lego transformation case study

• SUGGESTED TOPICS
• The Magazine
• Newsletters
• Managing Yourself
• Managing Teams
• Work-life Balance
• The Big Idea
• Data & Visuals
• Reading Lists
• Case Selections
• HBR Learning
• Topic Feeds
• Account Settings
• Email Preferences

Innovating a Turnaround at LEGO

• David Robertson and Per Hjuler

Five years ago, the LEGO Group was near bankruptcy. Many of its innovation efforts—theme parks, Clikits craft sets (marketed to girls), an action figure called Galidor supported by a television show—were unprofitable or had failed outright. Today, as the overall toy market declines, LEGO’s revenues and profits are climbing, up 19% and 30% respectively in […]

Reprint: F0909B

Though the overall toy market is declining, LEGO’s revenues and profits are climbing—largely because the company revamped its innovation efforts to align with strategy.

Five years ago, the LEGO Group was near bankruptcy. Many of its innovation efforts—theme parks, Clikits craft sets (marketed to girls), an action figure called Galidor supported by a television show—were unprofitable or had failed outright. Today, as the overall toy market declines, LEGO’s revenues and profits are climbing, up 19% and 30% respectively in 2008.

• DR David Robertson ( [email protected] ) is a professor of innovation and technology management at IMD. Per Hjuler ( [email protected] ) is the LEGO Group vice president of product and marketing development. For more, visit www.innovationgovernance.net.

Partner Center

Lego Change Management Case Study

Lego, the Danish company known for its colorful plastic bricks, has been a beloved toy brand for over eight decades.

 However, in the late 90s and early 2000s, Lego experienced a significant decline in sales and profitability due to poor decision-making and failure to adapt to the changing market. 

To address these challenges, Lego had to undergo a significant transformation in its business model, manufacturing process, and organizational structure. 

This transformation was achieved through a successful Change Management strategy that involved collaboration, communication, and innovation. 

In this blog post, we will explore Lego’s Change Management Case Study and discuss the lessons learned from this transformation.

Brief History and Growth of Lego   

Lego is a Danish company that was founded in 1932 by Ole Kirk Christiansen. The name “Lego” is derived from the Danish words “leg godt,” which mean “play well.” The company originally produced wooden toys, but in 1949 it began producing plastic interlocking bricks.

The Lego brick was invented by Ole Kirk’s son, Godtfred Kirk Christiansen. The brick design was perfected over several years and was introduced in its modern form in 1958. The bricks were designed to be versatile and durable, and they quickly became popular among children and adults alike.

Over the years, Lego has continued to innovate and grow. In the 1960s, the company expanded its product line to include a wider variety of building sets and play themes, such as the famous Lego Space sets. In the 1970s and 1980s, Lego introduced its first licensed products, such as sets based on popular TV shows and movies.

In the 1990s, Lego experienced a period of financial difficulty, as the company had expanded too rapidly and faced increased competition from other toy manufacturers. In response, the company underwent a restructuring and refocused on its core products and values.

In the 2000s, Lego experienced a resurgence in popularity, as the company introduced new product lines, such as Lego Star Wars and Lego Harry Potter, which were based on popular movies and franchises. Lego also expanded its business into theme parks and other entertainment ventures.

Today, Lego is one of the world’s largest toy companies, with a wide range of products and a strong global presence. The company continues to innovate and evolve, as it seeks to provide children and adults with creative and engaging play experiences.

External factors that led to organizational changes at Lego 

Lego has undergone a number of organizational changes over the years, in response to various external factors. Some of the key external factors that have led to these changes include:

• Changes in the toy industry: The toy industry is constantly evolving, with new technologies and trends emerging all the time. In order to stay competitive, Lego has had to adapt its product offerings and business model to keep up with these changes.
• Economic conditions: Economic conditions can have a significant impact on consumer spending, and as a result, on toy sales. During periods of economic downturn, for example, consumers may be less likely to spend money on non-essential items like toys. In response, Lego may need to adjust its pricing or marketing strategies to maintain sales.
• Competition: Lego faces competition from a wide range of other toy manufacturers, some of whom may offer similar products at lower prices. In order to stay competitive, Lego may need to innovate and differentiate its products from those of its competitors.
• Changing demographics: Changes in demographics can also have an impact on toy sales. For example, as the population ages, there may be a shift away from toys and towards other types of products. In response, Lego may need to adjust its product offerings or marketing strategies to appeal to different age groups.
• Technological advancements: Advances in technology can have a significant impact on the toy industry. For example, the rise of video games and digital entertainment has led to a decline in traditional toy sales in some markets. In response, Lego has developed its own digital products and integrated technology into its traditional brick sets.
• Societal trends and attitudes: Societal trends and attitudes can also impact toy sales. For example, as concerns about the environment and sustainability have grown, there has been increased interest in eco-friendly products. In response, Lego has introduced a line of sustainable bricks made from plant-based materials.

Internal factors that led to organizational changes at Lego 

There were several internal factors that led to organizational change at Lego, including:

• Poor Financial Performance: Lego’s financial performance had declined significantly in the late 90s and early 2000s. This was due to several factors, including a lack of innovation, failure to adapt to changing consumer preferences, and over-expansion.
• Lack of Collaboration: Lego’s organizational structure was siloed, and there was a lack of collaboration between different departments. This led to inefficiencies, duplication of efforts, and a lack of innovation.
• Inefficient Manufacturing Process: Lego’s manufacturing process was outdated and inefficient, which led to longer lead times, higher costs, and lower quality products.
• Complexity of Product Lines: Lego’s product lines had become overly complex, which made it challenging to manage inventory, production, and sales effectively.
• Leadership Issues: Lego had experienced several leadership changes in a short period, which led to a lack of strategic direction and a disconnect between the company’s goals and its actions

05 biggest changes implemented by Lego

Here are the 5 biggest changes implemented by Lego:

• Simplified Product Lines: Lego streamlined its product lines by reducing the number of themes and sets it offered. This helped the company focus on its core offerings and improve its manufacturing process and inventory management.
• Agile Manufacturing Process: Lego introduced an agile manufacturing process that allowed for greater flexibility and responsiveness to changing market demands. This helped reduce lead times and costs, and improved the quality of its products.
• Collaborative Organizational Structure: Lego implemented a more collaborative organizational structure, which encouraged cross-functional teams to work together and share information. This led to greater innovation, more efficient decision-making, and better alignment with the company’s strategic goals.
• Customer-Centric Approach: Lego shifted its focus to a customer-centric approach, which involved listening to customer feedback and using it to inform product development and marketing decisions. This helped the company create products that better aligned with customer preferences, resulting in increased sales and profitability.
• Brand Expansion: Lego expanded its brand beyond traditional building sets to include video games, movies, and theme parks. This helped the company reach new audiences and diversify its revenue streams, making it less dependent on the success of its core products

05 Positive outcome and impact of change management implemented at Lego 

The successful implementation of changes by Lego led to several positive outcomes, including:

• Increased Revenue: Lego’s revenue grew significantly following the implementation of changes. In 2020, the company reported revenue of $6.5 billion, up from $1.4 billion in 2004.
• Improved Profitability: Lego’s profitability also improved, with the company reporting a net profit of $1.6 billion in 2020, up from a loss of $300 million in 2004.
• Increased Market Share: Lego’s market share in the toy industry grew from 4% in 2004 to 7.7% in 2020, making it one of the largest toy manufacturers in the world.
• Strong Brand Identity: Lego’s successful transformation helped establish it as a leading brand in the toy industry, known for its high-quality products, innovative designs, and commitment to sustainability.
• Diversified Product Line: Lego’s expansion beyond traditional building sets helped the company diversify its product line and revenue streams. This made it less dependent on the success of its core products, resulting in greater stability and sustainability for the company.

Final Words

The successful implementation of change management at Lego serves as a valuable case study for businesses looking to achieve sustainable growth and success in a rapidly changing market. Lego’s transformation was not easy, and it required a significant commitment to collaboration, communication, and innovation. However, the positive outcomes of the transformation demonstrate the importance of effective change management in achieving long-term success.

Lego’s successful transformation was achieved through a combination of strategic changes to its business model, organizational structure, and manufacturing process, as well as a focus on customer-centricity and brand expansion. By simplifying its product lines, implementing an agile manufacturing process, and creating a more collaborative organizational structure, Lego was able to improve its efficiency and responsiveness to market demands. This, in turn, led to increased revenue, improved profitability, and a stronger brand identity.

About The Author

Tahir Abbas

Related posts.

Amazon Change Management Case Study

Advantages and Disadvantages of Crowdsourcing

Change Approval Process in ITIL Change Management

HBS Cases: LEGO

Although it isn't part of the admissions criteria, experience playing with LEGOs can come in handy at Harvard Business School.

When Stefan H. Thomke teaches his new case about the iconic toy company, he gives students eight-studded LEGO building bricks to figure out how many different ways they can be combined. Thomke's experience goes back a long way—as a kid growing up in Germany he participated in a LEGO competition. As an adult, though, his interests lie more in the business behind the bricks. "When you've written many cases you have a gut feeling that one like this could be really great," he says.

Thomke, the William Barclay Harding Professor of Business Administration, wrote the case with Harvard Business School's Jan W. Rivkin, the Bruce V. Rauner Professor of Business Administration, and Daniela Beyersdorfer, associate director of the HBS Europe Research Center.

LEGO explores how the company-one of the most profitable toymakers in the world-grew to global dominance from humble beginnings; the mistakes that led it near bankruptcy; and why one turnaround attempt failed while a second succeeded. LEGO executives were unusually supportive about the case-writing process, Thomke says. "We had access to everybody; they wanted the story to be told truthfully, with all the good and the bad."

Building At The Start

Part of that access included a visit to a wood craftsman's workshop in the small town of Billund, Denmark, where LEGO began, in 1916. Carpenter Ole Kirk Kristiansen eventually shifted the business from making houses and furniture to crafting wooden toys. He based the name of his new venture on the Danish words for "play well" (and, as it turned out, the Latin words for "to assemble"). His motto "Only the best is good enough" would later be carved into a wooden plaque and hung in the workshop. These themes of good play and quality products were both bedrocks and touchstones for future generations of LEGO toy makers.

Godtfred Kirk Kristiansen represented the second generation, working alongside his father at age 12. The LEGO brick played with by kids and adults around the globe came into being during Godtfred's tenure. He considered it a unique, sturdy, simple product—a system—that offered endless opportunities for creative fun, and drew up a list of product characteristics including "long hours of play" and "quality in every detail" that was distributed to everyone in the company.

Like his father, Godtfred paid careful attention to every aspect of the business, applying, for example, his knowledge of material science and production technology to the brick-manufacturing process. It's because of these precise specifications that bricks made under his watch are interchangeable with those available today. Godtfred's cautious nature extended all the way to the profit margins: he championed slow, steady growth. Because of this, it could take years for a new product to go to market. Green bricks, for instance, appeared in play sets only after a decadelong decision-making process-and the idea to include them came from Godtfred's son (and third-generation toymaker), Kjeld.

The snail's pace served the company well, as did the grandson of its founder. Under Kjeld's management, product demand was so high at times that executives actually found themselves discussing ways to slow sales.

A Shock To The System

That all changed in the early 1990s as seismic shifts pounded the toy market. Big Box toy discounters trampled mom-and-pops and lowered prices dramatically. Meanwhile, birth rates declined, children had less time to play and not much interest in toys that didn't offer instant gratification. "These changes did not play well to our strengths," observed current CEO Jørgen Vig Knudstorp in the case.

Serious jolts were also taking place in the LEGO Group. Out of work for a year following a serious illness in 1993, Kjeld appointed a five-person management team to help him run the company when he returned. The group focused mainly on driving growth. When a benchmarking study revealed LEGO's global name recognition was on par with industry giants like Disney, the team started churning out new products and ideas to leverage the brand's untapped value. A line of LEGO-branded children's wear was created and a division of the LEGO Group was charged with pitching book, movie, and TV ideas. LEGO building sets became increasingly complex with more unique components.

While the number of LEGO-branded items grew, sales did not, and in 1998 the company suffered its first financial loss. "Their top-line growth was slowing down but their cost was accelerating, so they were starting to lose some significant money," says Thomke.

Danish turnaround expert Poul Plougmann was hired to reassemble LEGO and staunch the red ink. "He comes in and … does things by the book," says Thomke. "He lays people off, he streamlines some things, he globalizes." And yet the financial picture grew worse. "He's basically going by the turnaround book, but it doesn't work."

One continuing problem: the company's growing complexity was choking it. Adding more bricks made products harder to assemble, forecasts harder to determine, and inventory harder to manage. Depending on the kit, there was either too much inventory, or no inventory at all, and restocking could take months.

"You had this multiplier effect of added complexity that went through the entire supply chain," Thomke says.

The LEGO Group had also gotten too far away from the core values it had been building on for the better part of a century. The toymaker found itself needing to turn around its turnaround.

Outside The Family

Enter Jørgen Knudstorp. He was just 35 years old when Kjeld promoted him from director of strategic development to CEO in 2004. (Kjeld retired that same year.)

Like Plougmann, he had no family ties to the company. Unlike Plougmann, his turnaround attempt succeeded. Knudstorp's slow-it-down approach of careful cash management, focusing on core products, and reducing product complexity certainly contributed to that success. It would also take re-engaging with customers, many of whom passed a love of LEGOs to their children while still connecting with the toys themselves. "One of the insights Jørgen had when he became CEO was that he needed to reconnect with the community [of loyal LEGO fans], one of the most powerful assets the company had," says Thomke. "It was a huge part of the comeback."

Knudstorp worked hard to define the core business of the company. "How you work with, and experiment outside of, the core of your business is part of that balance," explains Thomke.

Knudstorp recognized that innovation was part of that core, but he'd also seen the result of unconstrained creativity, so new product design began to be informed by market research, user feedback, and how well the toys matched the vision of quality creative play laid out by its founding fathers. Putting parameters on how people innovate had the paradoxical effect of making them better at it.

Reining in the creative process was part of a larger push by Knudstorp to reduce overall complexity within the organization. On the supply chain side, he did away with many of the unique brick components added during Plougmann's tenure, and eventually decided to bring brick manufacturing back in-house to ensure quality control.

Finally, Knudstorp made big changes to the management team, firing five of seven manufacturing executives and appointing a new leader for the team. A psychoanalyst was brought in to teach the management team how to identify decision-making made by logic versus emotion.

Sustainable And Balanced

It turns out that LEGOs promote lifelong learning. While the bricks themselves teach children the fundamentals of construction and creativity, the company's almost century-old history of management change has important lessons for businesspeople. "Managing sustainable growth is also about managing a balanced business system," says Thomke. "Complexity is something you need to watch very closely."

Controlling complexity, clarifying the core of its business, and engaging the larger community helped save the LEGO Group. Although he was not a Kristiansen by birth, Knudstorp's management style and business ideals closely mirrored those of its founding fathers. Only the best was, and is, good enough.

• marcos Vizcaino Gerlach
• KAM, HABERMAA?
• Romuald Kepa
• self-employed
• Ted Gutelius
• Dr. Mrunal Asher
• Director, ITM's Institute of Management & Research, Nagpur
• Kapil Kumar Sopory
• Company Secretary, SMEC(India) Private Limited
• Managing Director, E M Consutlancy
• Phillip Gelman
• Managing Partner, MoneyInTheTill.com
• Anders Sorman-Nilsson
• Managing Director, Thinque
• Noman Ahmed Khan
• CEO, BiMS COLLEGE
• Chris Sutcliffe
• Owner, The Bean People
• 06 May 2024
• Research & Ideas

The Critical Minutes After a Virtual Meeting That Can Build Up or Tear Down Teams

• 28 May 2024
• In Practice

Job Search Advice for a Tough Market: Think Broadly and Stay Flexible

• 24 Jan 2024

Why Boeing’s Problems with the 737 MAX Began More Than 25 Years Ago

• 22 May 2024

Banned or Not, TikTok Is a Force Companies Can’t Afford to Ignore

• 22 Nov 2023

Humans vs. Machines: Untangling the Tasks AI Can (and Can't) Handle

• Innovation and Management
• Change Management
• Entertainment and Recreation

Sign up for our weekly newsletter

• Harvard Business School →
• Faculty & Research →
• HBS Case Collection
• Format: Print
• | Language: English
• | Pages: 23

About The Authors

Jan W. Rivkin

Stefan H. Thomke

Related work.

• July 2013 (Revised February 2014)
• Faculty Research

Jørgen Vig Knudstorp: Reflections on LEGO's Transformation

• LEGO  By: Stefan Thomke and Jan W. Rivkin
• Jørgen Vig Knudstorp: Reflections on LEGO's Transformation  By: Stefan H. Thomke

Digital Transformation Strategy: The LEGO Case

The purpose of this paper is to shed light on the digital transformation of LEGO and to figure it out in innovation-oriented growth decisions. To this end, the study here examines the transformation process of the company from diversification to smart specialization strategy in more detail. Besides, where digital architecture for toys requires many innovations at the same time, authors discuss what LEGO does to add value. More importantly, the typologies of innovation strategy elucidate the changes and improvements that foster digital transformation.

• Related Documents

The concept of the Regional Scientific and Educational Cluster in the Conditions of Neo-Industrial Modernization and Smart Specialization of Donbass

The article is devoted to the analysis of preconditions and factors of neo-industrial modernization and smart specialization of the regions of Ukraine, in particular, the Donetsk region. The analysis of development of innovative cycles of economic conjuncture is carried out, the urgency of modernizations of transformations of economy in view of probable concentration of the sixth technological way on material (neoindustrial) manufacture is emphasized. A review of the digital transformation process in accordance with the DESI 2020 Index, as well as the results of research in the implementation of innovations in industrial enterprises, the need to strengthen the digital transformation of all spheres of life for the Donetsk region, taking into account recent changes in the regulatory framework (draft Law on Deoligarchization). It is stated that education, science and innovation are the drivers of modernization of the economy of any country, and in general, the driver of the formation of the infrastructural environment in the context of the fourth industrial revolution. The latest shifts of state accents towards innovative methods of education in Ukraine are considered, in particular, the innovative project "Presidential University" with a focus on a range of new and highly popular professions in the real sector of the economy. A detailed analysis of the benefits and risks of such a project and the entire scientific and educational field in general is provided. Emphasis is placed on the perception of the modern university as part of an industrial cluster that is threefold in its stakeholders: industrial enterprises, scientists and students. The need for comprehensive provision of such a trinity is indicated. The modern need for Ukraine's integration into the European educational space requires non-standard solutions, or the study of the most effective experience of the integrated education system in our country in the recent past. Effective recommendations for the implementation of integrated schemes of education-science-production, following the examples of the world's leading scientific institutions of the present and recent past (factories - universities). Modern examples of integrated educational and scientific institutions (DTEK Academy, Metinvest-Polytechnic University of Mariupol) are considered and analyzed, the need for a systematic and comprehensive approach is given given the priority of scientific and educational industries in the priorities of global industrial development. also, the use of existing capacity to solve specific problems in the region using smart specialization.

A study on the digital transformation strategy of a fashion brand

Developing a strategy for the digital transformation of an enterprise with allowance for the capabilities of business ecosystems.

The presented study analyzes the processes of creating ecosystems in the context of external challenges and increasing the level of competitive market environment and global digitalization of business to develop a strategy for the digital transformation of an enterprise.Aim. The study aims to assess the practicability of creating ecosystems when developing a strategy for the digital transformation of traditional (“defensive”) enterprises and to provide recommendations for their utilization.Tasks. The authors analyze the characteristics, features, and typology of business ecosystems; substantiate the need to analyze and use the capabilities of business ecosystems in the development of a strategy for corporate development in the digital environment; describe the essence, key aspects of development, and propose a modular structure for the strategy of the digital transformation of an enterprise; develop a conceptual framework for the strategic management of the digital transformation of an enterprise; formulate recommendations for selecting ecosystems that would enhance the enterprise’s competitiveness.Methods. This study uses general scientific methods of cognition in various aspects to propose approaches and a conceptual model of the corporate digital transformation strategy with allowance for the capabilities of business ecosystems.Results. The authors show that in the context of the developing digital economy, business ecosystems have become a new way to organize economic activity due to their high efficiency and rapid scaling. There are two major types of ecosystems: centralized (transaction) ecosystems in the form of digital platforms and adaptive (solution) ecosystems formed by the orchestrating company to create a new value proposition by joint efforts of partners from various industries through direct interaction with each other. The study identifies stages in the development of a digital transformation strategy based on enhancing the enterprise’s competitiveness through its participation in the ecosystem(s) and formulate recommendations for selecting ecosystems that would improve the efficiency of the enterprise.Conclusions. Ecosystem development is a business trend that determines the competitiveness of enterprises and improves the efficiency of their operation in the digital environment. Therefore, under modern conditions, an enterprise should develop its digital transformation strategy based on the creation and/or use of business ecosystems.

Counter-cyclical public venture capital: Debt-funding as an anti-austerity innovation strategy

This article outlines a counter-cyclical innovation strategy to achieve prosperity, derived from an innovative project, the California Institute for Regenerative Medicine (CIRM). We identify an ‘innovation paradox’ in that the very point in the business cycle, when legislators are tempted to view austerity as a cure for economic downturns and to reduce innovation spend, is when an increase is most needed to create new industries and jobs and innovate out of recession or depression. It is both desirable and possible that policymakers resist the urge to capitulate to the innovation paradox. During periods that exhibit subdued inflation, elevated spare productive capacity, and low government borrowing rates, governments should increase their borrowings and use the proceeds to boost investment targeted towards innovation. We show how the State of California successfully utilized debt financing, traditionally reserved for physical infrastructure projects, to stimulate the development of intellectual infrastructure. Finally, we recommend a halt to European austerity policies and a ‘triple helix’ broadening of narrow ‘smart specialization’ policies that chase a private venture capital chimera. Europe should seize the present macroeconomic opportunity of low interest rates, borrow for innovation and be paid back manifold by ‘picking winners’, similarly to what the USA has been doing through DARPA (Defense Advanced Research Projects Agency) with GPS, as a response to Sputnik, the Internet and artificial intelligence, or the driverless car, formerly known as the ‘autonomous land vehicle’ in its military guise. Proactively targeted macroscopic investments in innovation are needed to solve the productivity/employment puzzle and foster the transition to a knowledge-based society.

DEVELOPMENT AND IMPLEMENTATION OF A DIGITAL TRANSFORMATION STRATEGY IN THE ECONOMY OF THE RUSSIAN FEDERATION

Digital transformation strategy making in pre-digital organizations: the case of a financial services provider, bin ali authoritarianism and international factors in tunisia (1987-2008).

Despite being shaken by the Arab Spring, authoritarian structures still exist in the regions of the Middle East and North Africa (MENA). Th is situation highlights the importance of studying the continuity of authoritarian structures more comprehensively. In addition to approaches that reduce authoritarianism to intra-state factors, literature has developed over the last decade emphasizing the importance of international factors. This literature in particular emphasizes the politics, economics, and diplomacy established by the West and that ties are effective in the continuity of authoritarianism in non-Western countries. This study attempts to explain Ben Ali’s period and the continuity of authoritarianism in Tunisia in the context of this developing new literature. Although Tunisia underwent a relatively positive transformation process after the Arab Spring, Ben Ali’s authoritarian rule was supported by the West as a model of an economic miracle and democratic stability; this administration managed to survive for 23 years. The study’s main argument can be expressed as follows: While the economic liberalization process imposed on Tunis by Western actors caused an increase in socio-economic inequalities, the instrumentalization of democracy by the West again served to suppress civil and political freedoms. Instead of focusing on the obstacles and opportunities in front of the transition to democracy in the post-Arab Spring period, examining theinternational factors influencing the continuity of authoritarianism in the Ben Ali period will shed light on how authoritarian structures still survive in MENA.

Corporate digital responsibility (CDR) in construction engineering—ethical guidelines for the application of digital transformation and artificial intelligence (AI) in user practice

AbstractDigitization is developing fast and has become a powerful tool for digital planning, construction and operations, for instance digital twins. Now is the right time for constructive approaches and to apply ethics-by-design in order to develop and implement a safe and efficient artificial intelligence (AI) application. So far, no study has addressed the key research question: Where can corporate digital responsibility (CDR) be allocated, and how shall an adequate ethical framework be designed to support digital innovations in order to make full use of the potentials of digitization and AI? Therefore, the research on how best practices meet their corporate responsibility in the digital transformation process and the requirements of the EU for trustworthy AI and its human-friendly use is essential. Its transformation bears a high potential for companies, is critical for success and thus, requires responsible handling. This study generates data by conducting case studies and interviewing experts as part of the qualitative method to win profound insights into applied practice. It provides an assessment of demands stated in the Sustainable Development Goals by the United Nations (SDGs), White Papers on AI by international institutions, European Commission and German Government requesting the consideration and protection of values and fundamental rights, the careful demarcation between machine (artificial) and human intelligence and the careful use of such technologies. The study discusses digitization and the impacts of AI in construction engineering from an ethical perspective. This research critically evaluates opportunities and risks concerning CDR in construction industry. To the author’s knowledge, no study has set out to investigate how CDR in construction could be conceptualized, especially in relation to digitization and AI, to mitigate digital transformation both in large, medium- and small-sized companies. This study applies a holistic, interdisciplinary, inclusive approach to provide guidelines for orientation and examine benefits as well as risks of AI. Furthermore, the goal is to define ethical principles which are key for success, resource-cost-time efficiency and sustainability using digital technologies and AI in construction engineering to enhance digital transformation. This study concludes that innovative corporate organizations starting new business models are more likely to succeed than those dominated by a more conservative, traditional attitude.

Optimization potential of the Digital Transformation program in EU top transportation company

Research background: We are living in complex and uncertain times and nowadays no one is doubting the DT expediency in order to support business transformation process or to boost agility for the new reality adoption and coping with the Crisis Purpose of the article: The aim of this study was to explore and assess Digital Transformation journey by one of Europe's largest transport companies – Girteka Logistics, in change environment and under uncertainty. The study collects data from the company’s Digital Transformation program, enabled by SAP solutions, insides from the Digital Transformation program internal and external teams. Methods: Within the study empirical research with descriptive research method was carried out using qualitative and quantitative observation methods. As the study is only about one company, the statistical population represents most of the Digital Transformation program team members. The data collection happened by the online questionary and afterward through the interviews with the key respondents to validate and extend gathered data. Second part of the data gathered is from Girteka’s Digital Transformation program documentation. The data collection happened by the documentation analysis and information consolidation. Findings & Value added: As the result of the study the antifragile generic hand-on Digital Transformation program roadmap was created and number of aspects were highlighted to be considered for the potential future research, like internal transformation team competency level requirements, expert labor marker and transformation partners situation as enabler for the companies’ digital transformation, process for the digital transformation program and overall business KPI definition to be used as transformation execution success indicator.

Digital transformation of legionella-safe cooling towers: an ecosystem design approach

Purpose Legionnaires’ disease is a major threat to public health. Solutions to deal with this problem are usually siloed and not entirely effective. This paper aims to model the information requirements of legionella-safe cooling towers in the era of Industry 4.0. Design/methodology/approach A year-long design science research was conducted in a cooling tower producer for heavy industries. The project started with a bibliometric analysis and literature review of legionella in cooling towers. Goal modeling techniques are then used to identify the requirements for digital transformation. Findings The improvement of legionella prevention, detection and outbreak response in digitally enabled cooling tower should involve different stakeholders. Digital twins and blockchain are disruptive technologies that can transform the cooling tower industry. Originality/value For theory, this study revises the most recent advances in legionella protection. Legionella-safe systems must be prepared to anticipate, monitor and immediate alert in case of an outbreak. For practice, this paper presents a distributed and digital architecture for cooling tower safety. However, technology is only a part of outbreak management solutions, requiring trustworthy conditions and real-time communication among stakeholders.

Export Citation Format

Share document.

Suggested keywords

• Intelligence
• CAPCO INTELLIGENCE

THE LEGO BLUEPRINT: LEARNING FROM INDUSTRIES THAT HAVE SUCCESSFULLY SCALED AGILE

THE LEGO BLUEPRINT - LEARNING FROM INDUSTRIES THAT HAVE SUCCESSFULLY SCALED AGILE

• Abigail Pease, Robert Ord, Michelle Weatherup
• Published: 27 May 2022

“One of the things people often overlook is the massive system integration and to what degree the LEGO group is actually an IT-driven company as much as a brand driven company.”

Jørgen Vig Knudstorp, CEO

“Radical is the new normal. Lifecycles are getting shorter and shorter. There’s no time to catch up. All companies need to experiment and understand these things.”

David Gram, LEGO

LEGO blocks are more than just a tool beloved by agile scrum masters – they are the product of a company that has embraced a scaled agile framework. Back in 2014, the LEGO Group kickstarted the transition towards a SAFe working model within its Digital Solutions department with the goal of building what the company termed the ‘Land of Awesome’. By transitioning to this collaborative way of working, LEGO has kept pace with children’s demands for digital products including video games and online communities. Adopting a fresh approach to delivery allowed the company to adapt where other toy manufacturers fell behind. 

A deep dive into the LEGO story reveals how the company successfully scaled an agile framework. Exploring this journey highlights that the key to an agile transformation lies in the mindsets, beliefs, and actions of the people at the heart of an organisation. In short, LEGO’s journey provides a blueprint of adaptive delivery for companies by highlighting the importance of culture in scaling agility. It showcases how the key to embedding an agile framework is teaching people firstly what an agile mindset truly is, and secondly how it can be embedded into their day-to-day operations.

Below I explore the step-by-step approach LEGO used to shift their working model in order to clarify crucial lessons for consultant looking to navigate digital projects in the financial services space. Like their counterparts in other industries, many financial services firm are facing the challenge of adapting or potentially becoming extinct. Taking note of how other industries have successful scaled agile therefore offers invaluable lessons for the modern financial services consultant.

The LEGO Group’s Problem Statements

Before diving into LEGO’s agile journey, it is useful to consider why the company had to alter its ways of working:

• It had to diversify into the digital toy market, matching the pace of competitors such as Minecraft creator Mojang Studios, or face being left behind as a physical only product company
• Embed a truly customer-centric focus into LEGO’s working model or risk losing its customers, whose expectations were evolving in an ever-shifting toy market
• Improve the efficiency of agile methods or risk cost-to-innovate becoming high, undermining profitability.

Short-term: How Did They Do It? 

• LEGO gathered together 20 managers from LEGO’s Digital Solutions department
• It held a two-day class on the fundamental principles of SAFe
• This was followed by a PI Planning event covering insights and lessons from the SAFe training
• As a result of this training, the Digital Solutions department expanded from five large teams to 20 small, self-organising, and cross-functional teams
• The company implemented programme and portfolio levels of planning that synced the work of different teams
• Iterative development was maintained through Design Sprints that streamlined different teams’ journeys

Benefits to the organisation:

• Faster innovation of products and an accelerated time to market. A study on LEGO agile transformation reports that for a product estimated to require 8,000 hours of development, that development time was reduced to 800 hours across two four-week sprints
• The working culture of employees was transformed, with redundant tasks reduced and a greater focus on creativity and collaboration

Benefits to the Customer

• Customers collaborated on new LEGO products through frequent feedback. This fed into the development of titles such as LEGO Super Mario in 2020, one of its most successful releases ever
• LEGO gave their customers a direct role in the production process by promising them a share in revenues from products they proposed that successfully made it to market.

Following the success of the Digital Solutions team’s transition, CEO Jørgen Vig Knudstorp announced an end to digital strategies, proposing a unified agile approach across LEGO as a vehicle to innovate in the digital world. Scaling agile, he argued, would result in three key benefits: streamlining decision-making; forging a direction for future development; and producing a global collaborative culture.

In the years since the LEGO Group’s commitment to scaling agility, the company has blossomed into a truly agile business and become a blueprint for success. LEGO continue to champion continuous learning to inject an agile philosophy into their company culture by employing a team of agile specialists worldwide , who ensure the company stays committed to genuine agility. LEGO’s blueprint can be summarised by three key lessons learnt:

My Lessons Learnt

By being adaptable, thorough, and direct in their approach to agility, LEGO evolved and secured their ongoing success as a digital toy manufacturer.  

• Be Bold and Flexible: “To change course, sometimes you have to pull the emergency brake”. Being bold is crucial to delivering real change. A key part of this is experimentation, whether in relation to team size or the disruption of roles. LEGO’s journey towards an agile working model demonstrates why it is important to think big and be flexible. SAFe is a good framework, but it needs adapting in line with the specific needs of the company; again, experimentation is essential.
• Embed an Agile Mindset The key to scaling an agile framework is embedding an agile culture. To do so, open conversation is required. LEGO’s journey showcases why conversations should be guided by experts with insight into the ways that agile can benefit a workforce. It is clear to me that those responsible for transforming an organisation must believe in the power of agility. Embedding such a mindset in the financial services space requires intelligent and adaptable consultants who can overcome pushback and doubt.
• Define and Pursue a Clear Vision Scaled agile can shine when a company pursues a clear vision that aligns with its working culture. At LEGO, 20 managers remained consistently committed to scaling agile whilst championing flexibility and innovation. Keeping the vision consistent ensured that their mission and approach were in sync. Within financial services, such alignment is key to navigating a vast and ever-changing industry.

Like LEGO, Capco seeks to disrupt the fabric of organisations. Learning from companies like LEGO provides a blueprint for embedding agile from the ground-up. Lessons learnt from LEGO include adopting a flexible and bold working model, embedding an agile culture, and pursuing a clear vision. These tips offer perspective to those of us within financial services who must wrestle with the challenges faced by the increasing digitisation of products and companies. In response, we must choose to adapt.

Bibliography

https://scaledagile.com/case_study/lego-digital-solutions/

https://www.icmrindia.org/casestudies/catalogue/IT%20and%20Systems/ITSY117.htm

https://ctl.mit.edu/sites/ctl.mit.edu/files/attachments/MIT_CISRwp407_TheLEGOGroup_AndersenRoss_0.pdf

https://itbrief.co.nz/story/lego-s-journey-through-digital-innovation-and-beyond

https://techbeacon.com/app-dev-testing/10-companies-killing-it-scaling-agile

https://www.simplilearn.com/how-companies-like-lego-scale-project-management-with-agile-and-scrum-article

https://www.lego.com/en-gb/careers/stories/inspiring-everyone-to-be-agile/

https://www.objectstyle.com/agile/scaled-agile-success-story-lessons

https://www.lego.com/en-us/aboutus/news/2021/march/2020-annual-results/

https://www.weforum.org/agenda/2021/03/lego-children-digital-empathy-covid-19/

https://www.infoq.com/news/2017/09/agile-lego/

https://uxplanet.org/how-lego-run-design-sprints-at-scale-47bf56b785f7

https://core.ac.uk/download/pdf/301370224.pdf

https://www.dockconsulting.nl/wp-content/uploads/2021/03/Agile-at-Lego.pdf

• Terms of Use
• Data Privacy Notice
• Cookie Notice
• Accessibility Statement

Technology and Operations Management

Mba student perspectives.

• Assignments
• Assignment: Digitization Challenge

LEGO in a Digital World

How the Danish toymaker is keeping pace in an era of digital transformation.

Shifts in digital technology are causing widespread disruptions across many industries, and the toy industry is in no way immune.  LEGO Group, a Danish toy manufacturer, offers an example of both the challenges presented by digital technology in the world of physical products as well as the opportunities if digital trends are harnessed and effectively applied across a company’s business and operating models.

In in the late 1990s and early 2000s, LEGO had taken massive strides into the digital space, producing several generations of interactive websites, console games, and computer media.  Yet by 2004 the company was in trouble, posting a $140M loss in March of the year and announcing that it would be cutting 500 Jobs.[1]  In addition to production inefficiencies and supply chain problems, a significant contributor to this loss was the challenge posed by digital transformation, which had begun to take its toll on the company’s bottom line.

At the core of the problem was LEGO’s misapplication of digital transformation to both its business model and its operational model.   In terms of the former, LEGO had diversified itself into digital mediums which distracted from its core product offering—the LEGO brick.   Digital media and video games showed promise, but LEGO was simply not adept at developing them and saw a series of media flops with corresponding losses.[2] As for its operational model, LEGO’s Press Officer in 2004 described a general lack of information flow in the company: “We had a lot of knowledge silos within the organization. One hand was doing something that the other didn’t know.”[3]

Pathways to Just Digital Future

New Product Offerings:  LEGO’s digital improvements to its business model refocused the company on its core physical product while allowing the company to still make inroads into other forms of entertainment. It made efforts to bridge the gap between digital media and physical LEGO bricks through more advanced software and hardware design.  Its first game in this space, “Life of George,” was launched in 2011, and it allowed users to construct physical LEGO designs which then were scanned into the game.[4] “LEGO Dimensions,” launched in 2015, further developed this concept.  The game employed about 300 physical LEGO pieces which were used to actually build the controller.  The controller could then scan physical LEGO constructions and render them on the screen.[5]

Product Design:   LEGO also leveraged digital technology to “crowdsource” its product design through communities of fans and designers on the internet.  In 2008 it launched “LEGO Ideas,” a website in which users could create and submit product designs which were subsequently voted on by their peers.  If the design received 10,000 or more votes, it would proceed to an official LEGO review board.  Crowdsourced designs performed relatively well in the market, and the site also allowed the company to keep a thumb on current consumer trends and interests.[6]

New Enterprise System.   Beginning in 2004 LEGO restructured its Enterprise IT system in order to improve data-sharing across the company.  The complicated user interface was replaced with a simple, app-styled model which ensured each employee only operated apps applicable to his/her specific job.  This decluttered the internal company site and allowed employees to quickly access required information.  LEGO also adjusted its IT hiring policies and implemented a system of rotating its employees throughout the organization in order to build wider industry exposure.  Furthermore, it instituted IT internship programs within its enterprise system and increased its hiring rate from Silicon Valley.[7]

LEGO’s use of digital technology since 2004 has been largely successful in improving its operating and business models, but there are additional areas of improvement that are worth considering as the company moves forward.[8]

Leverage Virtual Reality:   Virtual Reality is becoming an increasingly important playing in the video game industry, and offers an opportunity for LEGO to continue to bridge its physical and digital worlds.[9]

Continue Licensing Model in Digital Media:   This is an area in which LEGO has been incredibly successful, and the 2014 collected over $460 million at the box office.   This model allows the company to continue its focus on its physical product while diversifying into alternative revenue sources.

Expand Design Crowdsourcing: LEGO should consider expanding the “LEGO Ideas” model to be more accessible to a broader array of designers.  The current platform is quite stale and relatively difficult to use for a novice designer, which imposes a limit on the breadth of design ideas LEGO can access.[10]  In addition, the company should consider national or global-level design competitions as part of a broader digital media strategy. (788 Words)

References:

• “Strategic Play – LEGO: Building up an empire.” New Media Age. 29 April, 2004.  Accessed via ProQuest at http://search.proquest.com.ezp-prod1.hul.harvard.edu/abicomplete/docview/225140680/abstract/204948B098764946PQ/9?accountid=11311 , 13 November 2016.
• Davis, Scott. “How LEGO Built up from Innovation Rubble.” 24 September, 2013. http://www.forbes.com/sites/scottdavis/2013/09/24/how-lego-built-up-from-innovation-rubble/#19a8602c9dcc , Accessed 13 November, 2016.
• Trangbaek, Roar Rude. “We Lost the Focus on the Bricks.” http://www.internationaltradenews.com/interviews/we_lost_the_focus_on_the_bricks/ . Accessed 13 November, 2016.
• “LEGO Group Unveils First Fully Integrated Digital-to-Physical Gaming Experience.” PR Newswire. 29 September, 2011. Accessed via ProQuest at http://search.proquest.com.ezp-prod1.hul.harvard.edu/abicomplete/docview/896569043/9AD53CF2F066470EPQ/28?accountid=11311 .
• Milne, Richard. “LEGO Builds New Dimension with Digital Vision.” Financial Times. 28 September 2015.  Accessed via ProQuest at http://search.proquest.com.ezp-prod1.hul.harvard.edu/abicomplete/docview/1727763678/204948B098764946PQ/12?accountid=11311 .
• Amsinck, Herrik et al. “Building the Foundations and Enterprise Capabilities for Digital Leadership: The LEGO Experience.” 21 August, 2015. http://dinst.dk/UserFiles/Artikler/LEGO_SIM_Digital_Leadership_Paper_-_SIM_WIN.pdf , Accessed 13 November 2016.
• For an overview of the company’s growth over the past 12 years, see: Ringen, Jonathan. “How LEGO Became the Apple of Toys.” 1 August, 2015. https://www.fastcompany.com/3040223/when-it-clicks-it-clicks , Accessed 13 November 2015.
• LEGO has made some progress in this area with “Lego Fusion.” See also: http://www.theverge.com/2014/6/19/5821476/augmented-reality-lego-fusion-hands-on
• See: https://ideas.lego.com/

Image References:

• https://www.lego.com/en-us/aboutus/news-room/2015/february/lego-group-2014-annual-results, Accessed 16 November, 2016.
• https://www.lego.com/en-us/dimensions/how-to-play, Accessed 16 November, 2016.
• https://ideas.lego.com/, Accessed 16 November, 2016.

Additional Sources Consulted:

• “The LEGO Group History.” https://www.lego.com/en-us/aboutus/lego-group/the_lego_history/2000 , Accessed 13 November 2016.
• “World Economic Forum White Paper, Digital Transformation of Industries.” Digital Enterprise . January 2016. http://reports.weforum.org/digital-transformation-of-industries/wp-content/blogs.dir/94/mp/files/pages/files/digital-enterprise-narrative-final-january-2016.pdf , Accessed 13 November 2016.

Student comments on LEGO in a Digital World

This is really interesting! I used to play with LEGO when I was a child, and I, of course, bought the most popular toy in the world for my son and daughter so that they can foster their creativity and they really love the bricks. I even visited LEGO LAND in Malaysia with my son and was impressed how people can be creative by stacking the same shape small pieces of bricks. Yet I really did not notice about the digitalization of the physical bricks which got a history of more than 80 years. Especially, “LEGO ideas” fascinates me. While it is similar to the product development of Threadless, as LEGO is universal and as both adults and children love it, it can be a broader community and reflect the taste of everybody. Indeed I could enjoy seeing it with my son. Though I think LEGO will be sustainably successful, it can attract more people if it could communicate its digital presence to the world more dynamically.

That’s too bad that kids are losing interest in LEGOs. This article caught my eye as a former avid-LEGO user. I think these new ideas are compelling – crowdsourcing designs, the LEGO movie, LEGO Dimensions, LEGO computer games – but they get away from the key value proposition of the toy – building a physical product with your hands. The more you steer away from this then the less relevant the brand is going to be. I think it would be better to integrate the physical LEGO blocks with digital space using sensors or something where the LEGOs can interact with the internet. Maybe you could build a LEGO object that then gets scanned in to be the spaceship for a computer game or something. That would put the tangible LEGO blocks front and center while still tying into digital media.

Hey Matt – Thanks for this post. I am a big personal LEGO fan and really enjoyed reading about the new initiatives. While I think the “Lego Dimensions” sounds like a great idea for the company, I worry about the broader implications for society. Doctors and scientists have demonstrated that too much time spent in front of a computer screen can have very detrimental effects on children, including developmental and neurological delays and a lack of interpersonal skills. Many articles have been written on the subject but here is a high-level overview: http://www.livestrong.com/article/85306-negative-effects-computers-children/ . As one of the most iconic brands in physical play toys, it feels like Lego is moving down a slipper slope with its integration of gaming software into ints core brick product. If the major toy brands won’t stand firm and promote social play in young children as opposed to digital play, who will?

Thanks so much for the post, Matt!

Before I started reading, my first thought was that Lego has managed to stay pretty relevant in the digital and media world from my perspective, but the entirety of the success of their movies, games, etc. is dependent on invoking nostalgia and childhood memories formed by consumers while playing with actual Legos. Otherwise, their digital/media projects would require convincing customers that oddly-shaped characters and blocky worlds should be entertaining for some reason.

After reading your article, it’s comforting to know that Lego is doing a good job of improving their digital strategy while still focusing on building consumers’ love of their core products, instead of relying on self-perpetuation of their physical products’ popularity through nostalgic parents buying Legos for their kids. I think we’re all rooting for Lego to stick around for the long haul.

Have you seen the advertisement of the cartoon LEGO? It’s amazing. It also uses AR technology. Lego progressively develops in the field of AR from digital boxes in the store to advertising in public places. I think it’s cool for attracting new customers. Lego has an interesting history – https://invisible.toys/lego-history/ . Did you know how it appeared ?

Leave a comment Cancel reply

You must be logged in to post a comment.

The New Equation

Executive leadership hub - What’s important to the C-suite?

Tech Effect

Shared success benefits

Loading Results

No Match Found

Streamlining processes and standing up HR operations with PwC’s Total Workforce Management solution

From acquisition to autonomy: how a tech company transformed its workforce

• May 29, 2024

A regional tech company faced the challenge of establishing a new company after an acquisition, while also scaling its workforce. To avoid costly transition services agreements (TSAs) and preserve deal value, it needed a rapid HR system separation. The company worked with PwC to swiftly move its enterprise-wide HR operations to SAP and stand up its own system. The solution provides unprecedented visibility across the organization and empowers leadership to make data-driven decisions that improve employee experience.

Regional Tech Company

time and pay accuracy after converting enterprise data from legacy systems over to SAP

faster than industry standard timeline to implement SAP SuccessFactors and Fieldglass for 6,000+ employees and contractors

HR TSAs required post-divestiture, despite accounting for HR and tax nuances in 35 states and 25+ employee unions, which helped preserve deal value

A human-led, tech-powered workforce transformation enables transparency and helps build trust with stakeholders

PwC shares the path to operational efficiency

What was the challenge.

The challenge was managing rapid change amid a complex acquisition . The client needed to physically separate the HR, payroll and operations systems of its newly acquired company to avoid relying on the former owner’s tech infrastructure via costly TSAs.

Speed was key. The goal was to stand up the new systems as quickly as possible without a significant impact on either company’s daily operations, which span 35 states. Simultaneously, the team also had to onboard thousands of employees overnight, causing a rapid scaling of the HR organization.

Describe the solution delivered by the PwC community of solvers

PwC’s Total Workforce Management solution powered by SAP was chosen to streamline HR processes and manage all related operations. This comprehensive, cloud-based HR suite integrates modules like S/4HANA, SuccessFactors and Fieldglass to efficiently handle talent management, learning, recruitment, timekeeping, finance (including financial planning and analysis) and contractor management. The automation tools and data cleansing enabled a smooth transition under a tight deadline, along with accurate financial data posting and streamlined payment processing for both contractors and over 25 employee unions across the business.

Transitions of this magnitude typically take at least 12 to 15 months, but PwC did it in 9 months. The client now has great operational efficiency and workforce management capabilities.

How does the solution blend the strengths of technology and people?

Despite the time constraints, PwC quickly implemented Total Workforce Management and the Experience Suite framework . This is a digital SuccessFactors-driven solution that provides tools to enhance employee upskilling, labor sourcing and localized people management. The solution simplified governance, improved visibility and empowered smarter decisions as the organization grew. Within the Experience Suite, you could see exactly what the system build would look like via a test environment, incorporating standardized practices to meet the deadline as an independent company.

Where or how did innovation and unexpected ways of thinking come into play?

PwC’s Experience Suite framework provided a practical and efficient approach to setting up a new system. This included leading practices and pre-built models based on PwC’s extensive experience with SAP SuccessFactors and Fieldglass implementations. It streamlined project management, reduced decision-making time and minimized complexities. PwC’s fit-to-standard approach also helped provide a standard system setup and HR enhancements to simplify the implementation process. The team’s innovative solutions truly made a difference in the workforce transformation journey.

Get more on this topic

How expediting transition service agreement exits can unlock deal value

Total Workforce Management powered by SAP

Experience Suite framework

HR transformation: embrace the future  

Gain competitive advantage by moving your HR and its processes to the cloud.

EXPLORE PwC’s CASE STUDY LIBRARY

See how we're helping clients build trust and become outcomes obsessed in our case study library.

Kris Khanna

Principal, PwC US

© 2017 - 2024 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

• Data Privacy Framework
• Cookie info
• Terms and conditions
• Site provider
• Your Privacy Choices