It is rare for companies to generate consistent commercial hits from their customers’ ideas. In fact, customer-generated innovation efforts tend to be ad hoc or difficult to sustain.1 But when they succeed, they can create new sources of revenue, outcompete internally generated ideas, and create more loyalty among customers — which explains why business leaders continue to pursue this path for idea generation.2
The Lego Group has been one of the most widely researched and emulated companies for its open innovation achievements with consumers. A crowdsourcing pilot that Lego launched in 2008 evolved into Lego Ideas, a community of more than 2.8 million customers that has shared and debated more than 135,000 ideas for Lego sets and generated significant revenues for the company. The lucky few whose ideas are commercialized (like the top-selling medieval blacksmith set) get 1% of the product’s top-line revenue — often a life-changing sum. Meanwhile, popular ideas that are not selected as Lego products can get a second chance through a crowdfunding program on BrickLink, a consumer-led channel that Lego acquired in 2019.
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Our four-year study of Lego Ideas and BrickLink has uncovered fresh insights for managing open innovation platforms. Many open innovation initiatives start on the edge, as Lego’s did, and remain there. To create value over time, however, they need to be integrated into the organization’s core.3 We looked at how Lego involves customers in choosing hit products, provides an outlet for customers whose ideas are rejected, and enables customers to profit from their creations. Our findings could help business leaders strengthen their customer communities and keep members active in revenue creation, in part by integrating members into their product development and marketing operations.
Insight 1: Let Customers Find the Hits
Participants in the Lego Ideas community generate many more ideas than the Lego Group can implement. To winnow the field, customers vote for the best ideas in a multiround competition.
1. L. Dahlander and H. Piezunka, “Open to Suggestions: How Organizations Elicit Suggestions Through Proactive and Reactive Attention,” Research Policy 43, no. 5 (June 2014): 812-827.
2. D.W. Dahl, C. Fuchs, and M. Schreier, “Why and When Consumers Prefer Products of User-Driven Firms: A Social Identification Account,” Management Science 61, no. 8 (August 2015): 1978-1988.
3. J. West and M. Bogers, “Leveraging External Sources of Innovation: A Review of Research on Open Innovation,” Journal of Product Innovation Management 31, no. 4 (July 2014): 814-831; and L. Dahlander, D.M. Gann, and M.W. Wallin, “How Open Is Innovation? A Retrospective and Ideas Forward,” Research Policy 50, no. 4 (May 2021): 1-12.
4. M.J. Salganik, P.S. Dodds, and D.J. Watts, “Experimental Study of Inequality and Unpredictability in an Artificial Cultural Market,” Science 311, no. 5762 (Feb. 10, 2006): 854-856.
5. L. Hawthorne and E. Jezkova, “The Founding of BrickLink,” DanJezek.com, accessed June 26, 2023, www.danjezek.com.
6. “How BrickLink Works,” About BrickLink, BrickLink, accessed June 26, 2023, www.bricklink.com.
7. R. Katz and T. J. Allen, “Investigating the Not Invented Here (NIH) Syndrome: A Look at the Performance, Tenure, and Communication Patterns of 50 R&D Project Groups,” R&D Management 12, no. 1 (January 1982): 7-20.
8. H. Lifshitz-Assaf, “Dismantling Knowledge Boundaries at NASA: The Critical Role of Professional Identity in Open Innovation,” Administrative Science Quarterly 63, no. 4 (December 2018): 746-782.