The innovation expert and author of a book on LEGO discusses the human side of innovation.
LEGO construction bricks are ubiquitous toys played with by children—and also many adults—the world over. LEGO was also, of course, the inspiration for the wildly successful 2014 film The LEGO Movie. But in the early 2000s, LEGO’s story was far different; the Denmark-based company was in trouble, with its sales in free fall. How LEGO employed innovation to turn itself around is the subject of the book Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Toy Industry by David Robertson, a highly regarded expert on innovation and product development. A professor at the Wharton School of the University of Pennsylvania, Robertson researches innovation management and consults to U.S. and European companies on reaping the returns from their innovation investments.
Robertson spoke with GO about the challenge of defining innovation, LEGO’s lessons for other companies, and the role HR must play in driving innovation.
GO: How would you define innovation?
Robertson: I think the definition of innovation is changing. It used to be about developing the next product, the next car, the next widget, the next whatever. And I think we’ve evolved that pretty significantly, and we’re now realizing innovation can be lots of different things. It’s not just products but also services and channels to market, business models, ways of pricing things, internal processes, etc. When Ford invented the assembly line, that was innovation. When Dell changed the way you configure and assemble and deliver personal computers, that was also innovation. The problem is that we’re caught up in this trade-off, this dichotomy, this balance between incremental and radical innovation.
GO: By radical innovation, do you mean what’s often referred to as disruptive innovation?
Robertson: Yes, disruptive, little versus big. I think this is a dangerous way to think about it because what many companies are doing—LEGO is one of the best at this—is actually getting all the benefits of big innovation from well-integrated little innovations. In other words, by doing lots of little things and putting them together really well, they get all the competitive advantage of a big innovation without the risk. I feel LEGO’s story has lessons for every company. That’s the reason I wrote Brick by Brick.
GO: Is innovation something that morphs over time, or is it more of an absolute that gets interpreted and executed differently as we move forward?
Robertson: I think it’s something that every company has to define for itself. You have to think both where and where not you are going to innovate. I had a wonderful conversation with the head of marketing for a Triple A baseball team, a very innovative company that cannot innovate at all around the core product. I mean, baseball is baseball. But they’re doing amazing things about the experience around baseball. They’re doing all kinds of things: giveaway nights, rebranded uniforms and logos, new mascot, even video games in the restrooms. Their challenge is unique, right? When a minor league baseball team becomes successful, the corporate parent is going to reach in, take their good players, yank them out, and make the product bad again. They have the worst corporate parent, one who demands profitability yet works to sabotage the product. Like many companies, this organization is making lots of small, fairly safe innovations, but creating a compelling proposition that’s hard to match.
GO: Why do you think so many companies struggle with innovation?
Robertson: I think companies struggle because they’re always structured and organized around the last big innovation. Organizational structure and process are lagging indicators of innovation success. They show us that we did a big innovation successfully many years before and now the way we hire people, the way we train them, the processes we use, the rewards systems we set up—everything we do is around that last big innovation, which makes the next one difficult because we’ve become very good at the old way of doing things. And then when companies find an opportunity to do something really new and different, they have trouble fitting it into that structure and those processes.
GO: What’s the human side of innovation? How should organizations align talent with doing something new?
Robertson: The human side of it is that everybody should be thinking about innovation in the company. Too often I’ve seen companies where innovation is for the engineers and R&D, but if you think about innovation more broadly than that, if you think about innovation as something more than just products, then you have to involve many more people from inside the company and start partnering with other companies outside the company.
As an example, there are lots of different people at Apple who are always thinking about not only the next little device, but also with whom they should partner to bring in more interesting content and how they can innovatively market it. When Apple came out with the iPod, it was a nice little device but a fairly incremental improvement over what already existed. iTunes, on the other hand, where you can buy one song at a time and not have to buy the whole CD, and the way they then expanded it to be not just music but movies, books, and apps—there’s the true innovation. Apple partnered with a lot of people—record companies, book publishers, movie studios, app development companies—to create an entire Apple ecosystem that makes owning the iPod, then the iPhone and iPad, much more valuable.
GO: What’s your sense of ways in which HR is innovating, and how can it become more innovative?
Robertson: I think HR is really critical as we change innovation from something that just engineers do to something that lots of people do. HR must create all kinds of new roles, new processes, and rewards systems. HR’s job is, in part, to help with this kind of organizational design, to be that thought partner with the management team, to think about people structure—who’s going to be in the key roles, how to think about succession planning, careers, annual reviews, and so forth. If you don’t get that right, you kill everything in terms of innovation. You doom yourself to the same stuff that you’ve been doing in the past, and your competition is going to surpass you. If HR isn’t on board and really helping to restructure, rethink, and redo the way the organization works—then all this falls apart.