I chose to
talk in this assignment about the company LEGO. The firm was founded at the end
of the 1960s and began to experience serious difficulties in the late 90s and
early 2000s. Several phenomena were detrimental to the firm at the time.
On the one
hand, the company was working with more than 11,000 suppliers – more than
Boeing used to make its planes! Not easy in this case to navigate in this
environment. At the same time, the company was facing competition from the cost
of toys produced in Asia putting greater pressure on prices. Third negative
effect was the arrival of digital in children’s play behavior.
A new CEO
has arrived, Jorgen Vig Knudstorp, and started with a big job of rationalizing
the supply chain and its production lines. The first step was to secure the
firm and ensure the survival of the company. The number of unique pieces has
been logically reduced and new capital brought in.
methods and especially work with consumers and designers were developed with a
licensing strategy (Star Wars …) based on the principle that the screen was
part of the life of children who wanted logic extend the experience by playing
in the real world. This in-licensing strategy was decisive for Lego, and the
return to roots – the bricks – was quickly brought to fruition.
first digital steps consisted of launching websites, multiplying thematic
versions in the form of microsites and offering free interactive applications
for all age groups. The only concession granted to the social Web: a YouTube
platform where all the videos edited by the Danish toy manufacturer are
compiled. Nevertheless, Lego will quickly revise its approach to social media.
A man will be particularly key in this acculturation of the brand to the social
ecosystem: Lars Silberbauer. Today director of Global Social Media for Lego, he
joined the company in early 2011 as a social media strategist. For him to think
about the implementation of a device much more engaged on social networks.
opening the Facebook, Twitter and other spaces, Lego first led some noticeable
social incursions with the launch of collaborative platforms. The first of its
kind appeared in 2008 at the initiative of the Japanese partner Cuuso. His idea
was to gather from local consumers suggestions for new games to be created by
Lego. The suggestions were posted on a dedicated website and voted on by
Internet users. As soon as the 10,000 votes mark was reached, the idea was then
sent to the company’s decision makers to examine its industrial and commercial
feasibility. In 2011, the concept was renamed “Lego Ideas” and rolled
out around the world.
similar register, Lego launched a platform called ReBrick in December 2011. The
idea is also to solicit collective intelligence around the brand’s products.
The site therefore offers original model creators the opportunity to share
their imaginations online with the community of more than one million fans
LEGO has built manufacturing facilities near
major markets, allowing LEGO to accelerate product access and respond quickly
to last-minute requests. The company currently has factories in Mexico,
Hungary, the Czech Republic and Denmark and is building a factory in China.
Lesson learned: Use size and financial power to create physical barriers to
entry for early career competitors. The LEGO business model was guided by two
principles: the capacity for innovation and the commitment to quality.
Paradoxically, the emphasis on innovation and quality at no cost has led to
mismanagement of the operating model and a significant drop in profits for the
company. As described above, LEGO’s current operating model is being put in
place to create unique competitive advantages that have been essential to
enable LEGO to recover its financial performance. Despite the remarkable turnaround
of LEGO, a constant assessment of operating efficiencies and efficiency is
needed. LEGO recently announced that it did not anticipate an increase in
demand in Europe and, therefore, may not be able to respond to all orders
around Christmas. Until existing plants are expanded and new plants are built,
the company must focus on improving its customer demand forecasting capabilitie