case study on lego

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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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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How Lego clicked: the super brand that reinvented itself

The revival of Lego has been hailed as the greatest turnaround in corporate history, ousting Ferrari as the world’s most powerful brand. Johnny Davis reports

F rom its founding in 1932 until 1998, Lego had never posted a loss. By 2003 it was in big trouble. Sales were down 30% year-on-year and it was $800m in debt. An internal report revealed it hadn’t added anything of value to its portfolio for a decade.

Consultants hurried to Lego’s Danish HQ. They advised diversification. The brick had been around since the 1950s, they said, it was obsolete. Lego should look to Mattel, home to Fisher-Price, Barbie, Hot Wheels and Matchbox toys, a company whose portfolio was broad and varied. Lego took their advice: in doing so it almost went bust. It introduced jewellery for girls. There were Lego clothes. It opened theme parks that cost £125m to build and lost £25m in their first year. It built its own video games company from scratch, the largest installation of Silicon Graphics supercomputers in northern Europe , despite having no experience in the field. Lego’s toys still sold, particularly tie-ins, like their Star Wars and Harry Potter -themed kits. But only if there was a movie out that year. Otherwise they sat on shelves.

“We are on a burning platform,” Lego’s CEO Jørgen Vig Knudstorp told colleagues. “We’re running out of cash… [and] likely won’t survive”

In 2015, the still privately owned, family controlled Lego Group overtook Ferrari to become the world’s most powerful brand. It announced profits of £660m, making it the number one toy company in Europe and Asia, and number three in North America, where sales topped $1bn for the first time. From 2008 to 2010 its profits quadrupled, outstripping Apple’s. Indeed, it has been called the Apple of toys: a profit-generating, design-driven miracle built around premium, intuitive, covetable hardware that fans can’t get enough of. Last year Lego sold 75bn bricks. Lego people – “Minifigures” – the 4cm-tall yellow characters with dotty eyes, permanent grins, hooks for hands and pegs for legs – outnumber humans. The British Toy Retailers Association voted Lego the toy of the century.

When The Lego Movie came out in 2014 the film snob website Rotten Tomatoes awarded it a 96% approval rating: only Oscar nominees 12 Years a Slave and Gravity matched it. This year’s follow-up, The Lego Batman Movie , outperformed the last “proper” Batman movie, Batman v Superman: Dawn of Justice , to such a degree that DC Comics now faces a genuine problem: audiences overwhelmingly prefer the Dark Knight in his pompous and plastic version voiced by Will Arnett , rather than Ben Affleck ’s portrayal.

Lego’s revival has been called the greatest turnaround in corporate history. A book devoted to the subject, David Robertson’s Brick by Brick: How Lego Rewrote the Rules of Innovation , has become a set business text. Sony, Adidas and Boeing are said to refer to it. Google now uses Lego bricks to help its employees innovate.

Lego’s saviour is the aforementioned Vig Knudstorp – a father of four, perhaps not uncoincidentally – who arrived from management consultants McKinsey & Company in 2001 and was promoted to boss within three years, aged 36. “In some ways, I think he’s a better model for innovation than Steve Jobs,” Robertson has said.

Last month I flew to Billund, a small town in the Jutland peninsula where Lego was founded. The landscape was flat and grey, but as I drove from the airport a large primary coloured arm or head would occasionally appear though the pine trees: the Lego Group owns several buildings here and has decorated the landscape accordingly. I was immediately in a good mood.

“Billund was built to function, not to please,” explained Roar Trangbaek, Lego’s cheerful, bearded publicist. “There’s not a lot of fun here.” He meant there wasn’t a lot to do there – it’s hard to imagine the nightlife is up to much – but given that 120m Lego bricks are manufactured here every day, fun was very much the point of the place. As if to prove it, Trangbaek handed me his business card. It was a Minifigure of himself.

The following morning the Lego Group was due to announce its latest annual results. Today was an opportunity to meet some of its key employees, tour the factory and be among the first to step inside Lego House – a 130,000sq ft marvel that will open in September, and is expected to draw 250,000 visitors a year. It has been designed by Bjarke Ingels , the hottest name in architecture right now, whose commissions include Google’s HQ, the new World Trade Center and last year’s Serpentine Pavilion. Ingels certainly seems to have enjoyed himself: Lego House resembles 21 giant Lego bricks stacked into a 30m tower. Visitors can climb up to the rooftop garden and down the other side, pausing to take in attractions, restaurants, play zones and a gallery dedicated to fan-made Lego extravaganzas. Life-sized Lego sculptures had been placed around the interior – a cop, a firefighter – while real-life construction workers in hi-vis tabards beavered away around them, a surreal sight.

Lego had compensated for the disruption to the town’s shops by allowing them to exclusively sell Lego kits of the Lego House, the only place in the world they’ll be available. (For Lego’s numerous cult fans, this is a massive deal.)

Vig Knudstorp rescued Lego by methodically rebuilding it, brick by brick. He dumped things it had no expertise in – the Legoland parks are now owned by the British company Merlin Entertainments, for example. He slashed the inventory, halving the number of individual pieces Lego produces from 13,000 to 6,500. (Brick colours had somehow expanded from the original bright yellow, red and blue, sourced from Piet Mondrian , to more than 50.) He also encouraged interaction with Lego’s fans, something previously considered verboten. Far from killing off Lego, the internet has played a vital role in allowing fans to share their creations and promote events like Brickworld , adult Lego fan conventions. A year before James Surowiecki’s landmark book The Wisdom of Crowds was published, Lego launched its own crowdsourcing competition: originators of winning ideas get 1% of their product’s net sales, designs that so far include the Back to the Future DeLorean time machine, the Beatles’ Yellow Submarine and a set of female Nasa scientists.

“Lego has this incredible ability to engage with people and that has single-handedly enabled it to weather very, very difficult seas,” says Simon Cotterrell, from brand analytics firm Interbrand. “What’s made them successful over the past 10 years is their ability to create new entities, movies, TV shows, by partnering with brilliant people. They’ve said: ‘We might not make as much money if we outsource it, but the product will be better.’ That mentality is very Danish. It comes from saying: ‘We’re engineers. We know what we’re good at. Let’s stick to our knitting.’ That’s a very brave thing to do and it’s where a lot of companies go wrong. They don’t understand that sometimes it’s better to let go than to hang on.”

It also started making hit toys again. As well as putting a focus back on classic Lego lines like City and Space, it has launched the ninja-themed Ninjago line, Mindstorms, kits that allow you to build programmable Lego robots, aimed at teens. And for grown-up kids, Lego Architecture, replicas of the Guggenheim, Burj Khalifa and Robie House , that last one not for the feint-hearted or time-poor – it contains 2,276 bricks. Most impressively for a company with a customer base that in 2011 was 90% boys, it finally cracked the girls’ market. Lego Friends features a reconfigured “Mini-doll” and centres on five characters in the fictional Heartlake City. None of this has happened by chance. Lego is said to conduct the largest ethnographic study of children in the world.

“We call it ‘camping with consumers’,” says Anne Flemmert Jensen, senior director of its Global Insights group. “My team spends all our time travelling around the world, talking to kids and their families and participating in their daily lives.” This includes watching how kids play on their own and with friends, how siblings interact and why some toys remain perennial favourites while others are relegated to the toy box. Children are fickle – as the makers of forgotten “must-have” Christmas toys, like Pogs and Furby, will concede.

Ninjago was crowdsourced: its first iteration featured skeletons as enemies because tests proved they were the most popular baddies among six-year-old boys, globally. “Ninjas crystallised themselves because we were, like: ‘What’s the greatest hero entry point?’” says Cerim Manovi, senior design manager and creative lead on the line. “We showed them superheroes, everything – but ninjas just grabbed kids right there.”

Lego Friends took four years of research (plus a $40m global marketing push) to get right.

“One of the main things was they couldn’t really relate to the Minifigure,” says Mauricio Affonso, Friends’ model designer. “It’s too blocky. Boys tend to be a lot more about good versus evil, whereas girls really see themselves through the Mini-doll. They wanted a greater level of detail, proportions and realism.”

Lego Friends sets (bakery, amusement park, riding camp, etc) tend to feature something else missing from boys’ sets: a loo. The boys don’t care, the girls’ pragmatism demanded it.

Roar Trangbaek shows me the original Lego house, where the company’s founder Ole Kirk Christiansen lived. It’s now a private museum that tells the Lego chronology through artefacts, packaging and toys. More than one adult visitor has been known to burst into tears when confronted by a key line from their childhood: in my case the Space Lego of the mid-1970s. (Lego gets inundated with requests for re-releases, but they won’t do it. Their focus is the kids of now and tomorrow, not yesterday.) Christiansen was an expert carpenter when the Great Depression hit. He figured the one thing people would always find money for was toys for their children. His company motto is carved into a plaque here – “det bedste er ikke for godt” (Only the best is good enough) – something borne out when Christiansen’s son Godtfred returned home one day to proudly inform dad he’d saved them some cash by only applying two of the usual three coats of varnish to a wooden duck. He got a tongue- lashing for his trouble.

“It is a good story, but it’s also a true story,” says Trangbaek.

In 1946, against everyone’s advice, the family invested in a newfangled plastic-injection moulding machine. Later they adapted Croydon-based inventor Hilary Fisher Page’s self-locking bricks (billed his “sensible toy”) – plastic cubes with two rows of four studs to enable stacking. The final part of Lego’s success clicked into place in 1958 when it created its “system”. Where previously they’d made toys of all shapes and sizes now every brick fitted with every other: everything was backwards compatible. “We’ve got the bricks, you’ve got the ideas,” advised a 1992 Lego catalogue. A mathematician recently deduced that just six eight-stud bricks of the same colour could be combined 915,103,765 ways.

During the factory tour we saw some of those bricks being created. Here, 768 moulding machines work 24/7, 361 days of the year. There was a constant hiss: the sound of raw granulate being fed into the vast machines. Then something akin to Wonka magic, brightly coloured pieces of joy materialising at the other end. Lego’s quality control and precision is rigorous. As any parent who’s trodden on a piece knows, Lego is hard. The bricks have to be strong enough to hold together, but not so strong they can’t easily be pulled apart by a child. They call it “clutch power”. It is a huge industrial process, with similar plants in Hungary, China and Mexico. “Our idea is to have factories located close to key markets,” Trangbaek explained. Most companies make product where it’s cheapest then ship it. Not Lego. “It’s much more costly for us to lose a sale,” he said. “If you go to a toy store and you don’t find the product there on the shelf, you will be disappointed. But you will also not leave the shop without another toy.”

Lego is increasingly concentrating on bridging the physical and the virtual. This year it rolled out Lego Life, a social network for kids too young for Instagram to share their creations, gaining “likes” from peers and Lego characters alike. “Lego Batman can comment in character. ‘That’s awesome – would have been better in black and yellow,’” says Dieter Carstensen , head of digital child safety and the Lego Life team.“That kind of stuff.” There’s also Nexo Knights, a video game where powers are unlocked by scanning Lego pieces. They’re researching VR and AR. “Some of the things we’re looking at are very near to being feasible now,” says William Thorogood, an irrepressibly bouncy Brit, and the senior innovation director with Lego’s creative play lab. “Other things are very exciting, but probably not feasible for 10 years, depending on how mature the tech becomes.” Later this year we can look forward to The Lego Ninjago Movie , whose tone looks every bit as irreverently daft as its predecessors.

The next morning in Billund, Lego announced the highest revenues in its 85-year-history. Since December the company has been run by another Brit, Bali Padda, the first non-Dane in charge, after Vig Knudstorp moved into a new role to expand the brand globally. Asia, with its booming middle class, is a focus.

“The reality is that the last few years the growth has been supernatural,” Julia Goldin, Lego’s chief marketing officer, tells me. “When you look at the proportion of revenue that’s coming out of the mature markets it becomes more and more challenging with the level of penetration. But we look at every year starting at zero because you have to recruit every child again and make the brand exciting for them. That becomes a good challenge, of course.”

Earlier I had met Bo Stjerne Thomsen, the director of research and learning with the Lego Foundation, an independent body that owns 25% of the Lego Group and studies early childhood development through play. (It has partnered with Unicef in South Africa, and funded the world’s first professor of play , at Cambridge University)

Thomsen produced two plastic bags containing a few red and yellow bricks, part of a basic kit they use to engage learning.

“Quickly build a duck,” he instructed me. “Everybody can usually do it in 40 seconds.”

We set to work. Thomsen’s duck had two outstretched wings. Mine had a red bill, a red slab for feet and a yellow block for a tail.

“Oh, that’s fun!” he said. “I like that.”

There was no wrong or right duck, of course. That was the point. “It’s about the process of making and investigating and learning,” Thomsen said.

“How fast do you think anyone can do a duck?” Thomsen asked.

I’m not sure, I said. Ten seconds?

“Ten seconds? OK, let me count.”

Then he slammed another set of pieces straight down on to the table.

“That’s my duck!” he beamed. “I just sliced it up so it’s ready for the oven. Ha ha!”

Lego is a serious business. It just happens to be in the business of fun.

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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.

Related Articles

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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Lego Case Study: The Lego Group Competitive Advantage & Strategy

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.

Beal, Reginald. Competitive Advantage: Sustainable or Temporary in Today’s Dynamic Environment? Tallahassee, Florida: School of Business and Industry, 2001. Print.

Cooper, Robert. “New products: the factors that drive success.” International Marketing Review 11. 1 (1994): 60-76. Print.

Claus Brian, Riggs Neil & Sekeran Hari. Development of a low cost instructional platform for submersible design: Electrical and Computer Engineering . New York: IEEE, 2009. Print.

Dyllick, Thomas & Hockerts Kai. “Beyond the business case for corporate sustainability.” Business Strategy and the Environment 11 (2002): 130-141. Print.

Hatch, Mary and Schultz, Majken. “Toward a theory of brand co-creation with implications for brand governance.” Journal of Brand Management 17 . 8 (2010): 590-604. Print.

Hicks, Mark. “Collaborate to innovate?: getting fresh small company thinking into big company innovation.” Interactions 17. 3 (2010): 39-43. Print.

Hölzl, Werner. The evolutionary theory of the firm:Routines, complexity and change . Vienna: Vienna University of Economics and Business Administration, 2005. Print.

Irani Zahir, Sharif Amir & Love Peter. “Transforming failure into success through organisational learning: an analysis of a manufacturing information system.” European Journal of Information Systems 10. 1 (2001): 55-66. Print.

Johnson, Whittington. Exploring Strategy . Harlow: Pearsons Education, 2011. Print.

Laudon, Kenneth and Traver, Caroh. E-Commerce Business, Technology, Society . Boston: Adison Wesley, 2008. Print.

LeGoff, Daniel. “Use of LEGO as a therapeutic medium for improving social competence.” Journal of Autism and Developmental Disorders 34. 5 (2004): 557-571. Print.

Martin, Fred. Circuits to control: Learning engineering by designing LEGO robots . Cambridge: Massachusetts Institute of Technology, 1994. Print.

Michael, Porter. Commerce Strategy . Boston: Freepress, 2004. Print.

Morgan, Gareth. Images of Organisations. London: Sage Publications, 2006. Print.

Oliver, David and Roos, Johan. “Decision-making in high-velocity environments: The importance of guiding principles.” Organization Studies 26. 6 (2005): 889-913. Print.

Schau, Hope. “How brand community practices create value.” Journal of Marketing 73. 5 (2009): 30-51. Print.

Schroeder, Jonathan. Brand culture . United Kingdom: Taylor & Francis Publishers, 2006. Print.

Schultz, Majken and Hatch, Mary. “A cultural perspective on corporate branding.” Brand culture 13. 5 (2006): 17-26. Print.

Simoes, Claudia and Dibb Sally. “Rethinking the brand concept: new brand orientation.” Corporate Communications: An International Journal 6. 4 (2001): 217-224. Print.

Stacey, Ralph. Strategic Management and Organisational Dynamics . London: Pitman Publishing, 1993. Print.

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IvyPanda. (2022, July 31). Lego Case Study: The Lego Group Competitive Advantage & Strategy. https://ivypanda.com/essays/case-study-the-lego-group-working-with-strategy-case-study/

"Lego Case Study: The Lego Group Competitive Advantage & Strategy." IvyPanda , 31 July 2022, ivypanda.com/essays/case-study-the-lego-group-working-with-strategy-case-study/.

IvyPanda . (2022) 'Lego Case Study: The Lego Group Competitive Advantage & Strategy'. 31 July.

IvyPanda . 2022. "Lego Case Study: The Lego Group Competitive Advantage & Strategy." July 31, 2022. https://ivypanda.com/essays/case-study-the-lego-group-working-with-strategy-case-study/.

1. IvyPanda . "Lego Case Study: The Lego Group Competitive Advantage & Strategy." July 31, 2022. https://ivypanda.com/essays/case-study-the-lego-group-working-with-strategy-case-study/.

Bibliography

IvyPanda . "Lego Case Study: The Lego Group Competitive Advantage & Strategy." July 31, 2022. https://ivypanda.com/essays/case-study-the-lego-group-working-with-strategy-case-study/.

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• The Lego Company's Story of Innovate or Die
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• Lego's Competitive Environment
• Lego Company’s Performance Management
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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..

Back To The Branding Strategies Homepage

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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Case study: How the LEGO Group promotes integrity in its operations

As a family-owned, values-based company, with products sold in more than 140 countries around the globe and over 19,000 employees, the LEGO Group aims to have a positive impact on children, society and the planet, not least by operating according to the highest ethical standards.

This case study is based on the 2016 Responsibility Report b y the LEGO Group published on the Global Reporting Initiative Sustainability Disclosure Database  that can be found at this link . Through all case studies we aim to demonstrate what CSR/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.

With 131 LEGO Brand Retail Stores and sales offices in 37 countries, the LEGO Group is the world’s largest toy company. Operating ethically is, thus, a top priority. In order to promote integrity in its operations the LEGO Group took action to:

• promote compliance through the Corporate Compliance Board
• provide ethics training
• enhance third party due diligence

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With this case study you will see:

• Which are the most important impacts (material issues) the LEGO Group has identified;
• How the LEGO Group proceeded with stakeholder engagement , and
• What actions were taken by the LEGO Group to promote integrity in its operations

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What are the material issues the company has identified?

In its 2016 Responsibility Report the LEGO Group identified a range of material issues, such as product safety, climate change, waste, employee safety, the play and learning experience children get from products. Among these, promoting integrity in its operations stands out as a key material issue for the LEGO Group.

Stakeholder engagement in accordance with the GRI Standards

The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:

“The organization should identify its stakeholders, and explain how it has responded to their reasonable expectations.”

Stakeholders must be consulted in the process s of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.

Key stakeholder groups the LEGO Group engages with:   

How stakeholder engagement was made to identify material issues

To identify and prioritize material issues, the LEGO Group engaged with a wide range of stakeholders. They included consumers, customers, employees, NGOs, interest groups and industry associations. To achieve engagement, the LEGO Group conducted an online survey among over 1,500 respondents. Moreover, it carried out interviews with 1,500 additional participants, to identify stakeholders’ top priorities.

What actions were taken by the LEGO Group to   promote integrity in its operations?

In its 2016 Responsibility Report the LEGO Group reports that it took the following actions to promote integrity in its operations:

• Promoting compliance through the Corporate Compliance Board
• The Corporate Compliance Board (CCB) is the highest decision authority regarding non-compliance issues in the LEGO Group. The CCB promotes the proper handling of ethical issues and compliance with external regulations. The CCB is also responsible for providing relevant operational guidance and reviewing policies. In 2016, the CCB reviewed the updated Responsible Marketing to Children Policy and the Digital Child Safety Policy.
• Providing ethics training
• [tweetthis] All LEGO employees participate in mandatory training on the importance of operating ethically. [/tweetthis] More specifically, the LEGO Group offers training on the LEGO Code of Ethical Business Conduct and Corruption Awareness and Competition Law e-learning programmes. Moreover, the LEGO Group reached the target of training 100% of senior business leaders bi-annually on the LEGO Code of Ethical Business Conduct. Additionally, more than 98% of salaried employees have received bi-annual training on ethical business conduct and anti-corruption principles.
• Enhancing third party due diligence
• The LEGO Group carries out integrity due diligence screenings of third parties and continually improves its third party due diligence process. The LEGO Group addresses risks holistically, including issues concerning anti-bribery and corruption, social responsibility, human rights and environmental sustainability.

Which GRI indicators/Standards have been addressed?

The GRI indicator addressed in this case is: G4-SO4: Communication and training on anti-corruption policies and procedures and the updated GRI Standard is: Disclosure 205-2 Communication and training about anti-corruption policies and procedures

78% of the world’s 250 largest companies report in accordance with the GRI Standards

SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.

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References:

1) This case study is based on published information by the LEGO Group, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning.  If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:

http://database.globalreporting.org/

2)  http://www.fbrh.co.uk/en/global-reporting-initiative-gri-g4-guidelines-download-page

3) https://g4.globalreporting.org/Pages/default.aspx

4) https://www.globalreporting.org/standards/gri-standards-download-center/

Note to the LEGO Group: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us .

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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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CASE STUDY: LEGO Digital Solutions

LEGO ® applies its own approach of “systematic creativity” to adopting SAFe

UPDATE January, 2017 : A year after Henrik Kniberg and Eik Thyrsted shared the first phase of LEGO’s SAFe journey, they are back with the next chapter of their story. Their efforts to nip and tuck SAFe for optimal results run the gamut from large edits to small tweaks, and their learnings and outcomes are captured in a 36-page in-depth summary that is full of candid commentary and describes the thought process behind each decision. You can download it below.

Download LEGO Case Study Update

“ … this has ​improved the motivation​ of the team members. Going to work is more fun when there’s less confusion and less waste. And motivated people do better work, so it’s a positive cycle! Another impact we’ve seen is that other parts of LEGO visit the meeting, get super inspired, and start exploring how to implement some of these principles and practices in their own department. In fact, agile is spreading like a virus within the company, and the highly visible nature of the PI planning event is like a a catalyst. ” —Henrik Kniberg and Eik Thyrsted

One of the world’s leading manufacturers of play materials, The LEGO Group is still owned by the Kirk Kristiansen family who founded it in 1932. With headquarters in Billund, Denmark, and main offices in Enfield, USA, London, UK, Shanghai, China, and Singapore, the company employs more than 15,000 people worldwide.

In 2014, LEGO Digital Solutions turned to SAFe to improve their collaboration model and seek out what they like to refer to as the “Land of Awesome.” Their story of transformation was presented at LKCE (Lean Kanban Central Europe) by LEGO’s Head of Project Management, Eik Thyrsted Brandsgård and Lean/Kanban Coach, Mattias Skarin from Crisp.

Much like creating something from LEGO ® bricks, they built their transformation one piece at a time, starting with inviting 20 managers to a 2-day Leading SAFe class. From there, they began training the teams; first one, then another until they had 20 teams trained in SAFe. They approached every step as a learning journey, allowing for creativity along the way. When something didn’t seem like a good fit, they weren’t afraid to experiment. Taking results from Inspect and Adapt, they tweaked SAFe to their needs with a simple guiding principle, “Keep the stuff that generates energy.”

“The combination of a structured system, logic and unlimited creativity encourages the child to learn through play in a wholly unique LEGO fashion.” —The LEGO Group

Their first PI Planning event—which they now refer to as their “center of gravity”—went better than expected, with the teams eager to take what they learned and apply it.

“You just can’t replace face-to-face communication, and PI planning is just a fantastic way to do that.”

Their presentation includes insights and lessons learned, such as:

• You need critical mass
• They can now better manage expectations
• Don’t be afraid to experiment
• To become good at something you need to practice it
• Experimenting your way forward matters more than your selection of path

SAFe’s creator, Dean Leffingwell, calls their presentation, “One of the most insightful applications and presentations that I’ve yet seen on SAFe.” You can view their 45-minute video below.

Many thanks to Mattias and Eik for sharing their inspiring story!

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LEGO Case Study

World famous toy production company leveraged custom audience targeting via programmatic DOOH to drive footfall into stores across Italy.

Hivestack partnered with their agency Initiative to activate LEGO’s cross-channel, multi-market and award-winning campaign called "Rebuild the World'' in the Italian market during the holiday season.

Programmatic DOOH was leveraged to improve brand awareness and brand recall for a variety of LEGO products, as well as targeting custom audiences and driving footfall into LEGO stores.

The campaign took a two-phased approach to meet the desired objectives, the first focused on delivery of the DOOH campaign and the second focused on mobile retargeting and optimization.

It was imperative that the campaign reached LEGO’s target audiences and as such, Hivestack leveraged audience data to create bespoke custom audiences in the platform.

Custom audience segments were created for LEGO enthusiasts, specifically consumers that had been physically present in LEGO stores over the last 3 months.

Geofences were then used around LEGO stores in order to identify additional potential audiences.

Both of these audience segments were served the LEGO campaign advertisements, which allowed Adsquare and Hivestack to create a geo-behavioural segment with the device IDs that had been exposed to the campaign, excluding those that had not.

Leveraging the power of programmatic technology, the client was able to optimize the campaigns in real-time by leveraging heatmaps and switching their budget to line items with higher audience concentration index, resulting in better results and a 23% lower CPM cost.

Due to the success of the first phase, a second phase of the campaign was commissioned. The campaign was delivered by the Hawk DSP, integrated into Adsquare, allowing users to activate ads and drive consumers into physical stores and measure the uplift directly in the platform.

The second phase of the campaign also used a mobile retargeting activation via mobile marketing platform, TabMo:

The mobile retargeting campaign leveraged the custom audience data delivered through Initiative to identify target mobile IDs.

Data solutions provider Adsquare was used for data collection and construction of the geo-behavioural segments to target audiences with the campaign’s ads.

This campaign was the first to use Open Exchange in EMEA. Thanks to Hivestack’s integration with leading external 3rd party vendors, it was truly omni-channel, integrating mobile campaigns that drove in-store visitations, targeting a geo-behavioural audience of users intercepted by the campaign delivered through the Hivestack DSP.

The campaign obtained incredible performance results with:

37k visits in store - a visit rate of 1.3% vs 0.05% benchmark

Testimonial:

“We were thrilled to work with Hivestack to leverage the capabilities of programmatic digital out of home (DOOH) for our Rebuild The World campaign. Using Hivestack’s revolutionary Custom Audience solution, we were able to reach our target audience for the first time on DOOH screens leveraging anonymous customer location data. This in-depth targeting allowed us to drive a more contextually relevant experience for our customers and also gave us real and full control of the campaigns while reducing the ad wastage.” - Daniela Crescenti , Associate Director, Client Advice & Management, Initiative

Note: This campaign won the NC Award 2022 for the Integrated Campaign - Entertainment category.

Warner Bros.