The lessons all entrepreneurs and start-ups can learn from Lego
November 14, 2014
How is it that so much fun can come from such little blocks of plastic? It has spawned movies and cartoons, a cult following among men and women of all ages and it has inspired people to careers such as architecture and building – what is it? Well, first of all in 2012 45.7 billion of them were manufactured at a rate of 5.2 million per hour and if you were to take six standard bricks the exact number of combinations you could build to would be 915,103,765.
Of course it has to be Lego – that little bundle of goodness that pretty much leaves you singing “everything is awesome” (yeah, I’ve watched the Lego movie!).
What are the five things we can learn from Lego when it comes to building a business? First a little lesson in history to set the scene. Lego was founded in 1934 by Ole Kirk Kristiansen and, like many of the world’s great success stories, has very humble beginnings. It all began when he made wooden toys (he was a carpenter by trade) and expanded into plastics in 1947. The word Lego actually comes from the Danish phrase leg godt. In 1949 Lego started to produce a new range of products and it was amongst this range that the now famous interlocking blocks came into being. The bricks were loosely based on the design of the Kiddicraft brick that was patented in the United Kingdom in 1939. By the time 1951 rolled around plastic toys accounted for more than half of Legos production line and in 1954 it was Kristiansen’s son Gofred who cottoned onto the idea of turning he bricks into actual toy systems. With minor adjustments the new modern Lego brick was patented in 1958 and by 1969 the groups Duplo products began to roll of off the line.
Aimed at younger children the Duplo system was a success and in 1978 the first minifigure rolled out and has since become a standard feature. In fact, so good are Lego with the release cycle of the product that new elements are introduced into each new set that comes out. It is one of the most popular toy products on the face of the Planet and the company is still owned by a member of the family. Some quick facts from Lego:
On average, every person on the earth owns 86 LEGO bricks!
In 2012, 45.7 billion LEGO bricks were produced at a rate of 5.2 million per hour.
The LEGO Group is one of the world’s largest tyre manufacturers.
Laid end to end, the number of LEGO bricks sold in 2012 would stretch round the world more than 18 times.To reach the moon you would need to build a column of around 40 billion LEGO bricks.
The first minifigure was produced in 1978. Since then more than 4 billion have been made – making it the world’s largest population group!
Each minifigure is exactly four bricks high without a hat.
The first version of LEGO MINDSTORMS was launched in 1998 based on a collaboration between the LEGO Group and MIT (Massachusetts Institute of Technology), USA. Two further versions have been released, one in 2006 and the latest in 2013.
So what are some of the five lessons we can all learn from Lego?
1: Innovation is key: like Lego entrepreneurs and business need to continuously innovate their products to keep up with market demand and, importantly, market trends. In one of our previous stories on Nokia I pointed out that unless you understand market trends then it’s not good enough to just innovate – you need to innovate for the market. It is the same with any business either service or product based.
2: Creativity in creating market appeal: Lego found a great marketing technique in 1978 when the first minifigures came out in so far as it didn’t only innovate on its then products it created a new pull factor by really humanising what it sold – the lesson being that you have to be creative in your thinking and have a look at what the consumer is looking for.
3: Know your consumer: one of the problems many company’s and businesses fail to understand is who their actual consumer is and in doing so risk failure. Lego builds products for a range of different consumers and has the ability to capture lifelong clients – which are always the best! Their products appeal to men, women and children of all ages. You can see that appeal in the marketing techniques they use which are very much based on empowering our inner child.
4: Expansion and diversification: Lego expanded but it was cautious expansion and not mass. In other words they very much decided to walk before they ran. While many retailers were quick to ruthlessly expand into markets they felt would be easy to enter and easy to operate in, Lego was more conservative. They now have 90 retail stores. Importantly Lego also diversified the business along lines that made sense such as theme parks and children’s clothing. The important lesson being, don’t stray too far from home!
5: Persistence: From the founder right through to his grandson the business was persistent in maintaining the original integrity of the product and its mission statement. Too often we engineer changes in our strategies at a rapid pace because we are reacting to events in the market that we believe will be detrimental to the business. What we should be doing is being preventative and mitigating risk so we don’t have to constantly change strategies mid-flight. In other words staying the course
Lego is an example of a product that was not an innovation on a pre-existing product – it was a true to life invention at a time when demand was huge. What they have done along the way is to innovate on the original invention thereby creating brand and client loyalty. They captured the “inner” child market.
That said, there is always a risk that a market disruptor could come along and change that market demand so much so it would put the business at risk. In actual fact that market disruptor has already occurred in so far as the use of technology has essentially changed the way we live work and play. The rise of technology could have led to less people wanting to play with traditional toy’s but, remarkably, Lego has survived.
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