launch decisions based on which products seemed most promising. Management was very focused on turning Lego around by pushing developers to generate ideas as quickly as possible. One detrimental result of this over-innovation was the numerous Lego elements it produced. In technical terms, an element refers to a piece of a specific shape and color (e.g. a black 11 plate is a different element than a blue 1*1 plate). At the verge of bankruptcy, in 2003, the company's innovation binge had produced a library of ~14,000 elements. This irritated all stakeholders in the supply chain, drove up costs at Lego, and the company was burning cash. Lego appointed its first non-family member CEO, Jorgen Vig Knudstorp. Knudstorp led Lego's resurrection by implementing two major design changes. First, he began incorporating input from groups of young children in the design process. Designer's would present ideas in picture form to the children groups, ask questions, and observe the children’s reactions. Through an iterative process with children’s groups, Lego was able to shift the design decision-making process from its developers and management to the consumer. The first ninja themed playset that came out of this process was a massive hit Second, Knudstorp had developers reduce the number of elements in the Lego portfolio by half, deciding that minor variations across similar pieces added litle value to the consumer experience. This open innovation experiment helped Lego realize the value of collaborating with its user community. Over the next decade, Lego would continue to open the design process to the wisdom of the consumer. Some standout initiatives include “Lego Ideas” and "Lego Ambassadors”. Lego Ideas is a website that allows users to submit ideas for Lego products to be turned into potential sets available commercially, with the original designer receiving 1% of the royalties. Lego Ambassadors consists of around forty representatives in over twenty countries around the world among the community of fans that had naturally developed over various internet forums. The ambassadors representing these communities are responsible for transmitting information and are completely integrated into the design of new products. Lego's customer centric innovation strategy spurred substantial revenue growth from 2004-2016. Between 2010-2016 profit doubled, and, at one point, the company decided to scale back marketing activities because it couldn't keep up with demand. Ultimately, open innovation allowed Lego to understand much more clearly the potential and limitations of new product ideas.In the short term, Lego wants to focus on digitizing its innovation management system. Management's view is that children’s obsession with screens has left physical toys less popular. Fresh products, such as Lego Boost (an app that allows children to build their own toys), will enable Lego to collect data that will help drive the design process of new Lego building block sets. In the medium term, Lego wants to apply its innovation practices to markets outside of North America and Europe. Explain the concept of lead user and ethnographic research in context of above case. 5 Analyse the advantages and disadvantages of open innovation model of LEGO. 5