The LEGO group: Family business resilience (A)
The family-owned and family-run global toy firm LEGO had spent around a decade reinventing itself, launching new products, committing to continual innovation, employing top designers. It switched from a hierarchical structure to teams. It introduced robotics and computer games, diversified into theme parks, and pursued new profit lines from licensing and from partnering with major movie franchises. It was quick to see the internet’s potential for marketing purposes as well as for interactive games and products, and enabling customers to network with one another. The COO of the late 1990s/early 2000s implemented newly fashionable approaches to business innovation. The “seven truths of innovation” he identified were: hire diverse and creative people; head for “blue-ocean” (unexplored) markets; be customer-driven; practice disruptive innovation; foster open innovation or “wisdom of the crowd”; explore the full spectrum of innovation; and build an innovation culture. Yet in 2004 the company almost went bankrupt. Sales fell around 30% in 2003, and the company was running a negative cash flow of DKr 1 billion (US$160 million). Total debt had reached DKr 5 billion ($800 million). This was not just a case of cash-flow delays, it was an existential crisis that asked big questions of governance, strategy, management, approach to product development, manufacture and distribution processes. There were also pressing issues to attend to in the product mix, quality of senior management, the cost base, logistics, success rate and speed to market of innovations, adherence to founding values and “brand stretch.” On governance and leadership, they had to decide whether to appoint a non-family chief executive: a strong candidate had emerged with a plan for a turnaround based on greater discipline and simplification of a complex global empire. Recovery, even survival, was not guaranteed and the owners faced major strategic decisions that had to be taken under the pressure of urgency.
- Is it possible to be “too innovative”?
- How can communication be improved?
- How to introduce new ideas and promote non-family executives?
- If a market is being squeezed by new inventions, how do you judge if it is becoming obsolete or will find a new niche?
- How to maintain confidence while guarding against hubris?
- How to test operational assumptions against qualitative and quantitative measures?
Lego Group (The), Consumer Goods, Toys and Games
1995-2013
Cranfield University
Wharley End Beds MK43 0JR, UK
Tel +44 (0)1234 750903
Email [email protected]
Harvard Business School Publishing
60 Harvard Way, Boston MA 02163, USA
Tel (800) 545-7685 Tel (617)-783-7600
Fax (617) 783-7666
Email [email protected]
NUCB Business School
1-3-1 Nishiki Naka
Nagoya Aichi, Japan 460-0003
Tel +81 52 20 38 111
Email [email protected]
IMD retains all proprietary interests in its case studies and notes. Without prior written permission, IMD cases and notes may not be reproduced, used, translated, included in books or other publications, distributed in any form or by any means, stored in a database or in other retrieval systems. For additional copyright information related to case studies, please contact Case Services.
Research Information & Knowledge Hub for additional information on IMD publications
- The LEGO group: Family business resilience (A)
- The LEGO group: Family business resilience (B)
- The LEGO group: Family business resilience (A)
- The LEGO group: Family business resilience (B)
Case reference: IMD-7-1622 ©2014
Research Information & Knowledge Hub for additional information on IMD publications
Case reference: IMD-7-1623 ©2014
Research Information & Knowledge Hub for additional information on IMD publications
The literature indicates that the board of directors exists to provide resources and strategic direction (service task) and monitor top managers (control task), often tending to overgeneralize board tasks. Using a unique sample of 36 elite family ...
Research Information & Knowledge Hub for additional information on IMD publications
in Journal of Management Studies November 2024, vol. 61, no. 7, pp. 2814-2848, https://doi.org/10.1111/joms.12990
Research Information & Knowledge Hub for additional information on IMD publications
in I by IMD
Research Information & Knowledge Hub for additional information on IMD publications
Research Information & Knowledge Hub for additional information on IMD publications
in I by IMD
Research Information & Knowledge Hub for additional information on IMD publications
Research Information & Knowledge Hub for additional information on IMD publications
Research Information & Knowledge Hub for additional information on IMD publications
Research Information & Knowledge Hub for additional information on IMD publications
Research Information & Knowledge Hub for additional information on IMD publications
Research Information & Knowledge Hub for additional information on IMD publications