“The effort was oriented around seven of the business world’s most popular strategies for developing new products and services. In fact, they’re now so pervasive they’ve become a kind of gospel: the seven truths of innovation. Hire diverse and creative people. Head for blue-ocean markets. Be customer driven. Practice disruptive innovation. Foster open innovation — heed the wisdom of the crowd. Explore the full spectrum of innovation. Build an innovation culture.”
LEGO produced its first blocks in 1949, and it has grown to become an iconic building block toy. From 1998 to 2003 the company released diverse product lines and explored other lines of business, and amid accolades for innovation, it nearly collapsed. In Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry, David C. Robertson and Bill Breen explore the reasons LEGO declined, their process of recovery, and how they built a flourishing, innovative, and resilient company.
LEGO founded its business on simple principles that connected it to its product and customer. However, LEGO lost connection with its values. Management was disconnected and controlling, they lost track of profits and losses, they lost focus pursuing many initiatives, designers worked independently without constraints, they hired people with the wrong skills, they devalued core products and lost brand recognition, and lost touch with retailers and customers. It took radical changes and the “seven truths of innovation” to set the company on the right track.
Regaining authenticity was pivotal to LEGO’s recovery. Brick by Brick provides an in-depth look at LEGO’s foundation, what led to a crisis and near financial ruin, and the innovative process that led to re-creating a thriving company. For this summary, I’ll focus on authenticity.
The Big Idea
Act Authentically
"By restoring the company’s fundamental values, he laid the foundation for an innovation culture that put the retailer first; that focused designers as well as managers on creating only those toys that stood an odds-on chance of generating substantial profits; that revived the enduring LEGO product lines that appealed to kids who loved to build; that championed inside-the-box creativity; that challenged people to do more with less; and that pushed people to act authentically by showing instead of telling."
LEGO is well-known for the interlocking blocks with nearly infinite possibilities. The brick is a creativity catalyst inspiring a wide range of creations. The blocks are useful at all skill levels from preschool to Mensa-level hiring tests at Google. LEGO’s primary focus was 5-9 year-old boys who have made up their core consumers since the 1970’s. Market research showed that two-thirds of that group don’t play with construction toys. To capture more of the target market, LEGO developed toys that were not brick-based or recognizably LEGO. Unfortunately, customers buying LEGO products expected construction toys and the new products alienated them and failed to attract the new customers they targeted.
Within the company, designers decided that “LEGO is an idea, not a category” which freed them to develop innovative products but took away their focus. While breaking from its traditional product, it also broke with its fundamental values and became ineffective. LEGO had to act authentically to reconnect with its identity and reconnect with core customers. They focused their goal on creating products that were “recognizably LEGO, but have never been seen before.” Acting authentically builds credibility that drives customer support and fosters an impactful, innovative company culture.
Insight #1
Connect to Core Customers
"LEGO had launched so many new initiatives that Knudstorp believed it had forsaken a ‘crisp sense of identity’; the end result was a ‘loss of confidence’ in the company’s direction and its capacity to execute. It was one thing to get back to the brick and reconnect with 5-9 year-old boys. It was quite another to dig deeper and try to discover the company’s unshakable, inviolable core"
While pursuing new initiatives, LEGO refused outside ideas and isolated itself from its core customers. LEGO reconnected with customers by directly interacting with them. Designers tested new toys by carefully observing children playing with them. They allowed the children to become co-creators and guide their development. Ideas that didn’t work went to “lost ideas” binders for inspiration at another time.
LEGO had previously ignored adult enthusiasts, considering them a fringe group. However, they discovered a substantial number of adult customers primarily interested in more complex sets. LEGO partnered with enthusiasts to foster open innovation. Hackers broke the code on LEGO’s robotics software for Mindstorms. Instead of treating the fans like criminals, LEGO encouraged them to reinvent by providing a free downloadable software development kit. They also partnered with teams and individual enthusiasts which not only strengthened their fan base but also led to inventions LEGO would never have imagined.
Insight #2
Shared Vision Binds the Organization
"And that meant reconnecting with one of the LEGO Group’s most animating values, Ole Kirk’s dictum that ‘only the best is good enough.’ In recent years, LEGO staffers had grown to disparage the motto, believing it had significantly slowed the development process by encouraging designers to dither over products, overcomplicating and overdesigning them. Perfecting had gotten in the way of acting. But Knudstorp revived the motto and gave it more of a direct translation from the Danish: ‘even the best is not good enough."
Having a “Shared Vision” unified LEGO’s business practices. LEGO was slow to release new products; the development process took about 3 years because there were too many approvals required in the design process. Management had no tolerance for failure or dissent, and LEGO’s motto had become linked to the perfectionistic process. Their autocratic management style hobbled creativity. LEGO needed to realign the business vision to foster creativity in product development.
A simple motto is an easy way to connect everyone. By saying, “only the best is good enough,” LEGO implied everything must be perfect, which is a standard that is arguably never achievable and stifles creativity. But the revised motto, “even the best is not good enough” implies that they are always growing and developing better products. This small shift changes expectations across all areas of the business.
Brick by Brick is a remarkably detailed account of LEGO’s business practices illustrating both how bad practices devastate a successful organization and how LEGO successfully remade itself into a thriving, innovative company. Although this is not a blueprint for any group that wants to become more creative, it does offer many widely applicable and helpful ideas. A good first step is to act authentically, create a shared vision and build credibility within the company. Once you’ve connected to fundamental values, then focus on a core product and core customers. Authenticity is a firm basis to develop innovative initiatives that work.
