“Its supply chains were long and expensive – at one stage with 11,000 contractors Lego had more suppliers than Boeing used to build its aircraft! And its product development had become increasingly complex, with many product ranges involving such a wide range of choice – for example the Pirate figures had no less than 10 different leg designs, each with its own clothing – that it became difficult to manufacture economically.”
Joe Tidd, John Bessant from their case study on managing-innovation.com.
Fortune magazine named Lego as “toy of the century” in 1999 but by 2003 Lego was on the verge of being sold off after years of massive losses.
At that time Lego didn’t analyse the profitability of each product range. When new management launched a review, they found that only one line was actually making money (Bionicles).
Part of the problem was that Lego’s highly creative designers were designing kits that had many custom pieces and over small volume production runs they were not recovering the costs of developing the complex molds. Whereas standard rectangular blocks were produced by the millions, effectively reducing cost to almost 0 cents per block, the complex low-volume blocks were costing many cents per block.
The solution to the problem was relatively simple. Lego’s designers were asked to design kits with a high percentage of standard parts with a much smaller percentage of custom parts, with each custom part requiring justification. Lego designers still had a huge scope for creativity. In fact in many ways the constraints actually forced the designers to be more creative!
The analogy for OSS is multi-layered:
For OSS product developers, it is common to get creative to solve a customer’s (or industry’s) requirements. It’s even more creative to resolve those requirements from a more constrained set of code or product modules.
For OSS product customers, there is a need to develop services, products, processes, etc around clever building blocks, as described in more detail in yesterday’s blog.
I’m sure you can think of many other layers where modularisation and simplification are key objectives within OSS.