target sets that can achieve success based on the LEGO Ideas votes and comments. This co-create platform can also contribute reducing the risk of innovation as these feedback from the website can give business analysts idea about the viability of the new product.

Another great open innovation step LEGO did was building a partnership between the company and MIT Media Lab to deliver programmable bricks, which was introduced as LEGO Windstorm.

Samsung adopts an open innovation to build their external innovation strengths through Samsung Accelerator program. The initiative aims to build a collaboration between designers, innovators, and thinkers to focus on different solutions. The program provides office spaces, statical capital, and product support to entrepreneurs to help them to build software and services. Samsung does open innovation collaboration, especially with startups.

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The distinctive part of Samsung’s open innovation collaboration is that Samsung divides it into four categories: partnerships, ventures, accelerators, acquisitions. Typically Samsung partnerships aim for new features or integrations within Samsung’s existing products. Ventures can be described as investments in early-stage startups. These investments can bring revenue in case of exits, but also provide access to new technologies that Samsung can learn and benefit from. For example, Samsung has invested in Mobeam, a mobile payment company.

Accelerators provide startups with an innovative and empowering environment to create new things. Samsung offers these startups an initial investment, facilities to work in, as well as some resources from their vast pool. The idea is that the products coming from the internal startups could become a part of Samsung’s product portfolio over time or just serve as learning experiences for the company. Acquisitions aim to bring in startups working on innovations that are at the core of Samsung’s strategic areas of the future. These acquisitions often remain independent units and can even join the Accelerator program.

As an example of Samsung’s collaboration with startups, Samsung has acquired an IoT company called SmartThings to gain an IoT platform without having to spend the money, and more importantly, time on R&D. Samsung sees potential in the IoT industry and views it as a strategically important part of their future business and thus an area where they want to be the forerunner. For Smart Things, it continues to operate as an independent startup fueled with the resources of a big company. With the investment potential and home electronics of Samsung, SmartThings can be developed into an integral part of Samsung products, by creating new IoT possibilities for homes.

By collaborating with startups, Samsung aims to benefit from the variety of innovations that smaller companies have already come up with. These companies often have products that can complement or be integrated into Samsung’s products, creating value for both parties.

The Entrepreneurs in Residence program allows Cisco to invite early-stage entrepreneurs with big ideas for enterprise solutions to join their startup incubation program. This includes access funding from Cisco, potential opportunities to collaborate with their product & engineering teams, co-working space in Silicon Valley and much more.

Wayra by Telefonica has been around for three years, and today, it is present in 11 countries across Latin America and Europe. It seems to be very well organised, and it is very active with more than 300 startups engaged so far.

Hewlett Packard

It is one company in particular that has embraced the ideals of open innovation. It has developed labs where open innovation thrives. It has created an open innovation team that links collaborators that are researchers and entrepreneurs in business, government and academia, to come up with innovative solutions to hard problems with a goal of developing breakthrough technologies.

Peugeot CitroÃ«n

The French car manufacturer has launched a collaborative project to design the cars of the future and aimed at multiplying the company’s partnerships with scientific laboratories all around the world. This project materialised into the creation of a network of OpenLabs. These structures are designed to allow the encounter between the group’s research centres and the external partners. They have a goal of thinking about the future of the automotive industry, particularly according to scientific advances.

P&G’s open innovation with external partners culminates in their Connect+Develop website. Through this platform, P&G communicates their needs to innovators that can access detailed information related to specific needs and submit their ideas to the site. P&G recruits solutions for various problems all the time. Connect+Develop has generated multiple partnerships and produced relevant products.

The idea for Nivea’s B&W deodorant was coined together with Nivea’s users through social media. The way Nivea collaborated with its users throughout the R&D process is very interesting. They pretty much said that okay, we know that our current product can be connected to stains in clothes. Could you share your stories and home remedies so that we can develop a better product? Nivea then partnered up with a company they found via pearl finder and developed, together with the users, the B&W deodorant. This admittance of issues in their product could have been seen as a sign of weakness. However, users were very active in collaborating with Nivea, and the end-product ended up being a great success.

Telegram is a messenger application that works on computers and smartphones very much like WhatsApp and Line. However, what makes Telegram different is how much users can contribute to its content openly. Users with any developing skills can create their stickers and bots on the Telegram platform. Telegram also promotes the best stickers updating an in-app list of the trending stickers.

Open Innovation Books

To learn more about Open Innovation, I recommend you to read these interesting books about open innovation.

1. A Guide to Open Innovation and Crowdsourcing: Advice from Leading Experts in the Field by Paul Sloane

Open innovation is one of the hottest topics in strategy and management today. The concept of capturing ideas in a hub of collaboration, together with the outsourcing of tasks is a revolution that is rapidly changing our culture. A Guide to Open Innovation explains how to use the power of the internet to build and innovate to introduce a consumer democracy that has never existed before. With corporate case studies and best practice advice, this book is a vital read for anyone who wants to find innovative products and services from outside their organizations, make them work and overcome the practical difficulties that lie in the way.

2. Open Business Models: How To Thrive In The New Innovation Landscape by Henry W Chesbrough

In his book, the author demonstrated that because useful knowledge is no longer concentrated in a few large organisations, business leaders must adopt a new, open innovation model. Using this model, companies look outside their boundaries for ideas.

3. Open Services Innovation: Rethinking Your Business to Grow and Compete in a New Era by Henry Chesbrough

Chesbrough shows how companies in any industry can make the critical shift from product- to service-centric thinking, from closed to open innovation where co-creating with customers enables sustainable business models that drive continuous value creation for customers. He maps out a strategic approach and proven framework that any individual, business unit, company, or industry can put to work for renewed growth and profits. The book includes guidance and compelling examples for small and large companies, services businesses, and emerging economies, as well as a path forward for the innovation industry.

4. Open Innovation: Researching a New Paradigm by Henry Chesbrough, Wim Vanhaverbeke and Joel West

Authors describe an emergent model of innovation in which firms draw on research and development that may lie outside their boundaries. The book will be key reading for academics, researchers, and graduate students of innovation and technology management.

5. The Open Innovation Revolution: Essentials, Roadblocks, and Leadership Skills by Stefan Lindegaard, Guy Kawasaki

This practical guide reveals that, without the right people to drive innovation processes, your odds of success shrink dramatically. And as open innovation becomes the norm, developing the right people skills networking, communicating with stakeholders, building your brand and the ability to sell ideas is essential for your innovation leaders and intrapreneurs.

6. The Open Innovation Marketplace: Creating Value in the Challenge Driven Enterprise by Alpheus Bingham and Dwayne Spradlin

Authors Alpheus Bingham and Dwayne Spradlin draw on their own experience building InnoCentive, the pioneering global platform for open innovation. Writing for business executives, R&D leaders, and innovation strategists, Bingham and Spradlin demonstrate how to dramatically increase the flow of high-value ideas and innovative solutions both within enterprises and beyond their boundaries.

7. Online Communities and Open Innovation: Governance and Symbolic Value Creation by Linus Dahlander, Lars Frederiksen, Francesco Rullani

This book brings together distinguished scholars from different disciplines: economics, organisation theory, innovation studies and marketing to provide an improved understanding of how technological as well as symbolic value is created and appropriated at the intersection between online communities and firms. Empirical examples are presented from different industries, including software, services and manufacturing. The book offers food for thought for academics and managers to an important phenomenon that challenges many conventional pearls of wisdom for how business can be done.

8. Motivation in Open Innovation: An Exploratory Study on User Innovators by Robert Motzek

Robert Motzek’s study investigates most important factors controlling user innovators’ motivation and will derive suggestions on how manufacturers can address these points to tap the full potential of user innovation for their new product development.

9. Constructing Openness on Open Innovation Platforms: Creation of a Toolbox for designing Openness on Open Innovation Platforms in the Life Science Industry by Emelie Kuusk-Jonsson, Pernilla Book

The work benchmarks a model for designing Open Innovation Platforms and takes a theoretical standpoint in the socio-legal approach, viewing regulatory interventions and constructions of contractual and intellectual property law as the legal framework enabling the creation of openness, which in turn affects the choices made in the business arena.

10. SMEs and Open Innovation: Global Cases and Initiatives by Hakikur Rahman, Isabel Ramos

Open innovation has been widely implemented in small and medium enterprises with the aim of influencing business promotion, value gain, and economic empowerment. However, little is known about the processes used to implement open innovation in SMEs and the associated challenges and benefits. This book unites knowledge on how SMEs can apply open innovation strategies to development by incorporating academic, entrepreneurial, institutional, research, and empirical cases. This book discusses diverse policy , economic, and cultural issues, including numerous opportunities and challenges surrounding open innovation strategies; studies relevant risks and risk management; analyses SMEs evolution pattern on adopting open innovation strategies through available measurable criteria; and assists practitioners in designing action plans to empower SMEs.

11. Open Innovation Essentials for Small and Medium Enterprises: A Guide to Help Entrepreneurs in Adopting the Open Innovation Paradigm in Their Business by Luca Escoffier, Adriano La Vopa, Phyllis Speser , Daniel Stainsky

Small and Medium Enterprises have to approach open innovation differently than large companies. This practical guide to open innovation is expressly for entrepreneurs and managers in SMEs. The authors provide strategies, techniques, and tricks of the trade enabling SMEs to practice open innovation systems profitability and enhance the long-term value of their company.

12. Open Innovation: The New Imperative for Creating And Profiting from Technology by Henry W Chesbrough

This book represents a powerful synthesis of that work in the form of a new paradigm for managing corporate research and bringing new technologies to market. Chesbrough impressively articulates his ideas and how they connect to each other, weaving several disparate areas of work R&D, corporate venturing, spinoffs, licensing and intellectual property into a single coherent framework.

About Ekaterina Novoseltseva

I am a cmo at Apiumhub . Apiumhub is a software development company based in Barcelona that transformed into a tech hub, mainly offering services of mobile app development, web development & software architecture.

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“Embrace Open Innovation or be Destroyed by it…” – A Case Study on Lego & Bagels

Using the right innovation tool for the job, open innovation case studies – a history.

While the term Open Innovation was coined in 2003, in a book of the same name by Henry Chesbrough, its conceptual origins are more difficult to trace. People have technically ‘crowd-sourced’ information for thousands of years, however when Professor Murray requested that volunteers submit words for a dictionary that he was compiling 150 years ago, he was potentially the first person to use this concept commercially.

Murray received millions of submissions, and it took over 50 years for him to compile them, but the resulting Oxford English Dictionary is arguably the first product that utilized the collective intelligence of external stakeholders. (Mugglestone, 2005) Now if this task were to be attempted using a contemporary Idea Management platform , it could be completed in days rather than decades.

The Innovation Gamble

Open Innovation is defined by Chesbrough (2006) as “the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively.” However Open Innovation tools are evolving to allow external sources to contribute to every step of the product delivery chain, and this ongoing communication helps to align the final product with the specific needs of the market. (Lindegaard, 2010)

It can be argued that Innovation is innately beneficial, and that creating new products and services is essential to the evolution of society as a whole. While it is hard to depose this posit; innovation can certainly be detrimental to some of the individuals and organisations that employ it. When innovation is implemented without enough communication with those who are intended to benefit from it, the desired result is less likely to be achieved.

While Innovation is not innately positive, it is innately risky. By definition it involves change, and if your organisation is in a position of success, then there is a chance that the change will be to its detriment rather than its benefit. This gamble is often worth taking, and many organisations have figuratively hit the jackpot from such manoeuvres. However, the more communication that there is with external stakeholders, the less of a gamble such manoeuvres become. Utilizing a holistic Open Innovation tool is akin to sitting at a blackjack table with a card counting machine.

Lego – Bankruptcy & Innovo Beneficus

Lego, the Danish producer of construction toys, is an organisation that is well aware of the value of the open innovation challenge . In the 1990s the company came close to bankruptcy due to the rise of digital entertainment such as video games; they needed to find new ways of exciting their customers.

While Lego products have always fostered creativity by nature of their format, the Lego Mindstorm series that launched in 1998 took this to a new level by allowing electronic functionality to be added to constructions. This move gained the toy company a new mature audience, who proceeded to hack into the Mindstorm products and utilize them in unforeseen ways. (Nikel, 2013)

Initially Lego considered taking preventative measures, but soon they realized the potential value of these developments, and published some of the customer created content in future sets. By harnessing collective intelligence and creativity of their customers they managed to reverse their downward spiral, and reinvigorate Lego as an innovative and fun product for audiences of all ages.

Skip 20 years ahead and Lego have not forgotten how valuable external-stakeholders are to their innovation process. In 2008 they launched an Open Innovation platform called Lego Ideas which allows anyone to submit proposals for new construction sets. Proposals that receive support from 10,000 users are promoted to the next stage for review by a committee of experts. The ideas that are successful here become produced commercially and the original designer receives 1% of the total royalties. This has led to new sets based on popular franchises such as Ghostbusters, Back to the Future, and Big Bang Theory.

So when it is executed correctly there are a plethora of benefits to Open Innovation. One of the most beneficial consequences is the organic publicity that this type of platform generates, with individual proposals receiving hundreds of thousands of views, and thousands of comments from around the world. This inclusivity allows the brand to achieve an improved relationship with their existing customers, while simultaneously acquiring new pre-invigorated ones.

Lego have historically applied this principle with great success, and this is key to them maintaining a position of relative market security and organisational legitimacy. This year Lego are celebrating their 65th anniversary, which is a great achievement, however as long as they continue to involve customers in their innovation process, they will surely be celebrating again another 65 years from now. /*

Bagels – Innovo Damnosa

In the first quarter of 2013 the largest supplier of bagels in Europe, began selling their bestselling original bagels pre-sliced for convenience. While initially this might have looked like an innovative improvement upon a popular product, unforeseen problems arose once it became commercially available. Consumers found that the quality of the bagels was being affected by the mechanized slicing process, with many preferring to slice their own. This unforeseen issue inevitably lost the organisation customers, and in response to complaints they recently reverted to selling their product un-sliced.

However, many customers had grown accustomed to the convenience of the pre-sliced bagels, with parents appreciating the fact that their children were not required to use a knife to prepare one for themselves. As a result there has been an outcry on social media with hundreds of comments on the official company Facebook page demanding the return of the pre-sliced product, and a petitionary group with the same stance rapidly growing in size.

While the minutiae of bagel preparation policy might seem frivolous, it is guaranteed that the PR team for this bagel company disagrees. Not only has this fiasco disillusioned two separate shares of its consumer base, the back-pedaling and lack of stakeholder communication has irrevocably tarnished their public image. If they had communicated adequately with their customers to begin with, they would have found that there was a market to support the sale of both sliced and un-sliced bagels. This is something they now plan on eventually doing, however the archaic methodology of trial and error should not have been needed to come to this conclusion.

Collective Intelligence Solutions

Managing public relations and marketing can be a perilous gauntlet, and sometimes the seemingly most arbitrary molehill will grow into a mountain. There is no foolproof way of predicting the consequences of any commercial action, and it would arguably be a lot less fun if there was. However if the collective intelligence of all available external stakeholders is harvested, the resulting data will invariably allow for the plotting of a much more accurate trajectory. This can be achieved through a number of different routes in the modern idea management landscape, from forecasting to Open Innovation platforms.

Some organisations make the mistake of believing that a social media account is the only community portal that they need, but based on our experience at Qmarkets a more powerful innovation tool is required to develop a truly beneficial relationship with customers. Innovation Management software provides the intelligent evaluation tools and metrics that allow organisations to acquire a more accurate level of consumer insight than would be possible otherwise. Data such as this can prove to be invaluable in competitive vertical markets.

These open innovation case studies show how important it is for organisations to effectively incorporate customers into their innovation process within the age of communication that we currently inhabit. The public relations landscape is morphing into a scene where customers have a louder voice than ever before, and now it is up to organisations to choose whether they want to resist or embrace this change. The companies that value innovation will utilize this technology and prosper, while those that don’t will eventually be destroyed by it.

Contact Qmarkets to consult with our experts and discover how your enterprise can innovate and transform ideas into results!

*Originally posted on innovationmanagement.se

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Four Examples of Corporate Open Innovation: How Lego, NASA, Samsung, and General Electric Reached New Heights

Open Innovation

Open Innovation is no longer a new concept in 2020. Originally introduced by Professor Henry Chesbrough in 2003 through his book, Open Innovation: the New Imperative for Creating and Profiting from Technology, open innovation has become a popular concept in both academic research and industry practice. In industry, open innovation is a modern methodology to accelerate corporate innovation . Corporate innovation is essential to the long-term growth and profitability of a company as it drives the development of new products, services, and processes. Traditional or “closed” methods of corporate innovation rely on internal resources, which limits the volume of new knowledge . With the incredibly fast pace that technology and business are evolving globally, external sources are a must in order to keep up.

Open innovation became increasingly popular as the alternative to closed innovation as it allows internal and external resources to collaborate and drive innovation. Rather than concentrating innovation in the R&D department, or a select strategy group within the business, corporations are now leveraging the knowledge and creativity of its employees, customers, and external stakeholders to generate more relevant products and services. A vast number of companies have adopted this approach to varying degrees and have seen great success. Here are four examples of corporations that used open innovation to reach new heights:

How LEGO Successfully Crowdsourced Product Ideas

LEGO Central Perk Open Innovation Product Ideas

Central Perk, Big Bang Theory, and Adventure Time. These are some of the most popular LEGO sets released by the company in the past few years. They are all outputs from LEGO’s open innovation platform, LEGO Ideas , that invites the public to submit new product suggestions and participate in contests. Anyone can design and build a setting, product, or character out of lego, and submit it on the LEGO Ideas platform where users can then vote on the ideas they’d like to see LEGO put on their shelves.

Established in 2008, the platform has generated over 30 LEGO sets that have been widely successful by building off of trends and popular culture in real-time. LEGO as a medium allows anyone’s imagination to be immortalized in the form of building blocks. And by crowdsourcing what these creations can be, LEGO can further appeal and relate to different customer segmentations that it otherwise would not attract with its traditional product offerings.

LEGO Ideas also hosts contests to crowdsource ideas for specific themes. For example, to celebrate the motorcycle maker Ducati’s immortalization in LEGO Technic elements, the company is holding a contest inviting users to build their own bikes and scenery using LEGO bricks. Winners from this preliminary contest may have their designs move into production in the future, like many of LEGO's past contests winners. Another contest invites the public to submit either an ‘alternative nature build’ or a ‘fun lego mini-figure scene’ whose winners will have their creations featured in the famous LEGO House in Denmark. LEGO has employed open innovation to create a pipeline for new product ideas as well as a platform to keep their customers engaged.

How NASA Solved Challenges with Open Innovation

Since its establishment in 1958, NASA has been at the forefront of new innovations and technologies globally. The needs of space travel have led to the invention of many products essential to society today including camera phones, CAT scans, LED lights, and even athletic shoes . As an organization where innovation is crucial, NASA adopted open innovation as early as 2005 and now makes it an essential part of its innovation strategy. NASA uses the two specific techniques of prize competitions and crowdsourcing to implement challenges aimed at obtaining solutions to a focused problem statement. NASA’s current open innovation programs and challenges include:

NASA Solve, in particular, is an open platform where NASA can post challenges and projects for the public to submit ideas. One of the most recent challenges on the platform is the Lunar Loo Challenge .

NASA Solve Lunar Loo Innovation Challenge

Though space travel appears to be futuristic and glamorous, the bathroom situation in space is not. NASA is inviting the public to submit designs for a space toilet that is capable of working in both microgravity and lunar gravity, with the winning idea eligible for up to $35,000 in prizes. In 2014, NASA’s Green Flight Challenge called for teams to build an energy-efficient full-scale aircraft that can fly 200 miles in less than two hours. The winning team from Pipistrel USA received 1.3 million dollars for their aircraft which served as the proof of concept for NASA to generate whole new uses of green flight technologies.

In addition to using open innovation to generate technical designs and products, NASA also uses open innovation to globally source data on asteroids, landslides, interstellar dust, and more. By enlisting the public to build out these databases, NASA is able to gather significantly more information on these topics for their research. Needless to say, NASA’s approach to open innovation has been widely successful and demonstrates the power of open innovation if implemented properly.

How Samsung Decentralized Innovation

Samsung is one of the world’s most innovative companies and is the technology powerhouse of South Korea. It has a number of innovation initiatives and groups most of which fall under Samsung Next, a multifaceted innovation group within Samsung Electronics aimed at identifying new opportunities. The four core groups are:

NEXT product is the group’s in-house team of designers, product managers, engineers, and go-to-market specialists that develop new products and services software to transform the future of software. The group is currently focused on opportunities in the areas of automation, supply and demand, and interfaces where big industry shifts are happening.

The Ventures team focuses on investing in frontier and early-stage start-ups that can add to and boost Samsung’s technology capabilities.

In the same vein, the Mergers & Acquisitions team identifies and acquires innovative and high caliber companies that can add value to the wider Samsung organization.

Lastly is Partnerships , which identifies commercial collaboration opportunities between Samsung and third-party companies.

This model of decentralizing innovation enables Samsung to cover its basis, maximizing its innovative capabilities, and leverage both internal and external resources. In addition to sourcing innovation from external resources, Samsung is hugely supportive of internal innovations by its own employees. In May, Samsung announced that it would be funding and supporting five new start-ups that were generated through its in-house incubation program, C-Lab Inside. These ideas include Blockbuster, an application that enables creatives to directly apply computer graphics and 3D effects to videos using their smartphones, and SunnyFive, a device that produces artificial sunlight. The employees involved in these start-ups are given a five-year window to fully pursue and develop their ideas. If their start-ups are unsuccessful within the five-year window, employees can return to their original jobs at Samsung.

By creating an environment that encourages employees to explore and innovate without risking their jobs, the C-Lab Inside program has already generated 45 start-ups that have more than tripled Samsung’s 45 million USD investment in them. It is clear that open innovation is not just a simple initiative for Samsung. Rather, open innovation has already penetrated Samsung’s culture of innovation and is deeply embedded in Samsung’s long-term strategy.

How General Electric Rewrote the Playbook on Product Development

Like Samsung, this home appliance giant has turned to open innovation as a way to gain an edge in an already established and saturated market. In 2014 , GE partnered with Local Motors to launch an open innovation, co-creating space called FirstBuild . FirstBuild is both a workgroup and a microfactory that aims to make product development more agile, accelerated, and on-trend. In a case study on FirstBuild conducted by Deloitte, it found that though GE is one of the most established players in the home appliances market, it is falling behind to smaller and more nimble competitors who are able to develop and release cutting edge technology faster.

FirstBuild uses its physical community of innovators and engineers at the microfactory as well as its online community of co-creators to ideate, prototype, get feedback, and execute on product development at a speed that matches its new competitors. Within the first two years, FirstBuild already halved the time to take a product from mind to market from eight months to four months.

Not only does this innovation model help to accelerate the product development process, but the higher frequency of release is also helping the team improve their ability to develop better products. Moreover, by also taking a crowdsourcing and crowdfunding approach, FirstBuild is able to validate and generate buy-in to new products before the launch, and even fund most of its fixed production costs by locking in pre-sales.

The success of FirstBuild’s lean and fast-moving, open-innovation model of product development is setting a new standard, with the model already expanded overseas to China and India. The CEO of Haier, a Chinese multinational company, is also a fan of the model. ‍

For more information on the details and results of FirstBuild, please refer to the Deloitte Case Study .

Special Mention - How Google’s 20% Program Created Some of the Company’s Most Successful Products

A special mention goes out to Google’s 20% Project. Google did not become a household name in 2020 by sticking to conventional methods of innovation. While Google employs a variety of open innovation models and initiatives, the 20% Project is especially notable. Imagine being able to use 20% of your time at work to pursue personal interests and projects. That is exactly what the 20% Project enables employees at Google to do. Though Google popularized this concept in the 21st century, it was actually derived from an initiative called the 15% project by 3M in 1948 that required its employees to spend 15% of their work time on personal interests.

There have been a number of projects that came out of the employees allotted 20% time that have become significant products for Google. This includes Gmail , a side-project by developer Paul Buchheit originally called “Caribou”, and Adsense, a project envisioned by Paul Buchheit and brought to life by a team led by Susan Wojcicki . The success of the 20% Project in encouraging innovation and cultivating personal interests is now being applied in schools, where teachers are setting aside 20% class time for students to pursue their own projects.

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Ideas Made to Matter

Innovating in existing markets: 3 lessons from LEGO

Beth Stackpole

Sep 21, 2021

With the invention of the interlocking plastic brick, a favorite toy of generations, LEGO was a poster child for business innovation — that is, until it wasn’t.

The Danish toymaker’s trajectory from industry trailblazer to the brink of bankruptcy to sustained recovery shows there’s more to innovation than sheer luck or a wholesale focus on disruption.

“No innovation lasts forever,” said David Robertson, a senior lecturer in operations management, in a recent webinar hosted by MIT Sloan Executive Education. “Sometimes you get hyper growth for a couple of years, sometimes you get steady growth for longer. But innovations run their course.”

From its inception in the 1930s to its brush with bankruptcy in 2003 and its subsequent turnaround, LEGO tried every approach in the book to managing innovation, some resulting in spectacular success and others in great failure, said Robertson, author of “ Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry .”

Based on years of research and what he’s seen at LEGO and other companies, Robertson advocates for an expansive approach to innovation — helping customers get more value from existing products by offering innovative complementary products, services, and business models.

“It’s how Apple turned itself around, it’s how GoPro got five years of 90% growth, it’s how Sherwin-Williams gets twice the price per gallon of paint than other paints that are functional equivalents,” explained Robertson, who also teaches an executive education course on the topic . “Marvel Comics turned itself around in the same way.”

Among the innovation lessons to be learned from those firms: Have a variety of tools in the toolbox and don’t be afraid to use them, listen deeply to your customers, and prepare for a steady diet of continuous reinvention to remain relevant, even as an iconic brand.

LEGO’s brick-by-brick approach

LEGO was a small family business that grew steadily until the management reins were handed off in the late 1970s to the grandson of the founder and newly minted MBA, Kjeld Kirk Kristiansen, who quickly unleashed a wave of innovation.

With the younger Kristiansen at the helm, LEGO branched out into the Technic brand — a more sophisticated building system to attract older children — and launched the first mini figure and fantasy action play sets, fueling 15 years of growth during which the company doubled in size every five years.

Growth slowed in the 1990s for a number of reasons, including a rise in digital play experiences from companies such as Nintendo and Sony, the rise of Toys “R” Us and other big box stores, the expiration of LEGO’s brick patents, and the relocation of production of Mattel’s and Hasbro’s products to China, lowering the cost of their competitive toys.

LEGO responded in 1999 by refocusing its innovation efforts on revolutionary products that would reinvent the nature of play. “They became convinced that if all they offered was another box of bricks, they would become a commodity,” Robertson said. “They believed they needed to disrupt themselves before somebody else did.”

After a series of missteps that included the rollout of electronic toys for toddlers and a digitally connected action hero, LEGO found itself nearly bankrupt in 2003. In the rush to innovate, the firm lost sight of its core — physical construction-based play. After layoffs, emergency loans, and other measures aimed at staving off bankruptcy, LEGO turned those innovation miscues into a new strategy — one that precipitated a turnaround and laid the groundwork for further growth.

Among the key lessons that companies with a mature product line can follow to innovate:

Respect what made you great. Sometimes knowing where not to innovate is just as important as knowing where to innovate, Robertson said. LEGO learned that in a new digital landscape it was no longer enough to offer a box of plastic bricks — the brick had become a commodity. But the brick was still necessary, because that’s what customers expected of the brand.

Through trial and error and a number of failed digital-only initiatives, LEGO discovered customers wanted digital experiences that complemented core offerings, rather than replaced them.

Centering innovation around the brick-based construction experience through new stories, games, and experiences, exemplified by the fan-favorite Bionicle product line, is what drove customers back to the LEGO brand and returned the company to profitability.

“You try to understand who your customer is, what they care about — that’s the way we should think about innovation,” Robertson said. “You need to be dating your customer, not fighting your competitor.”

Maintain a customer-centric development process. When the big box stores took over from its ecosystem of small toy stores, LEGO lost an important channel for getting reliable customer feedback. LEGO began to evolve product development practices to support design thinking principles, empowering experts to come up with ideas for new products based on that critical customer input.

Today, LEGO regularly engages children in the process of character development, storytelling, and providing feedback on new playset ideas. “LEGO has a great expression for why they listen to kids when developing new toys,” said Robertson. “Mads Nipper, the former head of marketing and product development, liked to say, ‘Kids will never lie to you about whether something’s fun or not.’”

Develop a family of complementary innovations to distinguish yourself from competitors. Innovation leaders need to lean on a range of different approaches for innovation, since tactics will vary depending on the scenario and business goals. It’s important to nurture a culture that’s able to shift gears if traditional methods don't deliver desired results.

“You need to learn how to play chords, not keys, on the innovation ‘piano,’” Robertson said. “Pursuing multiple, complementary innovations that harmonize to create something is much better than any one key alone.”

digital sound waves flowing across a microphone

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LEGO Case Study of Innovation

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Case Study 1:

Q.1: how do you think the changes that lego made will reshape the firm for the long term.

Q.2: What suggestions would you have for LEGO’s competitors in the declining toy industry? What should they be watching for?

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Brick by Brick: A Case Study on LEGO’s Culture of Innovation

December 6, 2022

How does a company swing from scrapping together toys from actual scraps in the Great Depression to becoming a household name to nearly filing for bankruptcy to being one of history’s greatest innovation superstars?

By being really good at building, and rebuilding, one brick at a time.

I’m talking, of course, about LEGO .

LEGO wasn’t always an innovation success story. Like all large companies, they’ve gone through more than a few ups and downs. But somehow they always managed to turn things around.

Let’s take a look at how they consistently innovated their way into the hearts of kids and adults alike.

How LEGO built itself from nothing

LEGO bricks actually began as scraps of wood in 1932 by Danish woodworker Ole Kirk Kristiansen. Before making toys, he made practical objects like ladders, ironing boards, and farm equipment. The Great Depression made work scarce, so he switched to making toys since scraps were easier to come by than large bits of lumber. But even resourcefulness and innovation didn’t immediately save him. People considered toys a luxury in the Depression, and many of the folks in town couldn’t afford them. Ole often traded toys for food just to survive.

Fast forward to the 1940s and when the Nazis occupied Denmark. Not only was lumber crazy expensive, but Ole’s workshop also caught fire, and he lost his entire inventory and blueprints.

He managed to hold on to the business until the early 1950s when he met his next roadblock. World War II had made lumber nearly impossible for Ole to get his hands on. Instead, he used a new material: plastic. This is when he developed the patented interlocking system that made the LEGO bricks famously stackable.

LEGOs became wildly successful shortly after.

Success meets a brick wall

By the 1990s, LEGO’s popularity took a hit. The digital era began eeking its way into kids’ games and quickly caught the eyes of the brand’s curious customers. Nintendo was the sexy new stud on the block. (Yes, I’m absolutely going to fit in as many puns as I can.) Small toy shops closed their doors thanks to heavy competition from big box stores like Toys ‘R Us.

LEGO tried to keep up with the new trends in toymaking, even getting into the video game business to keep up with Nintendo. But it quickly became a case of trying too many things, getting away from its core business, and stretching itself too thin.

Teetering on the edge, LEGO barely avoided bankruptcy in the early 2000s. But a few emergency loans kept it afloat long enough to simplify its business and get back to its roots. By chasing every trend in the world of toys, LEGO had lost sight of what they were good at. They recentered their business on their iconic building sets, launching franchise sets including Star Wars, Harry Potter, Indiana Jones , and many other cult favorites.

That one move saved the company.

More renovations

The success of LEGO franchise sets gave the company enough liquidity to experiment again. But this time, they tried something they hadn’t done in years: openly accepting feedback from their fans. The relationship between customers and small toy shop owners used to be their main avenue for customer feedback. But thanks to competition from big box stores, small toy shops were closing and that invaluable feedback was lost. Until 1998.

In 1998, LEGO launched the Mindstorms robotics kits, a combination of hardware and software that let fans build robots using the iconic LEGO bricks. Just hours after the launch, thousands of hackers hijacked the software to make unauthorized modifications that gave new functions to the robots.

LEGO had a choice: prosecute the hackers… or embrace them.

LEGO recognized that they could collaborate with fans for feedback, and that would turn out to be invaluable.

They took a gamble and it paid off. Big time.

Using an open innovation strategy, LEGO re-launched the Mindstorms NXT series in 2006 which went on to become one of their biggest successes of all time. Why? They co-created with their customers.

LEGO used the feedback ecosystem they developed around the Mindstorms products as a model to create their now-famous culture of innovation. They started the LEGO Ambassador Program, which allowed fans to engage with the company around its kits. This continuous feedback loop gave LEGO tons of new ideas and partnerships, while making fans key decision-makers in the process.

Around the same time, LEGO started the crowdsourcing platform LEGO Ideas . The platform encourages fans to submit their ideas, and fellow fans can vote on which products they’d like to see put into production. Once an idea hits 10,000 votes, it moves on to a LEGO review board. If selected, the original creator receives 1% of the product’s revenue.

Building on success

Using feedback from their fans, LEGO consistently churns out great idea after great idea. Go to their website and, besides ordering products, you can build things, share them with friends, and watch videos. Five times a year they publish a magazine that kids go crazy over. They produced Beyond the Brick: A LEGO Brickumentary – a documentary for adult fans of LEGO bricks. They’ve released Hollywood feature films that grossed hundreds of millions of dollars. Their YouTube channel has millions of subscribers. They have eight amuse ment parks . There’s even a game you can download from the app store.

All from a company that sells little rectangular pieces of plastic.

LEGO’s 4 building blocks of success

Not every company has the massive innovation budget of LEGO, or the decades of experience as an industry giant, or the rabid (and vocal) fan base. So what are some lessons any company can learn from LEGO’s giant success?

1) Respect why your customers fell in love with you in the first place

LEGO became famous for its iconic bricks. But over the years, chasing too many trends drove them away from their core business model. While sometimes shifting the entire company makes sense – especially when technology deems old product lines extinct – in LEGO’s case, it was unnecessary. It wasn’t until they recommitted to their building sets in the early 2000s that LEGO was able to become an innovation legend.

2) Listen to your customers, including your biggest critics

From bringing hackers on board in the 90s to LEGO Ambassadors to crowdsourcing ideas, LEGO became a model for open innovation. The constant feedback loop with their fans tuned LEGO into exactly what their customers wanted and sparked endless ideas. It doesn’t have to be complicated. If you listen to your customers, they’ll tell you what they want to buy.

3) Develop complementary offerings instead of reinventing the wheel

LEGO only really started becoming the innovation darling we know today once they started listening to their customers. And what did their fans want? More ways to enjoy LEGOs! From movies to theme parks, LEGO created tons of new ways to enjoy the brand that didn’t compete with their core products. And that last part is key. Not only are you competing with your rivals, but your company might also just be competing with itself.

4) Create a culture of innovation

Google’s corporate campus has nothing on LEGO’s. Little toy bricks are everywhere . LEGO encourages all its employees to play regularly and submit ideas. So not only do they source ideas from their fans, but from everyone at the company, as well. From Frank in Accounting to Nadia in HR, everyone is invited to make the company better.

Want to know more about how to create a culture of innovation like LEGO? Check out:

The Museum of Play: The Connection Between Play and Innovation

How to Create a Culture of Innovation

Why Innovation is Your Competitive Advantage

How to Innovate

Photo credit: Jason Leung via Unsplash

About Carla

Carla is a world-renowned storyteller, an entertaining speaker, and a prolific author. Having lived, worked, and studied on five continents, she's partnered with top brands and conferences to train thousands of people how to rethink the work that they do and the impact they can have. Her visionary expertise has inspired and equipped leaders at all levels to embrace change, welcome new ideas, and transform their business.

Her work with Fortune 500 brands served as the foundation for many of her books. Her tenth, RE:Think Innovation, is a #1 new release that busts the myth that innovation is something that requires a specific degree or special training. In fact, Carla explains why, to be a successful company in today's hyper-competitive, customer-driven world, innovation must be everyone's business. Her goal is to teach one million people how to become innovators by 2025.

Consistently named one of the top influencers in B2B, digital and content marketing, Carla regularly challenges conventional thinking. Today, she travels the world teaching anyone (and everyone) how to cultivate idea-driven teams that breed unstoppable creativity and game-changing innovation.

Open innovation: benefits, case studies and books.

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Table of Contents

Today we hear a lot “ Open Innovation ” but actually there are a lot of people who are not sure what it means exactly. As this topic is important nowadays, we decided to write an article about it to clarify all your doubts.

What is Open innovation?

Open innovation is about combining internal resources with external ones to boost innovation culture in the company. For example, big companies like GE, Cisco or Microsoft, etc. tend to have 8-12 different value pools, for instance, think suppliers, startups, customers or universities, etc. to consider for their open innovation efforts.

In other words, open innovation is a business model that encourages you to connect with outside sources so you can profit from exciting new startups and product opportunities, get broader pool of talent, collaborate with others to come up with innovation that you could never do just by yourself.

Actually, now, large multinationals including Kraft, KLM, Pfizer, and Siemens actively and openly participate in collaborative, online innovation communities where seekers and solution providers work together. Much the way tech companies use hackathons to get outsiders to contribute to their goals, OI-committed businesses announce proudly that they’re taking full advantage of the global innovation community. That transparency demonstrates to the market that they have a clear strategy for the future and they’re aggressively pursuing it out in the open.

So, find the right collaborators! One of the most visible open innovation actions these days are suggested web sites or special places on the web that invite customers and the general public to submit ideas on how to improve a company’s products and services. And then, on these websites companies publish a hackathon info to find the right partner with the most brilliant idea.

Benefits of Open Innovation

1. Creating new products and services Especially when you’re a startup, there’s nothing more exciting than getting your first product out on the market. But it’s easy to get stuck, focusing all your efforts on selling your first product rather than thinking of what else you could provide for your customers. It can be scary to invest time and resources into creating a new product, especially taking into account that startups have limited budget. Yet, by investing your resources and the resources of the third parties into creating something new, that you know will bring value to your community. This move may help you increase your profits and create buzz around you.

2. Innovating old products and services Sometimes, you don’t need to create new products. Sometimes, your older service has a potential to be better, has potential to attract a lot of clients. This is when you need to get a creative team together to improve your idea. One of the benefits of open innovation is that the process never ends. You’re always thinking about how you can make your organisation better.

3. Building a strong community Lego is a great example of how a company can engage their fans on a wide scale by using open innovation. No matter the size of your organization, a great benefit of open innovation is taking the time to get in touch with your fans and your soulmates, news talents. Get to know what your community wants, and then give it to them. In the process, you will find that enthusiastic community members are willing to dedicate their time and ideas to helping you create something better. These relationships are key and will help your company build a strong community dedicated to your project.

4. Keeping your employees engaged One of the main sources of employee dissatisfaction is a lack of feeling of ownership on the projects they work on. Sometimes, your team may have some great ideas but might not feel comfortable bringing them forward. By bringing an open innovation initiative to your workplace, your team can get involved in big picture planning, make it their project. When people feel more invested in the bigger goals of the organisation, it makes them more excited to come to work in the morning and put their heart and their soul in it.

5. Staying ahead of the competition By keeping your team and your community engaged and on the lookout for new ideas, you make sure that your organisation stays helpful and relevant to your community. Using open innovation can help you find your niche that makes your organisation uniquely valuable to the community.

6. Costs reduction When you work with other companies, you split the costs. Moreover, you become more efficient because each company, each member works on what he is good at.

7. Time-to-market acceleration Instead of figuring our how to make a desired product, train your people, buy equipment,etc, you just start collaboration with company that already has all this, that allows you to bring product to market faster.

8. New revenue streams Did you know that some businesses get more revenue from secondary products rather than from the primary ones? Working with other companies will allow you to enter new market with an idea and product you have.

9. Innovation risk reduction Any innovation has risks, but if you work with experts you minimize your risk of failure, especially if you agile and get feedback from your target on a regular basis.

Let’s look at open innovation case studies

GE is one of the leading companies implementing different open innovation models. Their Open Innovation Manifesto focuses on the collaboration between experts and entrepreneurs from everywhere to share ideas and passionately solve problems. Based on their innovation Ecomagination project that aims to address environmental challenges through innovative solutions, GE has spent $17 billion on R&D and received total revenues of $232 billion over the last decade. GE is famous for their open innovation challenges and initiatives on their open innovation page. Through these challenges, GE familiarizes itself to future potential talents. For example the Unimpossible Missions: The University Edition challenge is clearly targeted for students that are creative, have a certain level of technical skills and a clear recruitment motivation. Through the challenge, GE aims to get three smart and creative students to have their internship at GE. Another example is GE’s project – First Build, a co-create collaboration platform, which connects designers, engineers, and thinkers to share ideas with other members who can discuss it together. It is one of the open innovation models that aims to provide a platform that can help both external and internal individuals to collaborate together in terms of ideas sharing and manufacturing to reach innovative ideas for products and services.

Open innovation was also adopted by NASA in order to build a mathematical algorithm that can determine the optimal content of medical kits for NASA’s future manned missions. In order to reach an innovative software who can solve this problem, NASA collaborated with TopCoder, Harvard Business School, and London Business School. The application of open innovation created a cost-effective and time-effective solution that could not be reached using the internal team alone.

Currently, the company is adopting open innovation models on levels between the team and other entrepreneurs from one side and the company and its consumers from the other. The Coca-Cola Accelerator program aims to help start-ups in eight cities around the world; Sydney, Buenos Aires, Rio de Janeiro, Berlin, Singapore, Istanbul, San Francisco, and Bangalore. Those start-ups aim to think in innovative ways to build a the Happiness Coca-Cola brand. Another open innovation model presented by Coca Cola is the Freestyle dispenser machine that allows users from around the world to mix their own flavors and suggest a new flavor for Coca-Cola products. The new product records the consumer flavor so they can get it from other Freestyle machines located around the world using the Coca-Cola mobile application. This model of open innovation puts the consumers in the heart of the production process as the company uses the suggested flavors as part the external ideas that can be evaluated and processed as a new product line.

The new LEGO strategy aimed to focus on the consumer by linking both business and creativity. This strategy was known as, LEGO’s Shared Vision. In order to innovative new LEGO sets that can achieve success in the market, LEGO started the LEGO Ideas, an initiative based on a co-create open innovation model. In this online website, LEGO consumers can design their own LEGO sets either using LEGO bricks or computer 3D applications. Other users start to discuss the idea and vote for it, once the idea reaches a targeted vote, LEGO can consider it as a new product with giving a small part of the revenues to the creator of the set. This model contributes putting the consumer in the heart of the innovation process and help the team to target sets that can achieve success based on the LEGO Ideas votes and comments. This co-create platform can also contribute reducing the risk of innovation as these feedback from the website can give business analysts idea about the viability of the new product. Another great open innovation step LEGO did was building a partnership between the company and MIT Media Lab to deliver programmable bricks, which was introduced as LEGO Windstorm.

Samsung adopts an open innovation in order to build their external innovation strengths through Samsung Accelerator program. The initiative aims to build a collaboration between designers, innovators, and thinkers to focus on different solutions. The program provides office spaces, statical capital, and product support to entrepreneurs to help them to build software and services. Samsung does open innovation collaboration especially with startups. The distinctive part of Samsung’s open innovation collaboration is that Samsung divides it to 4 categories: partnerships, ventures, accelerators, acquisitions. Typically Samsung partnerships aim for new features or integrations within Samsung’s existing products. Ventures can be described as investments into early stage startups. These investments can bring revenue in case of exits, but also provide access to new technologies that Samsung can learn and benefit from. For example, Samsung has invested in Mobeam, a mobile payment company. Accelerators provide startups with an innovative and empowering environment to create new things. Samsung offers these startups an initial investment, facilities to work in, as well as some resources from their vast pool. The idea is that the products coming from the internal startups could become a part of Samsung’s product portfolio over time or just serve as learning experiences for the company. Acquisitions aim to bring in startups working on innovations that are at the core of Samsung’s strategic areas of the future. These acquisitions often remain independent units and can even join the Accelerator program. As an example of Samsung’s collaboration with startups, Samsung has acquired an IoT company called SmartThings to gain an IoT platform without having to spend the money, and more importantly, time on R&D. Samsung sees potential in the IoT industry and views it as a strategically important part of their future business and thus an area where they want to be forerunner. For Smart Things, it still continues to operate as an independent startup fueled with the resources of a big company. With the investment potential and home electronics of Samsung, SmartThings can really be developed into an integral part of Samsung products, by creating new IoT possibilities for homes. By collaborating with startups, Samsung aims to benefit from the variety of innovations that smaller companies have already come up with. These companies often have products that can complement or be integrated to Samsung’s own products, creating value for both parties.

Wayra by Telefonica has been around for three years, and today, it is present in 11 countries across Latin America and Europe. It seems to be very well organised and it is very active with more than 300 startups engaged so far.

Hewlett Packard

It is one company in particular that has really embraced the ideals of open innovation. It has developed labs where open innovation thrives. It has created an open innovation team that links collaborators that are researchers and entrepreneurs in business, government and academia, to come up with innovative solutions to hard problems with a goal of developing breakthrough technologies.

Peugeot Citroën

The French car manufacturer has launched a collaborative project to design the cars of the future and aimed at multiplying the company’s partnerships with scientific laboratories all around the world. This project materialized into the creation of a network of OpenLabs. These structures are designed to allow the encounter between the group’s research centers and the external partners. They have a goal of thinking about the future of the automotive industry, particularly according to scientific advances.

P&G’s open innovation with external partners culminates in their Connect+Develop website. Through this platform P&G communicates their needs to innovators that can access detailed information related to specific needs and submit their ideas to the site. P&G recruits solutions for various problems all the time. Connect+Develop has generated multiple partnerships and produced relevant products.

The idea for Nivea’s B&W deodorant was coined together with Nivea’s users through social media. The way Nivea collaborated with its users throughout the R&D process is very interesting. They pretty much said that “okay, we know that our current product can be connected to stains in clothes. Could you share your stories and home remedies so that we can develop a better product?” Nivea then partnered up with a company they found via pearlfinder and developed, together with the users, the B&W deodorant. This admittance of issues in their product could have been seen as a sign of weakness, however, users were very active in collaborating with Nivea and the end-product ended up being a great success.

Telegram is a messenger application that works on computers and smartphones very much like WhatsApp and Line. However, what makes Telegram different is how much users can contribute to its content openly. Users with any developing skills can create their own stickers and bots on the Telegram platform. Telegram also promotes the best stickers updating an in-app list of the trending stickers.

Open Innovation Books

To learn more about Open Innovation, I recommend you to read these interesting books abour open innovation.

1. A Guide to Open Innovation and Crowdsourcing: Advice from Leading Experts in the Field by Paul Sloane

Open innovation is one of the hottest topics in strategy and management today. The concept of capturing ideas in a hub of collaboration, together with the outsourcing of tasks is a revolution that is rapidly changing our culture. A Guide to Open Innovation explains how to use the power of the internet to build and innovate in order to introduce a consumer democracy that has never existed before. With corporate case studies and best practice advice, this book is a vital read for anyone who wants to find innovative products and services from outside their organizations, make them work and overcome the practical difficulties that lie in the way.

2. Open Business Models: How To Thrive In The New Innovation Landscape by Henry W Chesbrough

In his book, author demonstrated that because useful knowledge is no longer concentrated in a few large organisations, business leaders must adopt a new, open innovation model. Using this model, companies look outside their boundaries for ideas.

3. Open Services Innovation: Rethinking Your Business to Grow and Compete in a New Era by Henry Chesbrough

4. Open Innovation: Researching a New Paradigm by Henry Chesbrough, Wim Vanhaverbeke and Joel West

Authors describe an emergent model of innovation in which firms draw on research and development that may lie outside their own boundaries. The book will be key reading for academics, researchers, and graduate students of innovation and technology management.

5. The Open Innovation Revolution: Essentials, Roadblocks, and Leadership Skills by Stefan Lindegaard, Guy Kawasaki

This practical guide reveals that, without the right people to drive innovation processes, your odds of success shrink dramatically. And as open innovation becomes the norm, developing the right people skills networking, communicating with stakeholders, building your personal brand and the ability to sell ideas is essential for your innovation leaders and intrapreneurs.

6. The Open Innovation Marketplace: Creating Value in the Challenge Driven Enterprise by Alpheus Bingham and Dwayne Spradlin

7. Online Communities and Open Innovation: Governance and Symbolic Value Creation by Linus Dahlander, Lars Frederiksen, Francesco Rullani

This book brings together distinguished scholars from different disciplines: economics, organization theory, innovation studies and marketing in order to provide an improved understanding of how technological as well as symbolic value is created and appropriated at the intersection between online communities and firms. Empirical examples are presented from different industries, including software, services and manufacturing. The book offers food for thought for academics and managers to an important phenomenon that challenges many conventional wisdoms for how business can be done.

8. Motivation in Open Innovation: An Exploratory Study on User Innovators by Robert Motzek

Robert Motzek’s study investigates most important factors controlling user innovators’ motivation and will derive suggestions on how manufacturers can address these points in order to tap the full potential of user innovation for their new product development.

9. Constructing Openness on Open Innovation Platforms: Creation of a Toolbox for designing Openness on Open Innovation Platforms in the Life Science Industry by Emelie Kuusk-Jonsson, Pernilla Book

The work benchmarks a model for designing Open Innovation Platforms and takes a theoretical standpoint in the socio-legal approach, viewing regulatory interventions and constructions of contractual and intellectual property law as the legal framework enabling creation of openness, which in turn affects the choices made in the business arena.

10. SMEs and Open Innovation: Global Cases and Initiatives by Hakikur Rahman, Isabel Ramos

Open innovation has been widely implemented in small and medium enterprises with the aim of influencing business promotion, value gain, and economic empowerment. However, little is known about the processes used to implement open innovation in SMEs and the associated challenges and benefits. This book unites knowledge on how SMEs can apply open innovation strategies to development by incorporating academic, entrepreneurial, institutional, research, and empirical cases. This book discusses diverse policy, economic, and cultural issues, including numerous opportunities and challenges surrounding open innovation strategies; studies relevant risks and risk management; analyzes SMEs evolution pattern on adopting open innovation strategies through available measurable criteria; and assists practitioners in designing action plans to empower SMEs.

11. Open Innovation Essentials for Small and Medium Enterprises: A Guide to Help Entrepreneurs in Adopting the Open Innovation Paradigm in Their Business by Luca Escoffier , Adriano La Vopa, Phyllis Speser, Daniel Stainsky

Small and Medium Enterprises have to approach open innovation differently than large companies. This practical guide on open innovation is expressly for entrepreneurs and managers in SMEs. The authors provide strategies, techniques, and tricks of the trade enabling SMEs to practice open innovation systems profitability and enhance the long-term value of their company.

12. Open Innovation: The New Imperative for Creating And Profiting from Technology by Henry W Chesbrough

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One Comment

July 26, 2019

Hello there! It’s hard to come by anything interesting on this subject (that is not overly simplistic), because everything related to 3D seems very difficult. You however seem like you know what you’re talking about 🙂 Thank you for finding time to write relevant content for us!

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Innovation management based on proactive engagement of customers: A case study on LEGO Group. Part II: Challenge of engaging the digital customer

S Avasilcăi 1 and G Rusu 1

Published under licence by IOP Publishing Ltd IOP Conference Series: Materials Science and Engineering , Volume 95 , Modern Technologies in Industrial Engineering (ModTech2015) 17–20 June 2015, Mamaia, Romania Citation S Avasilcăi and G Rusu 2015 IOP Conf. Ser.: Mater. Sci. Eng. 95 012144 DOI 10.1088/1757-899X/95/1/012144

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1 "Gheorghe Asachi" Technical University of Iasi, Department of Engineering and Management, Bd. D. Mangeron 29, Iasi, Romania

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To foster the development of innovative products and new technologies, nowadays companies use an open innovation system, encouraging stakeholders to contribute, using the companies' online platforms for open innovation or social media, bringing and sharing creative solutions and ideas in order to respond to challenging needs the company directly expresses. Accordingly, the current research continues the analysis of the LEGO Group innovation efforts, aiming to provide a case study approach based on describing the most important projects and online instruments company uses to interact with customers and other external stakeholders. Thus, by analysing the experience of the company in developing projects of involving stakeholders in the innovation processes, the article emphasizes the objective of these past projects developed by LEGO Group, outlining their objectives regarding the focus on the product or process innovation, the team management and stakeholders involved in the innovation actions and the results they obtained. Moreover, the case study highlights the features of the most important online instruments LEGO Group uses at the moment for engaging LEGO fans, children, parents, and other external stakeholders in developing new LEGO sets. Thus, LEGO online instruments provide the opportunity for customers to be creative and to respond to LEGO management team challenges. Accordingly, LEGO involve customers in bringing innovative ideas for LEGO sets through LEGO Ideas instrument, which aims to engage customers in submitting projects, voting and supporting ideas and also sharing them on social media. Also, the research emphasizes the role of supporting the open dialogue and interaction with customers and other external stakeholders through LEGO.com Create & Share Galleries instrument, using their creativity to upload innovative models in the public galleries. The continuous challenges LEGO launches for their fans create a long-term connection between company and its customers, supporting the value co-creation process, as the submitted ideas can materialize in new LEGO products which can be found on the market. As a consequence, customers' engagement in the co-creation process facilitated by the multiple online instruments provided by LEGO, resulted in positive outcomes for the company regarding new product development for the sets launched on the market to satisfy changing needs of their customers. The results provided by this case study approach can be useful for the business environment and academia as well in order to understand the role of engaging customers in the open innovation process, creating a competitive advantage on the market for companies.

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Open innovation at Lego makes a huge amount of sense, both from the perspective of reducing internal R&D costs as well as increasing customer engagement. I would view the open innovation platform as a kind of inbound marketing, building customer interest in the product, which should eventually lead to sales.
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What is Lego's Innovation Strategy Story? Founded in 1932 by Ole Kirk Kristiansen, LEGO started with a small collection of wooden toys in Denmark. The company has always been innovative, moving to plastics as early as 1946 and patenting the 'stud-and-tube' self-locking system in 1958.
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Lego is already known as the world's leading toy company. The company initially produced furniture and small objects, such as ladders, ironing boards, and wooden toys. The manufacture of this wooden toy then changed into plastic material based. Now, Lego is leading the market with their innovative breakthroughs. To face the digital competition, Lego implemented Open Innovation to their ...
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LEGO explores how the company-one of the most profitable toymakers in the world-grew to global dominance from humble beginnings; the mistakes that led it near bankruptcy; and why one turnaround attempt failed while a second succeeded. LEGO executives were unusually supportive about the case-writing process, Thomke says.
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Central to LEGO's turnaround is a new structure for strategically coordinating innovation activities, led by a cross-functional team: the Executive Innovation Governance Group. LEGO managers ...
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LEGOLAND themed parks. Instead, Lego doubled-down in making hit toys again. Focusing back on classic Lego lines like City and Space, Lego launched the ninja-themed Ninjago line and Mindstorms, kits that allow you to build programmable Lego robots. Grown-up kids got Lego Architecture, which included replicas of the Guggenheim and Burj Khalifa ...
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Case Studies ©2013 Joe Tidd, John Bessant 4 Open innovation and user engagement A second important feature in this learning process has been the opening up of the design process to outsiders. An early product aimed at competing with the growing computer games sector was Mindstorms - a sophisticated Technic-based kit with a programmable
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To innovative new LEGO sets that can achieve success in the market, LEGO started the LEGO Ideas, an initiative based on a co-create open innovation model. In this online website, LEGO consumers can design their own LEGO sets either using LEGO bricks or computer 3D applications.
"Embrace Open Innovation or be Destroyed by it…"
Lego, the Danish producer of construction toys, is an organisation that is well aware of the value of the open innovation challenge. In the 1990s the company came close to bankruptcy due to the rise of digital entertainment such as video games; they needed to find new ways of exciting their customers.
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LEGO has employed open innovation to create a pipeline for new product ideas as well as a platform to keep their customers engaged. How NASA Solved Challenges with Open Innovation Since its establishment in 1958, NASA has been at the forefront of new innovations and technologies globally.
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LEGO responded in 1999 by refocusing its innovation efforts on revolutionary products that would reinvent the nature of play. "They became convinced that if all they offered was another box of bricks, they would become a commodity," Robertson said. "They believed they needed to disrupt themselves before somebody else did."
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Answer: After LEGO met with failure in its innovative toys and diversification into other areas like theme parks, action figures like 'Galidor' and craft sets known as 'Clikits', it had to come up with an innovative strategy that will help the company to rise from the abyss. The company developed a new creative structure for its operations.
Brick by Brick: A Case Study on LEGO's Culture of Innovation
From bringing hackers on board in the 90s to LEGO Ambassadors to crowdsourcing ideas, LEGO became a model for open innovation. The constant feedback loop with their fans tuned LEGO into exactly what their customers wanted and sparked endless ideas. It doesn't have to be complicated.
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The study then proceeds to analyze the innovation management at LEGO Group, emphasizing the most important elements regarding the management team, the success and failures, the evolution of...
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As part of the OpTex project for Innventia, ImaginationLancaster at Lancaster University have put together a collection of case studies of existing open innovation platforms, which include Fab Lab, Facemooc Online Community, Lego Ideas, MIT's Media Lab and Procter Gamble's Connect + Develop.
Open innovation: benefits, case studies and books
In order to innovative new LEGO sets that can achieve success in the market, LEGO started the LEGO Ideas, an initiative based on a co-create open innovation model. In this online website, LEGO consumers can design their own LEGO sets either using LEGO bricks or computer 3D applications.
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LEGO Group is actually an IT-driven company as much as a brand-driven company. —Jørgen Vig Knudstorp, Chief Executive Officer Despite the company's early success with digital innovation, management felt that the LEGO Group was at risk of failing to respond quickly enough to the opportunities and threats the digital economy posed.
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Innovation management based on proactive engagement of customers: A case study on LEGO Group. Part II: Challenge of engaging the digital customer ... To foster the development of innovative products and new technologies, nowadays companies use an open innovation system, encouraging stakeholders to contribute, using the companies' online ...