Professional Documents
Culture Documents
1.0 INTRODUCTION
The author has noted, with support from various literatures, that innovation
and how it is managed are key factors in ensuring a company‟s continual
success. Companies with new products tend to capture a larger market share
as compared with companies with old products. As innovation streams and
how they are managed need not be status quo, the author supports the
initiative at the LEGO Group to constantly explore new possibilities for them to
succeed in this competitive world. Innovation management played a key role
in the successes achieved at LEGO Group through her initiation of the
“shared vision strategy” as an incremental strategy for growth is core to the
success that stabilize the LEGO Group to be the most profitable toy company
to capture totally new markets and are currently employing sustaining
innovations to increase their market share and profitability.
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Innovation Management - (N14G05) Individual Report (008169)
The LEGO Group was founded in 1932 by Ole Kirk Christiansen from a small
carpenter‟s workshop to a modern global toy manufacturer with products sold
to more than 130 countries. The LEGO Group started with craft of wooden
toys in the founder‟s carpenter workshop in Billund, Denmark. LEGO was a
shortened form of the Danish phrase, “leg godt” (play good). Ole Kirk
Christiansen built a business based on offering high quality products that
encouraged creative play. He designed his toys to captivate the imagination of
the local children; through building, they were supposed to develop a sense of
pride in accomplishment and learn while playing. In 1947, convinced that he
had found the ideal new material for his growing company, Christiansen
bought his first plastic injection-molding machine. The eventual result was
LEGO‟s iconic product, the plastic brick with eight studs, which the company
patented in 1958. It became the focus of a tight-knit community of devoted
enthusiasts, with their own newsletters, competitions and even conventions. It
was in the bid for legacy – for quality, creative play, community and
experimentation – that Christiansen passed on to his sons, who continued to
own and run the company. Tremendous achievements have been registered
since LEGO Group was founded in 1932, but to mention a few significant
landmarks. In 1988, the firs Lego World Cup building contest was held. The
Lego Group‟s Educational Products Department was renamed Lego Dakta in
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this year. MIT‟s Dr. Seymour Papert from the Laboratory of Computer
Learning was named “Lego Professor of Learning Research”.
Vision
Mission Statement
“Children are our role models. They are curious, creative, and imaginative”
The Product
The name Lego which is “leg” and “godt” in Danish, meaning “play good”
came out in 1934. This name is used for any products of this company until
date with core product – Lego bricks. Motivated by the appearance of plastics
in Denmark, Lego purchased the plastic injection molding machine in 1947. At
that time the British Company Kiddicraft released the products name
“Kiddicraft Self-Locking Building Bricks” which is the plastic interlocking bricks.
Then Christian designed the similar products named “Automatic Building
Bricks” in 1949. The product name was later changed to “Lego Bricks” in
1953. However, the product did not catch the interest of customers who were
familiar with metal and wooden toys and later positioned herself to develop
innovative products which promote creativity and fun-packed play for all
stages of her process development.
The concept to the start of Cycle 4 was focused on brand coherence across
regional markets and business areas outside of play materials (e.g., five
geographical regions and business areas, such as Interactive, Lifestyle, and
Parks). During the crisis at LEGO (October 2004), The CEO and Top
management felt that, although the specific ways of communicating and
marketing the LEGO brand could be adapted to different regional markets, it
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Innovation Management - (N14G05) Individual Report (008169)
was the clear vision of the CEO and other top management to create global
relevance and attraction through continually referencing the LEGO core
values of “playful learning, active fun, self-expression, endless ideas, and
stakeholder trust.”
The motivation to the application of this concept was the pace at which
applying the incremental strategy at the beginning could help LEGO Group to
create new ideas. The Incremental strategy is the core and successful
strategy that help Lego to be the most profitable toy company. Although it was
also faced with significant challenges later on, many scholars proved that this
strategy is the best choice for those with limited information in strength and
weakness. These issues happen at the time the company has just started.
And the Lego Company applied it perfectly.
Following the series of challenges facing the LEGO Group as at 2004 in need
to innovate and birth new strategy that will serve as “an action plan for
survival” titled a strategy called “shared vision.” The plan had three (3)
phases:
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Innovation Management - (N14G05) Individual Report (008169)
- Powerful retailers, high fixed costs and in particular, the shift away
from traditional play and the consolidation of retail-outlet power.
These challenges did not only spur LEGO to become more innovative, but
was a source of strategy for innovation among the LEGO Group. The
successes achieved were significant to the business strategy which the
management imbibes after the crisis in 2004.
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Innovation Management - (N14G05) Individual Report (008169)
All these tasks were the bedrock of LEGO‟s recovery putting them back in the
game, a result of the evolution of their business model.
The concept lab was also charged with handling the LEGO
Development Process (1995), a process with four major stages which
involve; idea exploration for toys, development, prototyping and
implementation. This concept turned out very successful reducing
product implementation time from three years to one and an increase
in products that made it to the market.
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Innovation Management - (N14G05) Individual Report (008169)
This open innovation culture saw a big improvement in company‟s sales and
the generation of new successful ideas like the LEGO factory and LEGO
universe.
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Innovation Management - (N14G05) Individual Report (008169)
In LEGO, there are four main innovation processes with two sub categories
namely;
Business; sales channel and business model
Product; product offering and platform
Communication; messaging and interaction
Processes; core processes and enabling processes.
The following is a table geared towards producing innovative ideas, for both
Radical and incremental innovation method used in selecting ideas and the
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initiatives from the CEO and corporate management team resulting to her
competitive advantage over its competitors in the market:
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Innovation Management - (N14G05) Individual Report (008169)
Components of
Innovative LEGO Company
Organization
Size of Innovating The LEGO Company has sold 320 billion LEGO®
bricks, the equivalent of 52 bricks per capita
Firms worldwide.
Market Size For export market to Europe, East Asia and
Australia.
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Innovation Management - (N14G05) Individual Report (008169)
Components of
Innovative LEGO Company
Organization
How the ideas are put The experience of its CEO and management
into practice? team and up-to-date knowledge of the industry
strategic analysis are factors in deciding the best
ways to implement innovation to remain ahead of
its competition.
How they think they After the appointment of the CEO, Jørgen Vig
are lacking in terms of Knudstorp. It has good R&D and management
innovation? teams which will ensure it is ahead in innovation
in the industry.
How they protect the The R&D is segmentalised whereby each team is
ideas from handling separate parts of the overall R&D. The
competitors? output from each team are coordinated and
complemented at management level.
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Components of
Innovative LEGO Company
Organization
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Justification
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6.0 RECOMMENDATIONS
Nevertheless, the author envisages that despite the significant growth of the
Lego group she could further improve her innovation stream and its
management by establishing external linkages with international organisations
as well as other supply chain management systems to explore other disruptive
opportunities for the future and increase overall business performance via
process innovation. These the author recommends can be further supported
via creating an innovative culture, build linkages with government bodies and
local universities, expand its R&D capabilities and, develop training and
innovative incentive programs.
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7.0 CONCLUSION
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Innovation Management - (N14G05) Individual Report (008169)
In short, the LEGO Group have successfully managed her innovation streams
and were able to relate her innovation streams with business performance
and thus increase her market share and profitability. Nevertheless, the author
will recommend that to further improve innovation management at the LEGO
Group, it is obvious to understand that innovation and how it is managed is a
key for a business to continuously succeed irregardless of whether it is a large
company or a small single-entity enterprise. The author, have also during the
course of this study discovered that a company which has a successful
innovation management strategy can still improve on its innovation
management as reflected in the recommendation section of this report. In
conclusion, innovation and its management thereof is a necessary and
ongoing process that can be changed and improved to enable a business to
succeed in this competitive world.
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8.0 REFERENCE
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