What every company can learn from Lego; Lego has built an open community of robotics enthusiasts who have helped make the company’s products better

What every company can learn from Lego

August 6, 2013: 11:28 AM ET

Lego has built an open community of robotics enthusiasts who have helped make the company’s products better.

By John Hagel and John Seely Brown

FORTUNE — By now, many businesses are aware of the benefits of ecosystems — communities of suppliers, partners, vendors, and customers — and the idea that there’s value to connecting participants with each other. One fax machine alone, for example, has no value. Connect that fax machine to another, however, and suddenly the machine has value even though nothing about it has changed. The value grows with each additional machine connected. Now imagine that the fax machines can learn from each other, gaining additional capabilities and getting better at what they do with each interaction. The more fax machines connected, the greater potential for interactions and the greater the rate of learning. That is the fundamental power of a dynamic ecosystem: Participants interact with each other with the goal of learning faster, getting better, and increasing the capabilities of each participant and the value of the entire community.In a dynamic ecosystem, participants benefit from sharing ideas and resources, a sense of common purpose or passion, and from learning how to use a product or service better.

Consider the Lego Mindstorms community. Once its platform was in place, the company discovered that the love of Lego robotics extended well past the 12-year-old boy. The group encourages members to share completed and ongoing projects. Members discuss challenges they are having and solutions they have discovered, while the platform allows them to be recognized and rewarded for developing new products or expertise.

Lego makes its robotics software openly accessible, and Mindstorms members have modified and built extensions off of it that they can share with each other. Periodic challenges, such as the most recent “to build a robot that can be used to improve the quality of life for senior citizens,” encourage members to team up. Live events allow enthusiasts to meet in person and showcase their skills. Participants also have the opportunity to apply to be part of an exclusive team, the Mindstorms Community Partners, which develops and tests new ideas, products, software, and hardware for Lego.

Most business ecosystems today are static. They focus on coordinating a fixed set of resources among a limited set of participants. But companies can turn those static communities into dynamic ones. For example, a coffee chain might pose a challenge to its cup and paper goods suppliers to solve the problem of accidental food and beverage spills. Or the company might pose a broader challenge of eliminating packaging waste or reducing its overall carbon footprint and encourage its partners to work together on the problem. Such challenges allow members to work together and begin forming relationships with each other. The result: one or more dynamic ecosystems nested within a larger, static one.

The bottom line is that you can derive more value out of a dynamic ecosystem (if done right, it can be the gift that keeps on giving) but creating one requires a new attitude. In a world where out-collaborating the competition is more important than out-competing it, the greatest risk you face might be in missing the opportunity to participate in the rapid learning and performance improvement of a dynamic ecosystem.

John Hagel III, director in Deloitte Consulting LLP, is the co-chairman of the Deloitte Center for the Edge based in Silicon Valley. John Seely Brown is the independent co-chairman of the Deloitte Center for the Edge.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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