The purpose of this paper is to analyze the benefit of IP modularity, and in particular how modular designs fill the gap between value creation and value appropriation in situations characterized by a distribution of knowledge across many actors.
In order to carry out such analysis, I will test the suitability of three out of the ten Henkel and Baldwin’s propositions (2010) to the product called Lego Mindstorms.
As a further premise, I would like to point out that, although Lego and its users do not perceive themselves as actors of modularity, I nonetheless suggest that the modularity framework represents the most suitable perspective to deeply interpret their attitude towards the knowledge-value creation dyad.
The Lego Mindstorms Case Study
In 1998 Lego released a brick-based robotics kit, called Lego Mindstorms, whose primary target was constituted by children. The flexibility and modularity associated to the Lego Mindstorms platform allowed for the prompt creation of different robot configurations. They did so by providing people with a motivation, with a first access to the world of robotic, and subsequently by according them an important role in rapid prototyping (Reshko et al. 2000).
Lego Mindstorms is composed by five main parts:
- The brain, that controls the robot’s actions (RCX);
- The body, the physical chassis;
- The actuators, like motors and hydraulic pistons, that allows the robot to move;
- The sensors, that give the robot information about the environment;
- The power source, that supply the juice needed to run the brain actuators and sensors.
When the first version was released, many complaints arose. Those mostly concerned its simplistic programming language, its limited capability to hold sensor values or other data, its subroutine, and its slow multitasking. However, while a disappointed young user might just stop playing with the new toy and toss it back in the closet, some adult users could change what they do not like and develop it in a more suitable way. For example Kekoa Proudfoot, a Stanford University graduate student, activated the so called “reverse engineering” and released on the Internet all his detailed findings – including the underlying software for the robot’s operations. The software release and its disclosure (against Lego’s intellectual property license), led to a burgeoning online community that created their own Mindstorms programming kits (Lakhani and Tushman, 2012).
Since then, many Lego’s fans have worked on the robot to make it more functional and congenial to their wishes. In 1998 David Baum – at the time software engineer at Motorola Inc. – developed, in a matter of days, a new version of the program protocol which was four times the speed of the original. Moreover, he created a new programming system that not only allowed to write and exchange codes more easily, but also provided a better control over the RCX hardware than did Lego’s programming blocks. In the meanwhile, John Barnes – an image-processing programmer – started to improve the sensors. It is crucial to emphasize that, already in these first moments, the modular design of Lego’s Mindstorms allowed every customers to select just one element of the product and challenge towards it her skills in order to improve it.
Such developments went against the company’s Intellectual Property. As a consequence, Lego could have sued these fans, especially considering that when Mindstorms was released on the market the boundaries of Lego were really locked outside. However, after some considerations on the part of the Group’s management, the company chose not to stop their fans’ creativity by opening legal litigations because such decision would have been contrary to the mission of Lego, that indeed stimulates creativity and invention. Furthermore, the company faced the challenge by offering new documentation, such as details of the firmware inner workings in its robotic Software Development Kit (SDK), a website on which AFOLs (Communities Of Lego’s Adult Fans) can exchange information or post pictures and texts describing their inventions, and also by including the “right of Hack” in the software license. Due to this act of disclosure, adult fans of Lego AFOLs kept on working on Lego Mindstorms and they developed amazing innovations.
The hypothesis I would like to advance and discuss in this paper is the following: Lego Mindstorms’ success is mostly due to its modular nature. Indeed, such a feature allowed those fans who participated to the innovation process to commit themselves just to parts of the robot – its firmware, hardware or sensors – and also to different modules within them. These fans – which we can compare to Von Hippel’s lead user – worked on the parts they knew better and developed improvements that Lego’s engineers could have never thought about. Building in a modular fashion also opens up the opportunity to re-use components in different projects, without having to re-build common systems that have already proved reliable. In other words, modular building invariably fosters alternative thinking and original problem-solving.
Application of Three Henkel and Baldwin’s Propositions to the Lego’s Case Study
Although Lego Mindstorms had been developed within the MIT of Boston, in a seven-year collaboration that involved several engineers, the product presented a range of shortcomings that could have made its life on the market really short. Rebuilding it anew, without the fans’ participation, would have taken longer and probably proved extremely expensive.Thus, I suggest that the first proposition represents a particularly fitting framework to analyze this case-study. In fact, the report shows how knowledge diffusion and value creation are mutually reinforcing elements. As Von Hippel argues, “it was a case of simple math: seven people from MIT worked on the original concept and they came up with a neat product. But that is nothing compared to the brain power of thousands of specialist users”(Von Hippel 2013).
A further hypothesis is that the second proposition is even more aligned to the Lego Mindstorms case than the first one. In fact, if Lego had followed the legalistic way, Mindstorms would never have been as successful as it is. Lego’s co-creators were everywhere and each of them was different from others. Most of all, nevertheless, such co-creators had different interests, expertise and experiences: this made the range of their innovations broad and differentiated.
Here we can clearly appreciate how the modularization of Lego’s robot has allowed each user to focus on the parts she really wanted to change and, most importantly, those she could change. Furthermore, this wave of innovation activated a new one: in order to reach even more fans and to organize them in structural units, Lego created the Ambassador Program in 2005. AP proved a fast and direct way to get into contact with one another and to accelerate the innovating chains. The improvements and innovations created by users represent substantial value, and there are benefits to be accrued by companies that adopt them. Engaging with user innovators can help reduce the often considerable economic risks involved in launching new products (Ogawa and Piller 2006; von Hippel 2005).
Finally, let us turn to the third hypothesis of this work. It is the most complicated one, since it is somehow conditional: my research, in fact, did not show any actual problem faced by the company with regard to the incoming IP. Nonetheless, I would like suggest what follows: the high modularity of Lego Mindstorms could easily solve any problems relating to possible IP claims. In fact, if the contribution of a particular user was such as to deserve more than simple recognition, the modularity design would help draw the IP’s boundaries, avoiding the block of value creation due to problems of value appropriation. Thus, it seems to me that the Henkel and Baldwin’s sixth proposition nicely fits this conditional situation which may be actually faced by Lego in the near future.
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