The entrepreneur always searches for change, responds to it, and exploits it as an opportunity. Great thoughts by Peter Drucker. Have you done any recent reading or research on crowdsourcing design? What about the Lego innovation fund? We follow these topics quite closely and have written several blogs on them.
It is not just for new entrants challenging established players; the latter can also leverage crowdsourcing and social fund to their advantage, enabling users to design new products and testing the demand at the same time.
Check out our thoughts on building innovation.
Before we continue, let me ask you a question.
What works best for the innovation process in your business? We would love to hear what it was. Would you do us a favor and post it in the comments section below? Be the one who starts a conversation.
With the advent of the Internet, the number of crowdsourcing options available to both budding and experienced entrepreneurs has become staggering.
And for the younger generation, crowdsourcing is simply a normal way of doing things. That’s the key lesson I learned this morning as I heard my grandson explain how Lego created his Lego Minecraft set.
Social fund … the Lego Crowdsourcing Objective
Lego has become a mammoth of the toy industry, but a nimble mammoth, one that seems quite able to adapt to the climate change of product design in the age of crowdsourcing.
After prototyping, testing, and refining their concept for three years in Japan, Lego has recently gone global with the beta version of its Cuusoo crowdsourcing platform. Their simple objectives were to increase the number of product ideas while improving customer engagement.
Their Crowdsourcing Business Model
The business model is simple: any user can submit a product design, which other users will be able to vote for. When a submission racks up 10,000 votes it gets a formal stage-gate review and – unless legal flaws or other showstoppers are identified – it moves into production.
The idea creator receives a 1% royalty on the net revenue.
It is too early to say how many voted-for submissions will fail the internal stage-gate review, but if Lego manages to provide clear feedback about submissions that fail, it will maintain the transparency of the scheme, which is essential to keep the user base engaged.
Related post: Generating Ideas by Convergent Thinking
Crowdsourcing design … the payoffs to Lego
Lego enjoys unprecedented benefits from this crowdsourced product development process:
A wider community for the ideation phase, which will inevitably turn up many more ideas than Lego’s own designers, however talented, could do.
In classic crowdsourcing fashion, the Shinkai 6500 submarine – the first project that emerged through this process – saw the Lego amateur designers reach out to the marine life science community for advice.
A very cost-efficient development phase, whereby unsuccessful projects cost nothing to Lego and projects that go into production attracts a very modest 1% royalty cost.
A virtually free pre-launch campaign through the voting phase that creates a buzz among the fan base and provides a clear metric on what the fan base wants to buy.
The bottom line
What we found most interesting in this concept is its simplicity. Making the simple complicated is commonplace … but making the complicated simple, awesomely simple is real creativity!
Lots of ideas are being generated and the process is definitely great at customer engagement.
The truth is that there is no one truth to innovation. Not IBM, Google nor Amazon has hit on the “right” way to innovate, but they have found the right way for them. It is how those practices have become so deeply embedded into the fabric of their organizations over time that makes the difference.
What’s important to consider is that when a task is automated, it is also democratized and value shifts to another place. So, for example, e-commerce devalues the processing of transactions but increases the value of things like customer service, expertise, and resolving problems with orders, which is why we see all those smiling faces when we walk into an Apple Store.
That’s what we often forget about innovation. It’s essentially a very human endeavor and, to measure true progress, humans always need to be at the center.
If you want to innovate, you need to find your own path.
We believe its success will generate more business experimentation in crowdsourcing. Lego deserves lots of credit and kudos for pushing the envelope.
