Jason Lopez: Lego got its started in 1932 when Ole Christiansen began making wooden toys in the town of Billand Denmark. The name Lego was coined two years later from a Danish word "play well" or "le godt," in Danish.
Jason Lopez: In the 1940s Christiansen started making toys from plastic and hit upon the idea for Automatic Binding Bricks. After some trial and error in the development of the bricks by the 1960s, the company settled on ABS plastic, which is what Lego bricks are still made of today. Gram says after the company nearly went bankrupt, it recognized that those plastic bricks are more than meets the eye.
David Gram: In the brick business is a core business, there's a lot of innovation happening, actually. In fact, legal has more than 400 unique skews products are launched every year. About 80% of the portfolio are changed every year. It's like the fashion industry. On the second level, we have innovation labs, not just one big R & D lab, but multiple innovation labs across the value chain. And then we have Lego ventures as the third level. It's anchored outside the main business in the holding company is completely off the balance sheet and invests strategically in startups, but it also builds new startups based on ideas coming from the ecosystem. And the approach to this is thinking big, but starting really small.
Jason Lopez: Perhaps one of the obvious innovations in toys is putting computers in them. Lego has collaborated with high tech companies, such as Intel and Google and with organizations like NASA.
David Gram: So what happens when toys and powered with artificial intelligence? So they can actually learn and think based on the interaction with the child. And then if you add robotics, now the toys can actually behave, move the way that the kids would expect them to. And if you add voice and speech, now the children can have conversation with the toys. And if you then connect all the toys to the internet of things, the toys can actually start playing with each other. So when the child leaves the bedroom, the toys will still be playing. It'll be like toy story, come to life, right? And on top of that, you can add augmented mixed reality, so now the child connects the physically see the stuff they imagine happening right in front of them in the physical world. So all this has got to definitely to change the toy industry entirely. And for someone who's really, really good at injection molding, that's a big thing that we need to take seriously.
Jason Lopez: It's easy to assume Lego must be all in on information technologies infused in their toys to capture the hearts and minds of kids, as well as the pocket books of their parents. But if you look at the work the company does to understand its users, Lego's motto "only the best is good." Enough is a driver behind inquiries into child creativity in may of 2020, the Lego Foundation published "Assessing Creativity: A Palette of Possibilities," featuring essays by researchers and scholars of child development. Gram says the world of toy making has more dimensions than just getting a child's attention. It's also about how toys affect that attention.
David Gram: All these things can do great things for kids. No doubt it can empower their creativity and can create awesome things, but it can also do the opposite. It can take away the creativity. It can remove any need for imagination. Basically hook them up to the matrix where they're just passively consuming, awesome content. That's basically pacifying them. They don't need to be creative because there are no cracks or gaps in what they're experiencing that they need to fill out. So there's a moral responsibility here for a company like Lego, but for any company in any industry to say, how do we make sure that these technologies actually deliver long-term value for users?
Jason Lopez: Lego does in-home studies with families to understand how things go in households, how kids spend their time, how they play. These understandings don't necessarily tie right back into the next toy design. Lego innovation operates a bit like a tech startup creating opportunity zones to prototype ideas, often working with partners and on an open platform. It's a strategic venture where R and D is not enough. Things need to launch and actually get tried out.
David Gram: So to get it right, the first time aim to iterate, and it's easier said than done. Everybody wants to get it right. It's in our nature. So how do we cultivate this more child is way of playing and learning. And it's about also how to measure performance. This needs to be more like a startup as something that's maturing over time and growing.