BMG744 Department of Management, Assignment Sample

Question 1

The leadership change in The Lego Group after Jorgen Vig Knudstorp took charge of the company as a CEO there were a number of changes that were brought about to ensure that the company achieves profitability. There are different changes that Jorgen Vig Knudstorp instils within the organisation to ensure that Lego operates in a functionally profitable manner. These changes can be classified and segregated into different stages based on Kotter’s 8 step change model that can help to understand how the organisation successfully achieved improvements by the strategy utilised by Jorgen Vig Knudstorp.

Urgency

Urgency is the first step of the Kotter 8-step change model, which reflects upon the reasons due to change management becoming a necessary requirement (Galli, 2019). In this regard, the reason for the urgency of implementing the change was the slow growth of the organisation, which almost led the company to the brink of bankruptcy. Apart from that, it has also been seen that the company was unable to make profits due to a lack of effective marketing and product development strategies. Diversification of products and reaching out to target customers turned out to be another issue that the organisation required to resolve. All these aspects related to a situation within the organisation, which required an urgent solution as a result of which the change management was initiated by Jorgen Vig Knudstorp.

Guiding team

Guiding the team in regards to the change that has been strategies by the management and the leader of the organisation is the second that can be identified as a part of the change management model (Laig and Abocejo, 2021). Based on the case study of the organisation it can be seen that Jorgen Vig Knudstorp ook sufficient steps to bring the team as well as the stakeholders together in order to discuss the issues and reflect on the current issues that the company has been facing. Guiding the team before initiating a change within an organisation is quite essential as it helps in establishing a better understanding between the employees and the different stakeholders who would be affected by the change. Moreover, this is also important within the organisation as this helps in achieving a higher level of collaboration once the change management process is initiated and implemented.

Developing vision

In order to successfully implement and initiate a change management program within an organisation, it is essential to have a clear edition of what the changes can achieve. In This regard, Jorgen Vig Knudstorp had a clear reason regarding the position to which The Lego Group can be taken. Profitability, sustainable growth, product diversification and organisational change in terms of structure (Roos and Victor, 2018). It was essential for Jorgen Vig Knudstorp to ensure that this vision is clearly communicated to all the employees and stakeholders so that they can understand the value that can be derived from implementing the change.

Communicate for Buy-in

Communication is another step of the change management process where the leaders and the management need to clearly communicate the importance of change management (Galli, 2018). An organisation while change management is initiated only when a substantial amount of potential is identified by the company, which can lead to profitable outcomes. With the help of communication, managers as well as the leader, can convince the employees to collaborate and participate in the change management process as in many cases resistance can slow down the overall change management process

Removing obstacles and Empowering action

While implementing the change management process an organisation often faces several challenges and issues due to which removing these challenges is an essential part of managing the change. This step was effectively handled by the leader, which allowed Lego to initiate the changes while also receiving support from the employees and the stakeholders (Tawalbeh et al. 2018). Jorgen Vig Knudstorp took the decision to empower the employees which substantially increased their overall change management process. This was a crucial decision taken by Jorgen Vig Knudstorp due to the visit can be stated that the change management within the organisation was successful.

Creating short term wins

Creating short wins in the journey towards achieving the major goal of the change management process is essential to keep the motivation levels of the employees high. Lego, in this regard, was able to achieve short term wins, which effectively help in keeping the motivation levels of the employees on the stakeholders high throughout the duration of the change management process (Sommer, 2019). Receiving positive gains from the market and increased sales were some of the short term wins that the company noticed after the change management process was implemented successfully.

Building on change

Once a change is initiated and implemented within an organisation it becomes essential for the company to substantially build upon the change; it effectively means that continuous improvement is achieved (Galli, 2018). This allows the organisation to keep the momentum of the company directed towards the vision that has been previously identified by the management. In this regard, Jorgen Vig Knudstorp took sufficient steps so that the change that has been planned and initiated can be built upon, which would thereby, help in achieving large scale benefits and goals. The organisation was able to successfully build upon the change due to which level received enormous success after the changes were implemented.

Make it stick

This is the last step of the change management process within which Jorgen Vig Knudstorp was able to successfully make the changes stick. In this regard, the organisation has been continuously maintaining the changes that were initiated which have been effectively helping Lego till the present day to operate profitability.

Question 2

Leadership and leadership are the most important factors of an organisation, which needs to be placed strategically to gain better guidance in the competitive business world. Leaders have all the capabilities which are required to take an organisation towards the way of success while maintaining peace and harmony (Pahuja et al. 2021). Hence, it can be asserted that leaders are the one who provide a purpose and clear direction to the organisation. In this context, as the assessment is based on leadership and change of The Lego Group, therefore, evaluating the leadership of the organisation is extremely necessary. It has been found out that Jorgen Vig Knudstorp is the CEO of The Lego Group. Knudstorp’s main aim was to become a teacher and he even taught near about 18 months in the kindergarten. Knudstorp is extremely talented which can be easily reflected by his education level, which says he is a scholar (Hollar, 2022). As per the case study, in 2004, Knudstorp stepped up to become the CEO of The Lego Group. Moreover, he was the first person who was outside the family of the founder of the company.

When Knudstorp entered into the organisation, the company was facing a serious crisis and now, it offers one of the most loved merchandises in the marketplace as reflected in the below figure.

Figure 1: Lego global revenue

(Source: Tighe, 2020)

The leadership style of Knudstorp was quite efficient due to which, the organisation is still having great success in the marketplace. One of the great focuses of Knudstorp was to be the real leader and to focus on earning the trust of the employees. While giving an interview to Harvard Business Review, he said that, at the beginning it was getting extremely challenging for him to gain their trust and he knew that to come out of the 2003-2004 condition, teamwork and alignment of the entire management is required (Ross, 2021). Apart from this, he focuses on the most important factor, which matters the most. While stepping into the organisation, the most foremost work done by Knudstorp was to prioritise the organisational priorities. He focuses on the organisational main aim and objective, which has become the turning point for the entire organisation (Ross, 2021). The brand set a significant goal for itself; to be the best, not the largest. This was a crucial point to make, but still it required a strategic shift. As per the case study, the organisation has tried a diversification strategy. The corporation would abandon its tight top-down style of management in favour of a more flexible model that would give personal executives more flexibility.

Apart from this, while focusing on the internal management of the organisation, Knudstorp also focuses on consumers and the importance of encouraging them to participate in the organisation. As per the case study, previously the organisation was “out of touch with its customers”. While giving an interview to Boston Consulting Group, Knudstorp specifically mentioned the significance of loyalty (Ross, 2021). He identified that in the past, the organisation has taken customer loyalty to be granted and became highly concerned with organisational initiatives. In order to address these issues, Knudstorp focused on determining success by analysing the specific value it had been providing to its consumers incorporating Net Promoter Score (Ross, 2021). He also began consulting with adult Lego lovers in an attempt to acquire a firsthand understanding of the company’s direction, as well as incorporating passionate consumers in the production process.

Figure 2: Lego communicating with customers through social media

(Source: Thita, 2019)

Beside this, as per the case study, Knudstorp under his leadership has made a multifaceted ecosystem of the organisation. While giving an interview to the Institute of Management, he discussed that he will never make the partners and the affiliates think that they are a part of a signal company. Instead regarding this, he sought to bring these entities, including such theme parks as well as educational institutions, greater liberty, allowing them to choose their own economic strategies and business methods. He claims that something like this, permits “natural synergies” to arise (Ross, 2021).

From this evaluation and investigation of the leadership of Jorgen Vig Knudstorp, it can be asserted that his leadership is quite positive  and efficient as well. To some extent his style of leadership is equivalent to the skills of a transformational leader. Starting from openness, boarding minds, commitments, accepting responsibilities and to have faith in team members (Abu-Rumman, 2021). All of these skills of a transformational leader are parallel to the leadership style of Knudstorp. For an in depth comprehending, transformational leadership theory will be justified explained by Bass & Avolio 1985. The concepts of transformational leadership are very unique but complementing. The leadership is concerned with the exchange of production for remuneration while also allowing individuals to build their own leadership potential (Ng and Rivera, 2018). As per the book of Bass and Avolio (1944), transformational leaders have the potential to stimulate the followers and their work practices along with generating awareness about the vision and values. Transformational leaders encouraged their followers to look beyond their own self and be efficient with approaches. The same has been the case of Knudstorp, due to whom the organisation has understood its real aim along with successfully operating in the marketplace. From the entire understanding, it can be asserted that with great leaders, great organisations are established. In this respect, under the guidance of Knudstorp, The Lego Group has emerged to be one of the ruling organisations in the toy industry.

Question 3

Recommendations

After the above analysis, some valuable recommendations for Lego are provided below.

Invest in technology and innovation

The organisation has to be focused on innovation in order to grab the attention of young adult customers. It is evident that during the lockdown most adults have started relying on crafting and innovative indoor games. More specially, as during the covid-19 pandemic governments around the world have started implementing lockdown. People are restricted to stay at home. These kinds of restrictions have influenced people to spend time on in-door games and crafting. In 2020 a large number of people have started focusing on home based art activities (Bradbury et al. 2021). Moreover, young adults have started spending time with video games and social media. Hence, the organisation is recommended to invest in innovation and develop games for adults. More specifically, the organisation has to invest in the use of updated technology that can help it to innovate and design new and more attractive games for adults.

In this regard, the theory of disruptive innovation can be described. This theory reflects that a company can challenge established companies through innovation. As per the opinion of Petzold et al. (2019), in this dynamic business environment companies can enhance their competitive advantage through continuous innovation. Hence, the organisation needs to be more focused on innovation in order to grab the market of adults. Moreover, it needs to develop more innovative games that can satisfy its young customers as well as adults.

Plastic use reduction

The organisation is recommended to reduce the use of plastic in production of toys. It has been found out that this specific industry has been using approximately 40 tons of plastic for every $1 million in revenue (The world counts, 2022). Moreover, the toy industry has been contributing greatly to the generation of plastic waste. It can be stated that an estimated 90% of toys, which are available in the market, are made of plastic (The world counts, 2022). In addition to that, plastic toys can contain harmful chemicals like dioxins. On the other hand, toys are made from approximately 40% hormone disrupting material. It is evident that Lego already has products that are made of sugarcane plastic (The world counts, 2022). However, the company needs to be more careful about this matter because plastics that are made of sugarcane are not biodegradable. More specifically, plastics made of sugarcane can be broken into tiny pieces when they get into the environment, which are called micro plastics (Deirdre and George, 2018). Hence, the organisation is recommended to be more focused on reusing plastic in manufacturing in order to reduce plastic pollution and impact the environment in a positive manner.

In this regard, the “Triple bottom line” theory can be described. According to this theory, business organisations should commit to measure their environmental and social impact. More specifically, rather than only focusing on the profit generation companies should take strategies for environmental improvement. As per the opinion of Elkington (2018), failure and success in sustainability cannot be measured by relying upon the terms of loss and profit. Moreover, in this current era of globalisation the demand for sustainable development has been increasing. Apart from that, as the concern about the environment has been increasing among people, they want to be connected to business organisations that are taking social responsibilities. Though the organisation has been taking social responsibility, it is recommended to be more focused on it. This kind of initiative can help the company to enhance its brand image and reputation in the marketplace, which would also influence the sales growth in a positive manner. Apart from that, this kind of initiative can influence the capital management of the organisation. More specifically, the process of reusing and reducing the use of plastic can help the organisation to save resources and use them in the further manufacturing processes.

Enhance digital games

It is evident that the organisation already has been focusing on digital games, though it needs to be enhanced. The covid-19 pandemic has influenced the demand of online games in a positive manner. The global market of digital media has been growing consistently and online games have a great contribution to that. It has been found that the global market of online gaming has generated an estimated 21.1billion US dollars in revenue in the year 2020 (Clement, 2021). This is indicating approximately 21.9% growth in a comparison with the previous year. It can be said that the covid-19 pandemic has a great influence on this growth, as people were forced to stay at home during the pandemic. Moreover, the audience for online gaming is projected to reach more than 1.3 billion in the year 2025 (Clement, 2021). Hence, it is recommended to the organisation to enhance the number of online games. Along with that, the organisation has to design games according to the market demand in order to satisfy customers. This kind of initiative can influence the sales and revenue growth of the organisation in a positive manner.

CSR improvement

The case study projected that in previous years the organisation has already faced an issue regarding the turnover rate of employees. Hence, it has to be more active to improve employee health and safety measures. Moreover, the organisational managers of Lego need to take strategies for motivating its employees in order to reduce the turnover rate and retain employees in the future. As per the opinion of Farooq et al. (2019), CSR strategies can enhance productivity as they influence factors like employee motivation.

References

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Bass, B.M. and Avolio, B.J. eds., (1994). Improving organizational effectiveness through transformational leadership. Sage.

Bradbury,A.,  Warran, K., Mak, H., W., and Fancourt, D., (2021). The Role of the Arts during the COVID-19 Pandemic. [Online]. Available at: <https://www.artscouncil.org.uk/sites/default/files/download-file/UCL_Role_of_the_Arts_during_COVID_13012022_0.pdf> [Accessed 20 April 2022]

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Deirdre, M., George, S., (2018). ‘Sustainable’ Lego: Why plastics from plants won’t solve the pollution crisis. [Online]. Available at: <https://www.independent.co.uk/news/science/sustainable-lego-plastic-plants-pollution-crisis-a8266256.html> [Accessed 20 April 2022]

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Ross, L. (2021). Lessons from Leaders: Jørgen Vig Knudstorp. [Online] Available at: <https://www.thomasnet.com/insights/lessons-from-leaders-j-rgen-vig-knudstorp/> [Accessed on 17 April 2022]

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