Jorgen Vig Knudstorp, Chairman of The LEGO Group, says hIs innovation process began with a question— “How do we think about the future?” Leaders must ask “How do we adapt the enterprise?” Adaptation has design and innovation aspects and he used Toyota as an example –Toyota adapts by design and is 10x more profitable than GM.
Knudstorp’s four frontiers of adaptation:
- Execution of speed and productivity. To achieve this you need a clear sharp strategy. Most companies don’t have one.
- You need a unique reason to exist get the strategy right.
- You need an organization that is flat, fast
- Perform to your maximum potential. Make sure everybody understands priorities. Lego asks this question every year and 2/3 of employees know the answer
How does Lego adapt? They love New Year’s resolutions. All strategy plans have the same language; profit , market share etc. They create written binding agreements. They make numbers etc visible with a show-and-tell from the CEO. The CEO believes in being the model for change: to act into new ways of thinking, not think new ways of acting.
Key drivers for employee engagement are energy, motivation, and the ability to push boundaries and get things done. The biggest motivators are image
Employees contribute to decision-making and do influence the CEO. Employees have bought business units and have made them more profitable because they are highly motivated. Ie They sold Legoland parks and franchised them. Now they are 2nd to Disney with 14 million visitors a year.
Innovation at Lego is user-driven. They use crowd-sourcing, mass collaboration (and all that stuff Wikinomics talks about) inviting the public to co-create new products. Knudstorp says lead users will participate in R&D for free just for the thrill of being part of the product.
An example is Lego Mindstorms. It began as a joint venture with MIT faculty and students. Two weeks after the launch, hackers deciphered part of the proprietary code, posted it on the internet, wrote advanced code for robots, and create a new operating system. Despite fears of competitors copying the product, Lego decided not to sue, and instead released a developer’s kit incorporating the best ideas from hackers.
The Lego hackers became an open source community of volunteer beta testers and product development specialists who accelerated product innovation. Mindstorms became a highly profitable product that surpassed the original conceptions of the internal PD team.
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This post is based on a keynote Jorgen Vig Knudstorp gave at the 2008 American Creativity Conference in Singapore when he was CEO of Lego.
Under Knudstorp’s tenure, LEGO Group’s yearly income has gone from a loss to drawing a notable profit and a 600% increase in turnover from 6.3 billion to 37.9 billion in 2016. In December 2016, it was announced that Knudstorp would step down as CEO of LEGO, and instead take the position of chairman of the group. VIa Wikipedia
