The Lost LEGO: Rebuilding An Empire

Rather than try to bring every idea to market, they focused on what LEGO did best, building blocks in the traditional sense.

What does new product development have in common with Frank Lloyd Wright? Imagination, of course. So it seemed appropriate that the Product Development Management Association’s (PDMA) 35th Annual Product Innovation Management Global Conference was held from October 29th to November 2nd 2011 at the gorgeous, historical Arizona Biltmore Hotel, designed in 1929 by the illustrious Wright.

The use of the word management in the title of this organization always makes me cringe. It conjures images from the movie Office Space where employees sit in cubicles and stare at monitors all day. The PDMA squashes those images, however, by bringing together some the most innovative management directors in the country to talk about how to build, nurture and most importantly, manage the product development process.

In the business of innovation and new product development, I often forget it’s not all about idea people and innovators. It’s the management team who actually gets the product out into the marketplace -- oftentimes this is a thankless job. Needless to say, Michael Scott-like hacks didn’t presenting at PDMA, only forward thinking product developers willing to share their own successes and failures.

One of the best presentations featured The Wharton School’s Dr. David Robertson. Dr. Robertson was recently named LEGO’s Professor of Innovation and Technology Management -- how’s that for a title? He spoke about LEGO and how the company emerged from the brink of bankruptcy to once again become a leader in the toy industry.

Did I hear that correctly? LEGO almost went bankrupt? As the mother of two young boys, the LEGO franchise is ranked right up there with Santa Claus and I found it preposterous to think that such a wonderful, creative, imaginative, pioneering company could have been on the brink of bankruptcy.

As it turns out, LEGO had done a great job at innovation, partnering with outside companies, and hiring creative people from all over the world. But by 2003, the company was in financial trouble and needed to make dramatic changes. LEGO downsized offices, sold off a majority of shares in the LEGOLAND theme parks, and outsourced some production. It wasn’t enough, so they tried to make product innovation lean, and they got serious about how to do it.

LEGO didn’t need more innovation, but the company did need to set boundaries on what they would innovate. Rather than try to bring every idea to market, they focused on what LEGO did best, building blocks in the traditional sense. LEGO also developed an innovation matrix system, to determine what innovation would be needed when developing new products. The innovation matrix also helped when LEGO decided to restructure the company, and each department was given more freedom to achieve individual goals.

While the LEGO brand was amazingly innovative, the company needed a better way to execute that innovation and make it profitable. By refocusing and implementing innovation in a controlled and calculated way, LEGO was able to save itself from bankruptcy and emerge once again as the toy powerhouse of the world.

What LEGO did was not easy, but it was necessary. As many of you know, product development is not for the faint of heart. It is hard and it can be messy, but there are opportunities to limit failure at every turn.

The PDMA is also going through some evolutionary changes, as do most 40-year-old entities. The organization recognizes that with technology and new generations, product development also changes.

For those of you who have never attended the association event, or for those of you who haven’t experienced it in a very long time, it might be time to revisit this association and everything that it has to offer.

If you live in the world of new product development, this is a conference where you’ll find yourself in good company to share successes, failures, and ultimately strategies to improve.

Questions? Comments? Contact Louise Rainone: lrain1@pcdworks.com and visit www.pcdworks.com.

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