When Jørgen Knudstorp took over as CEO of the LEGO group in 2004, the toy company was in a state of decline. A lack of innovation and loss of market position led to the group posting their first loss in 1998. LEGO had lost sight of the needs of their customers. “We were not making toys that were sufficiently interesting to children. We failed to innovate enough,” commented executive vice-president of the group Mads Nipper (The Telegraph, 2009).
Realising a need to reconnect with their customers, LEGO launched programmes to engage users in the development of products. An online crowd-sourcing platform called ‘Cuusoo’ (Japanese for ‘dream’ or ‘wish’) allowed customers to interact, share and vote for ideas regarding the kind of products or services they would like to see LEGO implement. Opening lines of communication with users in this way enhanced engagement with their growing customer base and strategic developments came to be informed by the user community, propelling the company into greater sync with industry trends. Largely thanks to Cuusoo and other related projects, LEGO has come to be recognised as a world leader in toy innovation, boasting high levels of growth and posting a record profit of USD $1.87 billion in 2016.
The LEGO story, and others like it about ‘open innovation’, have important implications for implementation of strategy in the public sector.