As a child, I was a huge fan of LEGO. A bucket full of colorful pieces occupied me for hours.

lego patent
Credit via LEGO

LEGO had no limit for creativity. I remember spending considerable time building planes and crashing them against the wall. The perk to destruction was an opportunity for creation.

Disruption

LEGO, as a company, was doing well up until 2003-2004 when the company defaulted on loans, had little money and was on the brink of closing down.

This was all due to a period of sailing for blue ocean markets and practicing creative disruption.

Blue Ocean Markets – Change a couple of dimensions and pursue an underserved population of the market, where there is no competition. Essentially trying to find untapped markets (not in the realm of their target clients).

Creative Disruption – Deliberately causing disruption to one’s organization to keep it nimble for changing markets.

Jack Stone and Virtual Bricks

During LEGO’s creative disruption, they pursued a Jack Stone series and virtual bricks.

jack stone
Credit via LEGO
Jack Stone was a set of LEGO pieces that were designed to be easy – snap together and play right away.

While the concept of immediate play sounds like a splendid idea, it proved to be fallible.

This was the same for virtual bricks. In the LEGO factory, users are able to build LEGO without any bricks.

Digital and cloud services are hot keywords, but not for LEGO in that aspect. Everything worked until it didn’t work.

Endowment Effect

Endowment Effect has a complicated definition. In a nutshell, we appreciate the items we invest the most time (money, energy …) into.

Looking back at LEGO, both Jack Stone and virtual bricks branched away from the essence of the company brand of “hard fun.” There was little to no ownership of something that can be easily built.

Fun is the happiness we experience when we are fully engaged in something that requires mastery (hard fun), when our abilities are in balance with the challenge at hand and we are making progress towards a goal …
The LEGO Brand

Think back to your own investments – be it a graduation certificate, your first car, and so forth. We value the things we invest the most time into acquiring.

Considering our own businesses, discounts without a barrier is the same as building a LEGO without a challenge. What barriers will you install? (Related article: Secrete on How to Handle Discounters)

Did you play with LEGO as a child? Or still do perhaps?

Happy Monday,

Lawrence Chan

P.S. It was really cool to listen to JΓΈrgen Vig Knudstorp (CEO of LEGO) speak at SXSW about what he did to turn LEGO around.

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