What every company can learn from Lego

August 6, 2013: 11:28 AM ET

Lego has built an open community of robotics enthusiasts who have helped make the company's products better.

By John Hagel and John Seely Brown

<> on June 27, 2013 in London, England.

FORTUNE -- By now, many businesses are aware of the benefits of ecosystems -- communities of suppliers, partners, vendors, and customers -- and the idea that there's value to connecting participants with each other. One fax machine alone, for example, has no value. Connect that fax machine to another, however, and suddenly the machine has value even though nothing about it has changed. The value grows with each additional machine connected.

Now imagine that the fax machines can learn from each other, gaining additional capabilities and getting better at what they do with each interaction. The more fax machines connected, the greater potential for interactions and the greater the rate of learning.

That is the fundamental power of a dynamic ecosystem: Participants interact with each other with the goal of learning faster, getting better, and increasing the capabilities of each participant and the value of the entire community.

MORE: Why didn't Buffett buy the Washington Post?

In a dynamic ecosystem, participants benefit from sharing ideas and resources, a sense of common purpose or passion, and from learning how to use a product or service better.

Consider the Lego Mindstorms community. Once its platform was in place, the company discovered that the love of Lego robotics extended well past the 12-year-old boy. The group encourages members to share completed and ongoing projects. Members discuss challenges they are having and solutions they have discovered, while the platform allows them to be recognized and rewarded for developing new products or expertise.

Lego makes its robotics software openly accessible, and Mindstorms members have modified and built extensions off of it that they can share with each other. Periodic challenges, such as the most recent "to build a robot that can be used to improve the quality of life for senior citizens," encourage members to team up. Live events allow enthusiasts to meet in person and showcase their skills. Participants also have the opportunity to apply to be part of an exclusive team, the Mindstorms Community Partners, which develops and tests new ideas, products, software, and hardware for Lego.

Most business ecosystems today are static. They focus on coordinating a fixed set of resources among a limited set of participants. But companies can turn those static communities into dynamic ones. For example, a coffee chain might pose a challenge to its cup and paper goods suppliers to solve the problem of accidental food and beverage spills. Or the company might pose a broader challenge of eliminating packaging waste or reducing its overall carbon footprint and encourage its partners to work together on the problem. Such challenges allow members to work together and begin forming relationships with each other. The result: one or more dynamic ecosystems nested within a larger, static one.

MORE: The myth of America's missing software engineers

The bottom line is that you can derive more value out of a dynamic ecosystem (if done right, it can be the gift that keeps on giving) but creating one requires a new attitude. In a world where out-collaborating the competition is more important than out-competing it, the greatest risk you face might be in missing the opportunity to participate in the rapid learning and performance improvement of a dynamic ecosystem.

John Hagel III, director in Deloitte Consulting LLP, is the co-chairman of the Deloitte Center for the Edge based in Silicon Valley. John Seely Brown is the independent co-chairman of the Deloitte Center for the Edge.

Join the Conversation
About These Authors
John Hagel III and John Seely Brown
John Hagel III and John Seely Brown

John Hagel III is co-chairman and John Seely Brown is independent co-chairman of the Silicon Valley-based Deloitte Center for the Edge, which conducts research to support corporate growth. Hagel has nearly 30 years experience as a management consultant, author, speaker and entrepreneur. From 1984 to 2000, Hagel was a principal at McKinsey & Co., where he was a leader of its strategy practice. Brown is a visiting scholar and advisor to the provost at the University of Southern California. He was the chief scientist of Xerox Corporation and the director of its Palo Alto Research Center. Brown holds several patents and was inducted into the Industry Hall of Fame in 2004.

Email John & John
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.