David Robertson: "Brick By Brick: How LEGO Rewrote The Rules Of Innovation And Conquered The Global Toy Industry"

MS. DIANE REHM

11:06:56
Thanks for joining us. I'm Diane Rehm. Few brands spark as much cult-like devotion as LEGO, but despite its wild popularity among children and adults, the brand came to the brink of bankruptcy just a decade ago. Wharton School of Business professor David Robertson makes the case that the toy manufacturer pulled off one of the most successful business transformations in recent memory. His new book is titled "Brick by Brick." David Robertson joins me from a studio at the Wharton School in Philadelphia.

MS. DIANE REHM

11:07:40
I'm sure many of you growing up have been fans of LEGOs. Give us a call, 800-433-8850. Join us by email or send us a tweet. Follow us on Facebook. Good morning to you, sir.

MR. DAVID ROBERTSON

11:08:00
Good morning. Thanks for having me.

REHM

11:08:02
Good to have you with us. Take us back in time to the beginnings of LEGOs.

ROBERTSON

11:08:12
Sure. LEGO was founded in 1932 by a Danish carpenter, and the story was that he had trouble getting enough wood to build furniture, so he started taking scraps of wood and making wooden toys out of them. Those toys proved to be popular and so he grew the business. His wife died, by the way, right after start of the business. And so he had to raise four young boys by himself.

ROBERTSON

11:08:41
He continued to grow the business, and then around 1946 he invested in an injection molding machine which his then grown sons actually didn't -- were not for. They thought it was too big a risk. But he thought he'd try plastic toys, and his first experiments were failures. The department stores returned them saying kids will never want toys made from plastic, you know. Let's go back to the wooden toys. But he kept at it and his son took over, Godtford Kirk Kristiansen patented the brick in 1958, and that's when the modern LEGO that we know was born.

REHM

11:09:20
You know, I was in Boston recently watching my grandson put together a windmill for his school project, and he had become so adept that these things just went together very quickly. The process of fitting them so that they fit perfectly had to be such an innovation and I gather there were some trials and some failures on that score.

ROBERTSON

11:10:05
Yeah. There was a lot of experimentation about it before they hit on that knob and tube concept. So the knobs are the little buttons on the top, and the tubes are inside a LEGO brick and they fit together just right with that click, and they have just the right amount of what they call clutch power, and clutch power is this wonderful concept. I think it's actually a metaphor for many of things, how they will fit together but still be -- a kid will be able to take them apart.

ROBERTSON

11:10:35
So they'll fit together and stay. In fact, early bricks, they'd fit together, and then after a little while, they'd pop apart.

REHM

11:10:42
Oh, I see.

ROBERTSON

11:10:44
So they tried lots of different geometries before they finally hit on the one that worked.

REHM

11:10:48
Yeah. What about the name LEGO?

ROBERTSON

11:10:53
LEGO is two Danish words, leg godt, which means play well. Although, you know, a friend of mine from high school became a professor of Latin, and I verified this with him, and it turns out that LEGO kind of roughly translated from Latin means, I put together, just coincidentally.

REHM

11:11:12
So, you know, it's interesting because before LEGOs, there were Tinkertoys. So how LEGO sort of appeal more to the young child then even Tinkertoys?

ROBERTSON

11:11:34
Boy, you know, I didn't do too much on the early marketing of it. There's a chapter in the book about the early years, but others have covered that better than I did. There -- you know, I think they were just seen as yet another toy that you could buy. I think that like Tinkertoys, and like one of my favorites as a kid was something called the Erector Set, it really was a system of play. It wasn't a toy in a box, and I think parents like that, and I think kids really appreciate that too, that if you get two or three different toys from a company, if they all fit together and you can start to do many more things.

ROBERTSON

11:12:17
That if adding more toys multiples the possibilities rather than just adds to it. Then I think it's really interesting. And so I think the whole idea of a system of play was something that LEGO got right, as did Tinkertoy, as did K'Nex, as did a number of other toys. But if you look at the toys that kids really love, they're often systems of play, not just a box with a toy in it.

REHM

11:12:39
Yeah. Are you a big fan of LEGOs?

ROBERTSON

11:12:45
You mean me personally?

REHM

11:12:46
Yeah. Yeah.

ROBERTSON

11:12:48
Well, you know, it's funny. These adult fans of LEGO play a critical role in the turnaround, and when I first started teaching the case in my executive education classes, I'd kind of make fun of those people in it, you know, gently, and I stopped doing that once I became one.

REHM

11:13:08
And the idea that they do have appeal for adults is really extraordinary when you think about it, because some of them are so incredibly complicated. I can remember giving to my grandson pieces that I thought, how in the world will this child figure it out, but they do.

ROBERTSON

11:13:41
They do, yeah. The -- so about the fans, I met this one guy, Adam Reed Tucker, who is an architect in Chicago, and he just got the inspiration one day. He was trying to explain skyscraper architecture to kids and was having trouble doing it, and so he got the inspiration that why don't I build instead of a small model, kind of a 6-, or 8- , or 9-foot model...

REHM

11:14:09
Wow.

ROBERTSON

11:14:10
...of these major architectural landmarks like the Sears Tower...

REHM

11:14:13
Sure.

ROBERTSON

11:14:13
...which is now called the Willis Tower, or the Empire State Building. And when you do that, you can show how does the architecture work. What's the structure inside it? How does it support the building? How does it resist the forces from wind and earthquakes and other things, and he found that he could explain it with LEGO better than any other medium. So he tells this wonderful story about one day he went to the Toys R' Us and just filled up a couple of shopping carts with LEGO and brought it back home and started building skyscrapers. He had to move to a bigger house because he ran out of room because of all the LEGO.

REHM

11:14:48
I'm sure. I'm sure. The subtitle of your book is "How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry." What do you mean they rewrote the rules of innovation?

ROBERTSON

11:15:08
Well, what attracted me to LEGO, I teach innovation, and specifically the management of innovation, so how can companies make themselves more consistently reliably innovative. And I think it's a really interesting area right now because companies are realizing that you can't just think about innovation as product innovation. You have to think about it in terms of your services, your channels to market, your pricing plan, your business processes, kind of everything about what you do has to innovate, otherwise you'll be left behind.

ROBERTSON

11:15:44
The example that I think everybody understands is the iPod from Apple. If Apple had only introduced a little device then, you know, would they still be in the same dominant position they are? But they introduced iTunes and the 99 cents per song pricing model and all that. And so what's interesting to me is how do you mange that? If you're thinking about innovation and more than product development, how do you manage that across a company?

ROBERTSON

11:16:12
And there's lots of ideas about innovation, theories of innovation, rules of innovation, like you should open up your innovation more. You should think about all these different types of innovation, you should practice disruptive innovation. There's all these theories out there about how you boost innovation. And when I went into do my initial interviews at LEGO, they hadn't read all those books. In fact some hadn't been written then, but they had done all those things that consultants and academics say you should do, and it almost put them out of business. And I thought that was really interesting. You know, how can we be so wrong?

REHM

11:16:51
Yeah. Well, what did they do that was wrong?

ROBERTSON

11:16:56
And by the way, I'm doubly guilty. I worked at McKenzie (word?) for five years, and then I went into academia about 10 years ago. So I'm as guilty as anybody of that. Simply put, what they did is they boosted innovation. It was almost that -- it wasn't that the theories didn't work, it's that they did work. They got a lot of innovation, and they got a lot of innovation in every different direction. And so, I mean, they did lots of different things. They...

REHM

11:17:26
Yeah. But give me one example of the kind of innovation they attempted that was so wrong.

ROBERTSON

11:17:36
There was Jack Stone. Jack Stone was this hero, supposed to be an action figure. And they did market research and found that most boys -- most kids really didn't like construction toys. They would rather just, you know, play with something like an action hero. And so they made a LEGO toy that wasn't very LEGO-y. You'd snap it together and 10 minutes and then play with it. And, you know, I talked to a fair number of parents when I was starting to write this case in 2005, 2006, and they'd complain to me about these toys.

ROBERTSON

11:18:09
They said, you know, it's a rainy Sunday afternoon. I go to the toy store, I buy something so I can have a couple hours of quiet, but after 10 minutes they're, you know...

REHM

11:18:18
They're finished.

ROBERTSON

11:18:18
…they're running around again.

REHM

11:18:19
Yeah. Yeah.

ROBERTSON

11:18:21
So it wasn't very LEGO-y.

REHM

11:18:22
All right.

ROBERTSON

11:18:22
And it also lost them a tremendous amount of money.

REHM

11:18:25
The book is titled "Brick by Brick." David Robertson is -- he teaches innovation and product development at the Wharton School. Short break here. I know many of you want to join us. I look forward to speaking with you.

REHM

11:20:04
And welcome back. David Robertson is joining me from the Wharton School of Business at the University of Pennsylvania where he teaches innovation and product development. And he used as a case study LEGO. His new book is titled, "Brick by Brick." And before, David, we go back to the discussion we were having before the break, I want to talk to you a second about this clutch power. I was fascinated with the idea of its key engineering precision. Talk about how finely those elements are made to stay together.

ROBERTSON

11:21:07
Yeah, the precision of LEGO manufacturing of those little plastic bricks is really pretty impressive. I mean, they get the tolerances down to about the one-tenth the thickness of a human hair and they need that to be able to have those bricks fit together just right. There's a fair amount of engineering that goes into not just the molding of the plastic but the formulation of the plastic itself. And also, they're very concerned about the bricks being durable.

ROBERTSON

11:21:36
They test them to make sure that they don't break, you know, chip off pieces that a young kid could swallow. So it's pretty impressive to walk through the factory and see that operation.

REHM

11:21:47
So have they ever made mistakes in the construction of those bricks themselves?

ROBERTSON

11:21:58
Well, it depends what you mean by mistake. They of course have some bricks that don't meet their quality standards and some sets that don't. And they will donate those to the poor children that couldn't afford them otherwise. There was a famous case where Star Wars, they changed the gray color. And that caused the fans to just go completely nuts because their previous sets wouldn't quite match with the new sets and they couldn't make their own creations out of the pieces. So they made mistakes like that.

REHM

11:22:34
I have an email here from Brad who says: When I look at current LEGOs, they all seem to have movie tie-ins like "Star Wars," "The Hobbit," "The Lone Ranger." Can you still buy the same simple blocks and sets that I grew up with that allow for true non-themed-directed creativity?

ROBERTSON

11:23:07
Yeah. And I think it's important that you do. As a parent, you know, I think LEGO is one of the best investments you can make in your kid's ability to support you when you're older. I think it's wonderful the effect that it can have on boys and girls both. And so you can still buy buckets of bricks. I like the creator sets. I think that -- the creator sets will have all the pieces you need to make three different things.

ROBERTSON

11:23:37
And I, you know, my advice to any parent is always build something together with your kids, but then take it apart. You know, part of the value of LEGO is rebuilding and trying something else and showing how the pieces can be put together in different ways.

REHM

11:23:52
But let me take you back to something you just said. What kind of effect do LEGOs have on young children or children of any age? What is it that is so valuable to them?

ROBERTSON

11:24:13
Oh, I just think that 3-D reasoning, the spatial skills, I think the creative part of it, just being able to think of something and make it, that joy of building something and then the pride of creation. I think all of us with kids and grandkids have that wonderful moment where they come in and they're holding something and they show it off. You know, I think that's a wonderful part of LEGO, too.

REHM

11:24:40
Okay. But given, let's say, a huge airplane and the child sees that airplane on the box and then opens the box and there are hundreds of pieces there. Are there some children who are just overwhelmed by that kind of challenge? Does it take a special kind of conception, of ability to conceptualize?

ROBERTSON

11:25:24
Well, I think that parents should pay attention to the age levels on the box. You know, when they say 5 through 9 or 9 through 14, there's a fair amount of thinking behind that that the younger sets, they kind of stack like a club sandwich. You can put it down on the table and the pieces go on top of each other. Whereas you get to the older sets and you have to lift it up and put a piece in from the side and it gets a lot more tricky. And so you can discourage kids if you get a set that's too advanced for them.

REHM

11:25:57
Okay. And now, let's talk about what happened when LEGO began to falter in the late '90s. They were almost bought up by Mattel.

ROBERTSON

11:26:13
Yeah. Well, that may be a little strong. They did go to Mattel and explored whether Mattel would want to buy them. This was in 2003 when they were running out of cash and they'd exhausted their lines of credit and they really weren't sure they were going to make it or not. They were about to default on some bank loans. And so they were exploring, you know, should we liquidate the company or sell ourselves off?

ROBERTSON

11:26:41
And so they did take that emergency trip out to Mattel. And, yeah, what had happened is that when they'd innovated, they just come out with a whole lot of toys that weren't very LEGO-ey. They weren't very popular. They weren't very profitable. And unfortunately, they had a couple -- and I say that deliberately -- unfortunately, they had a couple of hits like LEGO Star Wars and LEGO Harry Potter that were such man of hits, such huge hits that they covered up all the rot that was underneath it.

ROBERTSON

11:27:17
You know, all these other -- they made up for all these other toys that weren't very LEGO-ey or very profitable.

REHM

11:27:23
So you have clearly been interested in the whole idea of innovation. Now, what steps does one take when one begins to try to innovate? I would think that the first thing one does is to try to bring good minds together. Is that not what LEGO did?

ROBERTSON

11:27:58
Yes. I'm interested in the slightly different questions which is, what should a manager do to make it possible for the people inside his or her company to innovate well? And I think that's kind of a different question, because if you talk to people in companies and you ask about innovation, they often spend a lot of time complaining about how hard it is to innovate in their companies, how much their companies get in the way of innovation.

ROBERTSON

11:28:27
And what I was interested in with my book in general and what I found at LEGO is a system where it gives the people inside the company the space to be creative but also some direction to deliver. And I think striking that balance where you don't over-constrain your people but also you do put some barriers and some bumpers around it so that you're getting the right kind of toys for the markets that you're trying to serve and that are going to be profitable. That's a really hard thing to do, and LEGO does it really well.

REHM

11:29:04
So you're talking about the right balance between freedom and protection within that workplace. Freedom to experiment. Freedom to bring ideas to the fore, but also not chopping them down when they don't work.

ROBERTSON

11:29:27
That's right. Yeah. LEGO is really good about bringing in creative people and giving them great challenges and letting them go off. And between '99 and 2003, what happened is, you know, somebody would come in and they'd say create a great toy. And they'd create things like the Jack Stone or other toys that weren't very LEGO-ey and weren't very profitable. Now, if you go into LEGO and work as a designer, you're given a more confined challenge.

ROBERTSON

11:29:54
Create a great police station. Create a great fire truck. And, you know, some of the designers from 2001, 2002, they didn't like that and they left. But other designers said, you know, my toys now are much more likely to get in the hands of kids and the kids will play with them and the company will be profitable and I'll have a job. And so, you know, they're happy. And so, you know, they hired creative people.

ROBERTSON

11:30:20
But at the same time, they're also hiring kind of disciplined, focused people. You know, people whose job it is to keep those creatives in line, if you will. Not to over-constrain them, but to put some boundaries around them and say, this is the kind of creativity that the company needs. This is the kind of creativity that children are looking for. You know, this is the kind of toy that you should be trying to develop.

REHM

11:30:42
So…

ROBERTSON

11:30:43
And that's been very successful for them.

REHM

11:30:46
What did LEGO learned from creating that programmable robot named Mindstorms?

ROBERTSON

11:30:57
Mindstorms is a wonderful story. They -- so Mindstorms for your listeners who aren't familiar with it, it's a really sophisticated robotics kit masquerading as a kid's toy. It has an intelligent brick with a CPU computer in it. It has a programming language. It has sensors so that if you make noise or if light flashes. There's an ultrasonic sensor, a color sensor. Based on that, the intelligent brick can tell motors to do things in very precise ways.

ROBERTSON

11:31:32
And so you can make walking robots. You can make Rubik's Cube solvers. You can make amazing things. So the first Mindstorms kit had come out in 1998. And during the troubled years, they really ignored the kit and made some pretty bad editions to it. But the fans...

REHM

11:31:52
The fans.

ROBERTSON

11:31:52
The adult fans...

REHM

11:31:53
Yeah.

ROBERTSON

11:31:53
They kept organizing and doing things. And some started up companies to develop add-ons to it themselves since LEGO wasn't. And when it came time, you know, when they started turning around the company, the crisis in 2003, 2004 they're looking for revenue. They see they have this toy that people love, both kids and adults, that people are using in education to teach robotics and that there really, you know, there's an opportunity to do the next generation.

ROBERTSON

11:32:24
You know, it had been developed in '98, it's now 2004. I mean, that's a couple of generations of technology. And so they started to do the next round and what they found was that they'd fired a lot of the people who understood the toy. They had really knowledgeable fans that were continuing to develop the toy. And so they realized they should open up that, you know, LEGO is headquartered in this little town in Denmark called Billund.

ROBERTSON

11:32:50
And the locals say it's three hours from anything. You know, there's three hours of nothing in every direction. And so it's isolated even by Danish standards. And so they went online. They found a couple of passionate, knowledgeable fans. They invited them in and they used them to help them develop the next generation of the toy.

REHM

11:33:10
I love that story. And you're listening to "The Diane Rehm Show." Has there been really a dramatic shift from the old LEGO to the new in your mind?

ROBERTSON

11:33:32
No. I think, in a way, it's been a story of back to the brick. It's a LEGO that, you know, the old system of play was a beautiful idea. And in the frenzy of innovation between '99 and 2002, they got away from that, they forgot about it. And since then, they've really come back to it. And one of the things they did is they made close to 14,000 different pieces in their inventory. The worst of it in 2004. And they cut that in half.

ROBERTSON

11:34:14
And what they did is they -- during the innovation years, the experimentations, they'd let designers create any piece they wanted. And some of those pieces didn't quite fit with the other ones and you couldn't do much with them. Like, you can only build that one model with them. And so when they cut the number of pieces in half, they only ended up with the ones that could be used in lots of different kits.

ROBERTSON

11:34:35
And so, in a way, the designers, once they were constrained to use a much more limited palette of shapes and colors, they, in a way, rediscovered what LEGO was all about. You know, how do we take these pieces and recombine them in a fresh new way to make some interesting new toy. That's the old LEGO reappearing again. That's kind of, you know, thinking out of the box almost put LEGO out of business. And LEGO went back in the box, went back to the brick.

REHM

11:35:01
Interesting.

ROBERTSON

11:35:02
Yeah. It's really helpful.

REHM

11:35:02
All right, here's an email from someone who calls himself Roundhouse Jim. He says: I have about $4,000 worth of LEGO blocks in my living room, the product of some hundred LEGO sets. I didn't like the results of the Hogwarts castle set. It was just insufficient, so I got some more and went looking for a better model. What do you say to him?

ROBERTSON

11:35:41
So the Hogwarts set was one that came out, if I remember, during the troubled years. You know, Diane, this is the hard part about writing a book about LEGO, because I'm really trying to write a management book but, you know, I'm so worried that -- like Bionicles, I'm pretty sure that the Toa fought the Rahi in the first year and then they fought the Piraka in 2004, and then there's the Rahkshi.

ROBERTSON

11:36:07
You know, what if the Toa Nuva -- what if I say the Toa Nuva fought the Rahi, you know, people will jump all over me because I got it wrong.

REHM

11:36:14
Yeah, you got to get it right. That's for sure. And...

ROBERTSON

11:36:18
So the Harry Potter castle I think came out during that frenzy of innovation when LEGO lost track of the system. And that may be behind what is Roundhouse Jim's frustration with the set.

ROBERTSON

11:36:31
So at this point, you truly believe they're back on track, they know what they're doing and they'll continue to innovate but in a more constrained way?

ROBERTSON

11:36:50
Yes. You know, I should say, by the way, that I've never taken a penny from LEGO. I have no financial ties to the company. I mean, I am fan because I've seen my kids play with them and I think it's a good toy and I've gotten to know the company very well. And I had that wonderful access to the company. But, you know, I like to hope I keep a pretty objective view of it. What I find is -- what I think is that they are really good the little idea.

ROBERTSON

11:37:19
And I think that's pretty powerful. When we come back we can talk about the big idea.

REHM

11:37:23
Absolutely. "Brick by Brick," that's the title of David Robertson's new book. And when we come back, I see our lines are filled. We'll open the phones for your questions and comments. Stay with us.

REHM

11:40:05
And David Robertson, before we go any further, what is the plural of LEGO?

ROBERTSON

11:40:15
Well, LEGO is not a noun . LEGO is an adjective so it's -- from a trademark perspective you're supposed to say a LEGO toy or a LEGO kit or the LEGO group as the company name. But I think everybody just calls it LEGO or LEGOs.

REHM

11:40:32
So LEGOs with the S on it is acceptable?

ROBERTSON

11:40:39
If you were to ask LEGO they would say, no absolutely not.

REHM

11:40:43
Oh, I see, I see.

ROBERTSON

11:40:44
But I think that's the way everybody refers to it.

REHM

11:40:47
Okay. Here's an email from Ryan who says, "When LEGO was first introduced decades ago, they were advertised as a universal toy for boys and girls alike with no differentiation. In the past decade or two LEGO has diverged wildly from this process advertising sets almost exclusively to boys or to girls with controversial gender type behavior associated with each. How has this gendering of LEGO affected the brand and toy manufacturing in general?"

ROBERTSON

11:41:43
You know, I'm not an expert on the toy industry and I really didn't write the book to do that. All I can add is my kind of opinion as a father who has a son and a daughter that didn't suffer from a lack of LEGO. You know, I've seen the -- and as you probably have and your reader -- your listener has, the controversy over the new LEGO friends set, the very girly set with pink and lavender bricks and there was a protest against it and a petition on change.org to get 50,000 signatures saying that it was too girly.

ROBERTSON

11:42:21
And so I bought it for my daughter and I watched her play it. And it j-- you know, she seemed to really enjoy it. And my daughter is, of course, the most beautiful girl in the world.

REHM

11:42:32
Of course.

ROBERTSON

11:42:33
But I don't want her to be defined by that. You know, I'd like her to see herself as many different things as I think we all would for our daughters. And -- but what I liked about it is that she was drawn to the girly theme. Since she was very much, you know, I mean, naturally drawn to that and I don't know whether it's nature or nurture but she was drawn to it.

REHM

11:42:53
But...

ROBERTSON

11:42:53
But if -- you know, it's pink and she likes to play with it she's learning all the great things about LEGO. And what's wrong with that?

REHM

11:43:01
Exactly. And as I saw LEGO through my grandson's eyes, it was all battleship gray. And that had an appeal to him but not to my granddaughter. So perhaps indeed that kind of color differentiation would indeed draw in some girls that would not be drawn to battleship gray.

ROBERTSON

11:43:35
Yeah, you know, LEGO -- one of the guys told me a story -- one of the guys from Billund, Denmark told me a story that when boys pull out the LEGO sets and they start playing with them, the first thing they do is they throw away the girl mini figures and they just play with the boy mini figures, because that's, I guess, who they identify with. The one exception to that being Hermione Granger from Harry Potter.

REHM

11:44:02
Interesting. All right.

ROBERTSON

11:44:03
And so, should LEGO stop putting girls in the kits? They haven't but, you know, it's a hard question.

REHM

11:44:12
All right. To Brian in Alexandria, Va. Good morning, you're on the air.

BRIAN

11:44:19
Thank you for taking my call. I really find it very interesting. I'm an art director and designer and I've obviously been fascinated with LEGOs all my life. I just wanted to point out, you had mentioned -- in 2010 I was at the Washington Building Museum when they had that exhibition of the famous buildings -- skyscrapers built from LEGOs. I actually had friends from out of town and we specifically went to see that and was fascinated by what they could do with LEGOs. It just shows what you can do if you have enough time and money and what could be built.

BRIAN

11:44:50
But what also -- it might solve some of LEGOs problems -- back in 2012 I went with my son's school class to the Corcoran Gallery of Art where they had an exhibition by Artists Claire Healey and Sean -- I can't pronounce the last name -- Cordeiro or whatever -- where they had abstract artworks on the walls of the gallery all done with LEGOs. And to me that was a huge eye-opener of what can be done.

BRIAN

11:45:15
You've been talking about -- part of the show about building, the sets -- the theme sets and the building. But these were like beautiful abstract paintings that were done on vertical canvases, as it were, of that LEGO backing that were -- I had never seen anything like that before. And to me that opened up a new way that the company could promote that and open up a whole new way to use LEGOs, not just for building buildings and reconstructive -- you talk about fire trucks and this and that -- but these beautiful artworks that were all done with LEGOs in the gallery.

BRIAN

11:45:50
They had easels there with canvases. I use the word canvas in air quotes because it was just huge. I didn't know you could buy that stuff -- huge flat pieces of the backing. And then they had a huge table in the center just filled with thousands and thousands of LEGOs. And the kids all went to town producing -- again, nobody was building buildings or structures but they were doing painting like images with LEGOs. That should really be something they could promote because that really connected with all the kids. And these were high school aged kids.

REHM

11:46:18
Good Brian. Thanks for calling. What do you think of that, David?

ROBERTSON

11:46:23
You know I continue to be struck. And one of the things that attracted me to this story is that in a way LEGO is a fairly flawed company. And what I mean by that is that they have a significant disadvantage. I mean, what they're selling is a plastic brick that their patent protection expired on 30 years ago that anybody can make. They're making it in higher-cost countries. Anybody can make it in China.

ROBERTSON

11:46:51
You go to the toy store. You see a bunch of boxes of bricks for half the price and yet LEGO somehow attracts this devotion. You know, people are willing to pay twice as much to get the LEGO brick as they are for the other off-rand bricks. And that's a pretty amazing story, you know.

REHM

11:47:09
I should say.

ROBERTSON

11:47:10
I mean, how does a company survive much less thrive, given that they're making a commodity product in a global industry with tough competition and a cost disadvantage. That's amazing.

REHM

11:47:20
And here's an email from JB. "Please talk about how the 3D printing world will either help or hurt the LEGO business. There are many examples of small businesses and websites using 3D printers to create accessories for LEGO sets. Is the explosion of the 3D printing world a good sign for LEGO?"

ROBERTSON

11:47:59
It's an interesting question. In my book I spent some time on this. I got one of those 3D printers that uses LEGO plastic. And I made something out of it. What I did is I gave my son a kit called Falling Water. It's made from the architecture series. It cost $100 and I said, can you create that in Minecraft? Now Minecraft is this online game where you build with blocks. It was actually invented by a Swedish programmer. So not associated with LEGO at all.

ROBERTSON

11:48:35
He took a weekend -- a rainy weekend. He created it and then we sent it to the MakerBot 3D printer and we printed out a version of it that is remarkably good. There's pictures in the book and also on my website, RobertsonInnovation.com. And you can see that it's -- you know, you could make whatever version of Falling Water you wanted virtually. You could go inside the house and add furniture. You could build the guesthouse that's above the Falling Water house. You could do all kinds of things that aren't possible with a LEGO kit.

ROBERTSON

11:49:12
I don't think that you're going to be able to 3D print a LEGO brick for a decade. I mean, you know, who knows? It's going to be quite a long time before 3D printing gets to that level of quality. And you'd probably never be able to make it as cheaply as a company that's spitting out millions of these things from injection molding machines. But you could easily see a kind of generic brick coupled with 3D building environment and a 3D printer where you could create just the most amazing things and share them online and put all kinds of things together.

ROBERTSON

11:49:49
You know, I think that we were talking a little bit before the break about how LEGO is really good at small eye innovation, at incremental improvements at doing better police stations and fire trucks. Also in the book I talk about their biggest failure which was a 3D online game where you'd build together with other people called LEGO Universe. A huge expensive failure. And so, you know, LEGO is a wonderful case example of how to boost innovation in a company very profitably and very well.

ROBERTSON

11:50:23
They -- in the balance between giving people kind of the space to create and the direction to deliver since their crisis, they've really pushed back and really focused their people a lot. But one of the conclusions of the book is, you know, have they focused it too much? I mean, it's still an open question.

REHM

11:50:43
All right.

ROBERTSON

11:50:43
I mean, let me just say...

REHM

11:50:45
Sure.

ROBERTSON

11:50:45
...that they've grown sales at 24 percent per year every year for the past five years. And they've grown profits at 40 percent per year every year for the past five years. so this is a company that's doing really well.

REHM

11:50:58
I should say.

ROBERTSON

11:50:59
And still failed at their only big innovation that they tried.

REHM

11:51:02
Wow.

ROBERTSON

11:51:03
And so, you know, there's a lot of good lessons for companies.

REHM

11:51:06
All right. To Brooksville, Fla. Good morning, Nicholas.

NICHOLAS

11:51:12
Good morning, Diane. Thanks for having me.

REHM

11:51:14
Sure.

NICHOLAS

11:51:15
I just wanted to say that when I was a young kid LEGOs was one of my greatest toys that I ever played with. I remember the very first major LEGO I had, it was a space shuttle with a little docking station I had to build. It took me, you know, the whole weekend but I just -- you know, I thought it was great. And I think LEGOs really give kids the creative intuition they need that they may lack in other areas. And I just think they were a great toy for me when I was growing up.

REHM

11:51:45
Yeah, I think there are a lot of people who would share that thought, Nicholas. Thanks for calling. By the way, we do have a photo of the LEGO Falling Water on our website. That's drshow.org. Here's an email from Keefer who said, "Diane, you mentioned how LEGO appeals to adults. I can attest to that. I'm an engineering student and a design intern at an aircraft company. Lots of my fellow classmates talk about how we used to play with LEGO as a kid. And in an odd way that pushed us toward our engineering career. Pat"

REHM

11:52:39
What do you think of that, David? Do you think that quite frequently that may happen that kids really get fascinated with the idea of creation and building and structure and how it works?

ROBERTSON

11:52:57
Oh yeah. And I think that once you click that switch in a kid, even if they move away from LEGO, the switch stays clicked, you know.

REHM

11:53:05
Yeah, I think you're right.

ROBERTSON

11:53:07
I see it for the college kids that I teach, the undergrads in my class that I -- when I talk about the LEGO case, you know, some of their eyes just light up. It brings them back to good memories as a kid.

REHM

11:53:17
And you're listening to "The Diane Rehm Show." Let's go to Paris, Tenn. Good morning, Doris.

DORIS

11:53:29
Good -- this morning.

REHM

11:53:31
Oh dear, I'm afraid you're breaking up on us, Doris.

DORIS

11:53:36
Oh, are you able to hear me now?

REHM

11:53:38
Yeah, a little better. Go right ahead.

DORIS

11:53:41
Just wanted to tell I saved all my son's LEGO. He's now an adult with sons of his own. And a couple of years ago, as his boys were entering the LEGO phase, I went to the attic and brought down those earlier LEGOs. And the first words out of these then seven-year-olds mouths were, oh gosh, these are classic LEGOs. And he recognized a difference in the -- just the fact that they were an open-ended kind of thing versus the sets that he was used to.

DORIS

11:54:14
So they've enjoyed playing with those and not having to -- you know, the directions that the new sets have. They just kind of take those and their imaginations take off. But they still can separate those out. There's something about those, I can't always tell the difference, but they know the difference between their "dad's classic LEGOs" and their newer ones.

REHM

11:54:33
I'm glad you've called, Doris. What do you think, David?

ROBERTSON

11:54:39
Well, I think that this is quite deliberate on LEGO's part that, you know, parents I think look for the bricks and the construction experience. But kids get captivated by the stories behind the LEGO, whether it comes from a movie or LEGO had this very popular toy called Ninjago that they commissioned a cartoon series around. And so they play out those dramas that are either on the box or from the movie or from the cartoon show. And they do it in LEGO and that attracts them quite a lot.

REHM

11:55:10
All right.

ROBERTSON

11:55:11
But again, you know, I think it's important that parents teach kids about the creative construction experience, not just replaying a story.

REHM

11:55:18
Indeed. And in just the moment we have left, you write that LEGO has launched its Cuusoo platform in beta. And what is that going to do? Tell us about that.

ROBERTSON

11:55:37
It's past beta now. It's off and going. So if you go to LEGO.cuusoo.com and that's C-U-U-S-O-O.com. Cuusoo is Japanese. Kind of loosely translated it means wish. Although I think the way you just said it, Diane, it means something quite obscene.

REHM

11:55:59
Oh, dear. Oh, dear.

ROBERTSON

11:56:02
So if you wish that LEGO would make a set then you can go to Cuusoo and put the set up on line. And if 10,000 people put a wish on it then LEGO will bring it out to market. One of the latest ones to be approved was the time machine Delorean car from "Back to the Future." A really fun set that I don't know that they would've come up with in Billund, Denmark. But their fans loved and so they're going to bring it to market.

REHM

11:56:31
Isn't that a fascinating way to innovate and a wonderful way to end this discussion. So sorry I mispronounced that. I'll be careful in the future. David Robertson, thank you so much for joining us. He is -- he teaches innovation and product development at the Wharton School of Business at the University of Pennsylvania. His new books is titled "Brick by Brick." Thank you for joining us, David.

ROBERTSON

11:57:14
Thanks so much for having me, Diane. it was a pleasure.

REHM

11:57:16
Thank you. And thanks for listening all. I'm Diane Rehm.
Transcripts of WAMU programs are available for personal use. Transcripts are provided "As Is" without warranties of any kind, either express or implied. WAMU does not warrant that the transcript is error-free. For all WAMU programs, the broadcast audio should be considered the authoritative version. Transcripts are owned by WAMU 88.5 FM American University Radio and are protected by laws in both the United States and international law. You may not sell or modify transcripts or reproduce, display, distribute, or otherwise use the transcript, in whole or in part, in any way for any public or commercial purpose without the express written permission of WAMU. All requests for uses beyond personal and noncommercial use should be referred to (202) 885-1200.

Our address has changed!

The Diane Rehm Show is produced by member-supported WAMU 88.5 in Washington DC.