Tuesday, March 11, 2008

Secrets of Lego CEO's turnaround of company

From my paper, 03 Mar 2008 edition



Secrets of Lego CEO's turnaround of company


     It is a simple matter of putting brick upon brick, but

at the International Creativity Conference held here last

week, Lego’s chief executive gave an insight into the

building blocks that can not only make a game come alive,

but grow a business too.

     Mr Jorgen vig Knudstorp, who took over as CEO of the

Danish toymaker in 2004, shared the reasons for his

company’s near-miraculous turnaround from being an

ailing giant losing over US$240 million (S$34) in 2003,

to a healthy, vibrant corporation that made profits of

over US$200 million last year, The Business Times

reported on Saturday.

     Lego helps children think logically, while developing

endless creativity, he said. “Nobody learns anything

by just thinking or listening, but by doing.”

     At Lego, he said, this translates to the execution of

the business of the effort to make things happen.

     The next frontier is the ability to adapt and “break

the value chain.” Citing the expedient that the Blackstone

Group did a much better job operating the theme park

Legoland than the Lego Group ever could, Mr Knudstorp

said that it was a simple matter of Blackstone having

better expertise in the area of theme part management,

and that the arrangement profited both parties.

     The third aspect entails user involvement and putting

more power into the hands of customers. He explained

Lego’s success in making its development software

freely available online where fans could use it to work

on new designs and submit their proposals.

     Lastly, Mr Knudstorp mentioned that although Lego

had its building blocks in plastics, there is no way to

avoid digitalisation today. Digital technology, he says,

has the potential to transform a business model and

make it “super adaptable.”

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