ONE | Doing Business in the Lego World

“The assumptions on which most businesses are being run no longer fit reality.”

…The management world is only flat if you take an industrial perspective. If you just want the lowest cost, the capabilities exist virtually everyplace in the world to get the lowest cost. But if cost is not your only concern and you recognize that the industrial world has given way to an information and knowledge driven world, you will see that Indiana and India are not interchangeable.

In the twenty-first century, businesses exist in a Lego world. Companies are built out of Legos: People Legos, Product Legos, Idea Legos, and Real Estate Legos. And these aren’t just ordinary Legos; they pass through walls and geographic boundaries, and they are transparent. Everything is visible to everyone all the time. Designing and connecting the pieces is at least as important as providing them. It’s crucial to remember that these aren’t simply pieces of plastic or metal – they are not just factories or warehouses. They are also humans who program computers, train newcomers, and think about innovation as they prowl malls, libraries, and parks, coming up with new products. These pieces are constantly being put together, pulled apart, and re-assembled.

My company’s Legos – manufacturing, distribution, skills, and services – cannot be unique unto themselves; they have to connect with your company’s Legos. I can build my company, but in a year or two, my CEO and I might have to tear down and rebuild part of it in a totally different configuration, perhaps with fewer American People Legos and more of your company’s People Legos in Sweden or South Africa. Leading visionaries in business are expressing the same notion. Ray Ozzie, Microsoft’s chief software architect, recently explained: “What’s more important than any one individual Lego is that you know how to build with all the Legos. With everything out there, all those programs and applications and accessories, what’s important is the ability to find a way to connect fragmented software pieces rather than simply finding the next piece of software.”

That’s the idea that Peter embraced, but it was larger than software and components. He thought in terms of people, with a tremendous sense of humanity and compassion for the individual. That’s the beauty of it. We are not talking about commodities. We are talking about individuals and their ability to create. As these Legos connect and interconnect in ways we could never have imagined a decade ago, when the Internet was in its infancy, we find a powerful, human structure. In an organization, we can connect individuals’ strengths, minimizing their weaknesses. And across organizational boundaries, we can connect the strengths of each corporation and provide the customer with far greater value than can any single enterprise.

Amazon exemplifies the Lego approach in the retailing arena; it connects with other vendors who have expertise in making everything from textbooks to toys. Its Web site links you to book publishers, third-party used bookstores, individuals reselling books, and vendors for any product you can dream of, from televisions to telephones to T-shirts. Amazon knows you, and, when you log on, it welcomes you by name and offers you purchase suggestions at lightning speed. It often knows what I want before I do. It’s the high-tech version of the old grocer who not only knows you by name but also has a hunch you need sugar before you run out. The company is connected to you, your mind, and your credit card. It is the connection that is important. Dell took its expertise and understanding of the electronics world and connected that capability with each consumer to greatly increase its impact. Amazon linked one Lego to another, from baby clothes to DVDs, and created a simple interface offering the consumer scores of products and incredible ease of use – one-click checkout. Jeff Bezos had the patience and foresight to build a company around connections, and, after a decade of testing, learning, and growing, he made a profitable business. He also had the insight that told him that building an initial customer base around books would insure that his core customer would be literate, savvy, relatively affluent, and likely return to purchase more.

…There are no competitors. Let me repeat that, because it’s something that Peter Drucker loved to say: There are no longer competitors, just better solutions and more choices that can be put together in more ways