Monday, March 20, 2006

Will Lego Execute?

When reviewing Lego bricks and third party hardware, I intend to tell you the good and the bad about the item. Otherwise, I don't feel like it is a real review. Pointing at a few minor issues with a product doesn't mean I cannot like it as a whole.

Likewise, when I look at a company, I can see some things they did really poorly, and still like the company or their products. Lego is in this case.

With Mindstorms NXT, Lego set out to engage their audience. They got 4 users involved in the design, and they went out of their way to engage more people via the Mindstorms Developer Program. So far, the culmination of that effort was the story in Wired, that got a lot of people excited about Mindstorms.

Unfortunately, Lego seems to have taken too much on its plate. When Lego started the MDP, it boldly announced that it would notify everyone who applied for the MDP program about the result, even those not selected. It turned out that over 9600 people applied for the MDP. Still, in the marketing business, sending out 9600 mails is just business as usual. So sending out a polite "sorry" note to all participants seemed like the right thing to do.

Unfortunately, to the surprise of many, Lego did not accomplish this seemingly simple task. Unofficially, Lego has offered a story about emails that got caught in people's anti-spam filters, but this story is not in check with how the Internet really works. It appears that what really happened is that Lego's IT department has killed the "sorry" messages that went out from Lego's Marketing department.

Regardless of what happened or what event was to blame, where Lego really failed to execute is when, despite being well aware that the majority of these "sorry" messages did not arrive with their recipients, they made no (succesful) effort to resend the message. They have also not made any attempt to get a more credible story out on what really happened. It appears that the executives running the NXT MDP did not investigate what really happened, or did not use unbiased advise to investigate this. For a marketing program that tries to show off Lego's user-centric approach, such an attitude seems counterproductive.

We can only hope Lego improves its act as it goes forward. And it will need to do so, because more of its choices are already irritating future customers. As the product gains market visibility, these issues will only become more widely discussed.

For instance, in a tightly knitted community that is spread over the globe, there is an expectation that everyone is treated equally by Lego. Including when it comes to pricing. As it stands, the "official" pricing is only valid in the US and selected other parts of the world. Canadians have to pay 20% for no apparent reason. Australian prices are 20% higher. Northern Europe also pays 20% more than the Southern Europe, yet they use the same currency, and taxes across Europe do not follow the same north-south divide. To show the absurdness of the situation: if I drive 30 kilometers (19 miles), I cross the magical North-South border and pay 20% less. There is nothing to declare when I cross the border due to free traffic of goods within Europe. With eBay replacing the middleman, I suspect online shops in the South of Europe will mail lots of NXT bricks to the Northern parts. No import/export taxes apply...

Perhaps Lego is right in taking the actions it does. But it will need to communicate better about its choices to its customers. Executing in a connected world is very different from the old business. Let's hope they deliver better on their core business, because pre-ordering the Lego Mindstorms NXT starts in just 10 days, on April 1, 2006 (no joke!).

I, for one, will not pre-order. I'm waiting till August, and I'm going to drive those 30 km. Well, at least for my second and third box.


At March 22, 2006 9:59 AM , Blogger osvold said...

Well, not only, that Lego have brutal differences between their products pricing (for example Minstorms set 2.0 is still about 300 EUR in Czech republic), Lego company also completly ignores the political changes in last years. No single country (including my country) from the 10 new members of EU is approved to have the chance to buy from Legoshop. That way, getting NXT set in August for me and another allmost 75.000.000 potential customers is not possible. Its really sad. I am prepared to pay those 280 EUR what is the official prorder price in Germany, but i have no chance to do it.


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