Essay: Lego's identity crisis and its impact on the organisation

An introduction to LEGO
The LEGO Group is a great example of a successful organization that have had great growth since it was created in 1933. However, in the early 2000s Poul Plougmann and his team put innovation at the top of their management agenda and drove it throughout the company (Robertson, 2013). Plougmann and his management followed a strategy where they focused on using the LEGO brand to create other things such as games, clothes and merchandise. They wanted to be the best known brand among families in the whole world, but they forgot the core idea and values in LEGO ‘ the Bricks. However, at the beginning of the 2000s the LEGO Group was passing through an identity crisis, and they had an economic loss owing to the implementing of a new growth strategy. Finally, J??rgen Vig Knudstorp was hired, and he should get the LEGO Group back on track with a new strategy called Shared Vision. This also meant that they should focus more on their core values, and therefore focus on their core product, the LEGO Brick. To get back on track they sold the Lego Theme Parks. The change in leadership created a bigger social community, which made the employees feel safe in the organization. In that way J??rgen Vig Knudstorp and his management succeed in coming back to LEGO’s core values, with a focus on leading it into our digital and interactive age. (Lindholm, 2012)
Part 1: LEGO through modern, symbolic-interpretive and postmodern perspectives
1.1: Introduction
This paper will focus on LEGO’s identity crisis, and its impact on the organization. Furthermore this paper will focus on the implementation of the new Shared Vision strategy that was implemented in the beginning of the 2000’s.
1.2: Modern perspective
The modernists sees the world through an objectivist view where the world exists as an independent object. They believe that truth is discovered through valid information and reliable measurement. The modernist sees organizations as real entities operating in a real world (Hatch, 2013). From a modernist point of view, organizations are characterized by having either a flat or tall organizational structure. Tall structures are characterized by having many hierarchical levels with fewer departments whereas flat structures have more divisions but less hierarchical level (Hatch, 2013).
The modernists wants to resolve problems in the organization, and this also refers to LEGO, when Poul Plougmann was hired as a new financial manager in the LEGO Group. Plougmann and his team instituted a cost-cutting plan where LEGO should save one milliard danish kroner. When speaking of LEGO’s cost-cutting plan, they had a rational view of the situation. If the outcome were higher than the income, then cuts had to be made. Cutting down the employees had to be done, and it seemed as an easy way out of the crisis.
J??rgen Vig Knudstorp saved LEGO from an identity crisis, and they have since then been one of the largest toy companies in the world. LEGO has achieved being the number two most successful toy company in this year according to an article from The Richest (Sicoli 2014). LEGO earned 11.504 million danish kroner the first half year of january 2014, compared with 10.408 in january 2013. This was an outstanding development seen from an economic perspective (Annual report, Klausen, 2013, 20014).
Before J??rgen Vig Knudstorp became a leader the organization was characterized by the modern perspective. LEGO was becoming a bureaucratic management. Their only focus was now to obtain a higher income. They did not think about being the best anymore, but rather being the most successful and the biggest company in the world (O’Connell, 2009). British organization theorist Gareth Morgan explores organizations as metaphors. For instance he explored parallels between organizations and machines. Looking at LEGO before J??rgen Vig Knudstorp became a leader, one can say that the organization functioned as a machine. Every part of a machine had a task that needs to be done efficiently (Morgan, 2006). The machine organization has a structure that is characterized with hierarchy and a controlling leadership style. During the Poul Plougmann management one can say that the structure in LEGO remains a top-down communication. That is also characteristic for a machine organization.
However, after J??rgen Vig Knudstorp was hired, the organization turned into a more flat organization with more open communication lines. ‘This allowed LEGO to achieve both a broader and a deeper perspective on the realities of their business, while making it simpler and faster to make decisions’ (Trangb??k, 2011). However, LEGO is not a completely flat organization, it is still a quite bureaucratic organization.
1.3: Symbolic Perspective
The symbolists see the world through a subjective view where there is no objective reality apart from the subjective consciousness of it. They believe that truth is interpreted by the knower, and can only be understood from the point of view of individuals who are directly involved (Hatch, 2013). Through the Symbolic-Intepretive perspective organizations are constructed and reconstructed by their members through symbolically mediated interaction (Hatch, 2013). Through the symbolic perspective one can ask: What is LEGO? Is it just some colored bricks, or is it something completely else? It might be seen differently according to who you ask and where you stand. For some people it might only be bricks you can play with. For other people the LEGO bricks are a hobby or maybe a lifestyle. This shows that the bricks mean something completely different to the individual person. However, LEGO has a symbolic meaning. Most consumers are referring to the bricks and LEGO-figures as ‘LEGOS’ and in that way linking them to their name. This is a key symbol for the company. The brick is also used by employees in many different cultural manifestations such as sculptures made from bricks in factory buildings, and small brick-constructions found in most office. (Schultz, 2004)
Symbolists define organizational structure as a place where human can create things which is meaningful to them by reconstructing structure through observation and participation. This focus is more how to organize rather than having a structure such as a flat or tall organization as compared to the modern perspective (Hatch, 2013). J??rgen Vig Knudstrup wants to be seen as a community with much value placed on ‘everyone being equal’ (Jones, McCormick, Dewing). This also means that the employees in LEGO now see themselves as actual people who are hired to construct the organizational realities and also being a part of a coherent community.
1.4: Postmodern Perspective
According to the postmodernist’s view of the world, they think that the world is made to appear in language, discourse and artwork; what we talk about exists. They believe that there is no truth, there is only interpretations(Hatch, 2013).
In the postmodern perspective one is not seeking explanation, but they offer critique towards a phenomena. In relation to LEGO’s identity crisis, where the modernists sees the managerial suggestion of the cut in employees’ as rational, you can post critic towards their view. The postmodernist care more about the ethical and moral aspects of a phenomena. If employees has to be cut down, they know there will be a chance it will become them. Is that alright? – a postmodernist could ask
According to Lyotard there is no truth only true claims. Postmodernists believe that one cannot make mathematical calculations as the cut in employees in LEGO. It is considered as a true claim, because nobody knows if it is right or wrong. According to the postmodernists, one can therefore not make decisions about economy and future decisions (Hatch, 2013).
Postmodernists do not have a structure on what that needs to be done, because they rather choose themselves. They prefer to solve problems through experimentation rather than figure out the reason behind it, like modernists.
Before LEGO’s identity crisis, LEGO had so many specialized bricks, and several new design ideas, and even though the all had the LEGO idea in them, they still drifted away from the basic idea, the bricks. One might say that, it was not the innovative ideas in itself that made LEGO postmodern. LEGOLAND is an example of a postmodernism aspect in LEGO though it was not LEGOLAND in itself that made LEGO postmodern. However, LEGOLAND reflects the post-modern notion of hyperreality, which means that it is more real than reality itself (Wolf, 2014). Baudrillard claimed that ‘Disneyland is the ideal simulacrum because it creates the architecture, community, and traditional family values of a Main Street America that never existed. Although we may think Disneyland is imaginary (just a performance) and the rest of the world is real, it is the rest of the world that is an ongoing performance through which we strive to live up to the images fed to us by disneyland, the media, government, businesses, and other modern institutions.’ (Hatch, 2013). The same can be applied to LEGOLAND. The families that visits LEGOLAND obtain a feeling that they explore a new reality in the shape of a fantasy world.
It was the postmodern thinking that was a huge part of bringing the company down. They had no stop button which meant they produced a lot of new colors and many new LEGO elements. The rescuing of LEGO was the new themes with LEGO Stars Wars, LEGO Bionicle, LEGO Harry Potter, because they was not just postmodern, but figures that appeared in several other media platforms, such as movies, literature, video games and as toys like LEGO (Wolf, 2014).
Part 2: Core Technology in LEGO
2.1: Introduction
The second part of the paper will analyze LEGO’s core technology, which is production of toys. The three types of typologies taken from the modern perspective form a bigger picture of the organization. Secondly, the structuration theory makes us define how people have shaped the technology within LEGO. This part of the paper focus only on the production department in Denmark.
2.2: Woodward, Thompson & Perrow
Woodward’s scale of technological complexity, is divided into three groups called; ‘Small Batch and unit production’, ‘large batch or mass production’ and ‘continuous process production’. According to Woodward, the optimal efficiency is achieved when technologies fits the organizational structure. Woodward’s typology has that limitation that it only fits in manufacturing sectors (Hatch, 2013).
Thompson’s typology fits both the manufacturing and the service sector technologies (Hatch, 2013). He distinguished between three different kinds of technology:’long-linked, mediating and intensive’. By the four piece matrix he made it possible to determine a company with four different parameters: ‘(1) Standardized inputs/outputs with standardized transformation processes describe long-linked technology, (2) unstandardized input/output with standardized transformation processes describe mediating technologies, (3) unstandardized inputs/outputs with unstandardized transformation processes describe intensive technology, (4) standardized inputs/outputs with unstandardized transformation processes’ (Hatch, 2013).
Perrow took the two theories from Woodward and Thompson to make his own framework. He made a new two-by-two matrix in order to define the organization’s core technologies, and also how to analyze tasks to find out how much variability the tasks normally display (Hatch 2013).’Perrow distinguished between four different types of outputs called: routine, craft, engineering and non-routine technologies (Hatch, 2013).
2.3: Structuration Theory
Anthony Giddens came up with an idea, that both the actions of agents and the routines of the organization have an effect on one another (Hatch, 2013). The theory is called Structuration Theory and describes how the flow of actions affect the structure and the agents of the organization. Anthony Giddens came up with this idea called duality of structure. Appendix 1 shows Giddens’ duality of structure; saying that technology shapes people, and people shape technology through actions.
Several organizational researchers have used structuration theory in their analysis of organizational processes. Orlinkowski was one of the researchers that was rethinking the concept of technology in organizations. From inspiration from Giddens he made a new theory called ‘adaptive structuration theory’. The theory suggests that technology is a factor in the flow of change in structure and agency (Orlikowski, 1992). Orlinkowski believed that each agent uses technology uniquely (Hatch, 2013)