Tools & Processes
Human Centred Design
Business Model Canvas
User Journey Map
A business transformation case for change. LEGO GO is a smart device application that allows users to take a digital collection of their LEGO bricks on the go with them, allowing them to continue their playtime when out and about.
For four generations, the family-owned LEGO Group has grown from a small local company in Billund, Denmark to one of the world’s most powerful brands as voted by Forbes in 2017, and leads the way in providing creative play and learning materials. LEGO’s brand and commercial success in recent years was owed largely to the release of the LEGO Movie in 2015. Partnerships with Star Wars and Marvel have strengthened LEGO’s brand image, but these partnerships can only carry the brand’s success so far.
Despite being named the most powerful brand, 2017 saw the company’s first decline in revenue for over a decade. As part of this business transformation case, I researched and analysed why the revenue decline happened, presented opportunities for growth in a strategy that can be implemented over 3 - 5 years and also provided further recommendations for how LEGO can continue to inspire and develop the builders of tomorrow.
2017 was a challenging year for the LEGO Group. Revenue for the full year declined 8% to DKK 35.0 billion compared with DKK 37.9 billion in 2016. This decline in revenues along with net profit was most notable in North America and Europe, primarily due to actions the company took to reduce inventories across its value chain.
The ever-increasing digital lifestyles of consumers and earlier access to technology for children are driving manufacturers into producing smart toys, augmented reality games and integrated toys that can be controlled via smartphones and tablets. The future of the toys and games industry lies in innovative products that link the real-world with virtual toys. As the relationship between AR and retail continues to mature, augmented reality will have an impact in every stage of the process.
However, growing concerns over the physical and mental risks for children associated with digital addiction present an ethical dilemma. This is causing a resurgence in the development of traditional toys for their ability to spark imaginative play in a natural way.
2017 saw LEGO’s first decline in revenue and net profit for over a decade. Much of this was down to removing excess inventory, and a restructure of the company’s internal structure. Niels Christiensen, who took over as the CEO in October 2017, started work by slashing costs and overhauling the company’s bloated structure. Christiensen said there would be “no quick fix” and it would take years for the company to return to growth. As a result of this decline in revenue and profit, LEGO cut 8% of their staff - 1,527 employees in total - as well as some management upheaval.
Jorgen Vig Knudstorp, chairman and former CEO of LEGO, pointed to a development of overlapping functions and too many layers which were preventing LEGO from realising its potential growth.
LEGO’s mission statement is to, “Inspire and develop the builders of tomorrow”. However, a recent trip to one of their stores showed something different. A bland shopping experience, with LEGO models scattered around the walls behind Perspex windows, meant that the magic of LEGO was completely lost. Apart from the boxes of LEGO products lining the walls, there weren’t any other indications that you’d just stepped into a LEGO store and there were very few opportunities to “play well” - the very meaning of the words LEGO (“leg godt” in Danish). There was also a lack of opportunities to be able to interact with the bricks and play in-store. A visit to their website was equally uninspiring. If LEGO are to inspire the builders of tomorrow, what better place to start than by looking at the very places they can begin their journeys.
"Where’s the fun? I thought this was meant to be a LEGO store? Apart from the products and the lights above that look like a LEGO brick - that you have to look closely at anyway to realise what it is - there’s nothing else in here that says LEGO, really."
James – Customer to Manchester LEGO store
"Waste of time! LEGO bricks are iconic but what about all the other items you could sell? The M&M store across the road is great, M&Ms are only chocolate buttons – but they have 4 floors and you can buy anything and everything associated with M&M. Have LEGO missed a trick? There could be so much more."
Mike – Customer to Leicester Square LEGO store
By focusing on the business model canvas and the value propositions, further opportunity areas can be opened up for LEGO. The position in the toys and games industry may have been impacted by the fact that their core product has been the same for generations and it could be argued that LEGO has become complacent as a result. By identifying customer problems and needs and figuring out how to solve and satisfy them, LEGO can pull out areas of their business model to better appeal to their customer base.
"When I was little we went to LEGOLand Windsor, and the big LEGO shop in the park. I remember the magic of it. It felt like more of an event than a shopping trip. Much like I imagine kids feel when they go to a Disney store or a comic store – they feel like experiences."
Kyle – Childhood LEGO fan in the 1990’s
"Disney stores have a peak ‘kids eye level’ store layout. Lots of space to run around in. Big screen playing Disney stuff. My son was excited – you can see how much it means to a lot of kids when you’re in the store. It just felt magical."
Claire – Mother of two young boys
The following personas have been created through the insights gained from conducting primary research with LEGO customers. By using personas to identify consumer needs and desires, a solution can be developed that targets the issues that most customers face.
How might we bring the physical experience of LEGO into a digital landscape?
LEGO GO is a smart device application that allows users to take a digital collection of their LEGO bricks on the go with them, allowing them to continue their playtime when out and about.
The application utilises the power of haptic technology to provide a memorable opportunity to engage with the creative possibilities of LEGO. Haptic feedback allows the users to really feel the brick and its texture in their hands along with the pegboard below them.
Users can feel the bricks ‘click’ as they lock into each other, as well as the resistance as they are taken apart.
Users will be fully engrossed by the sounds of the bricks clicking together in real time, and the sensual, tactile experience it provides helps to capture the magic of physical LEGO play and make it a completely immersive experience, not just a visual one.
Having the feel of real-life LEGO when building will help develop fine motor skills, unlike current Augmented Reality (AR) and app technology, where users only use fingers to tap or slide.
LEGO GO aims to continue the fun when on the go, rather than replace the physical LEGO bricks. In fact, LEGO GO can be used to inspire physical play once the user gets home!
The app would be free. Digital downloads of each kit are priced at 50% of in-store prices. If customers want to buy the physical model, they then pay the other 50%, meaning they can essentially try before they buy. Each digital download adds those bricks to the user’s virtual Brick Collection, which can be browsed or used to create new ideas from scratch.
LEGO GO would even offer suggestions to build models based on your current collection, both physically and digitally. And playing with LEGO wouldn’t be complete without the thrill of rummaging through a pile of LEGO bricks looking for that one specific brick to complete that fabulous design - and neither is LEGO GO! Users can do exactly that, complete with all the sounds and textures of clawing through a mountain of digital bricks - without the scratches, of course.
Once their creation is complete, it’s time to see it in action! Users can upload their masterpieces to the LEGO Life app, turn it into a stop-frame animation, or even see their Minifigures running around the house through AR. And if that’s not enough, further kits can be ordered and delivered to the user’s home, or the user can undertake new challenges set to build different objects with the bricks in their collection. LEGO GO aims to bring the magic of LEGO along for the ride, no matter where you are!
Instructions for success over 3 to 5 years
Feasibility of LEGO GO
LEGO GO makes the ability to play with LEGO more affordable to those who want to play with LEGO, because each digital download is half the price of the physical version. I believe this will increase revenue as more customers will be willing to buy LEGO kits for when they’re on the go. The haptic technology is not new but has been increasingly making its way into our everyday devices with the increase in wearable technology. However, there are few, if any examples, of where a physical toy can be played with in much the same way in a digital environment. LEGO also has made use of AR technology in some of their previous apps like LEGO Life, and LEGO GO would interact with that. Driverless cars as an emerging technology will also change the way children are kept occupied during long journeys, so being able to take their LEGO kits on their journeys with them with LEGO GO will be one ready-made solution that has already gained interest on the market.
Customer Journey Map
By following a customer’s journey through the LEGO experience, pleasure and pain points become apparent, allowing stakeholders to focus on those areas when it comes to addressing needs and desires. There are many ways that a customer can interact with LEGO, be it through online marketing, social media, emails, in-store advertising or staff interaction. Technology has reached an advanced stage that now allows brands to track individual customer journeys, which also allows them to collect data that can support much deeper analyses of individual purchase decision processes than were previously possible. The customer journey map also maintains that a human-centred approach is adhered to and customer needs remain the prime focus throughout the customer’s experience.
In addition to the LEGO GO app suggested previously, the research conducted has also provided some further opportunities that may be able to help. These further recommendations can be split into offline, online and a combination of the two together. Suggestions for improving the offline store experience include making the stores feel more tactile by removing the plastic casing around the models to allow people to touch and feel the products; include a LEGO texture on the flooring or a packaging redesign that lets customers see the bricks inside the box. The magic of LEGO can be brought alive by having more giant LEGO models around the store, TVs that play various LEGO movies or shows on them or by having the LEGO soundtracks playing in the background while customers shop.
Store and Website
Today’s consumer can engage with a brand through a physical store, their online shop or mobile presence. A true omnichannel retail experience incorporates an engaging buyer’s journey both online and off.28 Through research, it has also been found that the offline and online experiences don’t talk to each other and lack magic and inspiration. As a way to improve these two channels, there are a series of suggestions: the LEGO Mosaic Maker could be rolled out from the Leicester Square store to all stores and also online. It came as a surprise that LEGO stores do not sell non-brick items. Instead, customers must shop elsewhere if they want to buy clothes, books, phone or computer accessories, DVDs and other memorabilia. It is proposed that LEGO stocks these items in their stores to give customers a variety of things to purchase. Both the store and website could be turned into a more immersive experience by making them feel more inspiring and magical.
LEGO also has a wide variety of mobile apps in the form of games and social apps. But a lot of these apps are standalones and don’t interact with one another. It is proposed that LEGO develops an app that houses all of these together under one account that can be switched between on the fly and talk with each other, so users don’t have to have lots of apps installed on their mobile devices.
An Augmented Reality (AR) side-scrolling game that requires user input to build a world for LEGO characters to interact with. LEGO Adventures gives voice commands to the user to build physical LEGO creations that the characters will use, climb over, walk around, drive, fly, fight or any other activity imaginable, all in real-time.