David Gram on how LEGO continues to invent the future of play through entrepreneurship
In this video, David Gram, Head of Business and Marketing Development, Future Lab, reveals how LEGO nearly lost it all, the challenges the organisation continues to face, and how they are innovating inside the larger organisation to ensure that they will “inspire and develop the builders of tomorrow”.
LEGO was invented in Denmark in 1932 by a carpenter who wanted to enable children to LEg GOdt – “play well’. This phrase became the much loved company and brand LEGO. With 12,000 employees and growth of circa 100% in last 5 years, the founding spirit of “Det bedste er ikke for godt” Only the best is good enough continues to underpin the entire company.
The brick as we know it today, was invented in 1958 and has remained basically the same ever since. But it wasn’t just the brick that was the early innovation – it was the core belief that with the brick came a system of building blocks that could unlock creativity in children – with the brick you can create anything you can imagine.
LEGOS’s portfolio now includes: LEGO Friends, LEGO Chima, LEGO City, LEGO DUPLO, LEGO Technic, and collaborations with other brands, such as Star Wars.
In early 2000’s the bottom fell out of the company. Slowly, LEGO had abandoned the basics of the brick and the principle of the system. Instead the company had followed competitors into the world of electronic kits. The owner, Kjeld Kirk Kristiansen, rescued the company with an injection of cash and in doing so regained control.
The company drove a new strategy of returning to the core brick, of optimising the supply chain, and setting in place some key rules. One of these is that there should be a maximum of 5-6,000 elements in the ‘system’ – if you invent a new element you have retire an existing one.
The return to basics paid off and growth returned, but the challenges remain:
LEGO no longer have excusive rights to the brick and competitors are making their own systems with bricks that look like LEGO.
Children are are moving to digital platforms earlier and earlier.
In creating story themes, such as LEGO Chima and LEGO Star Wars, where is the creativity of some basic bricks you put together however you wish? The stories mean that there are boxes of great models you can put together but LEGO ask themselves: do children really play with them once they are built?
Millions of fans are forming large communities and they see the brick as a tool not a product – in fact a tool to create their own products to sell. On etsy.com there are more than 9k unique products made of bricks for sale. Legally LEGO cannot keep up but are also asking themselves should the company not be celebrating the creativity of the fans – the brick as a tool for creativity and self expression.
LEGO know that new thinking is needed.
Future Lab is tasked to invent the future of play, spotting trends yet invent the future now. A group of business drivers, experience designers, project managers they are looking for new target groups, new markets, new technologies, new business models. They have to inspire the core business, validate new business opportunities, and create new standalone and sustainable businesses.
The approach at Future Lab is that everything big starts small. In the core business every new product is launched with a high profile, highly expensive big bang. At Future Lab the focus has been on moving quickly, on downscaling, on launch and experiment.
Inspired by Google and others technology companies, Future Lab creates some minimum viable products, looking at the brick more as code, more as a tool they can quickly prototype with and thus to get new products in the market in small scale.
They have their own small factory right next to the Danish headquarters, so are not depending on the big supply chain lead time; they partner with small agile companies who accept this is a small business and can move equally quickly; they cultivate intrapreneurship – meaning a ‘startup’ attitude – and almost see themselves as a small independent company within the larger organisation; they are characterised by small budgets (and actively don’t want big budgets); and by using market testing and validating their new products, they are building culture change to ensure that this new business model and new way of working will be accepted into the wider organisation.
David Gram was a key speaker at Wavelength Connect event Reconnect 2 (Making Change Happen). To view more videos from this event go to Reconnect 2 (Making Change Happen).
Lego is based in Billund Denmark. It was founded in 1932 by the Kirk Kristiansen family who still own it today. It was established with the aim of “developing children’s creativity through playing and learning”. Today the company sells it’s products in over 130 countries, it has around 10,000 employees and is the world’s third largest manufacturer of play materials.
A few interesting facts about Lego:
Since the company was founded in 1932 it has been passed from father to son.
When the company first started it had 10 employees this has now grown to 10,000.
Lego started in a small carpenters workshop and initially manufactured a variety of products, stepladders, ironing boards, stools and wooden toys.
In 1942 the Lego factory burned to the ground.
Godtfred Kirk had the idea for the Lego system in 1954 after a meeting with a purchasing agent on a ferry to England. The purchasing agent thought that the current product lacked “idea and system”. A year later the “Lego System of Play” was launched. With the interlocking principle being invented in 1957.
Back in 2004 the company announced a huge deficit and in 2005 Legoland parks were sold to Merlin Entertainment. At this time they set up a Lego Ambassador programme to bring Lego closer to its fans. In 2005 the company posts a profit.
In 2010 the company launched an online game “Lego Universe” and later in 2011 their first app combined with a product, “Life of George”.
87% of waste from the company is recycled.