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LEGO managers identified four categories
of innovation that mattered, with threetypes of innovation in each.
oduct innovationswere new toys and plat-
ms. Four years earlier, with Bionicle's
nch, the toy's development team had
ady innovated in both of those categories.
d invented an industry first, the buildable
on figure. In creating subsequent genera-
s of Bionicle characters, the team was adept
making modest but highly profitable
rovements to the line. And with its ball-
-socket connector, Bionicle also represent-
new building platform for LEGO.
ommunication innovations included nov-
ays of marketing and also connecting to
omers. Greg Farshteys outreach to cus-
ers via Bionicle fan sites, which he and
colleagues used to improve Bionicle's sto-ne, offered a proof-of-concept model for
raging feedback from fans. (LEGO subse-
ntly expanded on Farshtey's example and
it extensively today.)
usiness innovations consisted of new busi-
models (such as new pricing methods or
cription plans) and new channels to mar-
Since its debut in 2001, Bionicle had
ady delivered minor but noteworthy inno-
ons in both areas. With launches in the
peak months of January and August, and
ice tag that required just a few weeks of a
s allowance, Bionicle filled both a season-
nd a demographic gap in the LEGO brand's
ket. Although the attempt to sell the toy
ugh vending machines never panned out,
nicle freed marketers to seek out uncon-ional ways of pushing beyond such con-
ional intermediaries as Walmart and Toys
Us. Perhaps most significant, the range of
nsed products that Bionicle Boys snapped
elivered a healthy stream of royalties back
illund. As a result, other product teams
ulated the Bionicle model of partnering
und LEGO-developed properties to boost
s and profits.
Process innovations were core processes
ere money changes hands) or enabling
esses (such as new-product development).
e again, Bionicle suggested new innovation
hways for LEGO. The Bionicle team's com-
sed development cycles and customer
ght research became staples of the
amped LEGO Development Process.nicle proved it was indeed possible to cut
elopment time in half, which resulted in
stantial cost savings for LEGO. And it
wed that customer research could improve
odds of delivering toys that kids fervently
red. That, of course, augmented the com-
y's sales.
Having defined the different areas of inno-
on that LEGO would pursue, the working
up also recognized that "innovation" does-
necessarily mean "radical"that, in fact,
erent opportunities require varying
rees of innovativeness. The new model
lighted three different approaches to mar-
ing the kinds of change that would help
O advance its goals. The first, simplest
of innovation was to adjust existing toyshat is, to freshen up an evergreen line so
it attracts news waves of kids without
ng significantly more development and
nufacturing costs.
The next, more challenging innovation was
to reconfigure to change existing building
systems or platforms to provide a new cus-
tomer experience. LEGO had a blockbuster
with its Star Wars toys and a minor but
promising success with Slizer. Combining thetwo concepts to produce a set of buildable
action figures with a rich, episodic story line
meant that LEGO had to blaze a new path to
profits, but it was starting from a familiar place.
The result was a hit series of toys that gener-
ated significant sales for almost a decade.
Reconfiguring innovations change the terms
of competition in an existing market.
The most difficult and unpredictable inno-
vation is the kind that redefines a category.Case in point: the 1998 Mindstorms RCX kits,
the company's first foray into robotics. (The
second version of Mind-storms, released in
2006, was a reconfigure innovation for LEGO.)
The LEGO Group's senior management put
all these definitions onto a single pagean
innovation matrixthat it used to map the
kinds of innovations it would pursue.
Reprinted by permission of the publisher. ExcerptedfromBrick by Brickby David Robertson with Bill
Breen. Copyright Random House.
All rights reserved.
Related interview with David Robertson,
co-author, Brick by Brick, on page 3
OK EXTRACT
novation doesnt necessarily mean radical changes, sometimes,
simple makeover of a successful line is enough, says a new book
BRICK BYBRICK:HowLEGORewrote the Rules of Innovationand Conquered the Global ToyIndustry
AUTHOR: David CRobertson with Bill Breen
PUBLISHER: Random House
Price: ~599
THE LEGO INNOVATION MATRIX
REDEFINE
Neverseen
beforeoffering
RECONFIGURE
Combineknown
parametersof
categorytocreate
uniqueandbetter
solutions
ADJ
UST
Continua
llyadjust
parametersin
knownca
tegoryto
optimise
existing
solutions
Core processes> Financial
planning> Sales and
operationsplanning> Performancemanagement
Enablingprocesses> Marketing> Forecasting> Customer
businessplanning
ProductOffering> Products> Packaging> Software> Instructions
Platform> Building
systems> Toy technology> Digital
platforms> Packaging
platforms
Messaging> Campaigns> Web sites> Point of
sales displays> Catalogues
Customerinteraction> Communities
(online or not)> Events> Customerservice
Sales channel> Retailers> Direct to
consumer> Partners
Businessmodel> Revenue
model> Pricing model> Value chain
structure
New teamstructure and
process
New packagingplatform
Viral marketingcampaign
Directinteraction with
fans
Sell throughnon-traditional
channels
Licensingroyalties
Manufactureof new product
elements
Slizerlaunch first
buildable actionfigure
FirstBioniclelaunch(2001)
Ball andsocket joint
2002-2009Bionicle
launches
nnovation road mapREUTERS
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