LEGO - mission for digitalization

Aspire Case Competition Nusantara Helte Consulting Alfan Rezani - Ethenia Novianty - Ghina S. Filiana Wednesday, April 13th 2016

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Executive Summary Challenge

Complications

Solution

Finding the pathway to create a new, agile, and integrated approach for the project model

Initiating a new way to ‘experience’ LEGO products following a new digital disruption by optimizing customers insights

Create a new digital initiative that fits into LEGO core product lines as well as LEGO Group strategy

Apply data-driven approach along with an agile process into a new digital initiatives The need to adapt to a rapidly changing trends where it leads to more than just digitalization

Executive Summary

Analysis

Adding data-driven attitude and customer insights as new adjustment to new project model

Strategy Proposal

Implementation

The road map should be in line with core competencies and culture of the LEGO Group

Risk Analysis

Outcome

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LEGO Agile Digital Initiatives How does LEGO create a new digital experience and transform its future decision making and development process?

Goal

Context

Lego is one of the first-movers in toys industry and has opportunity to expand to a new digital experience ● Strong in traditional toys, but still figuring out how to step into the digital trends ● The digitalized products that LEGO has launched are: LEGO MINDSTORMS, LEGO DIMENSIONS, LEGO NEXO Knights Merlok 2.0, and LEGO Universe (has been closed in 2012). However, these products have not been very succeeded yet. ● Issue with combining digital trends and physical brick-building experience.

Transforming LEGO digitalized products into a success core product line

Integrating digital trends into the LEGO experience

Embracing big data and consumer insights

Applying disruptive digital experience

Executive Summary

Analysis

Strategy Proposal

Implementation

Risk Analysis

Outcome

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Pyramid Principle

Executive Summary

Analysis

Strategy Proposal

Implementation

Risk Analysis

Outcome

From traditional approach to a new digital era Digital Trends ●

New focus on consumer experience and engagement

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High reliance priority on big data & advanced analytics

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Impacts on LEGO

Rapidly new changing market trends that lead toward more innovation

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Force to have new approach towards digital product development

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Increasing level of flexibility and adaptability

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Allowing more customer insights and big data to be taken into consideration

“The Digitalization of Everything” Executive Summary

Analysis

Strategy Proposal

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Implementation

Risk Analysis

Outcome

And Everything is awesome!

Digitalization should NOT replace the True LEGO experience

LEGO Mindstorms LEGO Dimensions

LEGO Nexo Knights Merlok 2.0

Source: LEGO foundation, 2009

● Programming aspect is more dominant than building bricks ● LEGO bricks are just complementing the game in the screen

● Over diversification with no physical experience involved (has been shut down in 2012)

LEGO Universe

Executive Summary

Weak points:

Analysis

● Lack of physical experience of touching LEGO bricks

When too much modifying digital component in the LEGO products and it is more dominant than the physical building bricks experience, the true brand value of LEGO is in risk

Strategy Proposal

Implementation

Risk Analysis

Outcome

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Our new initiative should match key trends in toy industry with LEGO core values

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“Coveted Collectible” Socialization and share experience with their family and friends

“Bring Toys to Life” Combining technology with innovation with traditional toys to provide more interactive experience

Executive Summary Source: Toy Industry Association, 2016

“Brain Booster” “Family matters”

“Ultimate Creator”

Increase family bonding, online/offline, through toys.

Helping families create memory through play

Toys teach children to skillfully build and design that can later be implement in life

Analysis

Strategy Proposal

Implementation

Encourage kids’ proficiency and support children as they grow and gain new abilities, while also having fun

Risk Analysis

Outcome

Hint!

“More than Reality”

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Combining Virtual and Physical Experience Artistic Mode

LEGO is already in a strong position in toy industry with high branding perceived from consumers. But LEGO, which has a history of blending tech into its traditional building sets may get another chance to let its consumer to experience more than just ‘reality’.

Virtual

Physical Virtual - Physical

We want to bring the journey with combining both playfulness and imagination in the act of constructing LEGO bricks

Artistic - Scientific

Hint!

“More than Reality”

Scientific Mode Executive Summary Source: LEGO foundation, 2009

Analysis

Strategy Proposal

Implementation

Risk Analysis

Outcome

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Big data-driven would lead us to more innovation, yet optimization

Driving Agility with Big Data

Analyzing various information and data input can help LEGO deal better with change through a straightforward optimization process Gathering all the data on anything you’re doing will help you make recommendation on what to adjust for the better process Can help LEGO to adapt and analyze future initiatives or new development ideas

Driving Innovation with Big Data

Executive Summary

Analysis

Strategy Proposal

Innovation is a result from various data and insights from many aspects, including your market, consumers, or your own business.

Taking Big Data-driven optimization to the highest level is how companies make the most of their breakage-prone widgets

Implementation

Risk Analysis

Awesome!

Outcome

Our Recommendation Will Bring LEGO to a NEW Level Developing Existing Products + + + -

Creating a New Experience

Based on past experience Required no new expertise Minimum investment Non adaptive Over-diversification Provide no new value Provide less physical ‘building bricks’ experience

+ + + -

First mover advantage Open to a new business development perspective New insights gained from every process and technological development High investment Limited expertise

A new experience built will develop more innovation and bring LEGO to a new level Executive Summary

Analysis

Strategy Proposal

Implementation

Risk Analysis

Outcome

Introducing LEGO Beyond Reality

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Behind the Augmented Reality, not JUST virtual The trend of using Augmented Reality (AR) for gaming and entertainment has been increased and is predicted to keep rising for the next 5 years.1

With AR it can project someone that is located far away as if they are in the same room and these people can have real time interaction when both of them are using AR device.

A new software will be developed. and consumers can experience the augmented reality through Hololens by Microsoft.2 This will bring LEGO to a new level that allow consumer to experience both physical play and virtual digital component.

Executive Summary

Analysis

Strategy Proposal

Implementation

Risk Analysis

Outcome

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Matrix Prioritization

Augmented Reality allows a higher degree of ‘building bricks’ physical experience compared to mobile app and online game. It is also a new technology that brings great innovation in the future. Hololens by Microsoft is the most recent innovation in 2016 that provides many benefits.1 Executive Summary

Analysis

Strategy Proposal

Implementation

Risk Analysis

Outcome

Developing the new software, while using big data inputs and various insights

Gathering data from both external and internal sources

Start preparation to application testing

- consumer insights - internal developers - external developers Open innovation allows external (third party) to collaborate in developing software

Through ‘open innovation�, it will create more efficient and desired outcome as it is based on the real demand and current trend

Develop Executive Summary

Analysis

Strategy Proposal

Implementation

Risk Analysis

Outcome

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Evaluate and Improve even more through app testing ● Conduct an app testing from our new-built software in several region leader for LEGO market by using Microsoft emulator ● Analyze consumer behavior and consumer expectation through testing ● Perceive cultural differences and different global trends, then transform it into opportunities as LEGO strength in adaptability ● Through continuous testing, LEGO could analyze the market dynamics and create business agility in the process development

Software Testing Executive Summary

Analysis

Strategy Proposal

Implementation

Risk Analysis

Outcome

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When the market is ready, we will be more than ready!

During Launching ● ● ●

Post Launching

Campaign hard!

After continuous testings, it has create strong positive customer experience impact Quality and long term focus on service development will attract not just only children, but adults to have more fun!

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Create added value to the service by initiating new platform where people can share, connect, and socialize each other among LEGO-enthusiasts

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Continue to seek for more improvement by being data-driven & using agile development process

Isn’t it awesome? yet...

Launching and Market Acceptance Executive Summary

Analysis

Strategy Proposal

Implementation

Risk Analysis

Outcome

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To be ready, we have to start NOW! Wait, but How does it actually work?

1 year

2 year

We will develop an app that can be used in HoloLens that can also be used in any other Microsoft/ WIndows devices, that can bring our consumers to a new level of playing LEGO

Executive Summary

Analysis

+3 year

Through HoloLens, playing LEGO is not just building bricks by bricks.

Users can download an app developed by LEGO and use its ‘virtual’ instruction with characters that they like or play together with other users in real time Strategy Proposal

Implementation

Not just that!

But bringing LEGO bricks to life is also one of our goals, where consumers can ‘experience’ what they have built, e.g. being in a Star Wars movie.

Risk Analysis

Outcome

NERD stuffs!!

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Functional Benefits of LEGO Beyond Reality Bring The Children and Parents to Play Together (even within Long Distance)

In many countries, especially in America and Asia, parents are reluctant to sit down and play together with their children because many of them are very busy at work (less work-life balance).1 LEGO Beyond Reality will facilitate and bridge the distance barrier when parents are at work, but their children needs a guidance from them when they want to build LEGO bricks. It will also bring them closer!

Teach Children to Build LEGO Easier (with Virtual Assistant) Many children, especially those under 6 years old cannot read manual instructions in LEGO well to build the bricks. LEGO Beyond Reality that is equipped with a software will project LEGO figures, e.g. Emmet into real life that will assist children in a more engaging way on how to build the LEGO bricks step by step as if they are interacting to each other in real life.

Executive Summary

Analysis

Strategy Proposal

Implementation

Risk Analysis

Outcome

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Moving to digitalization, there are always solutions to mitigate risks!

Insufficient data at pre-product implementation Similar move from followers/other toy companies Unpredictable AR hardware price Zero consumer adaptation for AR technology Mitigation for the highest risk : Aggressive push strategy by developing another LEGO product that is very attractive to improve adoption rate of AR followed by Integrated Marketing Communication of the new LEGO Beyond Experience Executive Summary

Analysis

Strategy Proposal

Implementation

Risk Analysis

Outcome

We recommend LEGO to implement digital initiatives through LEGO Beyond Reality Create a totally new experience

Combining physical and virtual experience will create a new experience that is inline with LEGO core values

Augmented Reality is the perfect digitalization

Augmented reality has a steady growth as well as providing platform for big data generation and agile development processes

Beyond Reality Experience as a new LEGO service

To create a digital initiative that becomes the core product lines of LEGO, data-driven process in every step of Beyond Reality Experience will support the goal of transforming into more digitalized adaptive process model

Further digital development

Project model has been changed into data-driven approach, the market of AR/hololens has grown and been used more by consumers. It is the time to keep testing (post-test) for better digital experience.

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Executive Summary

Analysis

Strategy Proposal

Implementation

Risk Analysis

Outcome

Appendix

Appendix - Importance of Digital Innovation

Source: McKinsey Survey 2014

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Appendix - Intention to play

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