Lego Innovates Designs

Recently, Lego has turned from a protective and inward looking company who threatened to sue builders who altered the designs of their kits to one that actively looks to its customers for new ideas.  They have just announced the first eight winners of their Lego Factory contest.  The designs were created using Lego’s 3D Designer Kit and will be produced and sold as kits (the winner receiving 5% of the revenue from sales of their kit). 

In an article in The Age, Joshua Gans looks at why Lego made the switch to allowing customers to participate in product design and how this phenomenon of manufacturers looking to customers for development ideas has gotten so popular:

In his book Democratizing Innovation, [Eric] von Hippel shows companies how this can be done. No stranger to innovation himself (he played a key role in the invention of the fax and the founding of Lotus), von Hippel considers the ways in which companies might access the ideas of users. Methods differ from industry to industry: from holding freewheeling conferences, to visiting customer sites to examine what they are doing, to offering toolkits.

3M conducted a systematic search for user-based solutions. Looking back it found that annual sales generated by one of these were eight times the sales of products developed traditionally. In a world where eight out of 10 new products fail, this is a significant change in the risk-return balance.

Google, following Apple's recent footsteps, has made it easier for tailored user-solutions. In its sidebar, Google allows developers to create little programs to provide specific internet or desktop searches. This follows on from Apple's Dashboard, which allows others to create similar programs. In contrast to Lego, the innovations of others fit with these products rather than become the intellectual property of the manufacturer.