I love LEGO!
Growing up, there was nothing I enjoyed more than building with them. I would shake every birthday or Christmas present I ever got hoping to hear the sounds of LEGO bricks shaking within.
My interest in the small plastic bricks has been rekindled recently due to my reading the book Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry. It has been a fascinating view of one of the world’s most iconic brands. Born within a small carpenter’s shop in a tiny village in Denmark, the book tells the story of LEGO’s rise to the most recognizable toy on the planet, it’s eventual decline, and its subsequent return to glory. If you loved LEGOs growing up, I recommend you give it a read. If you are interested in how businesses innovate and reinvent themselves to stay relevant, I recommend you give it a read. If you are a human being with a heart and a soul, I recommend you give it a read.
Below are some of the lessons that stuck out to me especially stronger.
Actions to Thoughts
In the early 2000s, LEGO nearly went bankrupt. The company’s low point was in 2003, and in its desperation it turned to a newly hired former consultant, Jørgen Vig Knudstorp, to help right the ship. Over the course of the next few years, Knudstorp led a fundamental transformation of the company to help it compete in the 21st century. In hindsight, his actions look like those of a visionary, but Knudstorp himself would tell you that there was no master plan when he took over. It was clear that the company was in dire straights, but it took him almost a year to properly understand the issues the company was facing. Without a master plan, Knudstorp focused the company on blocking and tackling. His underlying theory was that the culture of LEGO needed to be fundamentally reorganized, but he believed this could only be done through action. Too often people start with thoughts and expect action to follow, but Knudstorp was convinced that if he was able to get the company doing the little things right again, that the positive culture change he was after would follow. I love this idea of the power of action to impact our thoughts. Too often in our personal and professional lives, we try to will ourselves to make a change. Sometimes it is easy to change you or your company’s actions and to have patience knowing that the thoughts will follow.
Creativity within Constraints
One of the big reasons why LEGO began to struggle was that it spread itself too thin in the name of trying to be innovative. It spread its attention out across a massive influx of new product lines trying to find winners. And it did! Unfortunately, for every winner, there were many more attempts that did not come to fruition. The company wasn’t doing a great job of tracking the success of different new efforts and at one point it was estimated that over 3/4 of the products the company sold were unprofitable on a per-unit basis. In an attempt to drive innovation, LEGO had removed all the parameters for its designs that ensured consistency and proper unit-economics. One of the key things LEGO did to turn itself around was put those guard rails back in place. Before the innovation explosion in the late 90s/early 2000s, LEGO had been strict about maintaining their catalog of brick designs at around 6,000 (each with varying colors). By 2003, this number had jumped to 14,000. Many of these new brick designs were custom pieces that might only be used in a handful of sets. As part of the company’s turn around, a strict review of brick designs was launched with the number of designs once again slashed to ~7,000. Designers suddenly had to do more with less. Their designs were constrained by a smaller universe of potential bricks, but something interesting happened. Design teams started churning out MORE creative designs, not less. By putting into place some constraints within which to operate, designers were forced to get more creative. Often this meant using bricks from existing sets in unique and interesting ways. This led to better, more profitable designs as the company had to produce far fewer one-off pieces. This is a great example of the positive power constraints can have on creativity. It helps to have guardrails sometimes. They can be a powerful impetus for unique thinking and help to get creative expression going.
Crowd Control
One of the favorite innovation strategies out there is to leverage the “Wisdom of the Crowds”. Get a large number of people working on something and they will often come up with better answers than even the most capable individual within their ranks would be able to generate alone. But crowdsourcing is not a silver bullet. Not all companies are right for this type of input from the masses. While LEGO did spend some time dabbling with user-generated designs, it really found its highest leverage point in “clique-sourcing” as opposed to drawing from a massive crowd. Taking designs submitted by anyone and everyone made it difficult to ensure consistency of brand and to maintain profitability on sets. Instead, LEGO turned to a small number of highly-vetted individuals that could bring a differentiated skill set to what LEGO had in-house. When LEGO was exploring how to re-launch a version 2.0 of its smash-hit Mindstorm set, the company wanted to make sure it got input from the consumer group that made the kit such a success, the adult fan segment. LEGO recruited a small set of a few super fans with differentiated skill sets to provide input as part of the design team for the new set. Each person brought something different to the table in terms of expertise, but they were all passionate LEGO enthusiasts and excited to participate simply for the sake of getting to help steer the direction of one of their favorite products. LEGO didn’t give them absolute free-reign. Internal teams already had major design decisions locked-in by the time they brought in the user experts. This ensured that the underlying fundamentals of the set would be aligned with LEGO’s vision and brand, with the details and features most important to fans still being represented in the final product. LEGO knew that there was power in tapping into the wisdom of the crowds, but it also knew that they needed to exercise some effective crowd-control if they were going to be able to deliver a truly impactful product.
Believing in the Brick
At the end of the day, LEGO’s biggest pitfall was that it strayed from what made it great. The LEGO brick was the innovation that built a toy empire, and LEGO’s attempts to appeal to fans who didn’t enjoy creative building almost shipwrecked the company. By foregoing the brick or lessening its importance in products, LEGO removed what made it special. it tried to appeal to everyone and in doing so it stopped appealing to anyone. LEGO was only able to recover by doubling down on the brick. They did so in a unique and interesting way. Yes, they cut toy-lines that had no actual LEGO bricks in it, but more than that, they focused on what the brick represented. A LEGO brick is a promise. A promise of consistency and effectiveness. A promise that no matter what set you bought it in, that brick will work with bricks from any other set. It is a canvas upon which a near-infinite world of possibilities can be built. LEGO recaptured success by focusing on what made it great in the first place, but that meant thinking beyond the physical brick and thinking about what the brick represented. One of the most successful product lines that helped turn the ship around (and one of my personal favorite toys growing up) was Bionicle. Bionicle wasn’t made from traditional LEGO bricks, but it maintained the same design principles that the original LEGO brick was built on. Sets were consistent, combinable, and infinitely buildable with each other. LEGO learned an important lesson that is every bit as applicable for people as it is for large enterprises. You won’t ever be able to be good at everything. You won’t ever be able to satisfy everyone. What you should instead focus on are the skills and strengths that are uniquely yours.
Grow.
Learn new things.
Develop new products.
But never neglect what got you to where you are in the first place.
We all have something unique inside us.
Sometimes we just need to remember to Believe in the Brick.