I have reported in this newsletter on August 30 about the new LEGO mass customization venture, Lego factory. Just a couple of weeks after its launch, the venture got a new drive and development. Here is an update:
At Lego Factory, users can create their own unique Lego models – using interactive software that helps them to overcome the engineering problem of combining basic modular elements (Lego bricks) into a new creation. Also, compared to the conventional building sets of Lego, the users are not restricted to the distribution of bricks in a pre-fabricated kit.
This is where mass customization comes into play: With Lego Factory, the company manufactures the bricks necessary for the model and ships them to users so they can assemble their models. Customers can also buy the bricks necessary to build from other people's designs, which are posted on the site.
Lego Factory is based on a toolkit for user co-design, called Lego Designer, a free, downloadable, 3D modeling program that lets users choose from digital collections of bricks to compose their own unique models. But as in many cases, once a company offers its users an innovative, more interactive way to create new products, some users want even more.
Already 15 days after its launch, the web site was hacked. The problem was that Lego used a simple algorithm to assign bricks to a user's unique creation. Instead of matching the blueprint with the exact number of the correct bricks, the Lego assembly center has pre-packed packages of bricks, and matches a user's designs with these packages.
The result: users got (and paid!) often for far more pieces than they really needed. At the same time, they were missing a few others that were integral to the creations, and had to purchase more packages. That made designing and buying models sometime very costly. While a child using her father's credit card wouldn't bother with this problem, adult fans of Lego, who adopted the Lego Factory rapidly, did.
So the adult Lego community became innovative: They collected information about the exact combination of each brick package (called a palette in Leo Factory language) and compiled this information in a database that lists which bags must be purchased in order to collect specific bricks. On top comes an algorithm that optimizes the number of bricks based on a user's design by making modifications in the design or at least promoting a warning if a user selects a part that would cause an additional order of a package of bricks.
In a great article about this user initiative on CNET Networks, the author Daniel Terdiman quotes Dan Malec, one of the user developers (Malec is a software engineer from Stow, MA):
"You'd see a lot of fan creations [on Lego factory] costing $400 or $500 because fans are not using the bags efficiently. If you could see it at the bag level (instead of the larger digital palettes offered by Lego), maybe you might make a different decision. Maybe (instead of buying) that one piece which takes a whole bag that you're not going to use, you might choose a different bag."
So users created a very beneficial addition to the company's offering, however once that undermines Lego's sales opportunities. But most astonishing, Lego's reaction has been largely positive. Terdiman quotes a Lego executive that "the adult community found out within a few days (of the Lego Factory launch) how these bags were mixed together. It was a puzzle to us. They took us completely by surprise." But the Lego manager added: "We really encourage and embrace some modifications of our software."
And while in the moment Lego has not incorporated the development of the Lego fan community into its proprietary Designer software, it may do so in the future:
"It's not surprising to us that they're doing the hacking, because that was the hope, that they would take the core of what we're doing and own the system" for themselves, Jacob McKee, Lego's global community relations specialist is quoted in the CNET Networks article. "We want to release more and more content and development tools to help that process along. The hope is that they really start to take this on and start to do things we haven't even thought of yet."
This is really an astonishing remark and could serve as a role model for many other companies who often fight against user modifications and do not recognize the input from the company. And will it pay off? I strongly believe so. Just google for user comments on Lego's reaction on this user hack, and you see that customers just love a company that encourages its users to become innovators.
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