Skip to content
Support Us

We need your help now

Support from readers like you keeps The Journal open.

You are visiting us because we have something you value. Independent, unbiased news that tells the truth. Advertising revenue goes some way to support our mission, but this year it has not been enough.

If you've seen value in our reporting, please contribute what you can, so we can continue to produce accurate and meaningful journalism. For everyone who needs it.

Shutterstock/cjmacer

What a Lego professor says Irish startups can learn from the toymaker's resurrection

David Robertson thinks firms shouldn’t be too quick to move away from their core products.

IT MIGHT BE hard to imagine given the brand’s near-ubiquitous presence, but there was a time when Lego was on the brink of going bust.

It was 2004 and the family-owned business had just recorded a $400 million loss following the spectacular failure of several new toy products. Private equity firms were circling to try to pick up the company at a cut-down price.

The toymaker’s return to strength – it went on to record more than a decade of sales and profit growth before a dip last year – was a topic that David Robertson studied in depth as Lego professor of innovation at Switzerland’s Institute for Management Development.

He believes there is a lot small businesses can learn from the toy company, which is now six times larger than when it flirted with bankruptcy.

Robertson was given exclusive access to senior management and employees at the business while in the position, which was paid for by the grandson of Lego’s founder, so he could learn how the company fundamentally changed its innovation strategy.

Speaking to Fora, Robertson said the main lesson from Lego’s ‘rebuilding’ project was that companies shouldn’t be too quick to dive into the next big thing.

“They moved away too far from the brick and to video games and action figures, we didn’t want Lego to do that,” he told Fora.

NO FEE KPMG INSPIRE SERIES DAVID ROBERTSON JB1 Robertson (right) was speaking at KPMG's Inspire Series KPMG KPMG

Robertson said startups and SMEs that already have products on the market frequently fell into a similar trap of trying to create the next gamechanger.

He said an obsession with disruption and revolutionary innovation was feeding these “dangerous” business practices.

“Those big ideas are few and far between, they’re risky, can be expensive and often fail.

“I think it’s a much higher probability bet to say, ‘OK, let’s take our current product and let’s think about what else to do for our customer around that product to make it more compelling and valuable and useful for the customer.’

“Innovation should start with a respect for your current products. What made you great as a company? Well take that and build around it.”

To explain his point, Robertson highlighted a commonly “misinterpreted” innovation trick relied on by Steve Jobs.

Robertson said when Jobs developed the iPod, he wasn’t trying to disrupt the music industry. He wanted to create a product that would make the Mac desktop more useful.

“I think there is a huge misinterpretation of where Steve Jobs was looking for innovation – he was looking for innovation around his current product, not going in and asking how he could change the music industry.

“What happened with that is the iPod morphed into the iPhone and what used to be a relatively unimportant peripheral is now the centre of profits for Apple. They make a lot more money from the small screen than the big screen.”

Perils

A lot of Robertson’s lessons are based on the hard-won experience of Lego when it emerged from its financial woes – although the company’s growth was halted recently when it reported its first profit and sales declines since 2004.

“I think Lego is in an interesting situation, and it shows nothing lasts forever,” said Robertson.

“They are six times larger than they were at the beginning of their turnaround back in 2004. That’s wonderful, what company wouldn’t want to try a strategy that will make their company six times larger?

“But you have to think about what happens when this growth phase ends. And thankfully Lego, just like Apple with the iPod, has been experimenting with movies, theme parks and digital play experiences.”

While few companies have the budget of a multinational giant to dabble in new revenue streams, that isn’t necessarily a bad thing, according to Robertson.

He said businesses needed to put boundaries on their innovation departments or risk breaking something that’s wasn’t already broken.

“What I argue is that you shouldn’t be too quick to leave your current business and customer. Rather, you should respect them and innovate in ways that will make your product more valuable,” he said.

Sign up to our newsletter to receive a regular digest of Fora’s top articles delivered to your inbox.

Written by Killian Woods and posted on Fora.ie

Close
Comments
This is YOUR comments community. Stay civil, stay constructive, stay on topic. Please familiarise yourself with our comments policy here before taking part.
Leave a Comment
    Install the app to use these features.
    Mute John Mallon
    Favourite John Mallon
    Report
    Jul 16th 2014, 9:30 AM

    There is a fallacy that endured about the relationship between Apple and IBM. It arises from the 1984 ad that Apple ran depicting ‘Big Blue’ as the boring ‘Big Brother’ character in computing. IBM invented the PC after all and Apple were launching a totally different kind of PC with its Macintosh.

    But aside from the hardware designs on both, the true difference was in the respective operating systems with IBM opting to use Microsoft Disk Operating System (MS/DOS) and Apple writing its own O/S. From an Apple perspective therefore, the hated enemy was Microsoft and not IBM. Companies such as Dell, Compaq, Hewlett-Packard and many others set themselves up as clones of the IBM hardware and because Apple refused to license its O/S, MS/DOS and later Windows-based computers became the dominant machines taking 90% of the market.

    With the advent of the Internet and TCP/IP in particular, the OS became less important, hardware now includes Pads and Phones as well as Laptops and Desktops and mobility is the key word in computing. It’s thirty years since that ad in 1984 and everything has changed utterly so the partnership of IBM and Apple is far from strange today.

    22
    Install the app to use these features.
    Mute Steven Geoghegan
    Favourite Steven Geoghegan
    Report
    Jul 16th 2014, 8:49 AM

    Very powerful united

    14
    Install the app to use these features.
    Mute Frank
    Favourite Frank
    Report
    Jul 16th 2014, 8:49 AM

    Both working towards the chip in hand.

    http://www.youtube.com/watch?v=eob532iEpqk&feature=kp

    7
    Install the app to use these features.
    Mute Claire O' Connor
    Favourite Claire O' Connor
    Report
    Jul 16th 2014, 8:40 AM

    Sleeping with the enemy..

    6
    Install the app to use these features.
    Mute Frank
    Favourite Frank
    Report
    Jul 16th 2014, 9:10 AM
    3
    Install the app to use these features.
    Mute Goldberg
    Favourite Goldberg
    Report
    Jul 16th 2014, 8:50 AM

    The iNerds won’t like this – queueing up all night to buy the latest bug fix from big brother

    6
    Install the app to use these features.
    Mute Niall Condren
    Favourite Niall Condren
    Report
    Jul 16th 2014, 9:39 AM

    “This is about two powerhouses unleashing the power of mobility for business”

    The last time IBM unleashed the power of mobility they provided the Third Reich with tabulating machines and punch card technology which allowed Hitler to identify and round up the Jews with stunning precision.

    5
    Install the app to use these features.
    Mute Sean gilsenan
    Favourite Sean gilsenan
    Report
    Jul 16th 2014, 9:48 AM

    In fairness the have done a few other things since then.

    22
    Install the app to use these features.
    Mute Frank
    Favourite Frank
    Report
    Jul 16th 2014, 10:05 AM

    The history book on the shelf always repeats itself…

    http://www.huffingtonpost.com/2011/12/30/biometric-identification-_n_1177277.html

    2
    See 3 more replies ▾
    Install the app to use these features.
    Mute Niall Condren
    Favourite Niall Condren
    Report
    Jul 16th 2014, 10:40 AM

    Of course they have, that’s just the one that stands out to me,

    1
    Install the app to use these features.
    Mute nutzen cider
    Favourite nutzen cider
    Report
    Jul 16th 2014, 11:22 AM

    Tabulating machines don’t kill people, people kill people.

    9
    Install the app to use these features.
    Mute Frank
    Favourite Frank
    Report
    Jul 16th 2014, 11:47 AM

    nutzen cider

    ….Tools and technology can be used to make the killing of people far more efficient.

    3
    Install the app to use these features.
    Mute Jack Ripper
    Favourite Jack Ripper
    Report
    Jul 16th 2014, 10:04 AM

    That psychopath Steve Jobs must be rolling in his grave. He hated IBM and everything they stand for.

    3
    Install the app to use these features.
    Mute Éanna McClean
    Favourite Éanna McClean
    Report
    Jul 17th 2014, 1:04 AM

    I wonder what Microsoft’s Board makes of this….

    1
Submit a report
Please help us understand how this comment violates our community guidelines.
Thank you for the feedback
Your feedback has been sent to our team for review.

Leave a comment

 
cancel reply