lego case study analysis

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.

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Lego Case Study: The Lego Group Competitive Advantage & Strategy

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Main Feature of Organization, Strategic Products and Current Mission

Internal and external environments of the lego group, internal environment – swot value change of the company, external environment – pestel, porter five forces, power interest matrix of the lego group, new strategic directions for the organization, works cited.

The Lego Group is a toy-manufacturing company which is based in Billund, Denmark. The company was founded as a family organization in the year 1932, by Ole Kirk Christian. Today, the company stands high as a global player in the world of toys, among other strategic entertainment products (LeGoff 557).

Initially, Lego started as a manufacturer of ironing boards, toys, stepladders, and stools. Among these products, the wooden toys have been the best selling items, thus according the firm a strong reputation in the entertainment business. By the year 1949, the firm started manufacturing early versions of the popular LEGO plastic bricks and this was a strategic approach by the organisation, considering the fact that plastics had just greeted the markets as a new material (Simoes and Dibb 219).

However, the outcome was not what the company managers had anticipated, since the public was a bit hesitant in accepting the new material. The company would rapidly gain popularly in most parts of the world, as a result of progressive development of its products. For instance, the basic bricks were sustained with extra figures and features, in a manner that diversified the playing opportunities for children.

The company’s sales and profit scales were rapidly taking a positive charge between 1950 and 1970. However, the period between 1970 and 1990 proved to be a difficult moment for the company, owing to the serious economical implications that greeted the world then, following the oil crisis of the time.

In the course of this era and the period that followed afterwards, the Lego Group underwent serious fluctuations, due to a number of reasons which included; rapid change in the business environment witnessed at the time, complications in logistic matters and financial control, and the extended times that would be required to run into the future plans of the company.

Among the many problems which threatened to shake the firm’s potential, was the issue of the rising competition from much bigger companies such as Hasbro and Mattel (Hicks 41). Other new firms such as Sony, Activision, and Nintendo, who had just ventured the scene with more advanced electronic products, also posed great challenge to the productivity of the Group.

In this regard, the company’s only survival option in the competitive market was to adopt a strategic development plan that would see it come up with new and more exciting products. According to Claus, Riggs & Sekeran, the toy company enjoys a wide range of products that are fit for children of all ages (71).

These products are grouped in various categories, and some of the latest developments include video gaming, pre-school products, play themes, bricks, licensed products, and educational-based products for children, just to mention but a few. This is a clear indication of how the company has managed to remain high in the current competitive business of toy products.

The Lego Group was actively been involved in several turnaround attempts for the better part of 1990s and in the early 2000s, but with little success. No one could have foretold a possible solution to the progressive issues which appeared to claim the company, until towards the end of the year 2004, when a glimpse of hope shone onto the firm.

It was in the course of this period when the company’s serving CEO, Kjeld, took on more involvement in strategies that helped to identify the factors responsible for the company’s downsizing. This helped in the design of effective strategies that would eventually see the firm come back on track. The design and implementation of these strategies was based on the company’s organization, management and business expectation plans.

This involved the replacement of over three quarters of the senior management team with a new batch. Other strategies would be centered on the firm’s operational systems, among other key interventions.

For instance, a thorough revision was carried out on the cost and the supply chain operations of the company, and major changes were inflicted on the sectors right away. More importantly, the Lego Group had realized that working alone would not take them anywhere, and this would see them cooperate with licensing partners in the widely acclaimed gaming sector.

These interventions were sustained with a progressive development of the company’s products, to fit the demands of the modern era. The company has shown steady advancements lately, as a result of these interventions. The climax of this success was realized in the 2008-2009 financial year, which saw the company registering the biggest rate of growth in sales and profits, since the year 1981.

With these positive outcomes, there can’t be any doubts that the Lego Group is now back to its place in the development of children’s creativity, after several years of financial loss and failure (Irani, Sharif & Love 59). The objective of the company is to develop innovative products to meet the expansive consumer requirements, as they occur in the market.

As part of their recovery strength, the Group has reclaimed its position in the global listings, where it is ranked among the top five toy companies, with an approximate value of 4.8 percent in market shares. Lego’s success can also be associated with their mission, which aims at inspiring the current generation of children to be able to explore and challenge their own potential in creativity (Stacey 79).

This has been achieved through the group’s brand values, which are tailored on aspects meant to bring a significant impact on children. Some of these aspects would include things such as quality, imagination, fun, creativity, caring, and learning.

Lego group is a good example of the international companies that have managed to balance the nature and constraints of the internal and external environments, to make a notable difference in the current competitive world of business. From the perspective of various reports about the company, it is apparent how the toy company has reacted in adapting and utilizing the potential offered by its internal resources, in meeting the demands of its external environment.

According to Dyllick, Thomas & Hockerts, the company’s current strategic development has been achieved through the focused leadership of its former CEO, Kjeld Kirk (139). A better part of this success however, has been reached upon through the feedback which had been received regarding the internal competencies of the firm and its external operating systems.

A major tool that can be used to assess the overall potential of a firm is the SWOT analysis structure, which stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis basically considers two main parts; a company’s inward elements which normally constitutes of its strengths and weaknesses, and the attempts to consider the way these factors would come to fit against the external aspects of an organisation’s threats and opportunities.

The company’s key strengths are commonly associated with its constant ability to apply the concept of brand recognition in all its products and services, without having to compromise their core values. The company also maintains a close mutual relationship with its suppliers and retailers, and this gives it a powerful business advantage over its rivals in the industry.

The toy market is an industry bulging with a big number of competent players, but Lego’s products and services are the most preferred by majority of the people in the world (Oliver and Roos 911). This is due to their effective leadership in the development of a wide range of children products that have been praised for quality and originality. The newest products by the company are real manifestation of how the power of innovation applies, in meeting their goals and objectives in business.

Brand heritage is another strength which has succeeded at keeping the company ahead of its rivals in the industry (Hatch and Schultz 597). This is evident in how the company’s products are manufactured to fit in their brand values, which are aimed at making a significant impact on the lives of children all over the world.

Lego’s weaknesses in business can be observed through a number of ways. For instance, even though there have been serious attempts by the company to diversify its products, the company has been poor in technology and IT related matters compared to other competitors, who have fully embraced the power of technology in making their products more enticing to the users in the new media age (Schau 43). Lego Group has also been operating through large toy retailers, and this has been one of their biggest drawbacks in the market.

The large retailers are effective marketing outlets, but they normally operate on high costs and this is likely to deprive the company of substantial amounts of money in profits. More importantly, the company has failed to understand the marketing concepts which are in line with their consumers all over the world.

In other words, Lego group seems to be lacking full understanding of their consumer preferences in the market, and due to this lack of a strategic fit, they have often ended up losing more sales to their competitors in the market, who are well informed of the consumer needs regarding toys and gaming products.

It is also apparent that, Lego Group lacks the ability to effectively translate potential strengths into implemented strategies. This actually explains the company’s gradual response to financial and management issues, among other problems which have affected the company previously (Hölzl 39).

Opportunities & Threats

The company’s notable opportunities and threats can be linked together as key aspects which the company can utilize in achieving its goals and mission in the toy business. According to Schultz and Hatch, while the company has been widely acclaimed all over the world for its production of toys and other children products, there has been a decline in the sales of its traditional toys which constitutes the largest part of their products, due to the increasing attention of children on devices from other companies, that are more electronic (21).

The other biggest threat of the group is the growing number of giant competitors, who are utilizing every opportunity possible to thrive in the industry, thus making it one of the most competitive sectors in the world (Johnson 11). However, Lego Group has always seen these threats as opportunities for further developments in business.

New developments and increase on products has always remained the biggest opportunity to the company. More importantly, as a result of the rapid competition in the market, the company has managed to come up with numerous categories of products, a key strategy which has enabled it to be able to meet the needs of children in the modern era of technology.

Porter’s five forces analysis is observed to have a significant impact on a business, in relation to elements of the external environment (Michael 13). These forces include level of rivalry, power of suppliers, threat of entrants, power of buyers, and threat of substitutes. Each of these five forces is considered individually in assessing and analysing the external environment of the company in this case.

Level of rivalry

The level of rivalry is quite intense and strong for the Lego Group. While it is clear that the company enjoys a strong position in the industry, with relatively few giant competitors, it should be considered that they are taking part in a broader market of toy production, which also includes key players in the electronic sector, such as Sony and Nintendo, among others (Martin 84).

Power of suppliers

The company, whose main products are largely based on standardised inputs, has an average power of suppliers. However, it should be noted that, the power of suppliers is likely to go up, in case the company decides to major in more sophisticated areas of productions, such as games or films.

Power of buyers

The power of buyers is relatively high for the Lego Group, with minimal costs between alternative products.

Threat of entrants

As it would be expected, the toy product industry normally requires huge investments of time and money, in a number of ways that include things such as business capital, research funds, and development costs. All these serve as obstacles to entry in the industry, thus restricting the number of new entrants in the sector. In that case, there is a relatively low threat of new entrants in the wider entertainment market, and this offers the Lego Group a much stronger bargaining power over majority of its competitors in the market.

Threat of substitutes

This is arguably one of the biggest threats facing the entertainment product company today. Even though the company is said to have developed electronic products such as video and games, there is still evidence that some of the company’s products are still made in the traditional form. This has the meaning that, the company is faced by a big threat, given that users are likely to substitute between traditional toy and gaming products through to the ones that are made into electronic features.

It is also apparent that the Lego group has touched many people with its products and services in the entertainment sector. Through the engagement of the right people in its management and productivity systems, the company has made a big success in its mission and objectives in business (Beal 29).

As it would be observed in the above internal and external analyses, the company has tried to implement a number of strategies, in order to influence and attract people on their products. Through these interventions, the company has successfully managed to impact a large number of people from all over the world, with both electronic and alternative traditional products for children entertainment. Among other key players in the market, the company has a high interest on its stakeholders and the community.

The firm recognises these as the people who play the greatest role in helping them achieve their business goal and for that reason it treats them with much respect. Both the shareholders and the people from the diverse community have a positive impact to the company’s financial interest and what motivates them most is to get nothing less of the best from the company. In that respect, the Lego group is fully engaged in putting the necessary efforts which are needed to satisfy these significant groups.

The Lego group is arguably one of the most successful companies in the toy manufacturing industry. Through a wise interaction of its internal and external systems, sustained by the effective management, the company has gained a sustainable competitive advantage over many of its rivals in the market.

However, there are numerous strategic directions which the product company can utilize, to be able to maintain a more sustainable competitive advantage over its rivals.

The Lego Group may have amassed great reputation and success in the entertainment sector, but changing the company into an all-time winner in the global toy market is something that would require much effort, from the company (Schroeder 54). Some of these efforts would tend to involve numerous aspects of strategic management, whose significance in business has often been underestimated.

Some of the strategic directions which the company can incorporate in its operation systems would include; a focus on international opportunities, expansion of digital systems and strategies, constant focus on cost, expansion of target markets, widening of product range, and focus on effective online distribution strategies.

The Lego Group may have made significant attempts in trying to incorporate some of these strategies in their routine business operations, but there is still room for improvement which can be achieved by revising these strategies over and over, to eliminate all the problems which continue to pose a big challenge to the company’s productivity and accountability in children’s toy and entertainment products (Morgan 45).

For instance, the company should focus on the many opportunities provided by the international community and try to utilize them effectively. A good way of achieving this goal is by ensuring that the toy products are manufactured and distributed in all regions of the world, where they are needed most by families, as a key engagement for their little ones.

It should also be considered that, things are changing with the times nowadays and in that respect, expansion of digital systems and strategies is very crucial for the development of the company to fit in the demands of the modern era, which is defined by technology (Cooper 75). To be able to comply fully with this call of modernity, the company should try to ensure that all their products are made into electronic features, to fit the growing demands of technology (Laudon and Traver 18).

It is also necessary for the company to make a constant focus on cost matters, to ensure that there is a two-sided benefit between the producer and the consumers. More importantly, there is also the need for the Lego Group to conduct extensive research on new developments to widen its product range.

Through a corporate level strategy aimed at increasing international coverage and product diversity, the company would be certain to realize more sales and profits out of its toy products. The company should also consider the vast potential business opportunities that are offered by the upcoming trend of e-commerce, and try to utilise these online mediums as effective distribution channels for their wide range of products.

Apart from these strategies, the Lego Group should also try to make good use of other strategic tools in today’s dynamic business world, such as important business information that would provide them with good lessons on how to achieve and uphold a sustainable competitive advantage in business affairs. All these strategies, sustained with the magical touch of an effective organizational management style are likely to bear promising results in the future operations of the company.

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Ideas Made to Matter

Innovating in existing markets: 3 lessons from LEGO

Beth Stackpole

Sep 21, 2021

With the invention of the interlocking plastic brick, a favorite toy of generations, LEGO was a poster child for business innovation — that is, until it wasn’t.

The Danish toymaker’s trajectory from industry trailblazer to the brink of bankruptcy to sustained recovery shows there’s more to innovation than sheer luck or a wholesale focus on disruption.

“No innovation lasts forever,” said David Robertson, a senior lecturer in operations management, in a recent webinar hosted by MIT Sloan Executive Education. “Sometimes you get hyper growth for a couple of years, sometimes you get steady growth for longer. But innovations run their course.”

From its inception in the 1930s to its brush with bankruptcy in 2003 and its subsequent turnaround, LEGO tried every approach in the book to managing innovation, some resulting in spectacular success and others in great failure, said Robertson, author of “ Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry .”

Based on years of research and what he’s seen at LEGO and other companies, Robertson advocates for an expansive approach to innovation — helping customers get more value from existing products by offering innovative complementary products, services, and business models.

“It’s how Apple turned itself around, it’s how GoPro got five years of 90% growth, it’s how Sherwin-Williams gets twice the price per gallon of paint than other paints that are functional equivalents,” explained Robertson, who also teaches an executive education course on the topic . “Marvel Comics turned itself around in the same way.”

Among the innovation lessons to be learned from those firms: Have a variety of tools in the toolbox and don’t be afraid to use them, listen deeply to your customers, and prepare for a steady diet of continuous reinvention to remain relevant, even as an iconic brand.

LEGO’s brick-by-brick approach

LEGO was a small family business that grew steadily until the management reins were handed off in the late 1970s to the grandson of the founder and newly minted MBA, Kjeld Kirk Kristiansen, who quickly unleashed a wave of innovation.

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With the younger Kristiansen at the helm, LEGO branched out into the Technic brand — a more sophisticated building system to attract older children — and launched the first mini figure and fantasy action play sets, fueling 15 years of growth during which the company doubled in size every five years.

Growth slowed in the 1990s for a number of reasons, including a rise in digital play experiences from companies such as Nintendo and Sony, the rise of Toys “R” Us and other big box stores, the expiration of LEGO’s brick patents, and the relocation of production of Mattel’s and Hasbro’s products to China, lowering the cost of their competitive toys.

LEGO responded in 1999 by refocusing its innovation efforts on revolutionary products that would reinvent the nature of play. “They became convinced that if all they offered was another box of bricks, they would become a commodity,” Robertson said. “They believed they needed to disrupt themselves before somebody else did.”

After a series of missteps that included the rollout of electronic toys for toddlers and a digitally connected action hero, LEGO found itself nearly bankrupt in 2003. In the rush to innovate, the firm lost sight of its core — physical construction-based play. After layoffs, emergency loans, and other measures aimed at staving off bankruptcy, LEGO turned those innovation miscues into a new strategy — one that precipitated a turnaround and laid the groundwork for further growth.

Among the key lessons that companies with a mature product line can follow to innovate:

Respect what made you great. Sometimes knowing where not to innovate is just as important as knowing where to innovate, Robertson said. LEGO learned that in a new digital landscape it was no longer enough to offer a box of plastic bricks — the brick had become a commodity. But the brick was still necessary, because that’s what customers expected of the brand.

Through trial and error and a number of failed digital-only initiatives, LEGO discovered customers wanted digital experiences that complemented core offerings, rather than replaced them.

Centering innovation around the brick-based construction experience through new stories, games, and experiences, exemplified by the fan-favorite Bionicle product line, is what drove customers back to the LEGO brand and returned the company to profitability.

“You try to understand who your customer is, what they care about — that’s the way we should think about innovation,” Robertson said. “You need to be dating your customer, not fighting your competitor.”

Maintain a customer-centric development process. When the big box stores took over from its ecosystem of small toy stores, LEGO lost an important channel for getting reliable customer feedback. LEGO began to evolve product development practices to support design thinking principles, empowering experts to come up with ideas for new products based on that critical customer input.

Today, LEGO regularly engages children in the process of character development, storytelling, and providing feedback on new playset ideas. “LEGO has a great expression for why they listen to kids when developing new toys,” said Robertson.  “Mads Nipper, the former head of marketing and product development, liked to say, ‘Kids will never lie to you about whether something’s fun or not.’”

Develop a family of complementary innovations to distinguish yourself from competitors. Innovation leaders need to lean on a range of different approaches for innovation, since tactics will vary depending on the scenario and business goals. It’s important to nurture a culture that’s able to shift gears if traditional methods don't deliver desired results.

“You need to learn how to play chords, not keys, on the innovation ‘piano,’” Robertson said. “Pursuing multiple, complementary innovations that harmonize to create something is much better than any one key alone.”

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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.

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Jørgen Vig Knudstorp: Reflections on LEGO's Transformation

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

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Case study: Lego

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By Carlos Cordon, Ralf Seifert and Edwin Wellian

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The story: For almost 70 years, Lego experienced steady growth. But in 1998 the company started losing money. By 2003, sales had dropped by 26 per cent and in 2004 by a further 20 per cent; these two years represented the biggest losses in Lego history.

The challenge: The company’s focus on creativity, innovation and superior quality had created high complexity. The company had a total of 12,500 stock-keeping units, with more than 100 different colours and more than 11,000 suppliers.

It also ran one of the largest injection-moulding operations in the world, with production sites in Denmark and Switzerland, and packing and other facilities in the Czech Republic, the US and South Korea.

The analysis: The company gathered a diverse group of senior executives and outside specialists in a “war room”, where they analysed the company’s product development, sourcing, manufacturing and logistics process. They developed a plan called “Shared Vision” and by October 2004 the strategy was approved by the board.

A new model: In 2005, through a series of collaborations between different functions in the company, Lego cut the number of colours by half and reduced the number of stock-keeping units to 6,500.

The company also decided to outsource logistics and production.

Additionally, to better understand the requirements of Lego’s key customer base, the company interviewed its top 20 clients, representing 70 per cent of Lego’s total business. This process revealed one very important trend: contrary to what the company had thought, most customers did not require daily or next-day deliveries.

This led to Lego’s decision to deliver to customers just once a week and ask for orders to be placed in advance.

Results for customer: While customers saw the number of product options reduced and were asked to change their ordering habits, they obtained a substantial improvement in customer service. On-time delivery rose from 62 per cent in 2005 to 92 per cent in 2008.

Customers rated Lego as a “best in class” supplier and Lego won a European supply chain excellence award. Those customers were now asking their other suppliers to use Lego as the benchmark for excellence.

The result for Lego: Sales increased from 2005 to 2008 by 35 per cent and profitability in 2008 was an all-time record. The fixed cost base had been reduced from 75 per cent to 33 per cent.

The unexpected problem: The outsourcing of logistics strained the relationship with DHL, Lego’s logistics partner. When it won the contract, it made its revenue calculations based on the existing customer service requirements (daily, which meant many more deliveries than weekly).

The new number of deliveries was much lower than they had forecast.

At the same time, the new outsourced logistics facility was the biggest of its kind in eastern Europe, thus creating huge start-up challenges for DHL.

The resulting conflicts could have derailed the turnround. The breakthrough came when two Lego executives met secretly with their DHL counterparts in a hotel in Prague at the beginning of 2007. They took a “four musketeers” oath – “all for one and one for all” – to not discuss the outcome of this meeting with anyone. Instead, they undertook to change their behaviour towards one another to set an example for the rest of their staff.

Key lessons: First, complexity in terms of a company offering too many products creates very high costs. These costs are frequently ignored by executives because they are difficult to quantify accurately.

Second, companies need to challenge in a constructive way the requirements of their customers. The idea of “exceeding customer expectations” might lead to an overly complex and costly value chain. Companies also need to develop a clear understanding of the “why” of customer requirements and to have an honest discussion with them about the costs of meeting those requirements.

Third, managing partnerships with customers and suppliers requires trust in the other party, a set of personal commitments across companies and a structured way of developing the relationship. These strategic relations must be proactively managed in a structured and planned way.

Messrs Cordon and Seifert are professors at IMD. Mr Wellian is a research associate

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International Edition

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

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LEGO (A): The Crisis

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Lego (a): the crisis description.

As this case opens, iconic toymaker LEGO stands on the brink of bankruptcy. Jorgen Vig Knudstorp, LEGO's young and newly appointed CEO, must size up changes in the toy industry, learn from the company's recent moves, and craft a strategy that will put LEGO back on track.

Case Description LEGO (A): The Crisis

Strategic managment tools used in case study analysis of lego (a): the crisis, step 1. problem identification in lego (a): the crisis case study, step 2. external environment analysis - pestel / pest / step analysis of lego (a): the crisis case study, step 3. industry specific / porter five forces analysis of lego (a): the crisis case study, step 4. evaluating alternatives / swot analysis of lego (a): the crisis case study, step 5. porter value chain analysis / vrio / vrin analysis lego (a): the crisis case study, step 6. recommendations lego (a): the crisis case study, step 7. basis of recommendations for lego (a): the crisis case study, quality & on time delivery.

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Case Analysis of LEGO (A): The Crisis

LEGO (A): The Crisis is a Harvard Business (HBR) Case Study on Strategy & Execution , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. LEGO (A): The Crisis is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. LEGO (A): The Crisis case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. LEGO (A): The Crisis will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

LEGO (A): The Crisis case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Strategy & Execution, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of LEGO (A): The Crisis, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The LEGO (A): The Crisis case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Strategy & Execution Solutions

In the Texas Business School, LEGO (A): The Crisis case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis. We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – LEGO (A): The Crisis

Step 1 – Problem Identification of LEGO (A): The Crisis - Harvard Business School Case Study

The first step to solve HBR LEGO (A): The Crisis case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Lego Jorgen is facing right now. Even though the problem statement is essentially – “Strategy & Execution” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Lego Jorgen, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the LEGO (A): The Crisis. The external environment analysis of LEGO (A): The Crisis will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in LEGO (A): The Crisis case study. PESTEL analysis of " LEGO (A): The Crisis" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with LEGO (A): The Crisis macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for LEGO (A): The Crisis

To do comprehensive PESTEL analysis of case study – LEGO (A): The Crisis , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact LEGO (A): The Crisis

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Government policies have significant impact on the business environment of any country. The firm in “ LEGO (A): The Crisis ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Lego Jorgen is operating, firms are required to store customer data within the premises of the country. Lego Jorgen needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. LEGO (A): The Crisis has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Lego Jorgen in case study LEGO (A): The Crisis" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Lego Jorgen in case study “ LEGO (A): The Crisis ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Lego Jorgen in case study “ LEGO (A): The Crisis ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ LEGO (A): The Crisis ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Lego Jorgen can compete against other competitors.

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at LEGO (A): The Crisis case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Lego Jorgen needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact LEGO (A): The Crisis

Social factors that impact lego (a): the crisis, technological factors that impact lego (a): the crisis, environmental factors that impact lego (a): the crisis, legal factors that impact lego (a): the crisis, step 3 – industry specific analysis, what is porter five forces analysis, step 4 – swot analysis / internal environment analysis, step 5 – porter value chain / vrio / vrin analysis, step 6 – evaluating alternatives & recommendations, step 7 – basis for recommendations, references :: lego (a): the crisis case study solution.

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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.

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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.

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LEGO SWOT Analysis

Before we dive deep into the SWOT analysis, let’s get the business overview of LEGO. The LEGO Group, founded in 1932, is a Danish family-owned company known for its globally popular plastic construction toys, LEGO bricks. 

The company’s name is derived from the Danish words “leg godt,” meaning “play well.” Since its inception, LEGO has expanded its product range to include various themes and sets, catering to different age groups, interests, and skill levels.

Key Product Segments:

• LEGO System: These are the traditional LEGO bricks and sets featuring various themes such as LEGO City, LEGO Technic, LEGO Ninjago, LEGO Friends, and LEGO Star Wars. These sets cater to a wide range of age groups, from toddlers to adults.
• LEGO DUPLO: Designed for younger children aged 1.5 to 5, DUPLO sets are larger, more colorful, and easier to handle than traditional LEGO bricks. They help to develop creativity, fine motor skills, and problem-solving abilities in young children.
• LEGO Education: This division provides learning solutions for schools and educational institutions. LEGO Education products integrate STEAM (Science, Technology, Engineering, Arts, and Mathematics) concepts into engaging, hands-on learning experiences using LEGO bricks and digital tools.
• LEGO Architecture: This product line targets adult fans of LEGO and architecture enthusiasts. The sets replicate famous landmarks and buildings worldwide, such as the Eiffel Tower, the White House, and the Sydney Opera House.
• LEGO Ideas: This platform allows LEGO fans to submit designs for future LEGO sets. If a design receives enough support from the community, it may be produced and sold as an official LEGO set.
• Licensed Themes: LEGO collaborates with various intellectual properties (IPs) to create sets based on popular franchises such as Marvel, DC Comics, Disney, Harry Potter, and many more.

Other Business Areas:

• Digital Experiences: The LEGO Group offers various digital experiences like video games, mobile apps, and online platforms, which provide a complementary experience to their physical products.
• LEGO Stores: The company operates LEGO-branded retail stores worldwide, offering a unique shopping experience, exclusive sets, and engaging in-store activities.
• LEGOLAND: Owned by Merlin Entertainments, LEGOLAND is a chain of family-friendly theme parks and resorts centered around the LEGO brand. These parks feature rides, attractions, and life-sized LEGO models for visitors to enjoy.
• Media and Content: LEGO produces animated movies, TV shows, and web content based on their popular themes, further expanding its brand reach and creating a broader entertainment ecosystem.

Financial Performance 2022 :  LEGO’s revenue grew 17 percent to DKK 64.6 billion ($9.33 billion), and Operating profit grew 5 percent to DKK 17.9 billion ($2.58 billion).

Here’s a SWOT analysis for LEGO:

A SWOT analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats of a business, project, or individual. It involves identifying the internal and external factors that can affect a venture’s success or failure and analyzing them to develop a strategic plan. In this article, we do a SWOT Analysis of LEGO.

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SWOT Analysis: Meaning, Importance, and Examples

• Brand Recognition : LEGO is one of the world’s most recognizable and beloved brands. Its iconic, interlocking brick system has been a staple of children’s playrooms for decades, and the company has successfully cultivated a loyal customer base that spans generations.  In 2021, the LEGO brand was valued at approximately 9.1 billion U.S.
• Product Quality and Innovation : LEGO is known for its high-quality products that are built to last. The company continually invests in research and development, introducing innovative new themes, sets, and building techniques that cater to a wide range of interests and age groups.
• Diverse Product Portfolio : LEGO offers diverse products, from the traditional LEGO System and DUPLO sets to licensed themes and niche offerings like LEGO Architecture. This variety ensures the brand remains relevant and appealing to a broad audience.
• Licensing Agreements : LEGO’s partnerships with popular intellectual properties (IPs), such as Marvel, Disney, Star Wars, and Harry Potter, allow the company to create highly sought-after sets that capitalize on the success of these franchises. These licensing agreements help to drive sales and maintain consumer interest.
• Community Engagement : The LEGO Ideas platform and the Adult Fans of LEGO (AFOL) community demonstrate the company’s commitment to fostering a strong connection with its customers. These platforms enable fans to share their creations, collaborate on projects, and contribute to developing new products.
• Digital Presence : LEGO has successfully integrated digital experiences with its physical products, offering video games, mobile apps, and online platforms that enhance and complement the traditional brick-building experience. This digital expansion allows LEGO to engage with consumers in new and innovative ways.
• Retail Experience : LEGO Stores provide a unique and immersive retail experience, featuring exclusive products, in-store activities, and life-sized models made from LEGO bricks. These stores help reinforce the brand image and create memorable customer experiences.
• Global Presence : With a strong presence in international markets, LEGO can cater to consumers’ needs and preferences worldwide, fueling global growth and expansion.
• Collaboration with Educational Institutions : LEGO Education focuses on providing learning solutions that integrate STEAM concepts into engaging, hands-on experiences using LEGO bricks and digital tools. These partnerships with schools and educational institutions enhance the brand’s credibility and support its mission to inspire and develop the builders of tomorrow.

• High Prices : LEGO products are often perceived as more expensive than other construction toys. This price premium may discourage price-sensitive customers and limit the brand’s ability to attract a broader consumer base.
• Dependence on Plastic : LEGO’s core products are primarily made from plastic, which faces increasing scrutiny due to environmental concerns. While the company is working towards using sustainable materials by 2030, it must address the environmental impact of its products in the meantime.
• Intellectual Property (IP) Dependency : LEGO’s collaborations with popular IPs have significantly driven its success. However, reliance on these partnerships also poses risks, as the company must continuously secure new agreements and adapt to the changing popularity of various franchises.
• Competition in Digital Space : The digital entertainment market is highly competitive, and LEGO faces challenges from numerous well-established players in the gaming and streaming industries. To succeed in this area, LEGO must continuously innovate and develop compelling digital content to retain and attract users.
• Product Complexity : Some LEGO sets have become increasingly complex and time-consuming to build, which may deter some consumers who prefer more straightforward, more accessible toys. Balancing the needs of advanced builders and casual fans can be challenging for the company.
• Counterfeits and Imitations: The LEGO brand faces competition from counterfeit and imitation products, often sold at lower prices. These products can undermine LEGO’s brand reputation, and the company must invest in legal and marketing efforts to protect its intellectual property and maintain consumer trust.
• Scalability of LEGO Education : While LEGO Education has the potential to impact learning, scaling this segment significantly may prove challenging. The company must navigate the complexities of educational systems and regulations across different countries to expand its offerings.
• Economic Conditions : The toy industry is sensitive to economic fluctuations, as consumer spending on non-essential items tends to decrease during economic downturns. Adverse economic conditions or shifts in consumer preferences may impact LEGO’s business.

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Opportunities 

• Sustainable Materials : As LEGO works towards its goal of using sustainable materials in its core products and packaging by 2030, it can strengthen its brand image as an environmentally responsible business and attract eco-conscious consumers.
• Emerging Markets : Expanding into emerging markets, such as Asia, Africa, and South America, can help LEGO tap into new consumer bases and achieve long-term growth.
• Personalization and Customization : Offering customized LEGO sets or bricks, such as personalized minifigures or unique designs, can create additional revenue streams and deepen customer engagement with the brand.
• Augmented Reality (AR) and Virtual Reality (VR) : LEGO can further explore opportunities in AR and VR, developing immersive experiences that combine physical and digital play, potentially revolutionizing how consumers interact with its products.
• Collaborations and Partnerships : Establishing new collaborations with popular intellectual properties or partnering with other brands can help LEGO create innovative products and attract new audiences.
• Expanding LEGO Education : LEGO can continue to expand its presence in the education sector, working closely with schools, educators, and governments to develop and promote innovative learning solutions that integrate STEAM concepts.
• Adult Fan Base : Catering to the growing adult fan base (AFOLs) by offering more sophisticated and niche product lines, such as LEGO Architecture and LEGO Technic, can help the company capitalize on this loyal and engaged customer segment.
• Direct-to-Consumer Sales : Strengthening its e-commerce capabilities and offering exclusive products through its online store can help LEGO capture more value from direct-to-consumer sales, reducing dependency on third-party retailers.
• Subscription Services : Introducing subscription-based services, such as monthly LEGO sets or access to premium digital content, can create recurring revenue streams and strengthen customer loyalty.
• Media and Content Expansion : LEGO can continue to invest in its media and content division, producing more animated movies, TV shows, and web content based on popular themes, further expanding its entertainment ecosystem and brand reach.

• Intense Competition : The toy industry is highly competitive, with numerous established brands and new entrants vying for market share. LEGO faces competition from other construction toy makers and alternative forms of entertainment, such as video games and mobile apps.
• Changing Consumer Preferences : LEGO must adapt its product offerings and marketing strategies to remain relevant as consumer preferences evolve. The growing popularity of digital entertainment poses a challenge, as children may increasingly favor screen-based activities over traditional toys.
• Environmental Concerns : As concerns about plastic pollution and environmental sustainability grow, the demand for eco-friendly products increases. LEGO’s dependence on plastic materials may become a liability if it fails to develop and implement sustainable alternatives on time.
• Counterfeit Products : The prevalence of fake and imitation LEGO products in the market can erode consumer trust in the brand and result in lost sales. The company must invest in legal and marketing efforts to protect its intellectual property and maintain its brand reputation.
• Economic Fluctuations : Economic downturns can reduce consumer spending on non-essential items like toys. This may result in lower sales for LEGO, impacting its revenue and profitability.
• Intellectual Property Dependency : LEGO’s reliance on licensing agreements with popular franchises exposes the company to risks associated with the changing popularity of these IPs and the potential loss of partnerships due to contractual issues or disputes.
• Supply Chain Disruptions : Global events, such as natural disasters, political instability, or pandemics, can disrupt LEGO’s complex supply chain, affecting its ability to produce and distribute products. The company must develop contingency plans and adopt flexible supply chain strategies to mitigate these risks.
• Regulatory Changes : Changes in regulations, such as safety standards, import/export restrictions, or environmental policies, can impact LEGO’s operations and require the company to adapt its products or manufacturing processes accordingly.
• Technological Disruption : Rapid technological advancements can render certain products or business models obsolete. LEGO must continually innovate and invest in research and development to stay ahead of technological trends and maintain its competitive edge.
• Data Security and Privacy : As LEGO expands its digital offerings, the company must ensure the security of its customers’ data and comply with increasingly strict data protection regulations. A data breach or failure to meet regulatory requirements could damage the brand’s reputation and result in financial penalties.

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Lego Branding Strategy and Marketing Case Study

Analysis and examples of lego’s identity, positioning, key messages, tone of voice, brand archetypes, customer benefits, competitors, and marketing content..

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Brand Overview

• Entertainment & Media

Business Type

Physical Products & In-Person Service

https://lego.com

Target Customer

Creative Minded Kids and Adults

Primary Need ( Job To Be Done )

Engage with an activity that combines creativity, problem solving, and a tactile experience

Brand Visual Identity & Content

Primary brand colors, brand typefaces, hero content.

Hero Content Type

Content features people, brand messaging, key messages, benefit or feature focus, tone of voice, brand archetypes.

( Learn More About Brand Archetypes )

Brand Positioning ( Elements of Value )

( Learn More About The Elements of Value )

Aspirational

Self-Actualization

Fun & Entertainment

Brand Benefits

Gets kids engaged with a toy that encourages creativity with non-digital play

Teaches important lessons around problem solving, following directions, and spatial relations

Offers fun connections and integrations with many other brands and properties to spark the imagination

Competition

Key competitors.

Mattel, Hasbro, Playmates Toys

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Get a 10 page workbook on Purpose, Vision, and Values. Plus resources for Archetypes, Tone, Messaging, and more.

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Aligning Values to CSR: A LEGO Case Study

• July 17, 2020

The role of business in society is evolving – and was evolving even before COVID-19 forced companies to pivot how they engage with customers, employees and other stakeholders. How people view their relationships with work and the brands they support is changing. Sustainable Brands’ recent report, Enabling the Good Life , found that across generations people are looking for simple, more balanced lives with meaningful connections to people, communities and the environment. 

Having a business model that prioritizes social responsibility, equity and inclusion, and sustainability will win favor with prospective customers and employees alike. So how should a company start to implement these programs and policies when there are so many worthwhile causes? By starting with their core values. ✨

Let’s look at LEGO as an example. LEGO’s mission is to “inspire and develop the builders of tomorrow,” which is guided by values like imagination, creativity, fun, learning, caring, and quality. 

Having a well-articulated mission and set of values gives LEGO the ability to assess what sort of commitments it can and should make as a brand. In this case, LEGO has made four key promises:

People Promise 🧑🏽‍🤝‍🧑🏽 LEGO cares deeply about the people who are part of making LEGO possible, and is committed to upholding human rights and ensuring safe, healthy and respectful workplaces for our employees. This is huge – people who view their employers as good corporate citizens feel a higher sense of engagement and are more committed to their employer . 

Play Promise 🧰 The company recognizes the vital role of play in a child’s development. LEGO has a unique opportunity to help children problem solve, be creative and develop resilience. 

Planet Promise 🌎 LEGO is designed for children – children who will one day inherit the planet. LEGO’s promise to minimize the environmental impact of its operations not only demonstrates caring for children who love LEGO, but also the core values of creativity and quality by implementing more sustainable practices. 

Partner Promise 🤝🏼 A critical component of any corporate social responsibility strategy is thinking about stakeholders beyond shareholders or investors. LEGO understands the importance of building partnerships with stakeholders like customers and suppliers in being a better corporate citizen.

These promises are embodiments of LEGO’s core values and offer a framework for how LEGO engages with stakeholders from employees and customers to the environment. This is also reflected in the three pillars of LEGO’s corporate social responsibility: children , environment and people . It’s easy to see the connection between these pillars and the brand promises LEGO has made. 

Focusing on core values also gives companies the ability to evolve what CSR looks like over time. As employee and customer needs and expectations change, taking a values-based leadership approach offers greater ability to respond. LEGO’s core products are the classic bricks many of us know and love, but LEGO has more recently ventured into digital play offerings. While digital play offers children new ways to engage with the LEGO brand, there are also risks with giving children access to mobile devices. LEGO responded to this risk by taking a values-led approach – the brand’s digital experience prioritizes child safety . Beyond that, LEGO joined forces with UNICEF to develop an industry-first Digital Child Safety Policy. LEGO even helped create a tool called the ‘Child Safety Online Assessment’ to help other companies understand and address children’s rights online. 

For any corporate social responsibility program to be successful, it has to be authentic to the business’ culture and principles. LEGO is just one example of walking the talk of values-aligned corporate social responsibility. We’re excited to see how even more businesses implement these types of initiatives!

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Lego (a): the crisis case study analysis & solution, harvard business case studies solutions - assignment help.

LEGO (A): The Crisis is a Harvard Business (HBR) Case Study on Strategy & Execution , Fern Fort University provides HBR case study assignment help for just $11. Our case solution is based on Case Study Method expertise & our global insights.

Strategy & Execution Case Study | Authors :: Jan W. Rivkin, Stefan Thomke, Daniela Beyersdorfer

Case study description.

As this case opens, iconic toymaker LEGO stands on the brink of bankruptcy. Jorgen Vig Knudstorp, LEGO's young and newly appointed CEO, must size up changes in the toy industry, learn from the company's recent moves, and craft a strategy that will put LEGO back on track.

Crisis management, Financial management, Product development

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[10 Steps] Case Study Analysis & Solution

Step 1 - reading up harvard business review fundamentals on the strategy & execution.

Even before you start reading a business case study just make sure that you have brushed up the Harvard Business Review (HBR) fundamentals on the Strategy & Execution. Brushing up HBR fundamentals will provide a strong base for investigative reading. Often readers scan through the business case study without having a clear map in mind. This leads to unstructured learning process resulting in missed details and at worse wrong conclusions. Reading up the HBR fundamentals helps in sketching out business case study analysis and solution roadmap even before you start reading the case study. It also provides starting ideas as fundamentals often provide insight into some of the aspects that may not be covered in the business case study itself.

Step 2 - Reading the LEGO (A): The Crisis HBR Case Study

To write an emphatic case study analysis and provide pragmatic and actionable solutions, you must have a strong grasps of the facts and the central problem of the HBR case study. Begin slowly - underline the details and sketch out the business case study description map. In some cases you will able to find the central problem in the beginning itself while in others it may be in the end in form of questions. Business case study paragraph by paragraph mapping will help you in organizing the information correctly and provide a clear guide to go back to the case study if you need further information. My case study strategy involves -

• Marking out the protagonist and key players in the case study from the very start.
• Drawing a motivation chart of the key players and their priorities from the case study description.
• Refine the central problem the protagonist is facing in the case and how it relates to the HBR fundamentals on the topic.
• Evaluate each detail in the case study in light of the HBR case study analysis core ideas.

Step 3 - LEGO (A): The Crisis Case Study Analysis

Once you are comfortable with the details and objective of the business case study proceed forward to put some details into the analysis template. You can do business case study analysis by following Fern Fort University step by step instructions -

• Company history is provided in the first half of the case. You can use this history to draw a growth path and illustrate vision, mission and strategic objectives of the organization. Often history is provided in the case not only to provide a background to the problem but also provide the scope of the solution that you can write for the case study.
• HBR case studies provide anecdotal instances from managers and employees in the organization to give a feel of real situation on the ground. Use these instances and opinions to mark out the organization's culture, its people priorities & inhibitions.
• Make a time line of the events and issues in the case study. Time line can provide the clue for the next step in organization's journey. Time line also provides an insight into the progressive challenges the company is facing in the case study.

Step 4 - SWOT Analysis of LEGO (A): The Crisis

Once you finished the case analysis, time line of the events and other critical details. Focus on the following -

• Zero down on the central problem and two to five related problems in the case study.
• Do the SWOT analysis of the LEGO (A): The Crisis . SWOT analysis is a strategic tool to map out the strengths, weakness, opportunities and threats that a firm is facing.
• SWOT analysis and SWOT Matrix will help you to clearly mark out - Strengths Weakness Opportunities & Threats that the organization or manager is facing in the LEGO (A): The Crisis
• SWOT analysis will also provide a priority list of problem to be solved.
• You can also do a weighted SWOT analysis of LEGO (A): The Crisis HBR case study.

Step 5 - Porter 5 Forces / Strategic Analysis of Industry Analysis LEGO (A): The Crisis

In our live classes we often come across business managers who pinpoint one problem in the case and build a case study analysis and solution around that singular point. Business environments are often complex and require holistic solutions. You should try to understand not only the organization but also the industry which the business operates in. Porter Five Forces is a strategic analysis tool that will help you in understanding the relative powers of the key players in the business case study and what sort of pragmatic and actionable case study solution is viable in the light of given facts.

Step 6 - PESTEL, PEST / STEP Analysis of LEGO (A): The Crisis

Another way of understanding the external environment of the firm in LEGO (A): The Crisis is to do a PESTEL - Political, Economic, Social, Technological, Environmental & Legal analysis of the environment the firm operates in. You should make a list of factors that have significant impact on the organization and factors that drive growth in the industry. You can even identify the source of firm's competitive advantage based on PESTEL analysis and Organization's Core Competencies.

Step 7 - Organizing & Prioritizing the Analysis into LEGO (A): The Crisis Case Study Solution

Once you have developed multipronged approach and work out various suggestions based on the strategic tools. The next step is organizing the solution based on the requirement of the case. You can use the following strategy to organize the findings and suggestions.

• Build a corporate level strategy - organizing your findings and recommendations in a way to answer the larger strategic objective of the firm. It include using the analysis to answer the company's vision, mission and key objectives , and how your suggestions will take the company to next level in achieving those goals.
• Business Unit Level Solution - The case study may put you in a position of a marketing manager of a small brand. So instead of providing recommendations for overall company you need to specify the marketing objectives of that particular brand. You have to recommend business unit level recommendations. The scope of the recommendations will be limited to the particular unit but you have to take care of the fact that your recommendations are don't directly contradict the company's overall strategy. For example you can recommend a low cost strategy but the company core competency is design differentiation.
• Case study solutions can also provide recommendation for the business manager or leader described in the business case study.

Step 8 -Implementation Framework

The goal of the business case study is not only to identify problems and recommend solutions but also to provide a framework to implement those case study solutions. Implementation framework differentiates good case study solutions from great case study solutions. If you able to provide a detailed implementation framework then you have successfully achieved the following objectives -

• Detailed understanding of the case,
• Clarity of HBR case study fundamentals,
• Analyzed case details based on those fundamentals and
• Developed an ability to prioritize recommendations based on probability of their successful implementation.

Implementation framework helps in weeding out non actionable recommendations, resulting in awesome LEGO (A): The Crisis case study solution.

Step 9 - Take a Break

Once you finished the case study implementation framework. Take a small break, grab a cup of coffee or whatever you like, go for a walk or just shoot some hoops.

Step 10 - Critically Examine LEGO (A): The Crisis case study solution

After refreshing your mind, read your case study solution critically. When we are writing case study solution we often have details on our screen as well as in our head. This leads to either missing details or poor sentence structures. Once refreshed go through the case solution again - improve sentence structures and grammar, double check the numbers provided in your analysis and question your recommendations. Be very slow with this process as rushing through it leads to missing key details. Once done it is time to hit the attach button.

Previous 5 HBR Case Study Solution

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