Building on Customer Ingenuity: Lego Pushes Boundaries with Innovative Ideas
Demonstrating the Power of Crowdsourced Innovation, Lego Embraces Customer Collaboration for Financial Growth and Customer Loyalty
Lego's innovative approach to customer involvement has proven to be a successful strategy in generating revenue, producing commercially viable ideas, and fostering customer loyalty. A recent study of Lego's customer-driven innovation platform highlights three key insights for businesses seeking to harness customer communities for innovation and revenue generation.
Customers Play Dual Roles in Idea Generation and Selection
Lego Ideas utilizes a multi-stage selection process, with customers participating in both generating and selecting promising ideas. Machine learning reveals factors such as community status and the idea's presentation influence early-stage selection. Although predicting which ideas advance to the final 10,000-vote threshold remains challenging, the community's engagement offers valuable insights into market fitness and demand.
Nurturing Positive Community Engagement Amidst Rejections
When popular ideas are rejected, maintaining customer loyalty is crucial. While rejection may initially spark negative feedback, Lego's prioritization of customer connections and community loyalty ensures continued engagement. Platform design that encourages connection, as well as offline events like fairs and competitions, help Lego navigate the challenges of rejected ideas without damaging customer relationships.
Providing Opportunities for Financial Rewards
Lego's commitment to its creative community is shown through the BrickLink Designer Program, which allows creators to crowdfund their unselected projects. Offering design assistance, quality control, and manufacturing support for projects exceeding 3,000 preorders, Lego enables creators to market and profit from their own designs. This program initially focused on 10K Club members but has since expanded to broader submissions and ongoing competitions.
Integrating Customer Collaboration into the Core Organization
Successfully bringing external ideas into the core organization requires overcoming internal resistance and redefining roles. Lego leverages internal experts to ensure customer designs meet brand standards while focusing on community engagement, platform development, and aligning contributions with product strategy. This synergy between Lego Ideas and BrickLink allows the company to capture a larger share of the value generated by these innovations.
Four years of research on Lego's customer innovation platform reveals three key lessons:
- Customers contribute both by generating and selecting promising ideas.
- Mitigating negativity from rejected ideas requires prioritizing and sustaining customer loyalty.
- Deepening customer relationships involves enabling them to profit from their creativity.
Ultimately, successful open innovation requires internal organizational changes to integrate and manage customer collaboration effectively. Lego's commitment to community engagement and alignment of contributions with product strategy has led to increased innovation, revenue, and customer loyalty.
In a rapidly changing business landscape, innovation is key to achieving long-term growth and success. By actively involving its customers in product selection, fostering deep relationships, and providing financial incentives, Lego demonstrates a powerful method for leveraging customer communities for innovation and revenue generation.
Sources: Michela Beretta, Linus Dahlander, Lars Frederiksen, Arne Thomas (2023). Lego Takes Customers' Innovations Further. MIT Sloan Management Review. Link.
- Machine learning can help businesses, such as Lego, understand factors that influence idea selection within customer communities, contributing to their innovation and revenue growth.
- By offering opportunities for financial rewards and providing platforms that encourage connection, businesses can build strong relationships with customers, even amidst rejections or setbacks.
- Lego's success in integrating customer collaboration into the core organization, by focusing on community engagement, platform development, and aligning contributions with product strategy, demonstrates the potential for innovative ideas and growth in industries like finance, technology, education-and-self-development, and lifestyle through crowdsourced innovation.
