How does LEGO stay fresh with no technical moat?
My kids sometimes buy off-brand LEGO sets.
When I was a kid, the off-brand bricks didn’t work very well. Now they do. I don’t know if patents expired or if competition found ways to innovate around them, but it doesn’t matter.
LEGO has no technical advantage. No product moat.
Yet LEGO still dominates the plastic brick business. In the last few years, they’ve shown record growth and profit.
LEGO does three things their competitors don’t
- Surround their products with stories and experiences
- Partnerup with other brands trusted by their customers
- Encourage an open ecosystem of creators
Experiences around the product
When I was a kid, you had LEGO sets and LEGO magazine. The publication provided plenty of fodder for my imagination as it showed the possibilities hidden in my bricks. It also made customers famous by allowing kids to submit photos of their builds, and some would get featured in each issue.
By the time I had kids playing with LEGO, they had become a full-fledged multimedia entertainment company.
They have original stories turned into shows, video games, feature films, books, comics, and more. They get to tell stories to kids (and adults!) that bring them into new worlds, using the bricks as a part of those worlds. The audience wants to enter that world too, and they can do it by buying the bricks.
Study the way they surround their product with media. It is brilliant.
Partnering up with trusted brands
I used to get frustrated that my LEGO version of the Star Wars TIE Fighter was multicolored and clunky. There were no custom sets back in those days.
LEGO realized that kids wanted to build scenes from their favorite movies. Instead of seeing other toy and entertainment companies only as a threat, LEGO made the savvy move to partner with them.
Today, you can buy sets from the world of Disney, Minecraft, Harry Potter, Nintendo, and more. All the major characters and brands kids love can be found in LEGO sets.
They turned what would pull customers away from their product and towards other new franchises into a win-win.
Encouraging an ecosystem of indy creators
Search YouTube for "LEGO stop-motion" and you’ll find hours of incredible videos.
Hobbyists painstakingly create scenes and stories with LEGO bricks, and have garnered millions of views and turned it into a great living.
There have been some lawsuits against YouTubers (LEGO claims they were passing off as official LEGO channels), but for the most part, they have left alone or even encouraged indy creators to post videos using LEGO.
And why wouldn’t they?
No company, no matter how strong their media game and brand partnerships, can compete with the long tail of individual users and creators who come up with imaginative designs and original stories.
There are LEGO builder meetups, clubs, conventions, and DIY guides and instructions galore. When you allow these to flourish, you have a truly antifragile ecosystem.
We can’t all be LEGO.
True, but we can all learn from LEGO.
Surround your products with experiences. Partner with those your customers trust. Encourage indy experimentation.
You can outlast product copycats when you do.
