1. It doesn’t have to be new. It just has to be fresh.

The toy brick was invented (and patented) by British toymaker, Hilary Fisher Page in the 1950s. But when LEGO released its own riff on the brick, they made some very important changes to ‘freshen up’ the idea for the Danish market. One of those important changes was the little tubes underneath the brick for extra ‘clutch power.’ This twist allowed children to build tall towers, roads, and even little cars—something that wasn’t possible with previous versions of the toy.

2. World-building through partnerships

Two key imagination-sparking innovations followed the original brick—kits and minifigures. Kids could now create entire transportative worlds and characters’ stories in their living rooms. These products also enabled LEGO to stay at the center of the cultural zeitgeist via excellent partnerships. LEGO toys are always at the ‘front of every toy store’ due to their perpetual cultural relevance, whether the latest craze is Star War s or Harry Potter .

3. Lean into the advantages of your medium.

When LEGO moved from making wooden toys to plastic toys, they were able to bring over many of their development practices and cultural norms—attention to detail, precision, and craftsmanship. This worked really well for the company. A huge part of LEGO’s moat is their unique precision manufacturing skill. But this attitude did not serve LEGO well when they attempted to build a video game. While LEGO engineers were spending months and even years trying to render the brick exactly correctly in a digital environment, indie game developer, Markus ‘Notch’ Persson, launched Minecraft as a team of one. He perfected the game by releasing new versions very quickly, racking up over 36 million users and $100+ million in sales in its first three years.

4. Take innovation one bite at a time.

When a business takes off, it can be tempting to go on an innovation binge. LEGO was no exception—it almost lost everything. In 2003, when the new CFO, Jesper Ovesen (former CFO of Danske Bank) joined, he conducted a sweeping financial analysis. The results were stark, and in a presentation titled What is the price of good management? he revealed that LEGO had lost $1.8 billion in economic value. The LEGO family had depleted its own fortune at a rate of half a million dollars per day! Cue an immediate, company-saving shift ‘back to the brick’ and away from other shiny objects that weren’t pulling their weight.

5. How do you maximize innovation without going off the rails? Try a points system.

In 2004, LEGO learned that of the 14,200 pieces it produced, 90% were only used once. Producing these pieces lost the company money, while common pieces that could be used across multiple kits yielded much higher margins. LEGO found itself walking a tightrope—how could it preserve the unique feel of each kit without bleeding money? Its solution was a smart points system, where design teams could choose how to allocate their points. Highly customized pieces cost the most. Constraints breed creativity—like the Eiffel Tower balustrades (hot dogs) and the orchid flowers (frogs).

Five lessons from LEGO - Colossus