A digital journey at LEGO

All right, thank you very much for inviting me here today. I want to take you through part of the digital journey that we've taken at LEGO and look at the last couple of years leading up to where we are right now. I could spend a lot of time talking about what we're doing in our marketing side, on the digital side, but that is a lot of my fantastic colleagues that are working there. So I would rather talk about what are we doing in terms of our products. What are we doing there when we're looking at what is digital for LEGO now and in the future. And we are very much experimenting our way into it and that is also one of the things I found very exciting when I saw some of the other presentations that it is a lot about data. And that is also what we are doing. We are tapping into as much data as possible to understand what are the consumers looking for and how can we use that in the best possible way. I'm leading a group in LEGO of 25 people working on digital product technologies. That is technologies that can bridge between the traditional physical LEGO experience and digital experiences. So we've been involved in some of the products here that I will share some of the stories with you about. So I'll talk a little bit about our early trial. Then what we in LEGO called a small experiment. Which was a launch in the American market. And then the next big thing that we've launched. So taking you guys back a few years to 2012 is where we launched this experience here called Life of George. That was the first experience where we merged between physical and digital where you get a box of LEGO bricks. And you get the play mat there. And then there's an app. And the product is about building a LEGO figure, scanning it with a camera on your iPhone. And then being rewarded for having built the right model. And when it was launched we got a lot of recognition there from a lot of media that this was very new. This was very inspiring. But actually what matters the most for us. Is these kind of awards. That we're influencing kids. There's about a seven year old that loves the game. And can play it for hours. And the only problem is that this kid needs to borrow the phone, the iPhone to use this app. So it's a new kind of problems that we're creating in the homes of the consumers. And still the pain of walking on the LEGO bricks. But now we also make the kids borrow the parent's iPhone if they don't have one themselves. But for us this was a very new journey. And being a traditional toy manufacturer there was a lot of things that we needed to learn internally as well. We know how to sell LEGO products. We've taught the consumers how to understand the LEGO products. But how do we communicate something that is both digital and physical. When you take the box down from the shelves. There's not that many bricks in as there would be if it was a pure physical product. So how do you communicate this about there's a digital side to it as well. And one of the things that we did was to start doing what we call privatizing. So actually going out into the stores. And making sure that the consumer. Making sure that the consumers can try out the products. See that there's more in the box than just the physical bricks. Which was very important for us to just experiment with this. And what we saw was actually that we saw a lot of smiles around those privatizing booths. As soon as we got the kids to play with the product. They really engaged with it. And they really felt passionate about the experience. And they wanted to go on and on. But we needed to put it in the hands of them. And give them an opportunity to try it out. But that built a lot of learnings. And that was just a confirmation for us that there's something here that is worth pursuing even further. And we have traditionally the last many, many years done a lot of market research. And we're doing that still. Also in the digital market. And some of the learnings of findings are also things that for you here in the room. I'm sure. Is more or less given. Because you deal with this on a daily basis. But from a traditional production company. These are new things as well. So some of the things that we saw was that smart devices are radically changing the way that kids and adults play. And the technology is now available in all households. Being a global brand. It is still a challenge to see. See all households as one. Because the markets are very, very different. And that is some of the things that we're looking at. Also because what we've done until now is to make global launches with the same product in all markets. We'll still do that. But I think definitely with the eyes on technology. There may be reasons for considering whether that's the right approach going forward as well. Yeah. Thank you. Yeah. So with the approach to digital and experimentation which we really encouraged here. Is that we actually pushed for making sure that in this area here. That everything's big starts small. And that is also what we wanted to do. We wanted to experiment our way into digital. Instead of doing something really big. And that also meant that we needed to. Educate the business. The company about the new things. Some new things that they hadn't necessarily heard about in corporate management. And one of them was to do pilot launches. So actually doing small things. Iterative development. And just having a market entry. Try things out. And then build from there. That is a very new approach to LEGO. Because what we've done is we've been successful. So we have had the luxury of being able to launch big. And then just push our marketing machine in front of it. And open the markets. But we couldn't do that in digital in the same way. So we needed to take a different approach. But it didn't mean that we had small ambitions. We just wanted to scale responsibly instead. So what we did was the work on LEGO Fusion. It was a product that we launched as I said only in the American market. With a few of the retailers over there. So still a very, very big launch. But from a LEGO perspective as a limited launch still. It was again a box of LEGO that you bought. There was an app linked with it. And it involved mobile gaming, brick recognition, creativity and a unique 2D building. So any one of you familiar with LEGO Fusion here? A couple? Yeah. So it is something that it lived in the American market to just capture some learnings there. So for us 2014 it was really a learning year for us. And the approach we have to product development is that we do a lot of experimentation through the product development cycle. And that is also what we did here. So we'll just see if we can. So we talked with some of our consumers. Do they want to mess the world? Yeah. I hope they should. I hope they do. I've never had anything like this. Not in the clothes. It's like unique. You could keep playing this over and over again. There's no limit. I think they should really do this because like it's really cool. It's like a mix of LEGOs. And like video games. Which is like kids two favorite things. It's also really fun. And you can get to play video games while your mom thinks you're doing LEGOs. Gosh. If you want to stay engaged with children you have to go to a virtual world. Are you saying that LEGO would be making a big mistake if they didn't continue to get into the digital part? Yes. That they could lose kids? Yes. Yeah. Because it's safe. Yeah. I can't wait for this to hit the shelves. If he knew what this was he would want to go to the store right now and spend every dime he has saved on this. And this is going to be off the charts for him. So there was definitely something to build on there. So what we did was launch this experience where you wanted the... There were four different sets. One of them was where you built townhouses. So you start with building creatively to a challenge that you get in the app where there's a 3D environment. You enter into this 3D environment and meet minifigures where they ask you to build a pizzeria or a bakery because they need food in there. Then you capture your creation with the camera. So take a picture of the model or scan it. Then your creation comes to life in the app. So you can walk around as a minifigure plays the house where it makes sense. And then you can inspire it to challenge in the game to continue that loop here. So going around in this circle. Going from physical into digital. Back into physical, digital. And that is very much our ambition. It's not that we want to drive kids from the product, from the physical product into digital. We want to drive them back as well. So we need to find a way. Find those play mechanics that can take them back into the physical world and continue interacting with the bricks. And then go into digital again. So we launched this in August 2014 in the US. And again, we just got some amazing reviews. The media really liked the products. They were very excited about what they saw. And some of the statements there. This might be the coolest thing LEGO has done since that movie. Since the LEGO movie. I think that's fantastic. So there was definitely a lot of excitement around this. So again, it was a confirmation for us that this experiment was the right thing for us. We just needed to build more learnings and continue iterating on this. And therefore, again, tapping into big data and all the analytics. That we heard about in one of the previous sessions. That was also what we did. Because with digital, that gave us opportunities that we haven't had before. We could monitor our consumers in a completely different way than what we've done before. And therefore, we set up tracking systems to look at both things that come from the physical. With in-store experiments, brand and campaign tracking, entry and exit interviews. So a lot of things in the physical world. And then doing testings pre-launch. And we did post-launch with NPS. NPS is Net Promoter Score. That's how we measure the experience from the consumers. Where you rate a product experience from 1 to 10. In-app surveys, consumer sales tracking and so forth. So we did a lot to invest in capturing learnings. Capturing learnings from this product launch as well. And we also did some in-home studies as well. It just seems that we've got so much more. Even though there is certainly not a lot going on yet. But we are at a beginning. Like, levels and all that. This will be a big Christmas gift. I was telling all our friends. This will be huge. It's only $35. At this age, you need stuff for these kids. Is it true that you can play without the stuff? People are going to buy the stuff. But you know what? You just play the app with the numbers they have on here. You have to like hold it really still. And we had trouble scaling it to then put it into the app. When we tried to scale it. I think it should be a bit easier to scale now. It's not that easy for me to scale. So I'm going to take a picture. Is that frustrating? No. So I couldn't do it by myself. Because I had to have my mother like actually put it in. I don't like it when you have to focus it. Get it to like 16 blocks. Do all that like percolation and all that. The scaling is a little challenging. It should be easier. I don't like it when it's like 13 hours later. Finally I got focused. Yes! I'm really bad at making 3D things. I'm like the best at making 3D. So things you can just put it in 3D and then it comes out in 3D is a really cool thing that you can do. Thank you. Thank you. They play a lot of Minecraft. So I kind of thought, you know, this might lose interest and head back to Minecraft. But I have to say this held up. I would say it was a very equal play time with this ENG and that only being. I thought it was pretty awesome. You could just build this part. And then once it's scanned into the app, they built it and they build the rest. And it's not just flat in the game. You can walk, you can try to die. I like that you get to go to your own town. You make people happy, you make yourself happy, you get to save people and they give you a lot of points. And you get to go on missions to put out the fire and stuff. It's two of the things they did when I was young. I think it's a risk for the company because they're so non-linear for what they do. They're jumping into a new world that they don't have a lot of experience in. Perhaps it doesn't work well or there's technical problems. They run the risk of losing some of their customers. I don't know. I'll just say that maybe they have to go this route and I think kids their age is under a lot of technology. It's just something that even if you try to fight it, it's going to be better. It's always going to be better. So, it's not an easy journey and there's a lot of things that we need to consider. Quality is very key to us. So, creating quality experiences for the kids is important. And as you saw here, this kid here really expressed the challenges of being able to scan and recognize that of course he can't sit here and do that. We need to help him. And it is a challenge for us to work with technologies that may not be completely mature but we still want to push the innovation barrier. And that is what we feel we've done with this product as well. And also this about that there are apps and there's Lego and how can we make experiences that go between the two is something that we are looking very much into. But it is a challenge and that's also one of the reasons why this approach about building something, learn and then adapt, it's very important and very crucial for us to have those iterations because that is how we have seen that we can crack the formula and move forward. So, we built on our learnings again on what we saw on fusion and said let's try something again. And the next experiment was then Lego Dimensions that launched recently. It was a new technology again so we were taking a look at the competitors when we developed it and looked at both Skylanders, Disney Infinity and Amiibo that Skylanders has been in the market for several years Infinity for a while and Amiibo coming up as well. So there was definitely something so we didn't have to go in and penetrate a market, we came in to an existing market which was a help for us because we didn't have the same communication challenge to the consumers because they already understood what I am buying to my child. And there was a lot of things there as well with now looking at how Skylanders developed and made this where first the game ran on consoles and then moved into tablets so what platforms do we want to offer this experience that we are developing, where do we do that as well. So we did monitor and follow the market very much, very closely while we were in development with Dimensions. And where we took it was to build this interactive gameplay where you have the portal there that you build yourself and then you have characters and vehicles, weapons, animals, robots and so forth that you can mix and match in the game so depending on which of the characters you place on the portal you get those characters into the game and can play out the story universes. And you get the chance to mix and match the characters between the different story universes. So tapping into both some of the toys here and also enabling rebuilding so that you can actually progress and get new building instructions so that Homer when he starts he has this car but then you get instructions to move on and build other models to unlock more in the game. So it was a different technology not using cameras here but using RFID tags to create this experience. But it just goes to show that we want to push the innovation barrier. We are trying different technologies. And we have a lot of exciting things in the pipeline as well. Before coming down here I sat in meetings right now where we're talking about so what are we doing, what are the technologies, what is relevant for us in 18, 19, 20 and there's so many opportunities out there so we're just looking forward to try things out again and see how the consumers will see LEGO because I'm sure that the LEGO experience that most of us have had during our childhood will not be the same that we see in 10 years time. And we're trying to crack the formula of what will that be. And we are on that journey right now. Yes? Thank you very much for an inspiring look into the forefront of technology development at LEGO. I'm sure there are some LEGO passionate people amongst the audience who might have some questions or comments or who want to know a bit more of what is then coming in 18, 19. Any comments or questions? At least I'm seeing two passionate LEGO. I'm going to start over with you. Hi, I'm an AFL so it's natural to do these questions. Let's go between digital and the physical object. I see LEGO as the forefront of doing this but I also see a lot of other businesses looking at LEGO and see what is LEGO doing especially with the fusion, not as much with the dimension because as you mentioned we've seen that. But this crossover between digital and physical you said you're doing a lot of inspiration but where do you find inspiration looking forward? I think that's a very good question actually because years back we could look at our competitors for some inspiration but it was also to look at storytellers and other people that develop creative materials because in essence that is what LEGO is. It's a creative material. So right now I don't think that we should necessarily look in the toy area. It's also what are we doing in museums? What is happening in experience parks? There's a lot of areas and also in the start up areas. There's a lot of things happening that can inspire us very much. And that's mostly me from the technology side and then there's my colleagues that work more on the experiences for the kids and I know that they're scanning the whole world so traveling to Asia to be inspired as well. Talking with media companies to see what are the coming opportunities. So it's a very broad spectrum that we need to scan in order to find the inspiration. I don't know if it's as much a comment as a question but I think maybe this could actually bring back the core LEGO value somehow with digital because what I've kind of seen the last five or ten years with LEGO is that it's becoming very much a trophy toy. So you buy these very expensive boxes and you build them and especially with a friend Siri, my girl in seven years, she built it and she never rips it apart. And if she rips it apart she will never collect it again because she can't find all the different things you know. Whereas I think this is very much the core of LEGO once again where you actually build and rebuild all the time and kind of getting the playback into LEGO. I don't know if that's something that you talk about at LEGO and how to maintain the values of LEGO even though you're digitizing everything. Yeah, that's, I think it's a very good observation and it's something that we definitely have discussed internally as well. I don't think that we can just copy the physical properties of the LEGO bricks into a digital space and then expect to deliver on the core values of LEGO. There needs to be more than that. And that is some of the things that we are looking into. So what is LEGO in a digital context? Not necessarily just making a one to one copy but how can we tap into the true values of LEGO and deliver on that in a digital context? And we're trying out and see how can we do that. And again getting inspiration from other sources than where we've necessarily looked right now. But it is definitely a challenge for us. What is LEGO in a digital context? Yes. I would like to learn more about your strategy on Internet of Things. Have you considered that as, I think you have, as a part of the 2020 strategy? Yes. And also a little bit about how your target group, I mean my son loves your LEGO, my daughter thinks it's totally boring. And how does that apply to Internet of Things? Does that make any possible things according to the female target group? There's definitely a lot of new opportunities coming with Internet of Things. So the ability to be able to control and interact with devices very small gives new opportunities to make your models come alive in a completely different way than what has been possible before. So we are looking into what will the future bring when we can have sensors near the LEGO bricks or if we, is there something when there's a speaker that have wireless connection, can we do something there? So there's a lot of opportunities that open up to expand the play experience and the story universe. So we are definitely exploring what can we do in order to connect and utilize Internet of Things. How do you consider dimension compared to competitors? Do competitors have something that are fixed? You can't change those. I have a friend, this is going to be under the Christmas tree this year. It's bought and it's there already. But he is, my oldest is eight. He wants to put chains on Emmet's machine to whip around with. He wants to probably put some guns on there or whatever. One thing is what he wants to do. He doesn't want to allow guns, but how does he put that on there? Because he can't put it on Skylanders because it's not possible. But here, he can find all this LEGO stuff and put it on. How do you handle that expectation? In Minecraft, you can make machines that can build stuff. He can push a button and then they actually build something for him. How do you see that dilemma? It is definitely a dilemma that we would like to expand the story universes from the digital space into the physical. And hopefully your son will be inspired from playing and using the models here and then act out some of the story universes on the room, on the floor and in the playroom afterwards. So that he goes between physical play and going into digital again. But there are limitations with the technology that we have right now with RFID tags because it is a number that is being put into a machine and that won't change depending on what model you put on top of it. And that is just what the technology can offer right now. But hopefully, and that is what we've seen and the reason why we're building these story universes is that we actually see that when the kids see the TV series for Ninjago or for LEGO Chima, they actually get engaged into the story universes and want to play out those stories that they've seen in the room afterwards. And we believe that that is also what will happen with experiences like this. And offering more, I feel we do offer more than Skylanders where you can customize the models here, actually adds a layer to what our competitors are offering right now. Yes, it's nice to see that the DITMO environment is creating a lot of questions which was the comment from the early start of today that we should have an open dialogue. Any last comments or observations? Hang on. I was just curious now that we're also talking about this concept of Internet Week and what are the competencies that you look for in your team, both now and also what do you encompass in the coming years and you need? The last couple of years it has been developers and project managers or producers you can say. But what I see is that we'll start hiring technology scouts because we need to monitor the technology landscape even more than what we're doing right now. So that's definitely something that we'll do. We need prototype developers so that we can have these fast iterations, build something, get it in front of some consumers, capture some learnings and have that iterative approach as much as possible. And we can't necessarily get that only with using external vendors. We need to do that in-house where we can have these fast iterations with the design team, bring in some kits and see just the assumptions we have, does that hold. So that is some of the areas where we're building up competencies. Well maybe that should fit in with the closing remark that we hope that you'll want to be part of Internet Week 2016 and somehow use it as a platform to find some of the new staff that you'll need in the years to come. Thank you very much for joining us. Thank you.