CUSTOMER-LED INNOVATION AT LEGO AND NATIONAL INSTRUMENTS

I love the story of how lead customers co-designed LEGO® MINDSTORMS NXTTM and how LEGO wound up selecting National Instruments’ LabView software as the foundation for its next-generation robotics design toolkit. This story includes so many of the design principles for outside (customer-led) innovation.

1. Recruit Lead Customers as Co-Designers

In a nutshell, when LEGO® decided to produce a next-generation version of its MINDSTORMS^TM robotics kit, the toy company did something that was highly counter-cultural. LEGO recruited lead customers to co-design the new product. While getting customers involved early in product design for a next-generation product might sound like standard practice to software firms (actually it isn’t!), LEGO, like most toy companies, is extremely protective of its intellectual property.

Yet it took the risk of recruiting and involving customers as co-designers early in its product development cycle--18 months before the product would be commercially available. The customers that Søren Lund, LEGO’s director of MINDSTORMS, recruited were among the most advanced users of MINDSTORMS. Each had been using MINDSTORMS since it was launched in 1998 and each had invented new ways to extend the functionality of the original product. They were all well-respected heroes among MINDSTORMS AFOLs (Adult Fans of LEGO).

National Instruments’ LabView’s lead customers have also been actively extending the functionality of the LabView toolkit for the 20 years since its original introduction. In fact, 50 percent of each new LabView software release is comprised of modifications and extensions that customers have contributed.

Both LEGO and National Instruments take advantage of the natural selection process in winnowing out lead customers from mainstream customers. They actively recruit and recognize the customers who have proved their innovativeness by designing new products and extensions and by sharing their inventions with others in the user community.

CUSTOMER-LED INNOVATION AT LEGO AND NATIONAL INSTRUMENTS

I love the story of how lead customers co-designed LEGO® MINDSTORMS NXTTM and how LEGO wound up selecting National Instruments’ LabView software as the foundation for its next-generation robotics design toolkit. This story includes so many of the design principles for outside (customer-led) innovation.

1. Recruit Lead Customers as Co-Designers

In a nutshell, when LEGO® decided to produce a next-generation version of its MINDSTORMS^TM robotics kit, the toy company did something that was highly counter-cultural. LEGO recruited lead customers to co-design the new product. While getting customers involved early in product design for a next-generation product might sound like standard practice to software firms (actually it isn’t!), LEGO, like most toy companies, is extremely protective of its intellectual property.

Yet it took the risk of recruiting and involving customers as co-designers early in its product development cycle--18 months before the product would be commercially available. The customers that Søren Lund, LEGO’s director of MINDSTORMS, recruited were among the most advanced users of MINDSTORMS. Each had been using MINDSTORMS since it was launched in 1998 and each had invented new ways to extend the functionality of the original product. They were all well-respected heroes among MINDSTORMS AFOLs (Adult Fans of LEGO).

National Instruments’ LabView’s lead customers have also been actively extending the functionality of the LabView toolkit for the 20 years since its original introduction. In fact, 50 percent of each new LabView software release is comprised of modifications and extensions that customers have contributed.

Both LEGO and National Instruments take advantage of the natural selection process in winnowing out lead customers from mainstream customers. They actively recruit and recognize the customers who have proved their innovativeness by designing new products and extensions and by sharing their inventions with others in the user community.

2. Provide Toolkits to Support Customers’ Inventiveness

LEGO is in the toy business and National Instruments is in the virtual instrumentation business. LEGO’s customers are kids, parents, teachers, and hobbyists. National Instruments’ customers are scientists, researchers and engineers, professors and students from universities and technical institutes. Yet the two companies have a lot in common. Both sell products that are general-purpose software toolkits that end users program to solve problems and perform complex tasks.

In neither case does the company try to predict how customers might use their tools. They know that’s impossible. Their customers are way too diverse and creative for the solution providers to be able to correctly anticipate customers’ needs. But what people in both companies do is notice, celebrate, and reward customer inventions. Stories about customers’ inventions are the favorite topic of conversation in most formal and informal gatherings. Pictures and mock-ups of customers’ inventions adorn employees’ offices and conference rooms.

In the case of LEGO’s MINDSTORMS, customers--both kids and adults--build robots out of LEGO-supplied motors and building blocks and instruct them to perform all kinds of tasks. Teachers love the kits because kids learn by doing. Kids ranging in age from first grade to college students absorb logic, physics, science, math, and programming while they vie with one another to create their own robots, design their own experiments, and compete in science fairs and robot competitions.

National Instruments’ LabView software analyzes virtually any input signal and can drive virtually any output device. Its users are scientists and engineers in literally hundreds of diverse industries performing tasks as varied as oil exploration and gene-splicing. National Instruments doesn’t attempt to develop expertise in each of its customers’ subject matter domains. But end users can graphically program LabView to handle just about any measurement, analysis, or design task.

3. Encourage Vibrant Customer Communities

Both LEGO MINDSTORMS and National Instruments’ LabView had spawned very active online customer communities way before either company thought to support communities on their own Web sites. These user communities naturally sorted themselves out by topic and interest. For both MINDSTORMS and LabView, teachers and educators flocked together to share tips and curricula. Engineers and scientists solving specific kinds of problems with LabView--often across disciplines--gravitated to each other. Hobbyists using either platform had their own forums but also lurked on the fringes of the professionals’ discussions, often contributing new insights and tips.

Regional face-to-face user groups formed organically, as people who had met online got together to compare notes and to show off their latest inventions. Both companies hosted national and international user groups meetings and encouraged customers to present their inventions to one another.

Eventually, both LEGO and National Instruments realized how vital these customer communities were to their own business strategy, so they designed their own online communities, luring customers to migrate over to the company-sponsored community site by offering recognition, and by ensuring that their top product designers were listening and responsive to users’ problems and suggestions. Customers were willing to migrate some (but not all) of their online discussions when they realized that influential people within the brand owners/suppliers’ companies were truly paying attention to what they had to say.

4. Let Lead Customers Recruit Your Partners

It took Chris Rogers, a professor at Tufts University, to bring the two companies together. But he did it for selfish reasons. Like many “lead customers,” Chris had a problem to solve. He needed a version of MINDSTORMS that ran on the Apple Macintosh. LEGO’s retail version of the MINDSTORMS programming environment only ran on the PC. But Chris was involved with teachers and students in schools that had standardized on Macs. So he solved his problem by taking LabView--a program he already knew and loved, and which ran on both the PC and the Mac--and wrote his own graphical user interface for kids. He called it Robolab.

LEGO’s educational group was happy to help fund the software development effort, because it gave them the Mac platform they needed. Chris brought LEGO and National Instruments’ together to work out the licensing deal so Chris could roll Robolab out to his teachers and students, and LEGO’s educational group could sell the software.

Five years later, when LEGO’s MINDSTORMS’ retail division decided to a) design a next-generation platform for MINDSTORMS and b) converge the retail and educational units’ product lines, National Instruments was not really on Søren Lund’s radar. Again, it took a serendipitous meeting hosted by Chris Rogers at Tufts to bring LEGO and National Instruments together.

5. Support a Customer-Driven Ecosystem

Both LEGO MINDSTORMS and LabView’s toolkits and user communities have spawned entire ecosystems of suppliers, partners, peripheral manufacturers, consultants, authors, professors, and many people for whom the platform has become a big part of how they do their jobs and, in many cases, how they earn a living. When a new input sensor or camera or plotter or measurement instrument comes onto the market, customers notice it and tell the supplier that they need to interface to the toolkit. If the peripheral supplier doesn’t move quickly enough, some customer will write the interfaces himself or herself and offer it back to the community, for free or for sale.

6. Foster Friendly Competition Among Customers

Both LEGO and National Instruments like to encourage and sponsor friendly competitions among users. School students and classes compete within states and regions in MINDSTORMS design competitions and robotics contests. National Instruments hosts contests and gives out prizes to its most innovative customers at regional, national, and international user group meetings.

In fact, National Instruments landed the business to become the software platform for LEGO MINDSTORMS NXT largely because the LEGO executives turned up in Austin on the day that National Instruments’ employees and mentors were hosting a Robolab Mania competition with more than 500 participating students from elementary through secondary schools showing off their robots. When the LEGO executives saw how passionate the National Instruments employees were about helping kids have fun with science and engineering, they knew they had found the right software partner.

Roles Customers Have Played in Influencing the Strategic Direction of LEGO’s and National Instruments Businesses

Lead customers have been co-designers of the next-generation products from both companies. Customers are active problem solvers. They bring their questions to the online community and they receive answers from other customers. Customers invent new solutions using both companies’ toolkits. Customers act as guides, writing books, developing curricula, posting “how to’s” for other customers to use.

Customers act as promoters, championing these companies’ products and getting others to use them. Customers collaborate in ad hoc, often cross-disciplinary, teams to design new solutions to thorny problems. Customers are market makers. They recruit business partners. They buy and sell products from one another. They have built vibrant business ecosystems.

Comments

[Patty Seybold]

Bardo,
Thanks for the link to Lafraise... Great site! Very similar to Threadless, which I also commented upon here.. You've obviously answered your own question.. Even tiny companies can harness customer creativity by enticing customers to "strut their stuff."

In fact, it's probably easier for smaller (and newer) businesses to do this because they have less NIH.... small, older businesses, may have difficulty.. I think it has to do with how open minded you can be about all the different ways in which you can involve your customers!

Thanks!

Patty

[Bardo N. Nelgen]

Hi Patty,

this analysis definitely is as insightful as always – though I was wondering if this thing with customers co-designing your products eventually was for the big guys only…!?

However I remember this small t-shirt designing outlet doing something similar on a (maybe less innovative though) very profitable basis. They obviously just use a normal weblog for customer interaction and having the visitors co-design the shirts they will produce:

http://www.lafraise.com/index.php?language=en

This is the company 'Bloïc' [Loïc Le Meur, European VP of Six Apart, the company that hosts your weblog] likes to refer to in his presentations on what blogging can do for a business.

http://www.loiclemeur.com/english/2005/06/shel_interviews.html