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11. June 2014


LEGO - a business case for service co-design

Do you remember playing with Lego as a child or with your children? Let me give you a good reason to use LEGO at work to trigger your imagination and redesign your services the way LEGO did a couple of years ago.

Governance International has shown me that it is worth exploring new scenarios in which public service providers enable and skill up service users to help themselves and empower local communities to harness their knowledge and expertise to solve ‘wicked problems’.

The 50+ case studies in their Good Practice Hub show the wide range of co-production approaches all over the world. They demonstrate that co-production can either achieve improved outcomes or better value for money. Often it does both.  The Co-Production Explorer developed by Governance International highlights innovative co-production models so that you can design a new vision for your service. At the same time, it helps you to build on existing pockets of co-production in your service to link the present with the future.

Ignoring the imagination unleashed by co-production is almost like accepting the inevitability of future failure. Once again, don’t read on if that really is what you think is acceptable - but I certainly don’t.

Be honest - you probably need to save budget? Guess what, co-production can help with that, too. Co-production champions are refreshingly unwilling to accept that offering ‘less’ is the only path. Even with financial constraints, it is possible to do better.

Perhaps you might not expect a well known company to use co-production approaches? Well, read this Toy Story about Lego’s transformation.

Lego is now so popular that there are 62 little coloured blocks for every person on the planet but few people are aware that the family-run business nearly went bankrupt in 2004. From being an amazing start-up in the economic depression in the 1930s and experiencing a fast expansion in the 1960s Lego started to suffer losses in a fast changing toy market in the late 1990s. Kids simply preferred to play video games and playing with Lego was not cool any more. As a portrait of the Lego company in the Guardian states, in January 2004 the company reported a record deficit of £144m.

According to the brilliant analysis in Tim Kastelle’s blog on the Innovation Lessons from the Rise, Fall, and the Rise of Lego, its economic downturn was due to three factors:


  1. Poor overall management.  As LEGO reached its crisis point in 2003, everything was going wrong.  Its financial control was very poor, and it had lost touch with what customers wanted.  Furthermore, even when people who loved LEGO reached out to try to contribute ideas, the firm was fairly arrogant in ignoring this input, believing instead that they knew best.
  2. Lack of strategic focus.  In all of the pre-2003 innovation efforts, LEGO was obsessed with novelty – with doing new stuff.  But they were so far removed from understanding what their customers wanted (or even who they were), that these new ideas failed to create value.  They thought that the power was in the brand – so they launched things like LEGO TV series.  But really, the power was in the bricks – it was refocusing on this that started to turn the firm around.
  3. Disconnection from customers.  Many of the misfires prior to 2003 were the result of not understanding what kids wanted – most of the new products were based on assumptions about this, not on feedback from the customer base.

Does this sound familiar to you? Do you think that your commissioners know their clients – or what they need?

If not, continue to read the Lego story. Of course, as Lego is a private sector business not everything may be transferable to a public service context but in my view the LEGO transformation shows the potential of co-designing services with people using services.

Tim Kastelle describes in his blog how LEGO discovered co-design as a method to drive product and service innovations:

Shortly after LEGO released Mindstorm, the enthusiastic community of adults that love LEGO, hacked the software.  After a great deal of thought, instead of shutting down the hackers, LEGO embraced them.  This then led to further collaboration with the community. It was this community that drove the overwhelming success of the product:

Instead of taking a year to find two potentially big growth opportunities and then invest significant resources to develop them, the front-end team would align with entrepreneurs who were already working on nascent but promising projects. Within a matter of months or even weeks, the team would use the LEGO Group’s know-how to help these entrepreneurs test the market, make necessary revisions, and test again. The idea was to avoid making bet-the-firm mistakes by launching a series of low-cost, low-risk experiments, which would increase the odds that one might grow into a runaway success.

LEGO also discovered that the key to its success was harnessing the ideas of its end customers – children!  Lugnet, a Lego user community, works with users to co-design models, even using open source design software to create shared visions from different cities. This virtual community even tackled problem solving and design - for fun! Children are enabled to create their own designs making them co-designers of their own dreams. Lego now incorporates public feedback into its heart, soul and philosophy, contributing to its choices, designs and decision-making on new products.

In the end, it was its new strategic focus and this new collaboration with customers which turned the company completely around. As a result, five years after reporting its biggest ever loss, Lego was reborn and reported a net profit soaring to 32% to DKr1.35bn and sales up a healthy 18.7% for 2008 (source:

Are there any bells ringing yet or light-bulbs flashing inside your head? There should be…!

The transformation of Lego is the starting point for imagining how co-design can not only create ’improvements’ but can transform a whole organisation and its relationship to its clients and local communities.   

The many forms of co-design that Lego adopted illustrate the tremendous potential of harnessing the ideas and skills of people using services. And, as I’ve experienced in my career in public services, one ‘co’ leads to another ‘co’, involving clients and communities as part of the process, starting from co-commissioning, all the way to co-design, co-delivery and co-assessment.

Scotland has an amazing wealth of case studies to learn from – just look into the publication 

Co-Production of Health and Social Care in Scotland. But there is also an increasing number of local authorities in England and Wales such as LB of Lambeth, Stockport MBC, Surrey County Council and Swansea Council which have embarked on a co-production journey. What a difference it would all make, if even more service providers and commissioners adopted these ideas.

So we do some good things in the UK already – but don’t we now have a golden chance to harness fully the opportunities offered by co-production?

USA basketball legend Michael Jordan famously gave what I consider to be one of the best motivational quotes of all time:

“I can accept failure, everyone fails at something. But what I cannot accept is not trying”.

Now ask yourself honestly, why don’t you get in some Lego for the next senior management or team meeting and ask your colleagues to design an alternative service delivery model based on co-production? It’s obvious – what LEGO could achieve, you can do too!

Personal blog by Andy Tipper, a co-production practitioner in Birmingham.



Co-Production Around the World

Partner state, not paternalistic state - co-production in Germany to deal with the fiscal crisis?


When it snows in Germany, many local councils remind citizens of their legal duty to clear the snow from the footpath in front of their house. For example, Neuhofen Council, close to the BASF headquarters (where one of the authors has lived), transferred this duty to local residents in 1979. As a result, you can see a lot of local people out in the street early in the morning before they go to work, having a quick chat with each other (complaining about how cold it is or what a bad job others in the street have done with the snow) and helping elderly neighbours to clear their stretch of footpath. 

Result: Fewer falls due to slippery pavements, no school closures, more social capital and, yes, savings to the local council.

So, it is clear that user and community co-production of public outcomes is nothing new in Germany, even though most public managers would have no idea what this means (nor would they use the term Koproduktion, which sounds even more abstract in German than in English). Indeed, there was already a lively discussion in the 1990s (well before the 'Big Society' debate started in the UK) among German think tanks and academics about the 'activating state' - the idea that government needs to mobilise citizens to become more active and take more responsibility. In fact, this was the vision behind the 1999 White Paper 'Modern State - Modern Public Administration' of the 'red-green' coalition government of the time.

The paradox is that German citizens are already quite active. As a European citizen survey on the level of co-production showed in 2008, German citizens come second after the UK in terms of the extent of their co-production in public health, community safety and the local environment. When it comes to recycling, Germany actually topped the European league table in 2010, with a recycling rate of 45% compared to 25% in the UK. 

So it's not the citizens who need to be 'activated'. We would argue that it is actually the state and local authorities who need to become more active in harnessing the resources, skills and contributions of citizens. In Länder (states) such as North-Rhine Westphalia, where more than 15  percent of local councils are bankrupt and many others face severe fiscal stress, citizens and community groups are widely engaged in co-delivery of voluntary services such as leisure, culture, music, libraries or (very typical for local areas around the Rhine) the Fasching carnival. However, as the savings plans of the most indebted local councils reveal, they are much more likely to react to financial austerity by imposing tax increases or cuts in services than to involve citizens more thoroughly in the planning and delivery of public services. 

Nevertheless, there are many successful examples where involving citizens in public services has led to better outcomes or greater efficiency. A classical case in Germany is the system of voluntary fire brigades, which have existed at local level for 200 years. Indeed, all local councils, no matter what their size, have the legal duty to maintain a voluntary fire brigade (which, in bigger local councils, works side-by-side with the professional fire brigade). 

There are also co-production champions such as Offenbach Council (close to Frankfurt), which  works with 'street champions' to improve the local environment;  Weyhe Council in Northern Germany, which works with police and voluntary 'streetwatchers' to keep young people and residents safe at night; and the rural council of Brieselang, where local people run a citizen bus, which complements public transport from and to Berlin. 


The impact of street champions in Offenbach: before and after.


Great though these examples are, there remains a reluctance by social services (provided mainly by a conglomerate of powerful voluntary organisations) and health (provided by a public health care system which is completely separate from any other public agency) to recognise the potential of assets-based approaches to public services. Other forms of co-production such as involving citizens in designing public services (co-design) or assessing service quality (co-assessment) are also quite rare.

On the other hand, in these financially hard times, more and more local councils are involving citizens in the de-commissioning of public services. So-called participatory budgeting exercises have been carried out and have received widespread public attention - in Cologne, Solingen, Essen, Stuttgart and most Berlin boroughs. They have generally involved a wide range of local public services, although they have had to exclude transfer payments and the mandatory services which local councils provide on behalf of the state government. The success of 'participatory budgeting' depends decisively on whether it helps to bring the budget into balance or not. If not, motivation for participation soon sinks - the objective has to be: budget consolidation AND co-production. 

So what are the drivers of public service co-production in Germany?

Clearly, Germany's strong local government system - based on the principle of subsidiarity, directly elected mayors and elements of direct democracy in most Länder - means that people take a real interest in their local area and identify much more with their local council than is the case in more centralised countries. Baden-Württemberg and Bavaria, in particular, can build on a strong civic society with a high level of volunteering. However, the strongest driver is likely to be a factor which is very particular to Germany - the demographic change resulting from an extremely low birth rate, which means that the German population is becoming older and falling in numbers. Our European citizen survey on public service co-production in Germany, France, Czech Republic, Denmark and the UK shows that elderly people are more willing to co-produce probably because they wish to be useful but perhaps also because they know that their public agencies will soon not be able to afford to maintain the current level of public services. The second driver is probably the financial crisis, especially in North-Rhine Westphalia, as discussed above.

What is holding public agencies back from scaling up co-production?

Focus group sessions with public managers from three different public services have revealed that one factor is the strong professional culture in the German public sector, which tends to distrust citizens and does not believe that they can get it right. Indeed, in a co-production workshop a senior manager of the Interior Ministry of the State of Berlin recently insisted that there was no way a German citizen could perform the task of a 'speedwatcher', as this involved a sovereign task which could only be performed by professional police officers.  Strong trade unions, too, fear that public services could be 'privatised' into the hands of citizens, e.g. through sports clubs volunteers managing sports facilities instead of paid council workers. Most importantly, 'state-centred thinking' still influences mindsets and behaviours in the public sector, implying that 'Big Brother State' needs to look after its children and provide services FOR its citizens, not WITH them. Recent managerial reforms focussing on outputs (so-called 'product budgets') instead of outcomes have reinforced the focus on what public agencies do, while neglecting what communities actually want and what they can contribute to improve their quality of life. Last but not least: elected members of councils don't like the thought of re-delegating to citizens the decision-making powers which they believe citizens put in their hands through the election process.

The big question is whether reduced public budgets in Germany may, in time, become an eye-opener which will make public agencies more conscious, at last, of the resources available in communities? Is it possible that the German public sector today simply remains financially too well off, so that it believes it is still able to cope without using the assets, resources and contributions of citizens effectively? 

Of course, the warning signs of fiscal stress are already everywhere to be seen. Consequently, German local government associations and think tanks (such as the Bertelsmann Foundation or the Schader-Foundation in Darmstadt) have now put co-production on their agenda. For example, the Bertelsmann Foundation commissioned the authors of this blog to write a paper on co-production in German local government which was presented at a major local government conference in Berlin. The 120 participants at the workshop understood that this is nothing new as they identified co-production initiatives in all public services, starting from A like Abwasser (sewage) to Z like Zusammenhalt (social cohesion). However, the challenge in Germany is now to roll out co-production to make it more effective.  Indeed, the new strapline of Berlin, which sees itself as the 'Searching City', perhaps shows a new willingness to admit the need to open up to innovative approaches in the reform of the German welfare state.  In the German public sector of the next decade, the excellent examples of user and community co-production which already exist, including those we have cited above, may become more widely appreciated and emulated. 


This blog was co-produced by Dr Peter Timm-Arnold and Dr Elke Loeffler.

Dr Peter Timm-Arnold, Head of Task Force 'Local Government Efficiency Programmes', Local Audit Commission North-Rhine Westphalia


Dr Elke Loeffler, Chief Executive, Governance International


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