The LEGO Experience: What You Should Know About Innovation and Creativity

Many people perceive creativity as something separate from the company, its policies and goals. This approach does not lead to anything good: a short-term rise is replaced by a sharp decline in sales and popularity. By looking at the Lego example, there are some valuable lessons to be learned about innovation and creativity.

The design team locks up in a closed room, fences off the company, and comes up with an idea that will appeal to a client or project manager. Creatives come up with bright ideas, but they don't know what the company really needs. Then it turns out that the latest innovations, for all their attractiveness, have brought the company into another crisis. Can such unsuccessful innovations and ineffective creativity be avoided? You can, but for this you have to change the very process of creating new ideas.

Many companies do not pay enough attention to innovation and creativity, although it would seem that companies such as BT, Microsoft, Starbucks, Xerox, Yahoo and others have proven that innovation in design is the key to success.

Over the past century, there have been many cases of companies overcoming crises through innovation and creativity. But a creative approach in business should be much broader than a closed brainstorming of a team of creatives who have no idea about the company's problems, its goals and further development plans.

Innovation must be global, touching not only products, but also the very structure of the company. The result is a new production process, which creates new products - both creative and meeting the needs of the business.

An interesting example of this change is LEGO, a world renowned toy manufacturer. If you look at the company's crisis that lasted from 1993 to 2004, you can answer two main questions:

Can creativity and innovation help a company in times of crisis?
Is the new development model with an emphasis on innovation and creativity applicable to other companies?

The birth of a giant toy company

The Danish company LEGO was founded in 1932 by Ole Kirk Christiansen, whose small carpentry business collapsed due to a lack of timber supplies.

Christiansen switched to making wooden toys, then bought a plastic injection machine and started making plastic toys that sold well. After the death of the first owner, the company passed to his son, Kjeld Kirk Christiansen.

The production of LEGO plastic "bricks", the construction set we are used to, was launched 56 years ago, in 1958.

The company now has about 5,000 employees worldwide, more than 12,500 warehouses and 11,000 suppliers. In addition to the main base at LEGOLAND, the company's production sites are located in Sweden, the Czech Republic, the USA and South Korea.

The LEGO design team consists of 120 people in Denmark and 15 designers from Slough in the UK. However, this was not always the case. From 1993 to 2004, the LEGO company experienced two serious crises, but still remained afloat and even more.

Hard times LEGO

Until 1993, LEGO faced general sales problems, but did not experience major problems as overall sales and revenues continued to rise.

And after a difficult period between 1993 and 2004, sales rose again and generated £ 163 million in net income in 2008. In the UK, sales increased 51% and market share increased from 2.2% to 3.3%.

Between 1993 and 2004, the company faced two major challenges. The first one showed up between 1993 and 1998, when LEGO toys were already in all stores and the company began to grow.

To maintain constant growth, the company produced more products, but sales did not increase. Because of this, expenses increased, and profits, respectively, decreased.

The company suffered losses, followed by a wave of layoffs: a new job had to look for 1,000 employees. Kjeld Kirk Christiansen retired, saying that "maybe he is not the right person to lead the company in the next generation."

LEGO's new president, Paul Plugman, understood that the company needed to innovate. After analyzing the market and consumers, he found that children are getting smarter, the market is filled with serious competitors like toys from "R" Us and Walmart.

In addition, many toy stores have moved production to China in order to reduce its cost, so it will not work just to raise the price of construction toys - they will not withstand the competition.

Innovation outside the company - the company outside the business

Because the company was built on innovation to meet consumer expectations and market demands, LEGO responded to the financial crisis with a new product, hoping it would open up new opportunities.

LEGO has partnered with other toy companies based on famous films such as Star Wars or Harry Potter.

The company began to produce new construction sets based on famous films, and it was the popularity of the films that attracted children, not the LEGO construction set as such.

Some of the products, such as the Star Wars construction set, made a great hit in the market and helped the company survive, others were huge flops, such as Galidor.

Although LEGO turned to innovative thinking, the new products did not solve the company's problems, because they were liked by consumers due to famous films and cartoons, and not because of the LEGO constructor itself.

Themed products had short-term success: when interest in the film waned, toys were no longer bought. After LEGO invested in innovation, the company was out of business.

Moreover, new products reduced the proportion of original LEGO construction parts that also had their fans.

So creativity and innovation were the reason for the second fall of the company in 2003. After the popularity of "Star Wars" and "Harry Potter", the two main themes of new LEGO products, passed, sales plummeted.

Of course, LEGO's main problem was not innovation, but its disconnection from the company's business goals. The conclusion follows from this: when innovations get out of control and no longer fit the overall strategy of the company, a rift arises between business and creativity, which leads to inevitable losses.

A new approach to creativity and business

To summarize how LEGO solved its sales problems, it’s like they’ve started thinking internally again.

They returned to their traditional themes like racing cars, police stations and schools. These toys allowed children to use the same parts over and over again.

When buying a new LEGO set, you can simply add it to the old one and the pieces will fit. This is a key point in LEGO marketing and something that customers really love.

So, LEGO overcame the crisis by returning to the traditional building blocks. But before embodying this solution, innovations were introduced into the production process itself.

Unlike many companies that come up with concepts in a closed room, LEGO has come to be creative not only in the products, but also in the production process itself

Design for business

LEGO is one of the few companies that clearly understands the importance of creativity in an organization. The company has introduced a new design development model known as design for business.

This model is designed to link innovation with the company's business plan, creativity and design with the organization's strategy and its corporate goals. This approach tightly connects different teams, which also helps to improve the innovation process.

The set of tools and techniques used in "design for business" can be divided into innovation-related and design-related. Design is the link between innovation and creativity.

So, one LEGO problem has been solved by re-linking design with innovation more effectively. But there was still another problem for the company - the gap between the marketing strategy and the creative team. This gap was the reason for the next fall of the LEGO company in 1990.

Shared vision of LEGO

Design for Business was part of a seven-year strategy called Shared Vision, launched in 2004. The new vision was to stop positioning the brand as a production of creative toys, and come up with something new. The marketing department was asked to create a broader vision of innovation and creativity in the product development process.

This vision served to ensure that both parties - business and creative - would pursue the same goal and fully understand the company's business strategy. By combining business and creativity, employees learned to achieve strategic goals using the resources of another team.

While LEGO was struggling with this problem, many companies did not take design and creative ideas into account in their business strategy. Perhaps this problem was so urgent for LEGO because the company is focused on originality and creativity.

A shared vision strategy tied business and creativity together. The company's creatives were released from their sealed room and briefed on the business goals to be achieved.

The shared vision strategy is designed for 7 years, but already now it has a positive effect on sales and profits. In 2006, LEGO was named the world's sixth largest toy manufacturer with £ 717 million in revenue. In 2006, the company earned £ 123.5 million more than in 2005, increasing profits by 6.5%.

Conclusion

The story of LEGO can be inferred for any company with a commitment to creativity, design and a constant need for innovation.

You can't cut off designers and creatives from the business by locking them in for brainstorming and not giving an idea of the company's strategy

A clear understanding of where the company is heading and what goals it pursues will give the creative departments of the company the right direction for work, and the company itself - smooth development and increase in profits.