Lego CEO - presentation to ECCIX conference

We are half way though the second day of the 10th European Conference on Creativity and Innovation and there has been one outstanding talk so far - one of the best business presentations that I have seen in the last couple of years.

Jorgen Knudstorp is the CEO of Lego and his talk was a

combination of modesty and great insights into the Lego story of creativity and innovation.

Here are some extracts:

• Innovation is about increasing prices and margins - and therefore ensuring the survival of a business. Innovation that does not contribute to that goal is not relevant.

• Lego have taken the traditional approach to innovation which is about change and works in with this the idea of continuity. For them the acknowledgment of continuity - the pattern of children's play has not fundamentally changed in the last 50 years - is an important part of their innovation of the toys and tools that the children use in pursuit of those patterns. (the core Lego brick is 50 years in existence in January 2008)

• His definition of leadership - the ability to change an organisation in response to changes in the external environment.

• A learning by Jorgen from the CEO of Toyota - it takes 15 years for Toyota to bring a new manufacturing facility up to the standards of the rest of the group. For Jorgen and Lego this has massive expectation limitation implications as they move to outsource elements of their manufacturing process.

• Over 10 years to 2010 Lego will go from 10,000 employees to 3,000. This is the result of a process which is stripping them back to their core competencies. Therefore the theme parks are now only 30% owned by Lego and are not managed or run by them.

• This process is part of moving from being a manufacturer of physical product to being a digital brand with strong licensing income. One of the implications of this is a reduced requirement for cash to finance the operation - thus making the business more profitable.

• His thoughts on strategic focus versus execution are informed by an observation. Through contact with many businesses in his quest to outsource and partner he reckons that the majority of businesses execute badly. Therefore in most sectors a poor strategy that is well executed will probably ensure that the business is towards the top of its sector!

• One of his Key Performance Indicators (KPI's) is measuring how many of their customers would (unprompted) recommend the product to a friend. He said that this is running at 75%.

• In recent years Lego have strongly focused on using the internet to harness user feedback and to date there are 150,000 Lego model sets that have been designed by users. He believes that this interactions is a core part of Lego's future yet he also commented that he has a constant battle with the legal eagles who advise Lego. For them this interaction breaches a multiplicity of Lego's IP (intellectual property) and they want to control this.

• He sees the emergence of the internet as a digital platform is key for Lego (acknowledging that they missed out on the first wave of it) and he made references to a number of projects which they are engaged in which will position them as a digital brand.

• He also said that Lego regularly have visitors from other businesses and universities who ask him what the keys to success in this digital platform are and he has to say "I have no idea - can you tell me!". This is an emerging space and no-one knows.

keith

(cross post from http://blog.creativity.ie

Comments

[Frank Fullard]

Keith

Thanks for sharing your experiences with us. Now please try and enjoy your stay. Get out a bit, because attending conferences can be a hard auld station, or so I'm told, and we wouldn't want you to suffer burnout or anything like that.

Regards
Frank Fullard

[keith bohanna]

Thanks Frank! As it turns out we say almost nothing of Copenhagen which is a pity. But the conference itself was great.

keith