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LEGO's Open Innovation Strategy Explained

The document discusses the role of technology in customer-centric business models. It notes that using technology strategically can help companies reach solutions and gain competitive advantages faster than competitors. However, technology alone is not enough and must be supported by effective business processes, training, and organizational infrastructure. The document also discusses Lego's use of an open innovation approach through a digital design app that engaged customers and reduced innovation costs. Contest winners through this app had their designs turned into real Lego sets and received royalties on sales.

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Palash Jain
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53 views3 pages

LEGO's Open Innovation Strategy Explained

The document discusses the role of technology in customer-centric business models. It notes that using technology strategically can help companies reach solutions and gain competitive advantages faster than competitors. However, technology alone is not enough and must be supported by effective business processes, training, and organizational infrastructure. The document also discusses Lego's use of an open innovation approach through a digital design app that engaged customers and reduced innovation costs. Contest winners through this app had their designs turned into real Lego sets and received royalties on sales.

Uploaded by

Palash Jain
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Whats the role of technology in customer centric business model

Gaining a competitive advantage

by using technology in a smarter way companies can reach to solutions


quicker than their competitors which help in gaining a competitive
advantage bur technologyalone cannot drive change and success. Technology
has to be supported by proper business processes, proper training, and
the proper organizational infrastructure to enable it makes the desired
impact.

Open innovation approach

Open Innovation was defined as the use of purposive inflows and outflows
of knowledge to accelerate internal innovation, and expand the markets
for external use of innovation``

Reduction in the time and cost of innovation projects

Access to Virtual warehouse

Lego created an app Lego digital designer to implement open innovation


wherein everyone could make there own models or tweak and modify past
models

During its Beta phase, LEGO Group sponsored a contest to better understand
the types of models that consumers would design using LDD. The contest
lasted for 11 weeks and 8,000 models were custom designed. Ten models were
voted by consumers and LEGO Master Model Builders to become real LEGO sets
available exclusively through the company's Shop-at-Home division.
Contest winners, whose ages ranged from 9 to 38, will receive royalties
based on sales of their winning designs
Question 2
Challenges

Too many different layers and departments with overlapping functions

There are a number of different things that have caused the sales of Lego blocks to suffer a
setback, but the cause of these problems can probably be traced to the success that Legos
has had in the past. Right now the company’s structure has been designed to create a
company that was able to deal with double digit sales growth. The problem is that with sales
starting to decline, the company now finds itself with too many different layers and too many
departments that have overlapping functions.

Struggling to react to trends of the market

The company’s current structure makes it harder for their product mangers to implement
product strategies. The company is also struggling to react to the trends that they are seeing
in the marketplace. Finally, the way that the company is organized keeps the product
managers too far away from their primary customers: the retailers who sell the plastic blocks.
Lego understands that they have made a mistake and that their organization as it currently
stands is going to make it difficult for them to realize their growth potential.

Workforce distracted by other toys and activities

The fundamental problem that the Lego product managers are currently facing is that their
end customers, children, are having their attention distracted by other toys and activities.
The problems that Lego is facing are not unique to them – other toy manufacturers like Mattel
are facing exactly the same set of challenges. Today’s children like to be distracted by playing
video games or watching countless videos on YouTube. The response to these types of
challenges has been that the Lego product managers have tried to find ways to modernize
their toys for the digital age

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