Unable to compete for children’s attention in a world of videogames and PlayStation, LEGO had to transform itself into a new streamlined global company. Alongside selling off a 70% share of the LEGOLAND parks, laying off 1200 people and outsourcing some of its manufacturing, it has used the internet to change the way it develops its products. Since 1984, LEGO had been working with MIT’s MediaLab to integrate play into both the real and the emerging virtual worlds. By the end of the 1990s intelligence became an integral feature of the wider LEGO product range and simple robot technology was introduced into the portfolio.

Embracing the internet, in 2002 LEGO launched LEGO Direct and then LEGO Digital Designer which sowed the seeds for the largest children’s membership community in the world. By 2004 Lego.com had over 5m visits a month as children from all over the world started to share their creations. LEGOfactory.com was launched and grew into a full online design and customisation channel that allows fans to compete against each other to design the next LEGO kit. This channel now produces many of the thousand’s of customer designed LEGO sets introduced each year and the company has pushed much of its incremental innovation activity into the community.

One feature of this community is the 40,000 ‘Adult Fans of LEGO’ who now account for about 5% of LEGO’s sales. It was with this group that, in 2006, LEGO co-developed a new version of its MINDSTORMS product and, in so doing, put its’ customer centric approach firmly on the global innovation map. One hundred external software engineers, teachers, architects and engineers worked virtually with LEGO to create a new product that was a step forward for the market. MINDSTORMS NXT has been a huge hit and has grabbed much media coverage, even making the front of Wired magazine.

In the last year LEGO has continued to innovate with new products and online services. Alongside the evolution of product ranges linked to franchises such as Star Wars, Harry Potter and Batman, it has introduced new versions of its own BIONICLE range of fantasy underwater inhabitants that can be controlled by the Ninetendo Wii. LEGO has transformed the way it innovates. It has become the leading example of co-development with customers and is now launching over 300,000 different LEGO sets each year.

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