Abstract Abstract
Family-owned companies in a modern business setting have a
Family-owned companies in a modern business setting have a challenge of preserving theirchallenge of preserving their corporate identity while at the same time developing their business. This is also the case for corporate identity while at the same time developing their business. This is also the case for the LEGO Group, who after several years of financial losses and downsizing, is now
the LEGO Group, who after several years of financial losses and downsizing, is now experiencing great success with a product range different that
experiencing great success with a product range different that what people normally associatewhat people normally associate the company with. As a result of this
the company with. As a result of this development, this thesis will examine how the LEGOdevelopment, this thesis will examine how the LEGO Group manages to “(...)
Group manages to “(...) implement its company philosophy of play and creativity in itsimplement its company philosophy of play and creativity in its organization, while at the same time focusing on
organization, while at the same time focusing on aspects of innovation?”aspects of innovation?” .. In order to fully examine this
In order to fully examine this problem statement, the organizationaproblem statement, the organizational culture of the l culture of the LEGOLEGO Group will be analyzed. This is done by analyzing the organizational structure, the vision and Group will be analyzed. This is done by analyzing the organizational structure, the vision and mission statement, the organizational communication, the organizational culture, and the mission statement, the organizational communication, the organizational culture, and the motivational factors of the organization, in order to see how
motivational factors of the organization, in order to see how – – or even if or even if – – it is possible toit is possible to incorporate aspects of a traditional business history in the form of core values, with
incorporate aspects of a traditional business history in the form of core values, with anan important element of a
important element of a modern business setting, innovation.modern business setting, innovation.
As a basis for the thesis, a theoretical framework of methodological hermeneutics is used. As a basis for the thesis, a theoretical framework of methodological hermeneutics is used. This theoretical approach makes it possible to
This theoretical approach makes it possible to understand the meaning of documents from theunderstand the meaning of documents from the world of the sender, in this case the LEGO Group. Thereby, a more thorough analysis of the world of the sender, in this case the LEGO Group. Thereby, a more thorough analysis of the organization can be made and presented. In addition
organization can be made and presented. In addition to the methodological hermeneuticto the methodological hermeneutic approach, severa
approach, several theorists are used to support the l theorists are used to support the analysis of the organization of the LEGOanalysis of the organization of the LEGO Group.
Group. Katherine Miller‟sKatherine Miller‟s overview of the development in organizational management andoverview of the development in organizational management and communication is used to show the development of the LEGO Group organization. To communication is used to show the development of the LEGO Group organization. To analyze the organizational culture, the theory of
analyze the organizational culture, the theory of Fons Trompenaars and Charles Hampden-Fons Trompenaars and Charles Hampden-Turner, as well as theories of Ian Brooks, and Charles Conrad and Marshall Scott Poole are Turner, as well as theories of Ian Brooks, and Charles Conrad and Marshall Scott Poole are used. These theories account for the cultural
used. These theories account for the cultural complexity within the organization, andcomplexity within the organization, and investigate the organizational culture as it is today but also where it is
investigate the organizational culture as it is today but also where it is moving towards, i.e. amoving towards, i.e. a future perspective of the organization of the LEGO Group is considered. Finally, the
future perspective of the organization of the LEGO Group is considered. Finally, the motivational factors within the
motivational factors within the organizaorganization are analyzed by the use of David McClelland‟stion are analyzed by the use of David McClelland‟s needs-based motivational theory.
needs-based motivational theory. As the thesis is
As the thesis is based on a methodological hermeneutic approach, a qualitative method in based on a methodological hermeneutic approach, a qualitative method in thethe form of an
form of an analysis of documents is used. These documents include internal analysis of documents is used. These documents include internal documents fromdocuments from the organization of the LEGO Group as well as journal articles and academic books covering the organization of the LEGO Group as well as journal articles and academic books covering the topic.
the topic.
The thesis is structured with an introduction, where the motivation for the thesis is
The thesis is structured with an introduction, where the motivation for the thesis is stated, asstated, as well as the
well as the methodological approach is presented. A section covering the theoreticalmethodological approach is presented. A section covering the theoretical background of the thesis with
background of the thesis with important theories, and a company description, leads to important theories, and a company description, leads to the corethe core body of the thesis, t
body of the thesis, the analysis of the LEGO he analysis of the LEGO Group organization. The following discussionGroup organization. The following discussion part is based on the findings from the previous analysis but also debates other issues and part is based on the findings from the previous analysis but also debates other issues and solutions. Finally, an overall conclusion sums up the
solutions. Finally, an overall conclusion sums up the entire thesis.entire thesis. The analysis indicates that the
The analysis indicates that the LEGO Group successfully manages to implement its coreLEGO Group successfully manages to implement its core values while simultaneously handling the innovation aspects of the
values while simultaneously handling the innovation aspects of the company. It has howevercompany. It has however required some organizational changes in order to
required some organizational changes in order to create an organizational setting, where bothcreate an organizational setting, where both tradition and innovation are emphasized. In addition,
tradition and innovation are emphasized. In addition, a change in the product a change in the product range has alsorange has also taken place, in order to fully implement the technological development in the products of the taken place, in order to fully implement the technological development in the products of the LEGO Group. Despite this fact, it is stil
LEGO Group. Despite this fact, it is still the core values of quality, play and creativity, whichl the core values of quality, play and creativity, which are imbued in the organization. The future of the LEGO Group is
are imbued in the organization. The future of the LEGO Group is partly based on thepartly based on the
involvement of committed consumers, and the question is how their influence will affect the involvement of committed consumers, and the question is how their influence will affect the
organizational symbiosis of the core values and innovation. The
organizational symbiosis of the core values and innovation. The LEGO Group has a LEGO Group has a greatgreat challenge ahead of it, in
challenge ahead of it, in the form of the form of constantly developing new products and the productconstantly developing new products and the product range to satisfy external stakeholders, and doing so in a way where it is possible to
range to satisfy external stakeholders, and doing so in a way where it is possible to incorporate the core values of
Table of content Table of content 1. Introduction (MTJ & SBH) 1. Introduction (MTJ & SBH)... ... 55 1.2.1 Development of hermeneutics 1.2.1 Development of hermeneutics... 6... 6
1.2.2 Relating hermeneutics to the problem statement
1.2.2 Relating hermeneutics to the problem statement... 8... 8
1.4 Structure of thesis
1.4 Structure of thesis... 9... 9
1.5 Delimitation
1.5 Delimitation... 10... 10
2. The LEGO Group -
2. The LEGO Group - The Company (MTJ)The Company (MTJ)... ... 1111
3. Theoretical background (MTJ & SBH)
3. Theoretical background (MTJ & SBH)... ... 1313
3.1 Organizational management (MTJ)
3.1 Organizational management (MTJ)... 13... 13
3.1.1. Classical approach
3.1.1. Classical approach... 13... 13
3.1.2. Human Relations approach
3.1.2. Human Relations approach... 15... 15
3.1.3. Human Resources approach
3.1.3. Human Resources approach... 16... 16
3.2 Organizational culture
3.2 Organizational culture – – theoretical background (SBH)theoretical background (SBH)... 17... 17
3.2.1 Trompenaars and Hampden-Turner
3.2.1 Trompenaars and Hampden-Turner... 20... 20
3.2.2 Four Corporate Cultures
3.2.2 Four Corporate Cultures... 22... 22
3.2.3 Talking national culture?
3.2.3 Talking national culture?... 23... 23
3.3. Motivation
-3.3. Motivation - McClelland’s needsMcClelland’s needs-based motivational theory (MTJ)-based motivational theory (MTJ)... 23... 23
4. Organizational analysis of the
4. Organizational analysis of the LEGO Group (MTJ & SBH)LEGO Group (MTJ & SBH) ... 24... 24
4.1 Identity crisis (MTJ)
4.1 Identity crisis (MTJ)... 25... 25
4.2 Organizational structure (MTJ)
4.2 Organizational structure (MTJ)... 26... 26
4.3 Vision and Mission statement (SBH)
4.3 Vision and Mission statement (SBH)... 29... 29
4.4. Organizational communication (MTJ)
4.4. Organizational communication (MTJ)... 31... 31
4.5 Organizational culture (SBH)
4.5 Organizational culture (SBH)... 34... 34
4.5.1 The Cultural Web byJohnson & Scholes c
4.5.1 The Cultural Web byJohnson & Scholes c ombined with Organizational Symbolism byombined with Organizational Symbolism by Conrad & Poole
Conrad & Poole... 34... 34
4.5.2 Four Corporate Cultures:
4.5.2 Four Corporate Cultures:... 38... 38
4.5.3 Subcultures 4.5.3 Subcultures... 42... 42 4.6 Motivation (MTJ) 4.6 Motivation (MTJ)... 43... 43 4.7 Conclusion (MTJ & SBH) 4.7 Conclusion (MTJ & SBH)... 47... 47
5. The future of LEGO: can
5. The future of LEGO: can core values from the 1930’s exist in a core values from the 1930’s exist in a modern setting? (MTJmodern setting? (MTJ & SBH) & SBH)... ... 4848 6. Conclusion (MTJ & SBH) 6. Conclusion (MTJ & SBH)... ... 5353 7. References 7. References... ... 5555 7.1 Books 7.1 Books... 55... 55 7.2 Online materials 7.2 Online materials... 56... 56
7.3 The webpage of the LEGO Group
7.3 The webpage of the LEGO Group... 57... 57
Total characters: 98.641 Total characters: 98.641
Maria Tang Jansen (MTJ): 49,346 Maria Tang Jansen (MTJ): 49,346
Sascha Brinch Hummelgaard (SBH): 49,295 Sascha Brinch Hummelgaard (SBH): 49,295
1. Introduction (MTJ & SBH) 1. Introduction (MTJ & SBH)
This thesis will look upon how the LEGO Group® implements its
This thesis will look upon how the LEGO Group® implements its company philosophycompany philosophy,, which focuses on the following six
which focuses on the following six brand values; imagination, creativity, fun, learning, caringbrand values; imagination, creativity, fun, learning, caring and quality. Additionally, it will be analyzed how innovation practices impact upon both the and quality. Additionally, it will be analyzed how innovation practices impact upon both the philosophy of the LEGO Group but also the organization itself. This will
philosophy of the LEGO Group but also the organization itself. This will be done by lookingbe done by looking at the organizational structure, the vision
at the organizational structure, the vision and mission statement, the organizationaland mission statement, the organizational communication, the organizational culture, and motivation factors in
communication, the organizational culture, and motivation factors in the LEGO Group.the LEGO Group.
The LEGO Group is an international company of Danish origin and one of the world
The LEGO Group is an international company of Danish origin and one of the world ‟‟s largests largest toy manufacturers. It has a long history and a brand that i
toy manufacturers. It has a long history and a brand that is widely known throughout thes widely known throughout the world. The philosophy is an important characteristic of the company and is used to
world. The philosophy is an important characteristic of the company and is used to differentiate the LEGO Group from competitors. In order to fur
differentiate the LEGO Group from competitors. In order to fur ther strengthen itsther strengthen its competitiveness, the LEGO Group has focused on innovative initiatives, which competitiveness, the LEGO Group has focused on innovative initiatives, which havehave expanded the brand to cover new areas of
expanded the brand to cover new areas of the toy industry. Thereby, the the toy industry. Thereby, the company has chosencompany has chosen a two-pronged strategy to profile itself, both internally and externally.
a two-pronged strategy to profile itself, both internally and externally.
1.1 Problem statement 1.1 Problem statement It can be difficult for
It can be difficult for a company to brand itself as innovative while at the same time a company to brand itself as innovative while at the same time stayingstaying true to the core values founded in the organization of the company. The LEGO Group has a true to the core values founded in the organization of the company. The LEGO Group has a responsibility to not only
responsibility to not only consumers but also employees of successfully developing theconsumers but also employees of successfully developing the company while incorporating its history. Therefore, this thesis will examine the following company while incorporating its history. Therefore, this thesis will examine the following statement:
statement:
How does the LEGO Group implement its company philosophy of play and creativity in its How does the LEGO Group implement its company philosophy of play and creativity in its
organization, while at the same time focusing on aspects of innovation? organization, while at the same time focusing on aspects of innovation?
1.2 Methodological approach 1.2 Methodological approach
This thesis is based on the internal organizational perspective of the LEGO Group, where the This thesis is based on the internal organizational perspective of the LEGO Group, where the problem statement is being examined by an
organization of the company. This approach matches a hermeneutic view, more specifically a methodological hermeneutic view, where the aim is to understand the meanings of a text from the sender‟s point of view.
Hermeneutics is an interpretation technique, which interpret the intentions, feelings and experiences of humans. The social world is a text and reproduces meaning. Automatically, people have an opinion about others through their appearance and acting. Contrary to both positivism and critical rationalism, where focus is on the world being constructed of
measurable facts, the key idea of hermeneutics is a world constructed by meaning. This difference of explanation versus understanding is based on the f act that hermeneutics is a human science, while the others are natural sciences (Kure, N. (2008). Philosophical hermeneutics[PowerPoint Slides]. Retrieved from campusnet.asb.dk).
There are five main features that distinguish hermeneutics from other scientific theories. Firstly, as mentioned above, hermeneutics focuses on understanding, not explaining texts. Secondly, hermeneutics is about understanding the meaning and the purpose of human l ife, whereas natural science only deals with explanations. As a third feature, hermeneutics works from an internal aspect, meaning that the human culture and history is tried t o be understood from within. This is a great contrast to the natural scientific approach, where objects are examined from an external aspect. Fourthly, the methods of hermeneutics are also dealt with from an internal perspective, i.e. it is a use of more intuitive methods with a focus on, for example, empathy and identification. Lastly, in contrast to natural science that often
progresses by looking to the future for knowledge, hermeneutics often builds upon the past, e.g. there is still a great influence by Ancient writers such as Plato, Aristotle, and Cicero (Sherratt, 2005, p. 19).
1.2.1 Development of hermeneutics
Hermeneutics is one of the oldest traditions in the humanities and can be traced back to the ancient beginning. Back then the Gods and their messages were seen as a vital guidance to life by humans. The god Hermes was the messenger and brought messages of guidance to humans in their dreams. It is in this interpretation process of these messages, that proof of the first use of hermeneutics is found.
There is a historical depth and complexity of hermeneutics, which has resulted in many different branchings within the field. Sherratt (2005) argues that “(...) there are, very broadly speaking, two main groups approaching hermeneutics” (p. 20). One group merely focuses on contemporary hermeneutics, i.e. hermeneutics after the Reformation. The other challenges this view and emphasizes the historical depth of hermeneutics. Sherratt (2005) argues that her “(...) overall account of hermeneutics is historical” (p. 22), and furthermore states that “it is important, even for those with contemporary interest, to be aware of the biblical t radition as part of the West‟s intellectual legacy (...)” (p. 40). However, as this thesis has its starting point in methodological hermeneutics, biblical hermeneutics will only be covered briefly, as methodological hermeneutics first emerges after the Reformation.
The period of Ancient times, was followed by a long period, where the primary concern was the Bible. Focus was on an interpretation of the sacred text believed to contain the complete truth for human life. Through biblical hermeneutics, the approach to interpreting the Bible changed greatly from perceiving the Holy Book as actual words of God to rather being human texts referring to God.
The Reformation resulted in changes for hermeneutics, as the Church was suddenly challenged. Texts were no longer only written in Latin, which gave more people the
opportunity to interpret them. Additionally, the Church lost some of its i mportance, and a focus on disciplined faith and a more individual approach to reading the scriptures emerged.
Later on, in the early 19th century, the German philosopher and Romantic Friedrich
Schleiermacher, who is seen as the creator of modern hermeneutics, introduced a new form of hermeneutics. Due to his Romantic beliefs, Schleiermacher was very passionate about t he uniqueness of individual expression. Sherratt (2005) states that this fact represents “(...) a seminal shift: understanding moved for the first time away from finding an absolute truth, t o centring upon issues of individual creativity.” (p. 59). It was important to Schleiermacher to understand from a book exactly what the author meant subjectively. This led to the
development of a new form of hermeneutic practice, where Schleiermacher focused on two key elements: interpretation through a grammatical and a psychological element. These elements were looked upon in relation to the so-called hermeneutic circle, which
The hermeneutic circle is about understanding the text as a whole, and it requires the reader to analyze the parts by relating them to the unit. Schleiermacher distinguishes between two
dimensions of the circle; the before-mentioned grammatical and psychological dimensions. As stated by Sherratt (2005) “the grammatical element was a technique that addressed the practice of how to interpret the language and form of the text. The psychological dimension, meanwhile, was concerned by gaining access to the author ‟s intentions and meaning” (p. 59). In the grammatical dimension, things like genre, language and the body of the work by the author were taken into account. The psychological dimension was more concerned about biographical details, the cultural and historical context and the identification with the author. (Kure, N. (2008). Philosophical hermeneutics[PowerPoint Slides]. Retrieved from
campusnet.asb.dk). Schleiermacher considered both elements to be equally important for the interpretation process.
1.2.2 Relating hermeneutics to the problem statement
When interpreting the documents of the LEGO Group, it is also important to keep the hermeneutic circle in mind. As an interpreter one must reach the understanding of the texts through a referential process, in which a comparison of what is known and what is not known takes place. The interpreter should move back and forth between the parts and the whole. In the case of the LEGO Group, an example of an important part to consider in order to reach a full understanding of the whole, will be the traditions and the history of the company, which still play an essential role in the running of the business today.
Since the work of Schleiermacher, hermeneutics have been further developed by theorists such as Dilthey and later Heidegger and Gadamer. They all build upon some of the same ideas as Schleiermacher‟s theory, e.g. the hermeneutic circle, but other dimensions have been added as well. Dilthey, who is known for a hermeneutic approach called philosophical
hermeneutics, for example looks at the interpretation of texts from the receiver‟s perspective, and not the sender‟s as Schleiermacher does.
The work of Schleiermacher is the foundation for this thesis, as the focus of the problem statement is the internal organization of the LEGO Group. In order to examine the
LEGO organization must be made with a focus on documents with the LEGO Group as the sender. Thereby, identification with the LEGO Group can be obtained, which according to Schleiermacher, is essential for an optimal interpretation and thereby an optimal
understanding of the intentions of the company.
In hermeneutics, qualitative methods such as text analysis, semiotics, interviews and focus groups are used (Højberg, R. (2011). Bachelor’s Thesis - Method, Spring 2011 [PowerPoint slides]. Retrieved from campusnet.asb.dk). In this thesis, the method of text analysis is being used in order to find the motives of the LEGO Group in terms of how it incorporates the core values of the company, while at the same time still paying attention to innovative initiatives. A text analysis makes it possible to examine the organization‟s intentions when it comes to promoting a strategy which emphasizes both old and new elements of the corporation.
1.3 Theoretical framework
Katherine Miller‟s book “Organizational Communication: Approaches and Processes” is used to account for the development in organizational management and communication.
The book “Managing People Across Cultures” by Fons Trompenaars & Charles Hampden-Turner will be used to analyze the organizational culture within the LEGO Group. To support this analysis the book by Charles Conrad & Marshall Scott Poole and their theory of
Organizational Symbolism will also be used. Additionally, Ian Brooks‟ “Organizational Behaviour” also provides verification to the analysis of the organizational culture.
The article “Fit, you either have it or you don‟t: „Culture Matters A Lot” written for the Financial Post by Dave McGinn, will help emphasize the importance of company culture, hence strengthen our claim.
To account for an analysis of the motivational factor in the LEGO Group organization, David McClelland‟s needs-based motivational theory will be used.
The fundamental basis of the thesis is the theoretical approach of methodological hermeneutics, which is presented in section 1.2 „Methodological approach‟.
Chapter 2 provides the reader with a brief introduction to the LEGO Group, in order to create a better understanding of the company.
In chapter 3, some of the main theories, which the thesis builds upon, are presented. Firstly, the development in organizational management is shown, by accounting for the development from the classical approach to the human resources approach. Next, the theories of Conrad and Poole, Johnson & Scholes, and Trompenaars and Hampden-Turner are described as a basis for the analysis of the organizational culture. Lastly, a brief introduction to
McClelland‟s needs-based motivational theory is given.
Chapter 4 provides the reader with an organizational analysis of the LEGO Group. Firstly, however, a brief description of the identity crisis of the LEGO Group in 2004 is accounted for in order to create a better understanding of the organizational changes the company has
experienced. Thereafter follows an analysis of the organizational structure, the vision and mission statement, the organizational communication, the organizational culture, and the motivation factors of the LEGO Group organization.
Chapter 5 discusses the findings of chapter 4, before a final conclusion will round up the entire thesis in chapter 6.
1.5 Delimitation
The analysis of how the LEGO Group incorporates its philosophy in its organization is partly based on available documents written by the LEGO Group itself and must therefore be
categorized as biased in some way. Clearly, the company has written these documents in order to communicate with its stakeholders, and assumedly, with a purpose of benefiting the interests of the LEGO Group. Although the analysis does result in an academic solution to the problem statement, it can be difficult to interpret the internal side of an organization and come up with a thorough and satisfactory statement only by interpreting documents.
It is important to differ between organizational culture and national culture. Although it is non-discussable that the national culture has some impact on the culture wi thin the
organization, this thesis will have its main focus on the organizational culture due to the
length of the thesis. Additionally, cohesion exists between the internal and external culture of a company. As this thesis mainly focuses on the internal culture of the LEGO Group
organization, external influences will not be thoroughly accounted for.
2. The LEGO Group - The Company (MTJ)
The LEGO Group is a family owned toy manufacturing company. It was founded by Ole Kirk Christiansen in 1932, when the production of wooden toys started out in a small carpenter shop in Billund. The name “LEGO” came up by combining the two letters of the Danish words “leg godt”, meaning “play well”. The name reflects the main philosophy of the LEGO Group; that children should be able to learn and develop through play - something which the company believes enriches the lives of children. (LEGO.com - About Us - Facts and Figures – Company Profile)
Throughout its history, the LEGO Group has remained a popular brand due to its abilit y to continuously invent and develop new ideas and products, but also because of the high level of quality that the company strives for. The demand of quality is an essential part of the LEGO brand and is emphasized by the LEGO Group as an important characteristic of the brand, e.g. by living up to the motto of “only the best is good enough”.
Innovation is another key element of the history of the company, and is an aspect that is
clearly visible in the development of the company throughout the years. What started out as a production based solely on wooden toys in the early days of the company, quickly expanded to a production of plastic bricks in 1947. In 1966, the LEGO Group introduced the first LEGO trains and thereby further expanded its toy production. A few years later, the concept of the LEGO Group was extended by the opening of the first LEGOLAND® Park in Billund in 1968, and the launch of the popular minifigures in 1978. In the 1980‟s the LEGO Group focused on creating products centered around themes, and in the 1990‟s several initiatives were made in order to maintain the position of being one of the world‟s leading toy
manufacturers. Such initiatives were e.g. the LEGO.com website, and the opening of new LEGOLAND® Parks outside of Denmark. Also, the use of robot technology in the LEGO MINDSTORMS® products, which are made in cooperation with Massachusetts Institute of Technology, was an important part of the innovative initiatives of the LEGO Group during the 1990‟s. Storytelling, where products are built around a story or theme, such as LEGO ® STAR WARS™ or LEGO® TOY STORY™, has also contributed to the success of the company (LEGO.com - About Us - Facts and Figures – Company Profile).
The consumers of LEGO products play a vital role when it comes to innovation, and the LEGO Group ensures to keep a good relationship to its consumers by always involving them in the firm. For this purpose, the LEGO Group has launched several programs aimed at
different target groups of its wide audience, ranging from the LEGO Club for children
between the age of 6-12, to the LEGO User Groups for adult LEGO fans (LEGO.com - About Us - Facts and Figures – Company Profile).
Even though the LEGO Group is experiencing tough competition from consumer electronics, it still maintains a strong position as the world‟s fourth -largest toy manufacturer. In the early 2000‟s the company experienced a crisis with sales dropping and three years of loss. A new CEO, thorough organizational changes and a rebuilding of the company led the company back on track, and the LEGO Group managed to pull through the financial crisis in a very
satisfying way, and presented an impressive surplus of DKK 2,887 million for the year of 2009. The LEGO Group continues its success and has even managed to increase its growth in a toy market otherwise characterized by stagnation (LEGO.com - About Us - Facts and
Figures – Company Profile)
The LEGO Group has since its beginning been passed on from father to son, and it is still in the hands of the family. Currently, it is the founder‟s grandson, Kjeld Kirk Kristiansen, who is actively involved in the company in the form of his positions as deputy chairman of the board of LEGO A/S and as majority shareholder.
Today, the LEGO Group is a global company with more than 9,000 employees (LEGO.com -About Us - Facts and Figures – Company Profile). In a 2010 survey of over 3,000 people
made by Internet toy and gizmo gift store, Firebox.com, the LEGO Group won the titl e of the most popular toy across all ages and sexes. (Eaton, 2010. Cf. appendix 12).
3. Theoretical background (MTJ & SBH)
In the following section, the relevant theories and models will be accounted for in order to give an understanding of how and why they will be used in the later analysis.
3.1 Organizational management (MTJ)
In order to thoroughly understand the organizational changes that have happened through the history of the LEGO company, the development of organizational management and
organizational communication will be gone through. Focus will be on the so-called “founding approaches”, which have influenced the study of organizational management and
communication greatly. To start out with, the classical approach originating in the late 19th century will be outlined, followed by a brief description of the human relations approach, and finally, the approach of human resources will be covered briefly.
3.1.1. Classical approach
The classical approach originated due to a shift from agrarian society to industrial society, where people from the countryside moved to the cities and worked in large workforce groups in factories. Due to this societal change, a need for organizational changes which could match the societal changes arose. The classical approach centers around the machine metaphor, where specialization, standardization and replaceability are in focus, and is characterized by three main theorists; Henry Fayol, Max Weber and Frederick Taylor.
Fayol‟s “Theory of Classical Management” focuses on the “what” of managerial work, meaning what managers should do. Fayol proposes five elements of management, elements that management should consist of in order to be successful. The first element, planning, emphasizes the idea that in order to meet objectives, mangers must look ahead in the future. The second element, organizing, is about “(...) the arrangement of human resources
(employees) and the evaluation of those employees” (Miller, 2009, p. 18). As a third element, Fayol proposes command. This involves managers setting tasks for employees in order to
meet organizational goals. Coordination is the fourth element, and deals with how “(...)
separate activities of an organization must be harmonized into a single whole” (Miller, 2009, p. 19). Control, which is the final element, covers the comparison between goals and
activities. This comparison is important in order to ensure that the organization is functioning as planned. Fayol‟s theory has been criticized for not including the aspect of communication, which is essential for an organization to function. However, Miller (2009) argues, that “(...) communication can be seen as an implicit part of Fayol‟s elements of management” (p. 19), as it is necessary for running a business.
Weber was a German sociologist, who lived in the same time as Fayol, but who had a more scholarly approach to the running of organizations than Fayol did. Weber‟s “Theory of Bureaucracy” focuses on bureaucratic organizations, and can be divided into six facets. The sixth facet, the functioning of authority, is the one Weber emphasizes the most. Especially the rational-legal form of authority, where power rests in expertise and rationality rather than in an individual, was in his focus. Weber believed that the reliance on rationality and impersonal norms was the basis of bureaucratic functioning. Furthermore Weber emphasized that
bureaucracies should be closed systems, because in that way, they could avoid outside influences and interruptions, which could harm their functioning.
The third theorist, Frederick Taylor, developed the “Theory of Scientific Management” in the early twentieth century. Contrary to the two previous theories, Taylor focused on the
relationship between manager and employee. Taylor was frustrated with the “systematic soldiering” of organizations, where social pressure kept productivity down and wages up. Therefore, Taylor developed his theory where he suggested that the best way to do each job should be determined by scientific methods. These methods included, that workers should be scientifically selected for jobs and trained in methods considered most appropriate by time and motion studies. In addition, it can be mentioned that Taylor believed that in order for an organization to function effectively, there ought to be a strict distinction between workers and managers. Workers were responsible for the physical labor, while managers should do the thinking and organizing. (Miller, 2009, p. 26).
Common for all three theories within the classical approach is the hierarchical structure.
Furthermore, the communication is formal, vertical directed and task-related (Miller, 2009, p. 49).
3.1.2. Human Relations approach
One of the greatest influences on the human relations approach is that of the Hawthorne studies. The Hawthorne studies took place in the years between 1924 and 1933, and are a number of studies conducted by a research team led by Elton Mayo. The team examined how changes in the work environment would impact the productivity of factory workers. The team concluded on their findings that “(…) the social group‟s influence on worker behavior
exceeded the leverage exerted by formal organizational power structure” (Miller, 2009, p. 37). Mayo and his colleagues did in fact find examples of increased productivity caused by
physical and economic aspects, such as mentioned in the classical approach, but they rejected these and focused solely on the social and emotional needs of the workers. On the basis of the findings of the project, Mayo concluded that “(…) worker output increased as a direct r esult of the attention paid to workers by the researchers” (Miller, 2009, p. 37), a phenomenon later known as the Hawthorne effect. Later re-analyses have led to discussions concerning the result of the Hawthorne studies, as newer studies have shown that traditional explanations such as the ones mentioned in the classical approach, e.g. worker selection, incentives and pressure from management, are better explanations to the results of the Hawthorne studies. The importance of the actual Hawthorne studies is, however, of great importance as they led to a radical development in organizational management and communication. Due to the Hawthorne studies, human needs began to play a more central role in organizations.
In continuation of the Hawthorne studies, Abraham Maslow‟s Hierarchy of Needs and Douglas McGregor‟s Theory X and Theory Y, which are both theories from the human relations movement, can be mentioned in order to give an example of how the management approach changed.
Maslow‟s Hierarchy of Needs is a general theory of human motivation, which can be applied to organizations and management. Maslow proposed that humans are motivated b y five basic
needs; the psychological needs, the safety needs, the affiliation needs, the esteem needs and the need for self-actualization, and that management can increase productivity and job
satisfaction among workers if they manage to create a workplace where employees can fulfill these needs.
Douglas McGregor‟s Theory X and Theory Y focuses on the divergent a ssumptions that managers can hold about organizational functioning. Theory X represents the manger
influenced by the most negative aspects of classical management theories; workers are seen as unambitious, irresponsible and not very bright. In contrast, Theory Y is the manager who adheres the precepts of the human relation movement; that means a manager who assumes that workers are highly motivated to satisfy achievement and self-actualization needs, and that the job of the manager is to bring out the natural tendencies of these intelligent and motivated workers (Miller, 2009, p. 41). McGregor obviously recommends the use of Theory Y
management and thereby he emphasizes that a worker should be seen as an individual with needs for attention, social interaction and individual achievement. According to Miller, the shift from classical approach to human relations approach can be characterized by a shift in the belief that “workers work” to a belief that “workers feel”, which is also seen in the two mentioned theories of Maslow and McGregor.
Communication in the human relations approach is characterized by being task- and social related, vertical and horizontal directed communication, and informal (Miller, 2009, p. 49).
3.1.3. Human Resources approach
The human resources approach acknowledges both the classical and the human relations approach when it comes to organizing but it adds a very important factor to these approaches. The human resources approach puts an “(…) emphasis on the cognitive contribut ions
employees make with their thoughts and ideas” (Miller, 2009, p. 43). Thereby, the individual employee and his opinion are taken into account in the organizational setting. Even though the human relations approach is acknowledged in the human resources approach, the
Hawthorne studies e.g. are still seen as insufficient. When it comes to putting the studies to an empirical test, Miller (2009) argues, that there “(…) is evidence that many of the ideas of human relations theorists simply do not hold up” (p. 43). The human resource programs
therefore put emphasis on team management and employee involvement to ensure product or service quality and organizational productivity (Miller, 2009, p. 52).
The human resources approach believes that communication is task and social-related but the aspect of innovation also plays a great part. The communication goes in all directions and is team based and is thereby especially informal (Miller, 2009, p. 50).
3.2 Organizational culture
–theoretical background (SBH)
Organizational culture is discussed to be a metaphor and “a way of seeing and anal yzing” organizations (Brooks, 2009, p. 260). When discussing culture in general, it is somewhat difficult to have one specific definition, which makes the concept highly discussed among various theorists. As Cheng (1989) argues “even though substantial emphasis has been placed on study of organizational culture, the conception of organizational culture is still vague and controversial (Alvesson 1987; Smircich, 1983; Ashfort h, 1985)” (p.128. Cf. appendix 10).
To give the reader a better understanding of the concept, the following chapter will create an overview of the development of organizational culture and different views of the concept from various theorists.
Originally, the concept of organizational culture is borrowed from anthropology, which is normally referred to as the study of humanity. Dean & Kennedy (1982) and Kanter (1983) were some of the first theorists that began studying the concept of organizational culture. Blake and Mouton (1969) had however, drawn attention to the notion of culture at the organizational level much earlier (Brooks, 2009, p. 260).
According to the Financial Post journalist Dave McGinn (2007)“corporate culture, roughly defined as a company‟s mix of morals, written values and codes of behaviour, has become a hot to pic in the office recent years” (cf. appendix 18). Further in this article, he states a quote from Mr. Stilson, who is a partner at Cenera, that “you can have all the skills in the world, but if you don‟t fit into the culture, if you don‟t fit into the values of the organization, it costs the company big money to replace you” (cf. appendix 18). This shows the great importance of cultural understanding within an organization and clearly states t hat cultural differences or severe misunderstandings are not cost free – an important factor to keep in mind in times of
crisis (Hummelgaard, S. B. & Jansen, M. T. (2009). Sauer Danfoss, Organizational Communication. Unpublished paper, Aarhus School of Business, Aarhus, Denmark). In Dave McGinn‟s article “Fit, you either have it or you don‟t: Culture Matters A Lot”, McGinn puts emphasis on the importance of fitting into the company and to it s culture.
Before new employees are able to do this, it is important that organizations clearly state their perceived company culture. To do so, the company needs a clear idea of what its culture is about and should make it obvious to people outside the company as well (Hummelgaard, S. B. & Jansen, M. T. (2009). Sauer Danfoss, Organizational Communication . Unpublished paper, Aarhus School of Business, Aarhus, Denmark).
Brooks (2009) discusses different cultures at ascending levels. He differs between subculture, professional culture, organizational or corporate culture, national culture and supra-national culture. He defines organizational or corporate culture as
“(…) culture at the level of the organization or corporate body. Most organizations have a unique culture, even if this has numerous subcultures and/or professional cultures within it. The relative „influence‟ of culture at this level will depend, to an extent, on the strength of corporate identity and influence on its constituent units” (p. 263).
As Brooks also argues, different subcultures can arise within the corporate culture. It can therefore be argued, that organizations not only have one corporate culture, but several subcultures that need to be taken into consideration when managing the company. It i s therefore important to distinguish between these various forms of cultures, when looking at the implementation of the philosophy of the LEGO Group – to what extend does the
organizational culture and the possible subcultures within have an impact on the overall philosophy and how does the management handle this?
In the analysis of the corporate culture within the LEGO Group, it is important to have an underlying basic idea of its corporate culture of the LEGO Group in order t o see how the philosophy of play and creativity is integrated and emphasized. Johnson and Scholes (1994) suggested that the cultural complexity and the way of seeing the management are embraced in a cultural web (cf. appendix 2). The cultural web helps with t he understanding of the potential
significance of rituals, organizational stories, and the symbols of the organization and how these interact with each other in both creating and sustaining organizational culture.
The cultural web exists of six interrelated elements that help to make up what Johnson and Scholes call the "paradigm" of the work environment (Brooks, 2009, p.268). These six elements consist of Stories, Symbols, Power structures, Organizational structures, Control System, and Rituals and routines. The web brings the attention to the importance of the symbols and rituals of the organization. Symbols are seen as the visual presentation of the organization and how the employees of the organization interpret these. As Brooks (2009) states, “all aspects of organization and of behaviour by employees and managers can carry symbolic significance” (p. 269). Hence, symbols are a considerable part of the corporate culture. The Rituals and routines within the company are the daily behavior of the employees and how „things are done around here‟. By looking at the stories as a reinforcement of the culture within the company, it is important to note how storytelling is used to communicate norms and values, to develop commitment and trust, and to create an emotional commitment. It is also used as a way of emphasizing the culture in the history and development of the company (Brooks, 2009, p.268-269). The cultural web combines the six elements and is used to examine the already existing culture within the organization and possibly change or
improve things, which are not working.
By combining the cultural web with the work of Conrad and Poole, a thorough analysis can take place. Conrad and Poole analyze cultures through tree main terms; Metaphors, Rituals and Ceremonies, and Stories and Storytelling (Conrad, C. & Poole, M. S. 2005, p. 164). Some of these terms overlap the elements in the cultural web, which creates coherence between the two models.
By the means of metaphors Conrad and Poole (2005) state, “that these are symbols in which one image is used to describe another one” (p. 164). This also puts emphasis on how
employees see the organization.
Within the term Rituals and Ceremonies, Conrad and Poole (2005) state that “rituals are informal celebrations that may or may not be officially sanctioned by the organization, and ceremonies are planned, formal, and ordained by management” (p. 166). Ceremonies can be a
way of motivating and controlling the employees but can also be interpreted in many different ways.
Stories are, according to Conrad and Poole (2005), “told most often and are most powerful, when people are confused and concerned about what is going on in their organization (for instance, when a person is entering a new organization or when the organization is
undergoing major changes)” (p. 165). It is important to see the organization of the LEGO Group from all of the above-mentioned aspects, in order to create a better understanding of how, and if, the company philosophy is emphasized in the company culture (Hummelgaard, S. B. & Jansen, M. T. (2009). Sauer Danfoss, Organizational Communication. Unpublished paper, Aarhus School of Business, Aarhus, Denmark).
Both Johnson and Scholes “The cultural web”, and the work of Conrad and Poole give the reader a better understanding of the internal culture in an organization and how you are able to analyze this, as being either weak or strong. Other theorists, like Schein, are discussing corporate cultures as well. Schein provides a framework, which is analyzing in three levels. This model gives a rather statistic view of how cultures can be seen. It underplays the
importance of how, for example, stories are used as a symbolism in the internal
communication and culture (Brooks, 2009, p. 265). As a result thereof, the primary focus is on the theories of Johnson and Scholes, and Conrad and Poole, as they are able to provide a more thorough and comprehensive framework to analyze the corporate culture within the LEGO Group.
3.2.1 Trompenaars and Hampden-Turner
Corporate culture is important when discussing the communication within the LEGO Group and human resource management in general. Trompenaars and Hampden-Turner (2004) emphasize that “culture is often powerful and it persists when you try to disturb it” (p. 21).
They furthermore add about cultures, that “like superhuman organism they have their own energy, purpose, direction, values, and ways of processing information” (p. 21). Hence, it is something managers have to be aware of if they want to use it as a strategic tool for
In today's organizations, the corporate culture and internal communication is highly focused upon. If we therefore acknowledge that culture is important t o today‟s organizations, it is essential to have a clear definition of the term. Many definitions have been made over the years, but as Trompenaars and Hampden-Turner (2004) state, the best definition is given by Ed Schein of MIT in his book Organization, Culture and Leadership:
“A pattern of assumptions, invented, discovered, or developed by a given group, as it learns to cope with the problem of external adaption and internal
integration, that has worked well enough to be considered valid, and be taught to new members, as the correct way to perceive, think, and feel in relation to these problems” (p.21).
This definition perceives a dilemma between external and internal culture and to which extend these can be reconciled. How much does the external culture affect the internal one and how should the managers of organizations relate to these factors when entering a new market and culture?
Trompenaars and Hampden-Turner (2004) later give their own definition of culture:
“Culture is the pattern by which a group habitually mediates between value differences, such as rules and exceptions, technology and people, conflict and consensus, etc. Cultures can learn to reconcile such values at ever-higher levels of attainment, so that better rules are created from the study of numerous
exceptions. From such reconciliation come health, wealth, and wisdom. But cultures in which one value polarity dominates and militates against another will be stressful and stagnate” (p. 23).
Trompenaars and Hampden-Turner chose to give their own definition as they put high emphasis on the term synergy. One cannot work without the other. They then created their
framework which will be elaborated on later. Within this framework they emphasized how the quadrants need each other to frame the culture within the organization.
3.2.2 Four Corporate Cultures
Trompenaars and Hampden-Turner (2004) have developed a framework, which discusses the four corporate cultures that exist within a company (cf. appendix 3). They distinguish
between person and task related culture and whether they make use of egalitarian or hierarchical organizational structure. By the use of four quadrants, Trompenaars and Hampden-Turner break down their own rules, by emphasizing polarization, while their definition elucidates the opposite, a need for synergy (Trompenaars and Hampden-Turner, 2004, p. 23).
The four corporate culture model discusses four cultures; The Eiffel tower, the Family, the Incubator and the Guided Missile culture.
In their way of identifying the corporate cultures within an organization, Trompenaars and Hampden-Turner put high emphasis on the fact that “cultures, whether corporate or n ational, stereotype themselves” (p. 24). When analyzing corporate cultures within the four quadrants, the idea is not to avoid stereotypes but “(...) to go beyond superficial impressions to see what lies deeper and half-submerged” (Trompenaars and Hampden-Turner, 2004, p. 24).
The Four Corporate Culture model provides a framework for analyzing the corporate culture within an organization. By considering six typologies within the four quadrants (cf. appendix 4), a comprehensive picture of the culture within a company can be shown. But as
Trompenaars and Hampden-Turner (2004) state, it is important not to focus solely on one of the four quadrants within a company culture, but using aspects of them all (p. 31). They furthermore state, that “every quadrant needs the others to sustain it” (p. 41).
The Four Corporate Culture model discusses how the culture of an organization is an ongoing system with purpose and direction. It also touches upon the fact that cultures are so strong that they are often able to defeat all attempts from outside factors to break them down. Cultures can also work as a motivation factor, as well as they can successfully reward, inspire and inform their members (Trompenaars and Hampden-Turner, 2004, p. 15).
It is important to clarify that the Four Corporate Cultures model is a guideline to analyzing the culture within a company – it is very rare for an organization to solely rely on one
corporate culture, as several subcultures can be seen within the company. These subcultures can then create their own culture, within the overall company culture. By having different subcultures, it can be difficult for the managers of the company to implement an overall philosophy, which can be interpreted identically. Every organization should therefore
especially be aware of its overall corporate culture, as it is becoming an important term for the overall organizational appearance, both outside the organization but indeed also within it.
By using the Four Corporate Cultures model provided by Trompenaars and Hampden-Turner, combined with the work of both Johnson and Scholes and Conrad and Poole, an analysis, which goes beyond just seeing the corporate culture within the LEGO Group as it is today, but also where it is headed in the future, can be created. This is important for the discussion part of the thesis.
3.2.3 Talking national culture?
The above-mentioned theorists are all operating with the culture that exists within the organization. But what happens when organizations are working globally? In this case the national culture is an important factor to take into consideration as well, when talking about the organizational culture. All individuals have different views and perceptions of the world, depending on respective nationality, background and upbringing. A criticism of t he above-mentioned theories could be the missing focus on how national culture influences corporate culture. Especially when discussing the notion of perception among the employees. As Brooks (2009) states, “(…) culture could influence individual behaviour in the field of perception. Adler (1997) shows that there is likely to be a high l evel of selective perception between different cultures and countries (…)” (p. 303). It can cause misunderstanding and confusion if managers operate from different national cultures, and it is something which needs to be taken into consideration when analyzing corporate cultures.
David McClelland has proposed an acquired needs theory, where he states that human
behavior is controlled by three basic needs; the need for achievement, the need for power, and the need for affiliation. The need for achievement is “(...) the extent to which an individual has a strong desire to perform challenging tasks well and to meet personal standards for accomplishment” (Dyck & Neubert, 2008, p. 420). The need for affiliation is “(...) the desire to form close meaningful relationships, avoid conflict, and establish warm friendships” (Dyck & Neubert, 2008, p. 420). Finally, the need for power is “(...) the desire to control other
people, to influence their behavior, or to be responsible for them” (Dyck & Neubert, 2008, p. 420). According to McClelland, all humans have these needs but the relative intensity of them will vary from individual to individual, and a bias towards one of the needs is likely to be developed.
Dyck & Neubert (2008) argue, that it is very important for managers to acknowledge and understand these needs because “(...) nurtured motivation combines with natural motivation and abilities to affect productivity” (p. 420). The need for achievement is probably the most examined one of the three, most likely because it is clearly closely related to productivity. McClelland believes that the need for achievement is satisfied, if a person is productive and accomplishing goals.
In addition, it can be mentioned that McClelland‟s theory stands out from other motivational theories such as Maslow‟s Hierarchy of Needs or the ERG Theory by not arranging the needs in a hierarchical order. As McClelland believes individuals differ in the prioritizing of needs, it is impossible to create a hierarchical and general model of the thr ee needs. Also,
McClelland focuses on the development of the needs through “(...) life experiences and
interactions with the surrounding environments” (Dyck & Neubert, 2008, p. 420). Thereby, it is actually possible for organizations to change an individual‟s motivation code using
systematic training, i.e. people can be trained to e.g. have an achievement need, which will be beneficial for an organization as this specific need is closely linked to productivity.
4. Organizational analysis of the LEGO Group (MTJ & SBH)
In the following chapter, an analysis of the organization of the LEGO Group will be
as the vision and mission statement, and the motivational factors influences the members of the LEGO organization. As a foundation for this analysis, the first section „Identity crisis‟ gives a short introduction to the organizational changes that has happened in the LEGO Group since the year of 2004.
4.1 Identity crisis (MTJ)
In 1997, the LEGO Group experienced a significant decrease in its profit and the year after, the LEGO Group lost almost 300 million Danish kroner before taxes. This led to a substantial layoff round (the biggest in the history of the LEGO Group) in 1997, where 1,000 people lost their jobs (Fishman, 2001, p. 1. Cf. appendix 13).
This was a result of a significant change in children‟s engagement and perception of „play‟. The children of the LEGO Group were moving from a play economy to an ent ertainment economy, and this was a big challenge for LEGO and its core values. As the LEGO Group puts high emphasis on the philosophy of „play and creativity‟ and the deep respect for its end
-users, i.e. the children, this change of children's perception of „play‟ was a threat towards the core values of the company, that had been ongoing since the very start of the company.
As stated by Holden (2002), in his case about the LEGO Group “it is impossible to exaggerate the importance of children and their development within the LEGO company. Children are our vital concern – as a dependable partner for parents, it is our mission to stimulate
children‟s imagination and creativity, and to encourage them to explore, experience and express their own world – a world without limits” (p. 167). So what does a company as the LEGO Group do, when its most important assets are changing and shifting away from the core products and values of the company?
The LEGO Group chose to enter into a partnership with Lucasfilm Ltd. in 1999, and launched 14 STAR WARS-themed kits, here adding an important aspect to LEGO play; storytelling.
Children knew the story, vehicles, scenes, and characters and this became the biggest seller in the history of the company (Fishman, 2001, p. 4. Cf. appendix 13). As cited b y Fishman
licensing. What kids were buying was something that the LEGO Group had never offered before: a story. Says Eio: "it led us to say, Storytelling is important"” (p. 5. Cf. appendix 13).
The LEGO Group here chose to go from the focus of „free-play‟ LEGO bricks to more advanced toys, which needed directions in order to be build. As Fishman (2001) argues “that introduces a note of anxiety into playing with Legos--did I do it right?” (p. 4. Cf. appendix 13). This shows a confliction in the core values of the LEGO Group, as this goes against what is best for the children, and the LEGO Group is therefore still struggling on how to adapt its life-long philosophy and values to the changed world of its most important user – the
children. Despite these concerns, the approach has paid off and the LEGO Group is experiencing great success with its improved product range.
The organizational changes in 2004 also resulted in the strategic coordination of innovation activities. Nowadays, a cross-cultural team, the so-called „The Executive Innovation
Governance Group‟ is leading the innovation effort of the LEGO Group. The Executive Innovation Governance Group “(...) determines LEGO‟s innovation goals and strategy, defines the new-product portfolio, coordinates efforts so they are mutually reinforcing, delegates authority, allocates resources, and evaluates results to ensure that all activities support the company‟s overall strategy” (Hjuler, & Robertson, 2009, p.1. Cf. appendix 13). The innovation effort is “(...) split into eight distinct types, from product development to business innovation” (Hjuler, & Robertson, 2009, p.1. Cf. appendix 13). Thereby, the
responsibility is divided across four different areas; the functional groups, the Concept Lab, Product and Marketing Development and the Community. Different levels of innovativeness are expected from these four different areas. Furthermore, it is important to notice that the LEGO Group has a very broad view of innovation, and sees it as including not only new products but also pricing plans, community building, business processes and channels to markets (Hjuler & Robertson, 2009, p.1. Cf. appendix 13). This approach to innovation clearly shows that the LEGO Group considers innovation as a very important part of the process of adapting the business to the changing consumer demands.
This section looks at the organizational structure of the LEGO organization, and how it influences the incorporation of the core values and innovation.
The starting point for an analysis of the organizational structure of the LEGO Group is the structure that is visually presented in the „Company Profile – An introduction to the LEGO Group 2010‟. According to this image, the LEGO Group is using a hierarchical organization structure with five separate functional departments (cf. appendix 1, p. 7). The organization is centralized, meaning that the “(...) authority for decision making in the organization is
centralized so that it rests with top management” (Brooks, 2009, p. 191). It is however often the case that middle managers are consulted over decisions affecting them and their
departments, but the overall control lies with top management. The structural approach is very traditional, and one that is often seen in family-owned businesses, where the family has been very active in the running of the firm through several years or maybe even decades, such as in the case of the LEGO Group.
Centralization ensures consistency in an organization, as only few persons are in charge. Furthermore, the centralization causes jobs to be more simplified because important decision-making is removed. Thereby, employees are able to become highly specialized in their work, which is a great advantage for the LEGO Group, who employs a diverse workforce, ranging from manufacturing workers to financial managers, to people working within the field of HR management. Additionally, this simplification adds to a clear definition of the functional groups within the organization, resulting in a visible delegation of job tasks. The centralized structure form can, however, lead to a slow decision-making process, as decisions have to pass through heavy bureaucracy in order to get through to top managers. Also, employees can easily feel unheard and left out of decisions that actually affect them, and this lack of
involvement of employees can be dangerous for the job satisfaction, motivation and
productivity of employees (Brooks, 2009, p. 191). The functional structure is efficient when the organization is large, as is the case with the LEGO Group, but also when the
organizational environment is characterized by stability. Although the LEGO Group had a period where it experienced declining sales rates and lay-off rounds, the fact that it i s a
the involvement of the Kirk Kristiansen family ensures long-term goals and visions for the company.
An organizational structure as the one described above is also known as a classical or
traditional structure, and it emphasizes aspects of classical management approaches, such as the ones of Weber, Taylor and Fayol. Aspects of Weber‟s “Theory of Bureaucracy” is present in the organizational structure. Weber believed that bureaucratic organizations were
technically superior to other organizations, among other things because they had a clearly defined hierarchy, a clear division of labor, and centralized decision-making (Miller, 2009, p. 23). All are components which can be found in the functional structure of the LEGO Group. Also Taylor‟s “Theory of Scientific Management”, where focus is on the relationship between manager and employee and the control of individual work, can be applied in a context of the functional approach. Especially Taylor‟s idea of the “(...) inherent difference between
management and workers”, meaning that “(...) organizational managers are best suited for thinking, planning, and administrative tasks”, while “(...) organizat ional workers are best suited for labouring”, can be found in the clearly defined hierarchy in a functional structure (Miller, 2009, p. 26). Naturally, the division between organizational workers and managers was more distinct in the early twentieth century, when Taylor developed his theory, but a hierarchical structure does create a clear distinction between workers and their job tasks. This also relates to components of Fayol‟s Theory of Classical Management, where a strict,
vertical hierarchy, clear division of labor and order and control are seen as the ideal pri nciples of management.
According to Miller (2009), the communication channel for these three managerial
approaches is typically written, in a formal style, and the communication is happening in a vertical direction.
In terms of the philosophy of the LEGO Group, where inventive play is i n focus, it may be questioned how a firmly structured hierarchy can give space to play, creativity and
innovation. The organizational structure of the LEGO Group must, however, be assumed to consist of much more than what the visual presentation of the structure in t he Company Profile shows. Especially the organizational changes that happened around 2004, where the current CEO Jørgen Vig Knudstorp entered the company, emphasized a more innovative-oriented approach to the organization‟s structure and management. When Jørgen Vig
Knudstorp joined the LEGO Group in 2004, the company was in an identity crisis after years of bad results, which according to Knudstorp had resulted in the company‟s management being “(...) quite risk averse while focusing on survival” (O‟Connell, 2009, p.1. Cf. appendix
20). Instead, Knudstorp incorporated an opportunity-driven strategy. Knudstorp chose a back-to-basics strategy, focusing on the core values of the LEGO Group but doing this while
emphasizing an innovative strategy as well. To implement this new combined strategy, Knudstorp had to make organizational changes and change the management style of the corporation. He implemented a „managing at eye level‟ approach, which means “(...) being able to talk to people on the factory floor, to engineers, to marketers – being at home with everyone” (O‟Connell, 2009, p.1. Cf. appendix 20). Additionally, the strategy “(...) required a looser structure and a relaxation of the top-down management style” (O‟Connell, 2009, p.1. Cf. appendix 20), which among others things meant that responsibility and decision-making was pushed down the hierarchy (O‟Connell, 2009, p.1. Cf. appendix 20). Also, a focus on creating innovation through the use of cross-functional teamwork has become an important aspect of Knudstorp‟s strategy (Hjuler & Robertson, 2009, p. 1. Cf. appendix 20). With these organizational changes the LEGO Group moves away from its traditional organizational structure to one centered around flatter structures, cross-functional teamwork, employee involvement, and more open communication. Thereby, the LEGO Group embraces a human resources approach to management, where the above-mentioned aspects are vital but also innovation plays a big part.
The organizational changes are a great step towards a new future for the LEGO Group. The traditional structure of the company, which relates back to its long history, is still partly valid, but at the same time the structure has been changed and adapted. By flattening the hierarchy and delegating more responsibility, the LEGO Group has developed into an organization better prepared for the task of competing in a challenging and changing toy market. The new structural form takes the future and competitiveness of the LEGO Group into account by creating space for innovation-oriented teamwork. Meanwhile, the LEGO Group stays tru e to its core values dating back to the beginning of the company, and thereby has a structural foundation where old and new values can interact.
The LEGO Group puts high emphasis on the knowledge of its values and identity and how everyone in the company shares it. By looking at the company‟s vision and mission
statement, a basic understanding of the „who‟ and „what‟ of the or ganization can be made, e.g. which business the organization operates in and what it wants to be known and appreciated for. As Richard L. Daft (2004) states, “the mission describes the organization's vision, its shared values and belief s, and its reason for being” (p. 55) which further draws parallels to the culture that exists within the organization.
The mission and vision statement of the LEGO Group, as stated on its website, is as follows:
“Mission:
„Inspire and develop the builders of tomorrow‟ Our ultimate purpose is to inspire and develop children to think creatively, reason systematically and release their potential to shape their own future - experiencing the endless human possibility.
Vision:
„Inventing the future of play‟
We want to pioneer new ways of playing, play materials and the business models of play -leveraging globalization and digitalization... it is not just about products, it is about realizing the human possibility (LEGO.com – About Us – The LEGO Group – Mission and Vision).”
When looking at the above, it is clear that the LEGO Group puts high emphasis on caring for the creativity and innovation within the organization. The main focus of the LEGO Group is on the end-users, e.g. the children, and the overall philosophy of the company; that of play and creativity, is incorporated in the mission and vision statement. The LEGO Group creates coherence in its overall philosophy and what it wants the company to represent to the
stakeholders, as the focus on innovation, creativity and pl ay are emphasized both within the company but also stated in the external communication. As Holden (2002) also states in his research of the LEGO Group, “(…) the core essence of the LEGO brand lies in stimulating creativity” (p. 166). Creativity seems to be an ongoing and important part of the LEGO
