The philosophy of creating products based on a strategy of play and creativity is fascinating, and it is still as present in the organization of the LEGO Group today as it was when the company was founded in 1932. This creative universe, where only the imagination is a limit, is appealing to both consumers as well as employees. The organizational changes which started in March 2004 was however as far from the philosophy of the LEGO Group as possible. With his new management approach, CEO Jø rgen Vig Knudstorp created a “(…) simplified management structure and tried to foster a more commercial culture through a performance-based pay scheme and frank communication between management and
employees.” (Unknown author, 2006. Cf. appendix 21). Additionally, the LEGOLAND theme park division was sold, thousands of employees were laid -off, and the process of developing ideas was cut in half, “(…) going from idea to box in just 12 months.” (Schwartz, 2006, p. 46.
Cf. appendix 22). All these initiatives were in contrast to how the culture of the LEGO Group had been so far. Knudstorp described it as a culture with an attit ude of “(…) „we‟re doing great stuff for kids – don‟t bother us with financial goals‟. It was the culture where delivering what was promised wasn‟t critical.” (Schwartz, 2006, p. 45. Cf. appendix 22). The changes were an abrupt wake up for the LEGO employees, but the radical changes of Knudstorp worked and the company has performed very successfully ever since. An advantage of Knudstorp‟s strategy of cutting the culture of the LEGO Group back to the bone; the core values, is the fact that the LEGO Group succeeded in creating a common understanding of the corporate identity internally. Where employees before felt the company had drifted to far away from core values, the new management style of Knudstorp made sure that everybody
was one the same page, that “(...) innovation needed to be refocused back on the creative building experience” (Hjuler & Robertson, 2009, p. 1. Cf. appendix 14).
CEO Jørgen Vig Knudstorp decided upon a two-pronged approach as a solution to the critical state the company was in, when he took over in 2004. This means that on one side, the LEGO Group concentrates its effort on a back-to-basics strategy, meaning that the core values of the company are being emphasized throughout the organization and are connected to the
products. On the other side, the LEGO Group acknowledges the entry and popularity of modern technology, and knows that the future of the LEGO Group also has to be online. In terms of the back-to-basics strategy, it definitely has certain advantages. The strategy plays upon the history of the LEGO Group, which is something many employees can relate to, as they themselves have grown up with the LEGO products, and associates the LEGO brand with something well-known. Furthermore, the strategy creates coherence in the company, by ensuring that the identity from the beginning in 1932 still plays a part in the organization anno 2011. In addition, the core values are good values that represent good qualities of the
company such as fun and quality, which are easy to communicate to both consumers and employees. However, a back-to-basics strategy can also be a hindrance because a focus on old elements can be difficult to adapt into a modern setting. Even though the values of the LEGO Group may seem timeless, it is still important that they are represented in a new wrapping so they are digestible for a new generation of employees and not just considered old-fashioned.
Knudstorp‟s new strategy definitely has changed the organizational structur e of the company, and made it more modern, which is beneficial for both employees. The new structure makes communication in the organization more flowing, and gives employees much more
responsibility; important aspects when an organization wants to attract creative and innovative employees.
The other dimension of the strategy, innovation, is easier to grow in an or ganization where responsibility is divided among people, and where communication openly takes place between the different levels of the organization. An innovative work place creates a challenging environment for employees, where they themselves have the opportunity to develop along with the company. When dealing with innovation, it is however not sufficient to solely look at the internal side of the LEGO Group organization. The decisions the
company has made regarding innovation and a changed product range, do not only affect externally in the form of consumers, but are also reflected back to the organization. Although this thesis primarily focuses on the LEGO Group organization internally, external
stakeholders must therefore also be considered, when discussing the abilit y of the LEGO Group to complement core values with newer initiatives. Firstly, it can be argued whether a back-to-basics strategy is even enough in order to differentiate the LEGO Group in a
stagnated toy market full of offers? Being a child is different today than it was seventy years ago. Children of today grow up a lot faster, which has resulted in falling product cycles for the LEGO Group (Fishman, 2001, p. 1. Cf. appendix 13). In addition, the choice of toys and entertainment commodities has exploded, which causes children to be bombarded with offers every single day, resulting in a „shopping around‟ culture. The children simply do not stay loyal to a brand in the same way as their parents or grandparents did. Therefore, as a
company, you must have something very special to offer in order to gain but also maintain their attention.
The LEGO Group puts high emphasis on its brand and how it is l inked to the traditional values and in combination these elements basically works as a key part of the identity of the company. People associate the LEGO brand with quality, creativity and wholesome play for children. These values have worked as an acknowledging recognition factor for the brand, but the question is whether values are enough to create an image that differentiate a company in a packed and highly competitive market?
The back-to-basics strategy can also be considered as an easy solution for the LEGO Group. It could be expected of a company of world-class creative builders that it could create
something new and modern, instead of returning t o something well-known. This aspect leads to the focus on innovation, which the LEGO Group has. As a part of the innovation process, the LEGO Group has actually created products relatively different from what would normally be associated with the company. Knudstorp has focused on licensing agreements, such as the cooperation with Lucasfilm Ltd. on LEGO® STAR WARS™ products. The LEGO Group has previously been criticized for keeping the production too much in own hands but with the partnership with Lucasfilm Ltd., the company has taken a new approach to product
development (Fishman, 2001, p 3. Cf. appendix13). The approach with these licensing
products or IP products (Intellectual Property) emphasizes the role of the LEGO Group in the
virtual space, which obliges a wish from consumers of bringing the LEGO universe to the virtual scene where they e.g. can share the passion for the LEGO Group in online
communities. Thereby, the innovation process has not only contributed to an exciting
development in the product range of the LEGO Group but has also given the LEGO Group a foundation of building relationships with consumers. Additionally, being online has given the LEGO Group a greater opportunity of involving consumers in the company, e.g. by listening to their opinions about products and modifying the products according to their wishes.
Innovation is undoubtedly a necessary part of re-inventing the LEGO Group and ensuring the further competitiveness of the company. But the shifts the LEGO Group has taken in the process of advancing creative and innovative ideas, have also met criti cism from some of the most loyal customers of the company. They are concerned about how much the brand can be innovated, if it can actually be extended too much. Previously, LEGO products emphasized creativity and imagination without limits and therefore did not have instructions or pictures of how the final products should look like, the so-called building instructions. Instead, it was up to the consumer to decide the look of the final product itself, i.e. there were no right solutions.
With the entry of licensed products, the LEGO Group has shifted to an approach focusing on storytelling. Here, characters and the setting are decided in advance, and the play itself is structured from the beginning, as consumers know the characters from movies and games, and thereby have a knowledge of how the story evolve around the characters. In that way, it can be argued that the LEGO Group has left its philosophy of free creativity and play, and instead replaced it with a more theme-based and structured approach to play. The LEGO Group has a slogan of “nurturing the child” (Schwartz, 2006, p. 45. Cf. appendix 22), but by putting creativity into a frame, it can be argued that the LEGO Group deviates from its own principles, and actually robs children their opportunity of freely exploring their imagination.
These external issues naturally affect the internal organization of the LEGO Group. The involvement online and the focus on storytelling are part of a newer and broader product range, and although they have been very successful, they need to be transferable back to the back-to-basics strategy, which is embedded in the internal or ganization. Cohesion has to exist between what is communicated internally versus externally. Also, the organization of the LEGO Group faces great challenges when it comes to involving consumers in the decision-making process. Only recently, with the organizational changes in 2004, did employees
become an essential part of this process and it requires some structural coordination and a lot of growing in a short time, in order for the LEGO Group organization to fully embed
consumers in its process of developing ideas and benefit from it. Although the LEGO Group wishes to preserve certain traditions from the history of the company, e.g. the hierarchical structure, which reflects its past as a family business, the organizational structure may need further revision in order to successfully gain something from the creative inputs which come from all directions. As the organization is structured today, there are simply too many divided levels of management, which slows down the idea developing process. The LEGO Group is all about quality, but if Knudstorp wishes to go from idea to box in a year, creativity has to flow more easily across of the levels.
There is no doubt about the importance of the legacy of the LEGO Group. The challenge is how to adapt it to modern times. The legacy ensures the company a connection to consumers in many different age groups, which is an essential part of the LEGO Group being an
established brand. Obviously, a great pressure lies on the LEGO Group and especially on CEO Knudstorp, of continuing the company in a successful matter. It seems as if Knudstorp is well aware of the danger of diluting the popular and well-known brand, and so far he has managed to balance the relationship between core values tr acing back to the “old” LEGO with modern technology and innovation from the “new” LEGO, in a highly successful way. Only time and the demand from the consumers of the toy market will show, if the LEGO Group can continue with its fine equilibrium or if it has to make radical changes to its identity in order to maintain a competitive position. The question then is, whether the brand can survive a reformation. The LEGO Group can prepare, develop and innovate to infinity but in the end, it will be the consumers who decide the future of the company. By allowing these consumers participation in the decision-making process, the LEGO Group creates a feeling of
responsibility towards the company from the consumer‟s side, and thereby motivates them to stay loyal. This form of customer-relationship building is likely to be very beneficial for the company, and the setting in which it takes place, shows that there can exist a cohesion
between the philosophy and the innovation in the LEGO Group. The innovation aspects in the form of virtual relationship-building help strengthen the core values in a way so the t wo
elements melt together in a symbiosis, where the interdependent relationship between the two is emphasized.
6. Conclusion (MTJ & SBH)
The thesis have now analyzed and discussed how the LEGO Group implements its company philosophy, while simultaneously taking the concept of innovation into consideration. This has been done by thoroughly examining the organization of the LEGO Group, especially in terms of the organizational structure, the vision and mission statement, the organizational communication, the organizational culture, and also the motivational factors of the
organization. The analysis has revealed that the LEGO Group makes a great effort in order to stay true to its core values. They are emphasized throughout the entire organization, but are also an important part of branding the company to external stakeholders, e.g. trough the vision and the mission statement on the website.
The LEGO Group experienced an identity crisis in 2004, which led to changes in the organization. The new CEO emphasized a more innovative-oriented approach to the
organization‟s structure and management but also chose a back-to-basics strategy, focusing on values such as quality and creativity, which are implemented into all aspects of the LEGO Group.
The organizational culture within the LEGO Group puts high emphasis on its identity and its core values. The analysis has revealed that the LEGO Group is moving from the Eiffel Tower culture towards the Incubator culture, which is a clear example of the changes that has taken place since 2004. This embrace of several cultures within the company creates a strong
culture and contributes with an innovative edge to the company philosophy. Additionally, the looser structure in the organization has also made it easier to involve more employees in innovation and communication processes, which strengthens the organizational cultures as well as the competitiveness of the company.
The core values are also embedded in the work of the employees, which are thereby ensured a creative workplace – something which is of great importance when dealing with motivation.
The fact that the LEGO Group also emphasizes an innovative approach, gives the employees an opportunity for being stimulating through an exciting and challenging idea
development process. Thereby, the LEGO Group creates a work place where
motivational needs are taken into consideration, even though these differentiate from individual to individual.
The use of methodological hermeneutics has made it possible to analyze the organization from a perspective of the LEGO Group, and thereby examine how the management style affects the entire organization. Additionally, the hermeneutic circle makes it possible to
analyze back and forth between the parts and the whole, i.e. in the case of the LEGO Group it can be concluded that the core values and the newer innovation approach are inter-dependent elements, which are equally present in the organization.
The LEGO Group is currently experiencing success with its products, and a part of the explanation to this, is definitely to be found in the successful combination of well-known quality values and newer, innovative initiatives. How this combination will evolve in the future, depends greatly on the initiatives the LEGO Group has in mind. Although continuous innovation and development is a key part of ensuring growth in a company, then it is
important for the LEGO Group to always keep its legacy in mind, and make sure that there is a connection between the new products and the core values, which are the identity of the company.
7. References
7.1 Books
Brooks, I. (2009). Organizational Behaviour: Individuals, Groups and Organization . Essex, UK: Pearson Education Limited.
Conrad, C. & Poole, M. S. (2005). Strategic Organizational Communication: In A Global Economy. Belmont, CA, U.S: Thomson Wadsworth Publishing.
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Dyck, B. & Neubert, M. (2008). Management: Current Practices and New Directions.
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Hampden-Turner, C. & Trompenaars, F. (2004). Managing People Across Cultures. West Sussex, UK: Capstone Publishing Ltd.
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Sherratt, Y. (2005). Continental philosophy of social science: Hermeneutics, Genealogy and Critical Theory from ancient Greece to the Twenty-first Century . Cambridge, New York, U.S:
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7.2 Online materials
Cheng, Y. (1989). Organizational culture: Development of a theoretical framework for organizational research. CUHK Education Journal, 17, 128-147.
Doke, D. (2004, May 04). The world in their hands. Retrieved from
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Fishman, C. (2001). Why Can‟t Lego Click? Fast Company, (50) , 144-157. Retrieved from Business Source Complete database.
Hjuler, P. & Robertson, D. (2009). Innovation Governance in Action: The LEGO Group.
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Kirkbi A/S. (2010). About Us – Board of Directors. Retrieved from
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Kuang, C. (2009, March 09). Inside the LEGO-plex: No Wonder They Hatch Such Great Ideas. Retrieved from
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Kure, N. (2008). Philosophical hermeneutics[PowerPoint Slides]. Retrieved from
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O‟Connell, A. (2009, January). Lego CEO Jørgen Vig Knudstorp on leading through survival and growth. Retrieved from
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7.3 The webpage of the LEGO Group
LEGO.com - About Us -Facts and Figures – Company Profile
<http://aboutus.lego.com/en-US/factsfigures/default.aspx>
LEGO.com – About Us – Corporate Responsibility – Progress report 2010
<http://aboutus.lego.com/en-US/corporate/default.aspx>
LEGO.com – About Us – Jobs – Working at the LEGO Group
<http://jobs.lego.com/en-us/WorkingatLEGO/default.aspx>