Lego’s Seven Innovative Practices

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In “Brick by Brick: How LEGO Re-wrote the Rules of Innovation and Conquered the Global Toy Industry”, David C. Robertson and Bill Breen share the story of how innovation played a role in the creation and successful growth of LEGO – and when it overexpanded and nearly went out of business, how it turned itself around through discipline and turning to its innovative truths to resume growth.

LEGO’s culture and growth are rooted in seven “truths of innovation”;

  • Hire diverse and creative people. A private firm located in Billund Denmark, it has reached out for key employees and strategic partners from all over the world.
  • Head for blue-ocean markets. Red ocean growth focuses on incremental improvements to existing products offered to existing and neighboring customers – where all your competitors are fighting for growth. BlueOcean strategy seeks out untapped markets. This includes both younger and older age groups and products in new industries, such as education and games.
  • Be customer-driven. For LEGO, the ultimate user is the customer it always thinks of; but to make a profit it must first meet the needs of its distributors.
  • Practice disruptive innovation. Expanding from the blocks that are core to LEGO to online and table games.
  • Foster open innovation – heed the wisdom of the crowds in creating new products and ways of purchasing them.
  • Explore the full spectrum of innovation. Not only new products, but also new methods of creating them; not just LEGO blocks for building objects and playing games, but also viewing each product as part of a larger system for fun and growth, including theme parks, branded stores, licensed games etc.
  • Build an Innovation culture. Key to LEGO are several cultural elements. Its standard for product development are products that are “the best”; teams are encouraged to be creative in what and how they work at all times.

All of this innovative energy is key to its growth – and how it turned itself around. Innovation must always be balanced with meeting the financial needs of the organization and its stakeholders. When this was forgotten, LEGO management adopted strict disciplines to rein in unprofitable innovations and restart more productive lines of business.

Enjoy the story and think about how important innovation is to all our businesses every time your children and/or those of your neighbors are playing with LEGO Products. on are you investing in building better win-win relationships with your partners? Share some of the stories with us.