Citations › Source ID: 12

C61. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 267-268.

LEGO has gone out of its way to recruit what some call “T-shaped people.” The vertical leg of the T represents expertise in one particular area, while the horizontal bar signals a breadth of knowledge across multiple disciplines. This potent mix of depth and interdisciplinary skills increases the likelihood that T-shaped people will solve wickedly difficult problems, something that LEGO designers encounter all the time. Today, the vast majority of the LEGO Group’s developers share the same depth of competence: they are abundantly creative when it comes to inventing with and for the LEGO brick.

The LEGO Group seeks designers with both a breadth of skills and depth in specific areas.

C62. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 22.

After returning home, he spent several weeks working out the attributes that might define a viable system. He eventually identified six features, which he called the company’s “Principles of Play” and issued to every LEGO employee:

   1. Limited in size without setting limitations for imagination

   2. Affordable

   3. Simple, durable, and offer rich variations

   4. For girls, for boys, fun for every age

   5. A classic among toys, without the need of renewal

   6. Easy to distribute.

Godtfred established 6 principles of play to determine how to create a system of toys. Notably "5. A classic among toys, without the need of renewal"

C89. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 263-264.

THEY CALL IT THE “BIG BANG.” the moniker refers to a homegrown LEGO theme that’s built around an arresting story, one that shows a high potential for creating a worldwide sensation and generating lucrative revenue streams from the Web, television, and spin-off products, just as Bionicle had done for the better part of a decade. A Big Bang is also a big bet. LEGO launches a Big Bang line about every other year, and when it does, nearly every unit within the company, from manufacturing to logistics, marketing, IT, and beyond, goes all out to get behind the line and deliver a hit

The LEGO Group launches a 'big bang' theme every other year.

C90. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 255-256.

Howard enlisted a wider circle of LEGO designers and engineers to develop and perfect the line’s two most prominent, “never seen before” innovations, the die and a tiny LEGO man called a “microfig.” Designed to fit a single LEGO stud when placed on a game board, the microfig is an armless character that has the same knobby feet, stud-topped head, and facial expressiveness as its bigger sibling, the minifig. Because of the component’s prominence, its design went through eight major iterations before the final production microfig was fully born.

“We did rounds and rounds of challenge sketches,” said Howard. “And then when we thought we had it right, we found the decoration machine needed the figure to have slightly bigger feet. We had to battle with the engineers over tenths of millimeters to end up at a place where the feet were big enough for the machine to grab on to but still small enough to retain the figure’s proportions. It was fine-tune, fine-tune, fine-tune.”

It took a long time to fine-tune the design for the Microfig (Part 85863).

C91. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 237.

What’s certain is that Universe’s failure and Minecraft’s success demonstrate that to create a low-end disruptor, it’s far more effective to put a tight lid on resources, free the development group from outside distractions, kick the product into the market before it’s completely “finished,” learn from customers’ feedback, and make improvements in real time.

The LEGO Group struggled to innovate in new markets, largely due to the unwillingness to release imperfect products.

C92. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 195-196.

Hassenplug was disappointed to find that the proposed kit lacked a 90-degree joint. On a piece of paper, he sketched out a small L-shaped joint, which would enable Technic beams to be connected at right angles in one seamless move. Without it, he argued, it would take an unwieldy combination of seven Technic beams to do the same job. Lund loved the idea but told them he couldn’t make it happen. The company’s internal FMC targets wouldn’t allow it, he explained to the MUPs. The cost of building a new injection mold to manufacture Hassenplug’s proposed piece would put Mindstorms over its budget.

...

While investigating other options, Mindstorms designers discovered that a mold had long ago been developed for an L-shaped Technic piece that precisely fit their needs. Lund had easily obtained permission to add the piece to the assortment. The community dubbed it the “Hassenpin.”

A LEGO Mindstorms beta tester advocated for a part to make it easier to create 90° connections. 3×3 L-Shaped Connector w/ 4-Pins (Part 55615) is now sometimes referred to as the "Hassenpin".

C93. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 157-158.

Bionicle was far from an overnight success. It took nearly five years and many trial-and-error experiments to bring the line to life. The toy evolved from an idea to a real-world product largely because its development team was tenacious enough to keep grinding away at a challenging problem: how to keep kids who had outgrown LEGO System sets (such as City) from abandoning the LEGO brand before they were old enough and skilled enough to take on the more challenging LEGO Technic line of products.

Bionicle was designed to keep kids engaged and bridge the gap from System to Technic sets.

C94. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 157.

The core of the Bionicle building platform, and a defining characteristic of the toy, was the newly created ball-and-socket connector. With this mechanism, a character’s leg was topped off with a ball-shaped joint, which could be inserted into the hollow socket of the character’s hip. The leg could then be easily rotated. For the first time, boys could build LEGO figures that featured fully articulated heads and limbs, which added a degree of realism that couldn’t be found in more static plastic beings such as the minifig. This multibillion-dollar breakthrough put the “action” into this buildable action figure and ushered in a swarm of knockoffs from the likes of Mega Bloks and Hasbro. Thus the Bionicle building platform took the System of Play in a new direction while at the same time remaining faithful to it.

The Ball and Socket was introduced alongside Bionicle.

C95. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 196.

Full-spectrum innovation begins with a product platform that’s sturdy enough to support a broad range of complementary innovations. In 2005, Knudstorp had two very different models to learn from: Bionicle and Galidor. Both themes attempted to create complex story lines, rich play experiences, and a broad array of revenue streams. While Galidor, with its limited building experience and underwhelming story, was an expensive failure, the Bionicle platform was entirely different.

Comparing the success of Bionicle and the failure of Galidor.

C96. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 155-156.

With its vibrant story line and rich universe of characters, Bionicle was also the company’s first successful, internally developed intellectual property, or IP. In a very real sense, Bionicle was the LEGO Group’s own, homegrown Star Wars, and it let LEGO take on the role of licensor and put the brand’s imprimatur on a plethora of products. Bionicle-crazed boys could snag a simple Bionicle toy with a Happy Meal (from McDonald’s), kick around in Bionicle sneakers (Nike), retrieve a Bionicle video game from a box of Honey Nut Cheerios (General Mills), show off their favorite brand with Bionicle lunchboxes (DNC), amp up their cool factor with Bionicle T-shirts, sneakers, and backpacks (Qubic Tripod), and dream their Bionicle dreams while tucked into Bionicle-themed bedding (Dryen). Because LEGO invented the Bionicle IP, all the royalties from the sales of all that merchandise flowed back to the company’s coffers.

Bionicle was the first LEGO IP with a strong enough story to support a vast selection of licensed products.

C97. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 153.

The Bionicle story actually arcs back to the summer of 1999, when a development team from LEGO visited the offices of Advance, a Copenhagen-based advertising agency, with a concept for a decidedly different line of LEGO toys. Initially titled Voodoo Heads, the line of exotic action figures was to be targeted at what industry insiders call the “craze category”: flash-in-the-pan toys that strike it hot for a season and then flame out. The plan was to package Voodoo Heads in plastic canisters and sell them for less than $10.

Voodoo Heads was the name given to the product line which evolved into Bionicle. - Ball Joint w/ Axle Hole, 1-Side (Part 32474) was internally called a "Voodoo Ball".

C98. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 151.

"Bionicle is the toy that saved LEGO."
—Jørgen Vig Knudstorp, CEO, the LEGO Group

C99. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 118.

At every step, Knudstorp changed many of the artifacts—facilities, offices, tangible awards, and recognition—that together constituted the most visible aspects of the company’s cultural fabric. That meant creating physical changes that held people accountable for their results and the organization’s performance. After a first round of layoffs in 2004, he shuttered offices and moved the remaining associates into far tighter quarters. His reasoning: half-empty office space gave people a sense of abundance. At a time when LEGO was bleeding losses and starving for resources, he wanted people to have a sense of scarcity.

To help turn the company around, Knudstorp created an environment of scarcity.

C100. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 116.

At the same time, designers had free rein to create, so long as they kept within the FMC’s parameters. In a very real sense, they were forced to innovate inside the box. It was expected that designers would devise pieces that required new molds, since those elements would make, say, a LEGO City police station fresh and exciting. But such specialized pieces had to be really special—something that would light up the entire set. At the same time, the FMC frame ensured that designers would tamp down the desire to create lots of cool-for-cool’s-sake pieces and instead find creative ways to make more out of universal pieces. As a result, on average, at least 70 percent of every LEGO set, whether it’s a LEGO City box or a new play theme such as Ninjago, is now made up of standard, universal bricks. Or to put it another way, 70 percent of the bricks in a City line are used in radically different sets such as Ninjago, and vice versa. This allows LEGO to reap enormous cost savings by not having to produce more molds for “uncommon” elements.

After the belt-tightening in 2004, designers were pressured to keep specialized parts to a minimum, with "70 percent of the bricks" in a given set being "universal pieces" which are used across many themes.

C101. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 114-115.

Beginning in the late 1980s, every LEGO development team, when it began work on a new project, was assigned a full manufacturing cost (FMC) for producing the set. The FMC totaled the entire spectrum of the set’s costs—acquiring the raw materials, molding the bricks and other pieces, producing building instructions, packing and packaging the assortment of pieces, even the injection molding machine’s depreciation. No development team was permitted to exceed its FMC; if it had, it would have eaten into the company’s margins.

In the go-go years of the late 1990s, however, the LEGO Group’s management allowed developers to untether themselves from the FMC’s limits. The consequences were disastrous. Freed from the FMC’s constraints, designers concocted more and more of those specialized pieces. Designers didn’t simply decide to go wild. They were spurred by management’s insistence that they devise increasingly esoteric models, such as Galidor, Jack Stone, and LEGO Explore, which required radically different components.

Full Manufacturing Cost (FMC) is a framework to ensure all sets have a chance at profitability.

C102. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 113.

A mold for a standard LEGO piece costs anywhere from $50,000 to $80,000; over its lifetime, it will spit out some sixty million bricks. The cost of making the mold, spread out over all those bricks, is essentially zero. But when designers concoct a specialized piece and LEGO manufactures just fifty thousand of them, the molding cost rises to as high as $1 per piece. Including just a few of these specialized pieces, as LEGO did with unrelenting frequency during the Plougmann era, can potentially kill a LEGO set’s profit potential.

This is not to suggest that specialized pieces are bad. Far from it. LEGO Indiana Jones would never feel real without Indy’s whip; LEGO Board Games would never spring to life without their unique dice. But there’s no denying that specialized pieces are costly to produce, and their proliferation was a prime reason why the LEGO Group’s profits plummeted through much of the 1990s, despite steady sales.*

Moulds are very expensive to produce, which is why specialty parts can significantly increase production costs for sets with rare parts.

C103. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 113.

In just seven years, from 1997 to 2004, the number of elements in the company’s inventory exploded, ascending from slightly more than 6,000 to more than 14,200. So did its range of colors, which climbed from the original six (red, yellow, blue, green, black, and white) to more than fifty. As the number of components and colors mounted, soaring supply and production costs plundered the company’s bottom line.

...

Having launched a painstaking review of each of those 14,200 pieces in the LEGO universe, the Design Lab found that 90 percent of new elements were developed and used just once. And many components were duplicates. Among the dupes were eight minifig police officers and six minifig chefs, with barely decipherable differences between them. The Lab dealt with the redundancies by slashing the total number of components by more than 50 percent.

90 percent of elements produced in 1997-2004 were used just once.

C104. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 113.

A standard brick with two rows of four studs delivers a profit to LEGO that is orders of magnitude greater than any specialized element, all because the brick is what LEGO calls a “universal” or “evergreen” element that can be used in so many different sets. A one-of-a-kind, specialized piece, however, generally works in just one or a few sets. Moreover, the cost of molding a standard brick is orders of magnitude cheaper than producing a specialized piece.

Parts which can be used across wide range of sets are called "universal" or "evergreen".

C105. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 109.

Ovesen also inaugurated a near-term, measurable goal that consisted solely of a number: 13½ percent. He established a financial tracking system dubbed Consumer Product Profitability (CPP), which measured the return on sales of individual products and markets. CPP gave LEGO an unimpeded view into where it was losing and making money. To survive, any existing or proposed product should demonstrate that its return on sales would meet or surpass that 13½ percent benchmark, which was based on the company’s analysis of its competitors’ earnings and its expectation of what a premium toy brand should deliver.

13½ percent - The profit margin that Knudstorp set and expected every product to hit.

C106. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 69.

“They didn’t know where they made money. They didn’t know if they made money on the product side. They didn’t know product profitability. They did know the LEGOLAND parks were a cash drain, but they didn’t know why.”
--Jesper Ovesen

One of the main failures leading up to 2004 was the lack of good data.

C107. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 62.

From the birth of the brick until the early 1990s, LEGO innovated around two core areas: construction-based play with the LEGO System and figure-based play with the minifig.

Core areas of brick-based and figure-based play.

C108. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 57-58.

After several months of brainstorming ideas, the team came up with a building system where kids could snap together exotic plastic parts to create weird fantasy creatures, such as a caterpillar with webbed feet and an alien’s head. The system allowed for a very LEGO-like, free-form style of play. Kits came without instructions, harking back to the days of classic LEGO. Parts from one kit could seamlessly connect with parts from another kit, just like bricks. Except for one thing: there was no LEGO brick. The kit was made up of wholly original, snap-together pieces that eschewed the LEGO stud-and-tube coupling system. The team called the concept LEGO Beings. The idea was too outlandish to be commercialized, but it did give design leads tangible evidence that they could break out of the LEGO System of Play. What’s more, LEGO Beings became the genesis of one of the LEGO Group’s biggest bets of the new century.

LEGO Beings would eventually inspire both Galidor and Bionicle.

C109. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 48.

Ciccolella and his brand development team sought nothing less than the total transformation of LEGO from a toy to an idea, declaring that the company “will build businesses wherever our idea can be translated into unique concepts.” He also issued the brand statement “Play On,” which drew on the English translation of the LEGO name, “play well.” No doubt the “Play On” slogan reflected the company’s desire to keep kids playing with bricks—and buying bricks—through childhood and beyond. Writing in the new LEGO branding manual, Ciccolella’s image makers decreed, “PLAY ON is the ultimate expression of the LEGO brand.”

"Play On" was the phrase given by Ciccolella in the free-wheeling era where they aimed to transform "LEGO from a toy to an idea", and nearly bankrupting the company in the process.

C110. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 36.

By melding minifigures with themed sets, Kristiansen created a far more immersive play experience. Kids treated their minifigs as analog avatars, imagining themselves as knights or astronauts as they built entire worlds out of bricks. The combination of storytelling (through themes) and role-playing (through the minifigs) electrified a new generation of kids and sparked a period of dramatic expansion for LEGO.

Describing the minfigures as "Analog Avatars".

C111. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 21-22.

Long before the first computer software programs were patented, LEGO made the brick backward compatible, so that a newly manufactured brick could connect with an original 1958 brick. Thanks to backward compatibility, kids could integrate LEGO model buildings from one kit with LEGO model cars, light pylons, traffic signs, train tracks, and more from other kits. No matter what the toy, every brick clicked with every other brick, which meant every LEGO kit was expandable. Thus, the LEGO universe grew with the launch of each new toy.

Describing the LEGO brick as "Backward compatible".

C112. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 19-20.

Over the next decade, Godtfred continued to tinker with his “LEGO Mursten” (LEGO bricks). But the bricks still had problems bonding and often suffered from the “spring effect”—when you snapped two bricks together, they’d bind for a short time but then pop apart. Although LEGO continued to manufacture sets of bricks, they sold poorly, at most accounting for 5 to 7 percent of the company’s total sales in the early 1950s.

Sales of LEGO bricks accounted for 5-7% of sales in the early 1950s (before the introduction of the stud-and-tube principle).

C113. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 18-19.

In a first step, Ole Kirk and Godtfred, who in 1950 was named junior managing director of LEGO, modified British inventor Hilary Fisher Page’s “Self-Locking Building Bricks”—plastic cubes with two rows of four studs, which kids could stack into little houses and other creations—by altering the size of the bricks by 0.1 mm and sharpening the corners. The result was the “Automatic Binding Brick,” made out of cellulose acetate, which featured the little studs that top today’s LEGO brick but was hollow underneath.

LEGO brick design is just 0.1 mm different from Hilary Fisher Page’s “Self-Locking Building Bricks".

C114. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 19.

Although the “binding” bricks were stackable, they weren’t particularly sturdy once stacked. A child could layer the bricks into a wobbly house, but it took just a poke to crash the creation. Thus, retailers returned many Automatic Binding Brick sets unsold to LEGO.

Models created with Automatic Binding Bricks were not stable when stacked.

C115. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 25.

The original colors for the LEGO brick—the bright yellow, red, and blue—were sourced from the Dutch Modernist painter Piet Mondrian.

C116. BOOK: David C. Robertson, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown, 2013), p. 34.

Because it brought role-playing to LEGO and dramatically animated its kits, the minifig might well be the company’s most significant creation, second only to the brick.

The Minifigure is likely the second most important innovation.