“Experience is a master teacher, even when it’s not our own.” ― Gina Greenlee
As a child, we all have played with Lego blocks and it is amazing to see how this game of building blocks has sustained its charm for several generations. In the last few years, the Danish Lego Group has achieved tremendous growth to become one of the world’s largest toy manufacturers.
There are several lessons that product development can learn from the history of the Lego group and how it survived and reinvented itself several times from a small wooden toy manufacturer to one of the world’s widely recognized toy companies.
Lesson 1: How to stand out in the market
When the Lego company launched its first blocks products, they were not the only company offering such a product. Similarly, when you launch a product, there is a chance that the marketplace is already saturated with the product(s) offering similar features or capabilities. Now let’s see how Lego was able to penetrate the market start — Lego came up with a small innovation. They added a minor feature in each block set by adding pins at the bottom that allowed their blocks to fit well to provide better stability.
The same strategy can be adapted by product managers on focusing on one key feature and it can help in market validation. It need not be a breakthrough innovation as the sometimes small minor feature(s) can be a deal-breaker.
Key takeaways — Continue building your core strength, find your target market segment, follow them and solve their pain points.
Lesson 2: It’s all about creating a niche for yourself
After Lego’s patent expired, they lost their competitive edge as every company started producing blocks with bottom pins. This possessed a real threat to their leadership position as there was no competitive edge. However, they continued with their core offering without pivoting it too much. They added bright colours in their blocks as other companies used to offer only basic white and grey coloured blocks.
This is true in the technology market when a company establishes itself in the market, many other companies join the bandwagon. This is a common phenomenon as today’s technological innovation becomes tomorrow’s base offering.
So, when your product’s competitive offering is no longer unique, you should continue enhancing your offering by adding delighters without losing your core offering. Remember Amazon started as a book store, eBay used to offer only collectables, but they continuously worked on enhancing capabilities to increase the value proposition for their customers.
Key takeaways — Create differentiator for yourself, do not try to grow wide and tall at the same time.
Lesson 3: Managing Demand and Supply in the technology market
In the ’90s, Lego signed a deal to offer Star Trek Licensed set. This was one of their most successful offerings as star trek Lego sets became a huge hit. Customers from all over the world wanted to purchase this set as star trek movies were popular among all age groups. However, this successful product didn’t have a smooth ride as the Lego company didn’t anticipate the demand properly and soon customers were leaving shops disappointed as there were not enough star treks Lego sets in the market.
Let’s see how is this applicable to the technology market? Quite a few times, consumers have faced their favourite product is not accessible or taking ages to load. This is quite common when many start-ups apply growth hacking techniques to multiply their customer base but fail to focus on basic hygiene factors like scalability, operability etc.
Key takeaways — Focus on growth only after meeting basic hygiene factors of a successful technology product — non-functional requirements.
Lesson 4: How to strengthen your market position
After some hiccup’s, Lego was able to establish itself as a market leader. However, they continued to reinvent their offerings by adding more and more merchandised products and new product lines like Lego Mindstorms. These offerings opened a completely new segment for them as amateur engineers flocked around this new product line to build remote-control creations. Also, they were able to strengthen their brand by producing successful Lego movies.
This shows how a technology product company should continue product discovery journey by engaging with their customers. This is the stage that Jeff Moore called “The Main street” in his book “Inside the Tornado” — stage after a company is established as a proven leader. So, when you are established as a leader — Focus on keeping yourself ahead of the competition by improving customer engagement and collaborative development.
Key takeaways — Use customers as proof to win new markets and segments.
Lesson 5: How to win new markets
In 2008 Lego decided to gather global data about who buys Legos and found that 90 per cent of Lego sets in the US were sold were to boys. They identified that there is a huge untapped market for girls. After four years, they launched Lego Friends and launched it as a new line designed for girls.
For technology product companies, there will be always some opportunities to split up their customer base into separate categories, without much overlap. This will provide untapped opportunities for growth with little or less risk.
Key takeaways — change in marketing or product re-positioning helps in winning new accounts.
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