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The Strategic Leadership And The Leadership Of Change In Lego Company
Hooper and Potter (2000) have defined the leadership of change as “developing a vision for the future, crafting strategies to bring that vision into reality and that everybody in the organization is mobilizing their energies towards the same goal”. (Hooper and Potter 2000) Strategic leaders such as Jorgen Vig Knudstorp CEO of Lego are needed to introduce change into an organization successfully. (Gill 2003; O’Connell 2009) For a chance to be effective the strategic leaders should be able to anticipate, challenge, learn, align, make decisions, and interpret. (Schoemaker et al.2013) I will examine the strategic leadership and the leadership of change in Lego.
To start with the strategic leader should have the ability to anticipate. The leader should communicate with their stakeholders, conduct market research, and use scenario planning. Most companies fail to identify opportunities and threats. Lego management failed to foresee the digital gaming and toy revolution. In contrast, leaders monitor their environment for any indications of change.
Secondly, strategic leaders challenge their own, and others believe and support different views points. Leaders carefully examine the problem before acting. (Schoemaker et al.2013) Consider Knudstorp who faced the challenge of the organization’s deficit. He did not want to take a slash and burn approach. Knudstorp consulted with the adult fans of Lego and colleagues at the Massachusetts Institute of Technology. This allowed him to identify that Lego was not being true to itself. Knudstorp then took decisive action by cutting costs and implementing a back-to-basics simplicity.
As was previously stated learning is important for strategic leaders. (Schoemaker et al.2013) Under the Knudstorp rescue plan, Lego outsourced to Flextronics to save costs. This was seen to be a mistake as Flextronics could not cope. In this case, Knudstorp learned by doing. (Larsen and Pederson 2004) Also, Knudstorp created a learning environment in Lego. The future labs allowed for cheap mistakes and a huge amount of learning.
As well as that, strategic leaders must be skillful at alignment this is identifying a mutual ground and succeeding support among stakeholders who have different opinions. (Schoemaker et al.2013) Kjeld a former CEO of Lego tried to expand the business, he introduced a new management style. Unfortunately, senior management did not support the decision. As a result of Kjeld’s failure to align, several of the senior managers left the organization. Furthermore, Knudstorp has improved the organization’s ability to align as he created good relations with employees, fans, and suppliers.
Additionally, strategic leaders need to be good at decision-making. Strategic thinkers require multiple options and consider short- and long-term goals. (Schoemaker et al.2013). Knudstorp avoided binary decisions as he stated that “There is no single answer to anything anymore”. Also, the CEO suggested that the second stage of Lego’s recovery was a time of paradoxical thinking.
Furthermore, strategic leaders can interpret. They can identify patterns, pursue new visions, and shove through uncertainty. (Schoemaker et al.2013) Knudstorp appointed anthro-teams to observe customers and hear their stories. It was interpreted that the Lego brick is a medium for consumers rather than a toy. Therefore, Knudstorp thought that the organization might get higher sales if it focused on Lego’s core product (Lego brick) as opposed to new systems. His ability to connect the dots leads to a return in profitability for the company.
As a final point, change models can be used to guide or manage change or to distinguish what went wrong in the company. (Ryan 2020) The Kotter model can be used “at the strategic level of an organization to change its vision and subsequently transform the organization”. (Pryor et. al 2008) In 2004, to flourish and survive the leaders of Lego used the Kotter model of change as it was most suitable. They followed the eight stages of effective change in an orderly fashion. (Step 1) Lego created a sense of urgency as they announced a deficit in 2003 on their annual report. Lego built a core enterprise platform underlying the supply chain process. (Step 2) A team was assembled to influence and lead the change. (Step 3) Lego’s vision was to avoid bankruptcy. Their strategies included simplifying distribution, decreasing the amount of logistics providers, and suppliers. (Step 4) Lego communicated its vision with the big players and collaborated with the retailers. (Step 6) The group generated short-term wins as there was an 11% increase in revenue in 2006 as a result of improvements in the supply chain process. (Step 7) Lego leaders consolidated the change and made more changes as the enterprise platform was further extended with a new product lifecycle. This was essential to quickly bringing products to the market. (Step 8) Lego anchored new approaches in corporate culture therefore these changes were sustained as the enterprise platform was essential in 2016 to meet operational demands.
To conclude, strategic leaders use these skills to facilitate change within the organization. They can identify flaws in their skills and improve on them. (Schoemaker et al. 2013) The eight stages of the Kotter model remain to be under investigation as some steps are not relevant in some situations. In the case of Lego, step five empower broad-based action was not used.
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