What tech companies can learn from LEGO to outcompete price driven competitors, whilst continuing capturing premium value with an “Owned” ecosystem.
On August 19, 2021, MIT hosted a Webinar, called; “What If a Great Product Isn’t Enough?” that I was fortunate enough to have been invited and that I made the time to invest one hour to listen to David Robertson’s strategic framework on how LEGO’s innovation efforts can be applied in the technology world.
In 2014, David Robertson, a Senior Lecturer at MIT Sloan School of Management, penned a book titled Brick By Brick, in which he outlined how LEGO was able to come back from the brink of bankruptcy by what he describes as “customer-focussed” innovation.
The LEGO Story.
LEGO, founded on 10 August 1932 by a Danish Carpenter; Ole Kirk Christiansen (7 April 1891–11 March 1958), evolved his small wood-working shop, into an enterprise that became a global Toy brand. The name LEGO is derived from the Danish words: “leg godt’’, meaning “play well”.
Since its founding, LEGO’s analogue products became extremely successful over a 40 year period, until the 80’s where it’s growth slowed, as it’s “Target Users — Children”, where asking the “Buyers — the Parents”, to buy their children Digital products, such as Video games, and then later MP3 Players and other electronic devices.
The LEGO management team, during the 80’s and 90’s, under Kjeld Kirk Kristiansen, the founder’s grandson successfully implemented various new innovations such as brand extensions and new product categories, and at times with their own independent sub-brand names. However, these innovations had short term positive financial results, and made LEGO a less focused company, as well as diluting their core value proposition to Toy retailers — where shelf space is an asset in high demand. These innovations culminated in 2003, when LEGO announced the biggest financial loss in their history.
The Turnaround.
Former Mckinsey & Co Consultant and Academic Researcher; Jørgen Vig Knudstorp, was hired as CEO in…
