LEGO as a platform and as service

LEGO as a platform and as servicePlatforms are all the hype nowadays. Whether it’s iOS, Android, Uber, or Airbnb, it seems that platforms are set to inherit the Earth.

I have examined the platform hype and the deeper meanings derived from reinterpreting platforms through a lens of service-dominant logic before, and in this post I want to turn the focus to LEGO.

What? LEGO is not a software company that provides a platform for other companies to sell their wares, what has it got to do with platforms? While it is different, I claim that LEGO is, indeed, a platform, and I’ll show you why and why it matters – and how to go beyond that to LEGO as service.

LEGO as a platform

In terms of service-dominant logic, a platform increases the amount of accessible resources available to its customers to solve a particular problem by establishing itself as a new institution within a new service ecosystem. A platform does not limit itself to entering an existing market – it changes the rules of the marketplace and creates a new market for itself.

This is essentially what the LEGO System of Play was designed to do! It was meant to give children (and even adults) the means to create their own play, instead of handing out ready-made solutions. With complete interoperability between any bricks past and present, the LEGO System of Play is the platform on which a whole ecosystem is based. Children of my generation used LEGO not only with LEGO, but also to build vehicles, buildings, and furniture for action figures and dolls. It is this platform aspect that gives LEGO much of its longevity via spanning over generations. It is this platform aspect that has enticed people to found LEGO Users Groups (LUGs) all over the world, and unleash their creativity using LEGO.

LEGO is a forerunner in crowdsourcing with its LEGO Ideas (formerly Cuusoo) portal where it collects customer suggestions for new sets and works to create the most popular ones with a cut of profits going out to the originator of the idea. Lego Minecraft sets, for example, were created based on customer demand on this portal.

LEGO also uses the power of creation in its marketing, for example around LEGO Architecture, where various competitions bring out the creative side of LEGO customers.

Being a platform also implies that other companies can take LEGOs and do something with them. An example of this is Pley, the “Netflix for LEGO.” Pley is not only renting out LEGOs but it also runs its own crowdsourcing portal that is actually creating more new crowdsourced LEGO sets than LEGO’s own Ideas portal.

However, LEGO itself started drifting away from LEGO as a platform in the early 2000s in their innovation spree, and has not completely returned to the platform since. While the worst cases of single-use products and bricks that are only useful to build the designed model are now in the past, consider how most of LEGO’s ventures into digital (except for LEGO Universe) have been rather simplistic and without much room for creativity – and I say this while owning almost all of the LEGO titles made by TT Games. At the time when I’m writing this, the launch of Funcom’s revamped LEGO Minifigures Online (the original did not do that well) is less than a week away, but I don’t have great expectations for that one either.

The competition

There are two types of threats to LEGO within the ecosystems of creative play: displacement of LEGO as the central actor while retaining the paradigm and displacement of the LEGO System of Play entirely.

When looking at what happens within the paradigm, the most obvious competition comes from the various copy products, as the brick design is no longer protected. Mega, Kre-O, Cobi, Star Diamond, and tens of others, take your pick. Some of the competitors are also pursuing the licensed IP route that kept LEGO alive during its hard times a decade ago (the competitors have licenses for Skylanders, Smurfs, Halo, and Transformers, among others).

When it comes to displacing the System of Play entirely, one needs to just look into the digital space and Minecraft – inspired by LEGO but transcending it and delivering the real joy of creativity to the digital world. I have played a fair bit of Minecraft with my son and can attest to both the fun and the learning one has while playing it. Interestingly, Minecraft is also a platform: when you look at Minecraft streams on Twitch, for example, most people are not playing vanilla Minecraft but are instead using some of the thousands of user-created mods to tweak the game to their liking.

Even when it comes to merging digital and physical, LEGO is a latecomer, as Toys for Bob already started the hype with their highly successful Skylanders in 2011, followed by the likes of Disney (with Infinity) and Nintendo (with amiibo).

The LEGO strikes back…

LEGO has been hard at work for the past few years in experimenting how to create digital experiences and how to merge digital and physical together in what LEGO calls One Reality, with products such as LEGO Fusion taking fledgling steps into that direction.

This spring has brought about two major announcements from LEGO in the digital space: LEGO Dimensions and LEGO Worlds. LEGO Dimensions (available this autumn) is the LEGO version of Skylanders that brings LEGO to the center of the toys-to-life genre, while LEGO Worlds (currently available on Steam Early Access) is the LEGO version of Minecraft.

While these releases come somewhat late, that does not spell instant doom. First-mover advantage, while real, is often overrated. For example, Apple did not invent the MP3 player, smartphone, or tablet, but they have been hugely successful with each.

…but is it agile enough?

LEGO has clearly recognized that in order to remain relevant and not merely a niche product in the increasingly digital world, it needs to find ways to enter the digital realm and ideally find ways to merge physical and digital. However, so far LEGO has not been able to bring the platform aspect of its products to the digital realm, and it may not even recognize what it takes to become a digital platform.

One of the problems with running LEGO Universe was the high cost to make sure that everything the players built that could be seen by other players was suitable for children. While LEGO Worlds currently does not struggle with this as a single-player game (multiplayer to be added in the future), it is still not fully a digital platform, as mod support remain unconfirmed (you can import models from LEGO Digital Designer though).

As a physical platform, the LEGO System of Play can get by with innovation within the rules of the brick. As a digital platform, that is insufficient. In the digital world, the expectation is that the rules of the game can be modified for something to be a platform. (Taking a long-term view into emerging manufacturing technologies, 3D printing in particular, does raise the question whether the rules of play even in the physical world will be expected to become malleable in the future.)

How viable is a physical platform, anyway?

While many of the good things experienced by LEGO are the result of their System of Play as a platform, there are some fundamental differences between physical and digital platforms, and to an extent a physical platform is not as sustainable as a digital one.

Why did LEGO start moving away from its platform-like features in the early 2000s? Because LEGO was not doing very well. It needed something more than just the bricks to entice people to keep buying its products.

There are two product lines that basically sustained LEGO during the most difficult years: Star Wars and Bionicle. Both of these had a strong story aspect to them. Powerful stories are a vital ingredient to success in the physical realm. Some of these can be built internally (Bionicle, Ninjago, Friends), but the quicker route is often to license them (Star Wars).

It is also prohibitively expensive for other companies to operate within a physical platform. While selling an app in the App store gives a cut to Apple, selling LEGO bricks in new combinations means buying all of the original bricks from LEGO – and thus giving most of the profits to LEGO.

Thus, it is no wonder that LEGO faces competition from multiple copy products, some of them with strong licensed IPs to support their sales.

Nonetheless, by maintaining the platform aspects of the System of Play, LEGO can extend its longevity beyond the individual stories as well as possibilities for customer to combine stories, and this makes maintaining the platform a smart move. Platform alone just isn’t enough, it needs to be combined with an understanding of the context of the customers’ lives in order to create appealing products within the platform – essentially, the service of service-dominant logic.

Can LEGO disrupt itself to create a digital platform?

Innovation within the confines of the System of Play and powerful IPs have been a recipe for success for LEGO in the physical realm. They have also created a number of successful digital titles, although these titles have mostly been relatively good games that just happen to use LEGO visuals.

Creating a digital platform, however, would require something more, something that breaks the success formula of LEGO: it would require enabling customers to innovate beyond the System of Play.

Does LEGO need to do this? Probably not. Most digital products are not platforms. However, sandbox environments do have a certain appeal of longevity about them, just consider Minecraft or EVE. They are also the most creative digital environments there are, so here we come to the question why does LEGO exist? “To inspire and develop the builders of tomorrow.” In order to fulfill its mission in the digital world, LEGO needs to break its own rules.

Most architects have played with LEGOs in their childhood. LEGOs are an inspiration on building things, and with Mindstorms, even an inspiration on robotics. A digital builder, however, is a coder, who does not take physical pieces and arrange them in a new order, but instead has the ability to change things in a more fundamental way, to freely deform, reform, and create, with no boundaries. In a way, 3D printing is bringing some of this to the physical world as well by enabling the manufacturing of shapes that were previously unattainable – but not unimaginable.

LEGO could cross the chasm between physical and digital and create both interplay between the two as well as enable things in the digital realm that are not possible in the physical realm. In order to inspire and develop the builders of the digital tomorrow, LEGO should move beyond the System of Play in the digital realm.

If it doesn’t, it might still do fine as a company. It will just be entertainment then, though, not development of the builders of tomorrow, and a big part of the appeal of LEGO is its mission that goes beyond entertainment and into enlightenment. This is the unique service LEGO provides, and the way to provide it is through a platform. Realizing this mission in the digital space, however, requires new thinking.

Author: Ville Kilkku

I run my own consultancy business, so if you find the ideas on this blog intriguing, contact me at consulting@kilkku.com or call me at +358 50 588 5043 and we can discuss how I can help you solve your business problems. I am currently based in Tornio, Finland, but work globally. Google+