The Seven Truths of Innovation and the LEGO Group’s Decline Part 1

Values Are Priceless. Today, every person who’s hired into the LEGO Group’s Billund operations gets a tour of the small brick building, with lions flanking the front steps, where Ole Kirk and his family once lived. There, they learn of another bedrock value that the company’s founder bequeathed to his company: the bar-raising principle that “only the best is good enough.”

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It’s this melding of these two guiding principles—serving the “builders of tomorrow” and creating “only the best”—that separates LEGO from its competitors and helps it stand out in the global marketplace.

Relentless Experimentation Begets Breakthrough Innovation

Not a Product but a System. The LEGO Group’s breakaway success grew out of its ability to see where the toy world was heading and get there first. The company’s first farsighted move came when it bet on plastic toys and the future of the brick. The second came when LEGO had the insight that it must evolve from producing stand-alone toys to creating an entire system of play, with the brick as the unifying element.

Long before the first computer software programs were patented, LEGO made the brick backward compatible, so that a newly manufactured brick could connect with an original 1958 brick. Thanks to backward compatibility, kids could integrate LEGO model buildings from one kit with LEGO model cars, light pylons, traffic signs, train tracks, and more from other kits. No matter what the toy, every brick clicked with every other brick, which meant every LEGO kit was expandable.

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He [Godtfred Kirk, CEO of LEGO] eventually identified six features, which he called the company’s “Principles of Play” and issued to every LEGO employee:   

1. Limited in size without setting limitations for imagination   
2. Affordable   
3. Simple, durable, and offer rich variations   
4. For girls, for boys, fun for every age   
5. A classic among toys, without the need of renewal   
6. Easy to distribute.

Tighter Focus Leads to More Profitable Innovation. When Godtfred bet on the brick, he opted out of producing wooden toys. Dropping the toys that accounted for 90 percent of the company’s product assortment could not have been an easy decision. But Godtfred believed that too many options could overwhelm a nascent effort to create a new kind of play experience—that, in fact, less can be more. Channeling his company’s limited resources in just one area, the plastic brick, could lead to more and more profitable products getting to market.

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To protect the System’s integrity, he [Godtfred] limited the range of different shapes and colors of bricks that LEGO produced.

Source: Brick by Brick. How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (2013) by David C. Robertson.