I never noticed LEGO’s not-so-LEGO Galidor action-figure line, but it was a disaster, and even within its core construction toy business, LEGO was foundering:
LEGO managers had given designers free rein to come up with ever more imaginative creations. And they took it. Left to their own devices, designers conjured up increasingly complex models, many of which required the company to make new components — the various bricks, doors, helmets, and heads that come in a rainbow of colors and fill every LEGO box. By 2004 the number of components had exploded, climbing from about 7,000 to 12,400 in just seven years. Of course, supply costs went through the roof, too.
Even more troubling was that the new designs weren’t resonating with kids. That freedom to create elaborate new designs had a price. “It was making us more stupid,” Smith-Meyer says. All you needed to do was look at the fire truck in its LEGO City line. It went from being a conventional hook-and-ladder rig to a futuristic hot rod. Its cockpit-like pod for a driver was nearly twice the size of the back of the truck, where presumably all the firefighting gear was stored.
The truck looked cool to the adult designers, but kids hated it. “It totally failed,” says Nipper, the executive vice-president. The design free-for-all turned the LEGO City line, once among the largest pieces of LEGO’s business, into a shell of its former self, accounting for just 3 percent of the company’s total revenue, down from roughly 13 percent in 1999. “It literally almost evaporated,” Nipper says.
Looking back, Nipper doesn’t find fault with the designers. “Management was to blame,” Nipper says. “The same people who were doing crappy products then are making world-class products today.” Managers, rather, let those designers go wild. And, Smith-Meyer says, they did. “We almost did innovation suicide. We didn’t do a lot of clever components. We did a lot of stylized pieces,” Smith-Meyer says. “We wanted to be Philippe Starck” — the French industrial, interior, and furniture designer famous for everything from juicers to motorcycles. LEGO had assumed it would flourish by giving its designers whatever pieces they asked for in order to unleash their creativity. Instead, costs soared as the models veered toward the esoteric.
Just as design pushed LEGO to the precipice, it helped bring the company back. But here’s the paradox: Instead of giving designers free rein to conjure up their most brilliant creations to save the company, LEGO tied their hands. Instead of rubber-stamping nearly every request for a new component, LEGO put each one to a vote among designers. Only the top vote getters — the ones other designers imagined they could use — would be added to the palette. And it eliminated rarely used pieces, slashing the total number of components to about 7,000, the same number as in 1997.
LEGO also forced designers to come out of their cocoons and work with noncreative staff. At the earliest stages of product development, marketing managers, who had detailed research on the types of products kids wanted, helped guide development. Manufacturing personnel weighed in on production costs before a prototype ever saw the light of day. Gone were the days when designers could go wherever their imaginations took them.