The Lego Group's Success Essay Under Jorgen Vig Knudstorp's Leadership.

Evaluation of Jorgen Vig Knudstorp's leadership in The Lego Group

Lego has been a prominent brand that has been providing its customers with toys for both girls and boys and has also been providing various other accessories from the very start. The company has always aimed to generate ingenuity and imagination among the children. This change has been brought by Lego and the success of the company occur after Jorgen Vig Knudstorp took over the responsibility for the company’s success (Prince, 2018). Jorgen Vig Knudstorp had to take a new route for the success of Lego by focusing on an action short-term action plan to create a long-term sustainable strategy.

In the year 2001, Lego experienced a huge financial loss of DKK 831 million. The worldwide income of the company was 9.5 million concerning no turnover and also lesser than DKK 9.8 million in 1999. The main cause of the impact was the company's loss of focus on its core products for which the company was known among its customers. after Jorgen Vig Knudstorp took over the company the main aim of the company was to emphasize leading technologies to support the brand value for example extending intelligent brick a concept of Lego Mindstorms. According to Tang (2019), Kottler proposed 8 step change model that has 6 significant steps that can be implanted by the company to bring change within the organisation guiding coalitions and develop a vision for the organisation. Lego change management through Kotter 8 steps model can be described by:

1. Sense of urgency

When the company faced a huge loss in the year 2001 a certain decision was made to change the strategy of the company. the company decided to expand in its core area of innovation by applying an action plan and will solely focus on toys, video games and movies which will provide learning and experience to the children (Galli, 2018). 

2. Forming a guiding Coalition

A special team was elected by Lego to bring the change so that proper communication can be made. The company under the leadership of Jorgen Vig Knudstorp Lego should solely focus on a brick system that has been the value of the company rather several diversifications. The new CEO decided that the company need a short-term action plan rather than a comprehensive strategy and the cation plan includes surviving, cutting costs, selling its loss bearing businesses and ignoring the dash of growth.

3. Forming of Strategic Vision and initiatives

The company first focused on retail rather than end-user for improving margin and stocks to provide the right kits at the right volume and creating a balanced portfolio of shelves in retail stores. After that second focus was Kids by developing Focus groups targeting end-user and establishing more attention on Adult Fans of Lego. The process helped Lego in customer engagement. Jorgen Vig Knudstorp focused on Lego Classic products like DUPLO, LEGO, Lego Technic and Lego Mindstorms and utilized story-based products like Star Wars, Harry Potter and Bob the Builder.   Forming this strategic implementation change has helped Lego in establishing profitable growth and at the same time uphold the global brand position among children and families (Cameron and Green, 2019).

4. Enlisting Volunteer Army

Analysis of Changes made in The Lego Group since Jorgen Vig Knudstorp became CEO

The main focus was on building a customer base based on their needs and requirements. Using Focus groups, the brand tried to connect o kids and customers like parents and families for more engagement. Jordan tried to implement imagination and innovation concerning knowledge and experience children will get from Lego’s Products. Jordan performed market research and collaborated with individual customers and also introduced the voting system to interact with fans and followers creating an army of individuals that will help the brand in establishing its market presence. The company also hired expert enterprise architects and engineers with strategic capabilities (Hayes, 2022).

5. Enabling action plan by removing barriers

Lego under the guidance of Jordan the company diminished its differentiation of different SKUs which help the company to limit sales complications. The company focused on costs cutting process by adjusting production capacity and reduction of activity level and also the closure of factories. The company focused on implementing its classic Lego products and cutting down the offer in products. The company tried to optimize its inventory at the right costs (Jayatilleke and Lai, 2018).

6. Accomplishing Short-term wins

The company after implementation of focusing on its retail channel distribution, customer engagement and marketing its core beliefs and values related to people by applying its old model of products and services help the company in increasing its profit from 6.7 % to 8% between 2004 to 2007 (Ashcroft, 2022).

7. Build on the change

The leaders of Lego decided to implement, more products after 2007 but rather than solely focusing on core segment products rather than differentiation of products in different segments. The company also launched its products in large volumes, especially the products attracted by many children and focus groups and implemented new products based on core product strategy (Bekmukhambetova, 2016).

8. Stick with the change

The company decided to stick to its core values by providing its customers with quality bricks legacy system and at the same time developing core products for the special target and potential customers and eliminating adjacencies of various product differentiation and closing theme parks to increase the production of bricks of Lego and decreasing costs to bring more stability to the organization has become a prominent part of organisation current strategy building knowledge and capabilities of learning of students through toys, video games and movies (Stoner and Stoner, 2013).

Lego has created a comeback through the strong commitment of its core value formation and creating deep insight of target market requirements and formulation of research chain through distribution with proper production rate by cost-cutting has helped the brand to successfully develop its strategy rather than vast differentiation of products that one day led the company to ample loss. This show proper strategy implementation and believing the mission and vision of the core value are very important to sustain its position in the marketplace (O'Connell, 2018).

Kotter 8-step change model implemented by Lego Group

According to Anderson (2017), Bass Transformational Leadership refers to particular activities and behaviours shown by the leaders that help in putting efficiency in overall performance and outcomes of an organisation. According to Bass (1985), transformational leaders exhibit the qualities of transformational leadership behaviours in their daily communication routine and interaction style. The bass transformational leadership demonstrate leaders' qualities in expressing behaviours to their subordinates like idealizing influence, inspirational motivation, individualized consideration and intellectual stimulation. Individualized consideration involves coaching and mentoring of each induvial and providing proper feedback based on their needs, inspirational motivation dedicates leaders that communicate high-performance expectations in encouraging fashion, intellectual simulation depicts leaders' qualities that challenge individuals to develop new ways of thinking and reassess values and beliefs whereas Idealized Influence resembles leaders helping individuals to follow mission and vision and ensure individuals commitment in following the mission and vision of the company (Frandsen and Johansen, 2020).

Talking about Jorgen Vig Knudstorp's leadership in building Lego supremacy back on track has used the traits of transformational leadership for giving the company a new vision to optimize its performance (Radwan, 2020). Jordan has created a clear vision for the future direction of Lego emphasizing the idealized influence of transformational leadership. Jordan has resembled that a proper strategy has to be made with the help of communication with experts like Jepsen Ovensen to accurate the financial report of the company by ensuring an action plan is required for future strategy. Jordan has idealized the need for change and started communicating with employees for better decision-making and also established focus groups that can engage with customers to know their requirements and expectations from the company (Guzmán et al., 2020). Through incorporating intellectual stimulation Jorgen decided to emphasize the key success factors of the company and has also analysed the unique selling proposition of Lego. Jorgen collaborated with engineers, enterprise architects to build the right inventory and also decided to cut costs and implement warehouses in different regions (Alqatawenh, 2018). Jorgen believed that the company has provided less importance on its core product and only emphasized product diversification. Jorgen with its transformational leadership qualities emphasized building knowledge and experience for children through Lego products and also target communicating and interacting with Lego Fans regularly to receive feedback. The trait of transformation leadership was built by Jorgen through constant research of the marketplace and developing skills by learning outcomes from different aspects. Jorgen using the trait of inspirational motivation created clear targets and command structures within the Lego internal organisation structure by putting more emphasis on profit maximization and performance (O'Connell, 2018).

Efforts made by Jorgen Vig Knudstorp through Transformational Leadership

Jorgen emphasized expertise that has qualities to watch the vision and mission of the company and can survive the critical situation by applying proper values and considerations. Jorgen motivated workers and employees to continuous fashion to bring the passion of creating new ideas and bringing innovation to the market that can provide value to customers (Roe, 2020). Jorgen Vig Knudstorp established new ways of reporting in factories like whiteboards and has maintained the routine of performance of each factory at a given time. The visual factory helped the employees in improving the quality of work performance. Jorgen through transformational leadership traits emphasized encouraging employees by providing them with a chance to build their way systems and processes and also remain a part of all the actions happening in the company. Jorgen's personal communication with all employees either one-to-one or in the weekly letter was in the virtual board which helped employees to create a platform where interaction and communication can help each individual in building their knowledge and abilities to think through constant monitoring. (Northouse, 2018).

Building Communication through Transformational leadership Jorgen has built a culture of consistent transparency of sharing information within the organisation (Eliyana and Ma’arif, 2019). Jorgen Vig Knudstorp worked a lot on employees and personal communication skills by creating a social mechanism of identifying the profitable customers and the CEO used to write a weekly letter to 500 middle managers about the work process of business. Jorgen established a flat organisation structure where fluent dialogues have been used between employees and managers and everyone has the right to and feel to express their ideas and feelings and all the ideas can introduce a new action plan for the company. Transformational leaders motivate workers through intelligence, vision and mission and create the same urge in their employees (Asbari, 2020). That what Jorgen has created in Lego through innovation in strategy implementing an action plan for every stakeholder benefit and following the core value of the company’s motive of providing knowledge to adults and children provided a huge success of the company in present times (Lewis and Malmgren, 2018).

Lego has been successively holding its market reputation in the worldwide market. In 2015 reports the brand market valuation was about 5.4 million dollars and in current times specifically in 2021, the brand has a market valuation of approximately 9.1 billion dollars. Through putting efforts in its core values and focusing on core products of the company including movies and games franchises the company has surpassed its competitors (Statista, 2022). The company has also announced a major sustainability breakthrough by unveiling a prototype plastic brick made from recyclable drink bottles. Lego should aim to use 100% recycled products to promote sustainability and should stop using oil plastics in the future. in recent times companies are focused on building innovation that can help bring sustainability through eco-friendly initiatives (Gandolfi and Stone, 2018). Lego should constantly change its innovation in its brick system of toys to bring new development and the use of new technologies can help Lego in gaining constant competitive advantage. Quality management has been the main legacy for the company and constant quality improvement can help the brand in adopting a new system that will bring disruption in recent market traditions. Lego in 2017 saw a drop in sales because of too many distributions to retailers as shops were a stack of Lego products which was the main strategy for Lego back in 2003 to focus on retailers. Lego should maintain a balance between production and distribution too much production can implement loss in the market for retailers significantly impacting the brand image of the companies. In 2022 the company should focus on other products of Lego-like movies and games as lockdown has been significantly removed in most of the countries enabling the market opening of theatres and people are moving back to theatres (Guardian, 2022).

Focus on Customer Engagement and Market Research

In the current generation, children are mainly focused on watching their favourite shows all the time because of the rise of smartphones and Lego has been focusing on licensed products like Star Wars and Harry Potter. Due to the rise of different shows children are interested in different products that they want to build changing the views of a generation constantly. Lego should discover the trends of the children's requirements in recent times after 2021 to adopt new licensing and to provide new products design to its customers. Lego should consider focusing on emerging countries' marketing strategies like in Asia and should segment the market based on the requirements of customers. (Suciu and Baughn, 2016). The Asian market is a huge market with diverse cultures and Lego has the potential to build its name in this market by revamping new pricing strategies and building products that can cater for the needs of Asian markets. Lego can improve its decision-making mechanism with the support of Project Risk Management. The company should implement scenario planning and should evaluate cultural distinctions to address the complexities to eliminate future risks (Al Khajeh, 2018). The company should also focus on adopting new moulding facilities with keeping environmental safety in mind in different countries for increasing brand loyalty. Lego should consider a new theme for new countries since different consumers have different views in licensing products of Lego. Lego should consider deals of licensing with certain Asian firms to diversify their product lines in Asia for better market advantage. The brand also deals with threats of weak retail networks in Asia in Covid times because retails of the Asian toy market is solely dependent on manufacturer and due to Covid and lockdown supply has been degraded in the Asian market, therefore, Lego should consider building more manufacturing plant in Asia to facilitate risks in future times (Roll, 2019).  

Lego has been in games development for a long time. The franchise has also had a market in terms of offline games and Lego Games can be played with friends online using Parsec. Online multiplayer has significantly grown in recent times due to Covid where people are playing online games staying at home bringing a new experience to customers. Lego should make deal with online game platforms to make online games to capture the gaming industry as the company has already made its name in the global market through innovation and AI automation and the company has a huge chance to create a customer base in the online platform (Havenga, 2020). Lego during covid times has made a sustainable business and despite market closure, the company is ahead of its competitors twice in terms of revenues such as Hasbro. the company should maintain this position in the market in future by applying new strategies like 100%  sustainability in product development, establishing moulding factories in Asian countries, Licensing with more partners for figures, putting innovation in the supply chain of retail shops and creating a whole new platform for customers for playing online games with global players worldwide. These strategies can help the brand to sustain its market position in the coming changing generation of the global marketplace (Hensmans, 2019). 

Return to Core Values and Reduction of Product Diversification

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