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Case Study

Innovation at the LEGO Group (B)

By David C. Robertson

25 pages

April 2008

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Reference: IMD-3-1979

The (B) case describes the specific steps that the LEGO Group took to improve innovation. They include: 1) Restructuring the company to make responsibility for each part of the business clearer. Each toy line was given responsibility for its own sales and profitability, and the Concept Lab, which before had lacked focus, was separated and charged with developing new ideas that were “obviously LEGO but never seen before.” 2) The definition of innovation was redefined through the LEGO innovation matrix. 3) A new stage-gate process was implemented. 4) A new way of working with external inventors and complementary product producers was integrated into the structure and process. 5) Users were involved in the development of new toys, in particular the new generation of LEGO Mindstorms. Through these and other activities, the LEGO Group dramatically improved its performance, returning to profitability in 2005 and achieving very healthy profits in 2007.

Learning Objective

How to restructure an innovation system
How to encourage all types of innovation (innovation in pricing, business model, channel to market, branding, customer experience, etc.) and coordinate these innovations across the company
How to involve external parties such as customers, complementary product producers, and external inventors in your innovation system

Keywords

Customer-driven, General Management, Innovation, Open, Product Development, Renovation, Turnaround

Settings

2003-2007

Type

Field Research

Available Languages

English

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Industry Information Technology

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