From Lego to Web3: The Symbiotic Path of Companies and Communities.

Original Title: "From Lego to Web3: The Symbiotic Path of Companies and Communities"

Original Source: Empower Labs

Everyone in the Web3 world is familiar with Lego. We liken DeFi to financial Lego, DAO to organizational Lego, and in the future there will be business Lego and various vertical field Lego analogies. People like to use this analogy because various Web3 products often combine with each other, much like the creative combination of Lego blocks.

However, composability is far from the only inspiration that LEGO blocks give us. We often overlook the fact that having composability alone is not enough, and innovation does not just magically happen; an open and inclusive community is crucial for inspiring innovation.

With the mutual support of the company and the community, LEGO has risen from the brink of bankruptcy to become the number one player in the global toy industry over the past 20 years. This story demonstrates the importance of positive community involvement and provides a reference for achieving this goal. The LEGO case is not only worth learning for traditional enterprises, but also provides ample inspiration for the Web3 world.

(The revival of Lego is not only due to the community strategy, but also the result of various factors such as business contraction and focus. However, the community strategy has brought Lego a continuous stream of creativity and broad consumer support, which is one of the key factors.)

Half-hearted - The First Intimate Contact with the Community

Since its birth in 1932, LEGO has firmly occupied the main position in the toy market. However, in the 1990s, technological products such as game consoles and music players began to become popular, and children gradually lost interest in LEGO building block toys. As sales gradually declined, LEGO suffered its first loss in the 1998 fiscal year.

Faced with such a decline, Lego has made efforts to regain children's interest. In the late 1990s, Lego's R&D department developed many new products, including a set called Mindstorms, which includes a robot controller, three motors, three sensors, more than 700 building blocks, and software for programming the controller. Lego was originally designed for children of middle and high age, but soon found that 70% of their sales came from adults, and they bought these kits to play for themselves. Things quickly got out of control. First, a Stanford University student successfully decompiled the Mindstorms software, and within weeks, hackers from around the world cracked the toolkit and created more complex programs than the original Lego version, allowing enthusiasts to unleash their creativity.

In history, LEGO was a closed and proud company that insisted on quality and believed that "what LEGO made was the best in the market." Cracking from the community made LEGO's legal department very nervous and planned to take legal action.

But Lego hesitated for a long time. On the one hand, the lawsuit would be very difficult and costly, and on the other hand, the brainstorming team had different opinions. They believed that the reason why everyone cracked the product was because they liked it. After a long discussion, Lego finally gave up the lawsuit.

Let's cooperate. In order to cultivate this community, Lego has established an official forum and added a "right to hack" clause in the final user license agreement of brainstorming.

The result is very good. Both the official LEGO forum and the community-built websites are very popular. Fans from all over the world have created hundreds of web pages to showcase their new inventions and teach others how to replicate them step by step. Publishers have also started publishing books on how to program LEGO robots, and some start-ups have begun producing and selling sensors and other hardware compatible with Mindstorms. Community members have also organized robot competitions. Almost overnight, an ecosystem has formed around Mindstorms. Support from the community has attracted a large number of new users, resulting in the product being sold out before Christmas. LEGO has experienced the power of community involvement for the first time.

全面拥抱 – 社区成为核心战略

"Embracing comprehensively - Community becomes the core strategy."

Most of the products developed in panic in the 1990s ended in failure, almost dragging LEGO down, and multiple product lines were closed. Despite the brainstorming gathering a lot of community support, the management of the older generation of LEGO lacked sufficient enthusiasm for this product and community. In 2001, the brainstorming team was disbanded and the product was discontinued.

In 2004, LEGO was on the brink of collapse when Jrgen Vig Knudstorp was appointed as CEO. This gave the company an opportunity to reflect on its strategy, particularly the value of its relationship with the community. The new CEO quickly came to the conclusion - embrace the community.

"We believe that innovation will come from dialogue with the community."

Jrgen Vig Knudstorp, CEO of the LEGO Group.

Although the brainstorming product is no longer being updated, the community's enthusiasm for brainstorming has not diminished. The number of participants in the brainstorming competition has grown from thousands of people at the beginning to 50,000 in 2004. Therefore, the new CEO has decided to relaunch this series and hopes to invite the most active supporters in the community to create together.

Years later, when interviewed about this history, we found that LEGO did not have a deeper emotional connection to the community at that time, and even most members within the company did not understand or support the invitation of community members to create together. The new CEO ultimately convinced everyone based on several practical reasons.

1. The insights of community enthusiasts can increase the success rate of products.

2. Inviting the community to participate can establish better consumer trust.

3. Inviting the community to co-design the product itself has strong news value and may be reported by various media outlets, thus saving promotional costs.

4. The community will also spontaneously participate in promotion.

One sentence that can increase sales and save money.

Of course, the challenge was also great. Who is the right person in the community? How to ensure that the direction is not out of control? How to keep it confidential? How to dispel the internal members' prejudice against community collaboration? But in the end, Lego overcame all these difficulties. They discovered four of the most passionate elite users from the community to participate in co-creation. In 2006, the new version of Mindstorms was released, which achieved tremendous success. This is the classic Mindstorms NXT series.

One of the four community creators, Steve Hassenplug. Image source: Tech Insider

Lego Mindstorms NXT Image Source: Wikipedia

The increase in sales is not the only benefit. LEGO has since become deeply convinced of the power of the community, leading to a major shift in the company's strategy. Starting with a four-person elite team involved in design, LEGO began building a pyramid system, with different community enthusiasts divided into different levels, measured by their contributions to the product, such as designing new gameplay or finding loopholes. Community involvement has also expanded from brainstorming kits to more products, such as the classic train series makeover.

In 2006, an architect named Tucker used LEGO blocks to build the famous Chicago landmark Sears Tower, which attracted attention within the community. This dynamic was quickly noticed by LEGO, and eventually, LEGO and Tucker reached an experimental cooperation agreement, with LEGO providing blocks and brand authorization, and Tucker creating and selling 1250 sets of Sears Tower. Tucker and his wife completed the production of 1250 sets of blocks in their garage and delivered them to local souvenir shops in Chicago, selling half of them in just 10 days.

Lego Willis Tower Image Source: Wikipedia

After the initial success of the experiment, LEGO expanded the scale of the experiment and formed a temporary team within the company to complete the product packaging design, organize production, and other work in their spare time. They produced 4,000 sets of test products and sent them to more souvenir shops, which quickly sold out. Eventually, this set became LEGO's official product and quickly expanded into a series - the LEGO Architecture series.

LEGO Architecture Series - Shanghai Skyline

Starting from the LEGO Architecture series at the Hill House, dozens of popular products have been developed worldwide, achieving huge sales and expanding the user base to those who previously did not consume LEGO toys. Due to the high level of sophistication of this series, it looks more like an art piece than a children's toy, which has also enabled LEGO products to successfully enter many high-end retail channels.

Image source: Reddit user Neural-

As Lego gets closer to the community, it has also established a more comprehensive community support system.

LEGO Ambassador Network: Each certified LEGO community has an ambassador position, who has direct communication channels with the company and establishes connections with other ambassadors around the world to promote positive interaction between the community and LEGO.

LEGO certification experts: They are the most professional LEGO players and entrepreneurs, who have turned their passion for LEGO bricks into a part of their business and worked with LEGO to promote the brand ecosystem.

LEGO Ideas: An original design community created to encourage communication and collaboration among users, allowing them to share and evaluate each other's designs. Designs that receive high support within the community may be produced as official LEGO products. Designers not only receive recognition within the community, but also receive 1% of sales revenue as royalties.

LEGO World Construction: An online creative platform that allows LEGO fans, content creators, and story enthusiasts to collaborate and build a brand new LEGO world together. Users can create their own original LEGO world, design various characters, storylines, and environments, and participate in other people's LEGO worlds to discuss, modify, and improve them. Excellent works emerging from the community will be included in the official product line, and even developed into forms of content such as animation, movies, and TV shows.

BrickLink: a marketplace for buying and selling LEGO products, as well as a community space for sharing tips and designs. It also offers a free software called "Studio" for designing digital LEGO models. It was acquired by LEGO in 2019 and is now an important hub for innovation and collaboration.

Believe in the community and share power with the community

The story between LEGO and the community is very rich, and it's difficult to cover everything in one article. But now the storytelling has come to an end, and I believe that what has been shared is enough to inspire people.

We are all familiar with the term "community". Various companies also often mention "community" in various occasions. But the fact is, most companies have never had a community, and the "community" in the company's mouth often refers to consumers who spend money on our products. A community is a group of people with common interests, goals, or values. They interact and communicate with each other in a certain space (such as geographical location, online platform, etc.). From this definition, it is obvious that a group consisting only of users or consumers is not a community.

The ways and goals of establishing a consumer group and a community are different. The former aims to expand the scale as much as possible to increase sales. However, scale is not the primary goal pursued by a community. The goal of a community is to create closer connections among members and generate more meaningful interactions. Without these, even a large community will not generate significant value.

乐高社区的成功有几个关键点，

translates to

The success of the LEGO community has several key points,

1.     LEGO's products and brand culture are widely loved by players all over the world.

2.     LEGO's excellent interoperability provides better support for creative combinations.

3.     Lego has formed a culture of respect, support, and sharing power with the community, and has achieved excellent execution through a series of projects.

And when the community is effectively activated, there is an opportunity for community-driven innovation and adoption, which blurs the boundaries between producers and consumers. Consumers are no longer just consumers, they become producers, joining imaginative and non-traditional production work, creating a win-win situation.

Consumers have also become owners. Although LEGO has not provided consumers with true ownership, it at least makes the community feel like they own the LEGO brand. Psychological ownership is just as important as actual ownership. In the Web3 world, most projects have failed to establish effective communities because they have not been able to attract members who identify with the project and establish psychological ownership. In this case, all participants are investors or speculators, and they will leave regardless of whether the price rises or falls. They make profits and look for the next opportunity, or cut losses and form a rights protection group.

With the support of the community, the entire business ecosystem of Lego has been fundamentally changed. Starting in 2004, Lego gradually emerged from its difficulties and maintained high growth. Now, Lego is the world's largest toy company, and 2022 marks its 90th anniversary. In that year, Lego's sales reached a new high, nearly 11 times that of 2004.

LEGO Group Sales (in billions of euros) 2003-2021 Source: D. Tighe

Of course, there are also issues where the interests of the community and the company are not always aligned. For example, most community members are interested in participating in creation, but have no interest in helping companies with sales. In a highly active and interconnected community, the control of the company will gradually disappear, and sometimes the company's management authority will be challenged when its philosophy conflicts with the community's philosophy. But this is also the meaning of a symbiotic system, mutual input and support. An independent and active community is a true community, and is an equal partner to the company. If everything is controlled by the company, then the community is no different from a department.

However, in today's business world, most brands are unfamiliar with communities. They have millions of consumers, but do not know how to build communities, let alone share power with them and truly involve them in the creation process. But we also see a very good trend, many brands are bravely taking the first step supported by Web3 technology in new scenarios.

Web3 technology helps enterprises and communities form symbiotic relationships

The stories surrounding the LEGO community may be unfamiliar to most friends in the Web3 world. However, in a certain sense, we are also very familiar with such stories.

LEGO has successfully built a community through its open culture and people's love for the brand. LEGO encourages and nurtures the community to create better connections and interactions. LEGO has developed various mechanisms to encourage creativity and reward creators. The high standardization and interoperability of LEGO toys provide a foundation for convenient community innovation. Upon further research into the LEGO community, we can also find traces of DAO, discussing, collaborating, co-creating, proposing, voting, and even creator royalties.

However, in the LEGO community, everyone does not truly own control of the LEGO brand. The various works submitted by the community members do not grant them ownership of the data. To a certain extent, LEGO's support and power sharing with the community is a reward that can be taken back at any time. The vast majority of community members have not received any other rewards besides the joy of contributing value. This even includes the four community members who initially helped restart the brainstorming process. They even paid for their own plane tickets to attend the project discussions at LEGO headquarters for the first time.

This is not a criticism of Lego. Lego has gone much further than most brands. But it must be acknowledged that there is still room for further evolution in many scenarios. Even though most community members are already satisfied with the opportunity to participate in interaction and creation, as a business operator, more feedback should be considered for the community members, after all, everyone is creating value and supporting the brand.

Can we grant the true ownership of our creations to community members? How can we better identify the value generated by their interactions? Can we provide more reliable support and authorization for community support? Are there more effective community governance mechanisms for community projects? Can the community collectively own a part of the brand or at least share the value it creates? How can we explore more possibilities for openness and collaboration?

Web3 may be the key to unlocking all of this.

However, we should also realize that any technology is a tool. Web3 is a field born out of technological innovation, and various technologies and infrastructures are still developing rapidly. Therefore, the emphasis on the technical and infrastructure layers in the Web3 world is far greater than that on the application and social layers. But what we want is not the Industrial Revolution, the Internet Revolution, the Web3 Revolution, or the AI Revolution. What we want is for these technological revolutions to bring a better life to everyone.

And the company embraces the community, ultimately pursuing a culture that creates connections, encourages participation, respects every individual member of the community, and believes in and is willing to share brand power with the community. Because a brand belongs not only to the enterprise, but also to every consumer who contributes to its success.

Hi, I have building blocks, do you want to play together?

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