design management theory

To Examine How Design Management Theory Has Influenced the Recovery of The LEGO Group Through the Realignment of the Design Process

Tom Thomson Jones Regent's University November 2014

Word Count: 8,795

TO EXAMINE HOW DESIGN MANAGEMENT THEORY HAS INFLUENCED THE RECOVERY OF THE LEGO GROUP THROUGH THE REALIGNMENT OF THE DESIGN PROCESS

Acknowledgements

I would like to take this opportunity to express my gratitude to everyone who supported me throughout the course of this research project. I am thankful for their aspiring guidance, invaluably constructive criticism and friendly advice during the project. I am sincerely grateful to them for sharing their truthful and informative views regarding this topic.

I express my warm thanks to Mr. Graeme Campbell for his support and advice in guiding me to my conclusions.

I would also like to thank the interviewees: Tim Selders and Martin Riber Andersen, Design Directors at PARK Design Management in Denmark and Kim Yde Larsen, Senior Director at The LEGO Group for their willingness to support this research topic and their illuminating insight into the events occurring therein.

TOM THOMSON JONES DIS6A1 !2


Figures

Figure 1: Simplified Design Process Model (Lawson, 1990)

Figure 2: Design Management Iteration Process; Lockwood (2011)

Figure 3: Design Core Model; Pugh (1990)

Figure 4: Design Council Double Diamond Model (2007)

Figure 5: Adapted Research Onion; Thomson Jones (2014)

Figure 6: Proposed Departmental Hierarchy at The LEGO Group; Thomson Jones (2014)

Figure 7: Adapted Design Core Model; Thomson Jones (2014)

Figure 8: Snapshot of LEGO Roadmap; Authorised by The LEGO Group 2010

Figure 9: LEGO Innovation Model; Design Council Denmark (2013)

Figure 10: Snapshot from Adapted Design Core Model highlighting red stage-gates; Thomson Jones (2014)

Figure 11: Snapshot of LEGO Development Process; The LEGO Group (2010)

Figure 12: Snapshot of LEGO DNA Profile ; The LEGO Group (2010)

Figure 13: Snapshot from Adapted Design Core Model highlighting green iterations; Thomson Jones (2014)

Figure 14: Snapshot from Double Diamond Model illustrating the necessary shape of the iterations in Figure 13; Design Council (2007)

Figure 15: Snapshot of LEGO Design Practice Deck; The LEGO Group (2010)

Chart 1: Financial Highlights 1999-2013 Horizontal Bar Diagram; Thomson Jones (2014)

Chart 2: Financial Highlights 1999-2013 Line Diagram; Thomson Jones (2014)

Chart 3: Total Continuing Assets 1999-2004; Thomson Jones (2014)



Abbreviations

PARK DM - PARK Design Management, Denmark NCD - New Concept Development NPD - New Product Development



Abstract

Purpose - This paper examines the effectiveness of design management theories in influencing the business recovery of The LEGO Group between 1999 - 2013. The aims of this paper are to identify the structural weaknesses and the key design management theories utilised to resolve the crises the company was observing. Design - The study uses semi-structured interviews with key stakeholders of both at The LEGO Group and the associated consultancy firm to provide descriptive accounts of the events taking place. A thematic analysis was used to highlight central themes concerning the components of the restructuring initiative and the internal reactions to its implementation. Findings - In conclusion, the study identified advanced Stage-gates and Design matrix tools as the crucial components of the structural change with the installation of cross-departmentalised communication channels aiding the smooth implementation of the tools. A causal relationship was identified between he introduction of design management theorem and financial recovery.

Key Words - Design, Design Management, Design Process, The LEGO Group

LEGO and the LEGO logo are trademarks of the LEGO Group. ©2014 The LEGO Group. All rights reserved.



Aim, Objectives and Research Question 9 AIM 9 OBJECTIVES 9 RESEARCH QUESTION 9 Introduction 10 STATEMENT OF THE PROBLEM 11 Literature Review 12 INTRODUCTION 12 DESIGN AND ITS MANAGEMENT 12 THE DESIGN PROCESS 14 THE DESIGN/CONTROL PARADOX 16 THE FALL OF THE LEGO GROUP 18 Methodology 20 INTRODUCTION 20 DATA COLLECTION 21 Interviews 21 Financial Performance Data Records 22

DATA ANALYSIS 22 OBSTACLES AND LIMITATIONS 23 Findings 24 OBJECTIVE 1: TO IDENTIFY THE PROCEDURAL WEAKNESSES WITHIN THE DESIGN PROCESS AND REASONING BEHIND REALIGNMENT 24 OBJECTIVE 2: PROVIDE AN IN DEPTH ANALYSIS OF THE KEY COMPONENTS OF THE DESIGN 4 BUSINESS INITIATIVE 26 Adaptation of Pugh’s Design Core Model 27 The LEGO Road Map 28 Core Team Creation 28 The LEGO Innovation Model 29 The LEGO Foundation Process 31 The LEGO DNA Profile 33 The LEGO Design Process 33

OBJECTIVE 3: REVIEW THE EXTENT TO WHICH LEGO HAS ACHIEVED THE OPTIMUM DESIGN-BUSINESS EQUILIBRIUM 36 Design Structure Fears 36 Habitual Change Resistance 37



Overcoming Resistance 37 Value-Added 37 Strategic Balance 38

OBJECTIVE 4: UTILISE FINANCIAL DATA TO BETTER QUANTIFY THE EFFECTIVENESS OF THE DESIGN 4 BUSINESS INITIATIVE 39 The LEGO Group Financial Data Charts 39 Managing for Cash 40 Managing for Profit (D4B) 40

Managing for Growth 41 Conclusions 42 OBJECTIVE 1: TO IDENTIFY THE PROCEDURAL WEAKNESSES WITHIN THE DESIGN PROCESS AND REASONING BEHIND REALIGNMENT 42 OBJECTIVE 2: PROVIDE AN IN DEPTH ANALYSIS OF THE COMPONENTS OF THE DESIGN 4 BUSINESS INITIATIVE 42 OBJECTIVE 3: REVIEW THE EXTENT TO WHICH LEGO HAS ACHIEVED THE OPTIMUM DESIGN-BUSINESS EQUILIBRIUM 43 OBJECTIVE 4: UTILISE FINANCIAL DATA TO BETTER QUANTIFY THE EFFECTIVENESS OF THE DESIGN 4 BUSINESS INITIATIVE 43 Recommendations 44 Limitations 44 References 45 Bibliography 49 Appendices 50 APPENDIX 1: THE RESEARCH ONION 50 APPENDIX 2: LEGO EMPLOYEE INTERVIEW PROTOCOL 51 APPENDIX 3: PARK DM INTERVIEW PROTOCOL 52 APPENDIX 4: THEMATIC CODING ANALYSIS DIAGRAM SECTION 53 APPENDIX 5: THEMATIC CODING ANALYSIS DIAGRAM SECTION 54 APPENDIX 6: STUART PUGH’S DESIGN CORE PROCESS MODEL 55 APPENDIX 7: SKYPE INTERVIEW TRANSCRIPT: TOM THOMSON JONES & TIM SELDERS, PARK DESIGN MANAGEMENT 56



APPENDIX 8: SKYPE INTERVIEW TRANSCRIPT: TOM THOMSON JONES & MARTIN RIBER ANDERSEN, PARK DESIGN MANAGEMENT & THE LEGO GROUP 60 APPENDIX 9: TEXT-ONLY EMAIL INTERVIEW QUESTIONS RESPONSE FROM KIM YDE LARSEN, SENIOR DESIGN DIRECTOR, THE LEGO GROUP 67 APPENDIX 10: STUART PUGH’S DESIGN CORE PROCESS MODEL 70 APPENDIX 11: STANDARDISED DESIGN MATRIX 71 APPENDIX 12: THE LEGO GROUP INNOVATION MODEL 72 APPENDIX 13: THE LEGO GROUP INNOVATION MODEL BUSINESS COLUMN 73 APPENDIX 14: DESIGN COUNCIL’S NARRATION OF THE LEGO DEVELOPMENT STAGED PROCESS 74 APPENDIX 15: LEGO’S DESIGN 4 BUSINESS INNOVATION TOOLS AND PROCESSES OVERVIEW 76 APPENDIX 16: LEGO’S DESIGN 4 BUSINESS DESIGN TOOLS AND PROCESSES OVERVIEW 77 APPENDIX 17: LEGO FINANCIAL DATA HIGHLIGHTS 1999-2001 78APPENDIX 18: LEGO FINANCIAL DATA HIGHLIGHTS 2001-2005 79APPENDIX 19: LEGO FINANCIAL DATA HIGHLIGHTS 2005-2009 80APPENDIX 20: LEGO FINANCIAL DATA HIGHLIGHTS 2009-2013 81



Aim, Objectives and Research Question

AIM

To examine how design management theory has influenced the recovery of The LEGO Group through the realignment of the design process.

OBJECTIVES

1) Identify the procedural weaknesses within the design process and reasoning behind realignment.

2) Provide an in depth analysis of the key components of the design process realignment initiative.

3) Review the extent to which LEGO has achieved the optimum design-business environment.

4) Utilise financial data to better understand the effectiveness of design management theory.

RESEARCH QUESTION

How has Design Management Theory influenced the recovery of The LEGO Group?



Introduction

This research seek to provide a detailed analysis of how the LEGO Group attempted to implement a series of design management tools and strategies to rebalance its corporate structure. Additionally, it will analyse how these innovative management structures impacted upon both the employees as well as the overall financial recovery of the organisation.

The LEGO Group is a privately held company based in Billund, Denmark founded by Ole Kirk Christiansen in 1949. The company, the creator of the infamous ‘LEGO Brick’, observes annual revenues exceeding £2 billion (2013), and employs 13,800 people worldwide within the construction toys segment of the toys and games market. The corporate culture at The LEGO Group has been regarded as a unique environment that seeks to drive and nurture design and innovation. However the result of this saw the design department and process mature at a much faster rate between 1996-1999 resulting in the rise of a design ‘centred’ business model. The in-house development process contained missing and weakened structures and controls providing the necessary company-wide communication. This breakdown caused a saturation of LEGO product lines with antithetical merchandise which added considerable complexity to the supply chain and the design process and consequently generated waves of unforeseen costs.

The LEGO Group looking to revive and realign their design process and reduce the unnecessary complexity. Consultancy firms were brought in to aid the company by drawing up the necessary route for survival. The use of rich, descriptive interviews with key stakeholders of this realignment process, both at LEGO and the design management agency, aim to highlight the most crucial elements of the initiative; what were the weaknesses, what were the solutions and how did the company react internally to change?

LEGO is a brand that holds design at its heart. The perceived value of design has made it difficult to actively hold back its outputs in favour of the improvements of other departments. LEGO has thus sought to provide those necessary connections to ensure the safety of the company’s future, employing the specific design management strategies to solidify its porous synapses.



STATEMENT OF THE PROBLEM

Design Management focuses on the promotion of design and design thinking within the formal structures of existing businesses and corporations. This research looks to the acute scenario whereby design exists at every level of business practice. This position is one aspired to by countless competitors and businesses alike, accomplishing one of design management’s founding targets. However from this position, the competitive advantage has caused growing issues of both cost and complexity due to uneven departmental focuses and power.

This research highlights the notion that although design, the promotion of design principles and design thinking in business may yield untold benefits, there are considerable detriments to its introduction unless appropriately managed. Comprehensive analysis of the LEGO Group between 1999 and 2013 will provide a progenitive case study to support the theories and themes explored.



Literature Review

INTRODUCTION

There is a growing notion within business, especially with the emergence of great innovative and creative superpowers such as Apple, Google and IBM, that design is increasingly worthy of a place within traditional business structures. ‘Design is a potent strategic tool that companies can use to gain a sustainable competitive advantage. Yet most companies neglect design as a strategic tool. What they don’t realise is that good designer can enhance products, environment, communications and corporate identity.’ (Kotler & Rath, 1984)

This review is divided into four sections: 1) Design and its Management. 2) The Design/Control Paradox. 3) The Design Process. 4) The Fall of The LEGO Group. These four components will act to define and clarify the concepts present within the research.

DESIGN AND ITS MANAGEMENT

The term ‘design’ is often misinterpreted by its singular definition of artistic creation employed in product development. However, Kotler & Rath (1984) define the term as the ‘process of seeking to optimise consumer satisfaction and company profitability’, a process that does not just focus on physical creation. Design is in effect present in most areas of business, through the building of both tangible products or intangible services (Koostra, 2009). The Design Mix elements illustrate ‘designers’ must be aware of Performance (Marketing) – what consumers want, Quality and Durability (Manufacturing and Sourcing) – quality of the materials and workmanship, Appearance (Creative Vision) – the element mostly associated with ‘designers’, and finally Cost (Finance) – the determination of budgetary and cost constraint (Kotler & Rath, 1984). Businesses frequently overlook and neglect design, often failing to acknowledge its worth resulting in its mismanagement (Kotler & Rath, 1984).

The traditional ignorance to the presence of design can act to inhibit a firm’s ability to exploit competitive advantage, as mentioned previously, removing the possibility for effectual design management (Martin, 2009). Design management



comprises the creation of synergy between both the creative and business sectors of a company regardless of each operating with their own culture, own values, opinions, and dynamics (Koostra, 2009). Design management aims to create a physical connection, establishment of communication channels, between these two divisions (Oakley, 2011), basing itself on the notion that ‘organisations will perform better when they manage to successfully harness and exploit the potential of design’ (Smith, 1978). One of the key purposes of design management was to establish design within management sentience, proposing to use language associated within traditional management theory and apply it to creative process (Cooper, Junginger, & Lockwood, 2011). Cooper et. al. (2011) defined a series of common practices now utilised in the management of design; Stage-Gate Processes – the visible articulation and regulation of product development, Standardisations – operation guidelines, Design Audits – Illustration of, both qualitatively and quantitatively, design’s outcomes and attitudes towards it, and Models for Evaluation – organisational self-assessment tools to measure design (Gorb & Dumas, 2011).

Kotler & Rath (1984), however, continue to focus their studies on the reasoning behind the suppression of effective design management in business. Designers resume the belief that managers are ‘design illiterate’ believing the cost of design will outweigh its benefits. Managers are too concerned with servicing existing markets than developing new ones (Cooper, Junginger, & Lockwood, 2011). The failure to educate may result in the failure to innovate, for management to be creative in future strategies seeking out customer satisfaction (Kotler & Rath, 1984). Creativity is the forefront characteristic of design innovation defining differentiation in product development, a notable option for new profit generation (Bowers, 2013). The promotion of ‘design thinking’ and innovative practice, as stated by Martin (2009), often depicts a profitable reaction to a businesses’ performance. However Bowers (2013) recognised this as high-risk activity, thus labelling them largely problematic (Stevens and Burley, 1997). The risks of limiting innovation often act to obstruct the potential of a company making their market actions seem dated on account of changing customer expectations, technology progression and the threat of new competition (Keizer et al., 2005). Taplin (2005) goes as far as to state a dependence on innovation and creativity for survival.


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THE DESIGN PROCESS

The design process is the formal structure within business describing the ‘series of events, actions or methods by which a procedure or set of procedures are followed, in order to achieve an intended purpose, goal or outcome’ (Best, 2006). Much like the principle of design and its management it cannot be thought to constitute only an aesthetically based developmental process instead of being applied to any such genre of business (Gorb & Dumas, 2011). The understanding of the internal design process is key to defining it’s best practice, understanding the context in which a business lies and what influences its functionality by external and internal pressures (Best, 2006). The mapping of the design process can take numerous forms depending on the number of competing factors and departments acknowledged (Design Council, 2007).

The first process maps provided more linear illustrations of design’s presence within business structures. These tangible structures constituted of only three standard phases: Analysis, Synthesis and Evaluation (Lawson, 1990) (Figure 1). These were soon replaced with more detailed models due to criticism of the simplified notion that ‘a problem could be solved in one go’ (Design Council, 2007) concealing interactions between departments. Stuart Pugh (1990) sought to introduce the concept of loops and iterative phases, defined in Lockwood’s (2011) Iteration Process (Figure 2), which allow for the incorporation of business activities ensuring the alignment and position of design within a business process, the ‘design core’ (Pugh, 1990).


Figure 1: Lawson’s Simplified Design Process Model (1990)

Figure 3: Design Core Model; Pugh (1990)

Figure 2: Design Management Iteration Process; Lockwood (2011)


Pugh’s (1990) reference to the ‘design core’ (Figure 3) depicts the constant presence of iterative design activities at every level of the process highlighting the necessary complexities within the process. The concept of ‘total design’ (Pugh, 1990) seeks to incorporate every instance of each business sector ‘from early identification of the market and user need through to the [manufacturing and] selling of a product that meets that need’ (Design Council, 2007). Returning to Kotler et. al. (1984) and design’s functionality, Pugh (1990) recognises the presence of iterative design phases from a corporate perspective and how there is a diverse range of business departments interacting with designers within each level to provide a solution to the proposed problem.

With the progression of both internal and external factors such as technology, sustainability and legislation the complexity of the design process advances in unison (Design Council, 2007). Archer’s (1963) formalisation of design into a science through process mapping has devolved to the extent where unique external and internal processes are materialising at such a rate there is limited universal or standardised processes to follow (Best, 2006). Best (2006) continues to state the absence of a ‘set best practice’ when mapping one’s design process stating the need for a dynamic and user-specific illustration of process-wide influences: who is interacting with who, at which stage, and to what extent.

Despite this statement, the Design Council (2007) have utilised Best’s (2006) research to compile a series of distinct commonalities under a more dynamic process model – the ‘Double Diamond’ (Figure 4) (Design Council, 2007). Clarkson et. al. (2005) stress the importance that the design process cannot be approached from a singular direction. However the Design Council’s (2007) Double Diamond model outlines the linear nature of the process progressing through four standardised phases of Discover, Define, Develop and Deliver but allow the shape to ‘morph’ and ‘stretch’ to accommodate differing levels of procedural complexity and cross departmental touchpoints (Design Council, 2007). This model provides the most flexible and modern map to illustrate the business design process, factoring in the advances in complexity and the differing structures present business to business. The Double Diamond structure will be effectively utilised to aid in the illustration of the design process present at the LEGO Group, which will provide an overview to highlight areas of procedural weakness and reform.




Figure 4: Design Council Double Diamond Model (2007)


THE DESIGN/CONTROL PARADOX

As mentioned previously by Best (2006) and the Design Council (2007), one cannot seek to improve the overall performance of a process without procedural maps, stakeholders and influences effectively mapped out. With the inception of a process map, design managers may begin to highlight deficient structures and processes within a business to apply resolvent solutions. Businesses often seek out ways in which to encourage new concept development (NCD), new product development (NPD) and innovation by implementing stimulation strategies (Gorb & Dumas, 2011). Despite the necessity of NCD and NPD, ‘forcing’ or cross-departmental communication breakdown (Bowers, 2013) may conceal structural and developmental risks as projects have a high tendency for failure: the result is a significant loss of resources (Simon, 2009). Bowers (2013) states a balance is required to effectively manage the stimulation breadth of projects, whilst Taplin (2005) discourages strategies involving risk ‘avoidance’ as extensive risk management may dissuade creative thought processes by stifling innovation altogether. Although expenditure on unsuccessful projects might be reduced, however, original market pressures will remain, however. When determining the appropriate form of risk management, efforts should be made to consider costs, market data availability and the management value of the outputs of the additional analyses (Bowers, 2013). Project integrity is made up of the ‘usability’, ‘producibility’ and ‘appropriateness’ of products if they are to be successful in the market place (Trueman, 1998).

Hands (2011) begins to expose the notion of the Design/Control Paradox stating ‘that taking a ‘Fordist’ view, will adjust systems to exterior performance criteria… in turn [reducing] effective control of creative processes’ (Hands, 2011). Hands (2011) continues to highlight that as the control complexity over creative processes increases the ‘compliance required naturally attacks the required flexibility to operate creatively’ with ‘trust between levels…lost and individual contribution denied’ (Hands, 2011). The paradox thus dictates design fragility; the weaker the level of design compliance and creative freedom the higher the risk of resource misallocation with creative compliance in itself acting to squander innovative process. Smith (1978), Trueman (1998) and Bowers (2013) all state the need for succinct yet balanced control of innovation within the design process, stressing the need for the equality of design departments within a company’s hierarchy. In the view



of Koostra (2009) and Dumas & Mintzberg (1991) the role of design should take it’s place at the core of the company’s main business process, agreeing with the model set out by Pugh (1990). Design should help to influence the corporate culture and every step of the development process at the top step of the design ladder (Ramlau en Melander, 2004). Although there is considerable evidence to support the benefits of design appreciation within customary business procedure (Koostra, 2009), situations such as that which LEGO encountered essentially act to deter such notions. The scenario whereby design is the lifeblood and the fundamental culture of the company, necessary controls and management were not established to monitor the trait. The existing design culture surpassed the very fabric of progression endangering LEGO’s corporate existence through design departmental predominance.

THE FALL OF THE LEGO GROUP

David Robertson (2013), Professor of Practice at Wharton School, recently released a detailed account of the events taking place at The LEGO Group between 1999 and 2012 titled ‘Brick by Brick: How LEGO Reinvented its Innovation System and Conquered the Toy Industry. His narration of the phenomenon, using sources within the organisation, provides a rich source of literature and foundation of understanding. The LEGO Group entered a period of stagnation in the late 1990’s where by sales revenue dwindled, an anomaly from previous performance statistics. In fear of poor sales, management prompted designers to innovate product lines where possible, embarking on an ‘innovation binge’ (Robertson, 2013). LEGO began stretching into markets it did not know, lacking the market experience of native competitors. Production lines had ‘risen to more than 14,000 different components (most not having the ‘LEGO feel’) (Robertson, 2013) without complete consumer testing and market analysis. This resulted in the huge failure of the majority of their new products. Designers were given too much slack in the innovative leash so much so that LEGO lost control of their innovation and design process leaving them with escalating costs and an overhaul of unwanted goods (Robertson, 2013).

This disunity was a clear issue that had begun to appear within LEGO’s business structure, a clear failure or break down of communication between these two very different sectors, which resulted in the flooding of their production lines and damaged sales (Selders, 2013). Robertson (2013) refers to Smith (1978), Trueman (1998) and Bowers (2013) by supporting statements that ‘As you boost



the amount of creativity and innovation, you’ve also got to boost the amount of focus and control’. This concept is widely accepted as a code of conduct when managing design – ‘change needs rigorous control, and product design and development, which are crucial to innovation [which] needs rigorous management… creativity can be nurtured and exploited but too much without necessary controls and boundaries can disfigure the brand, identity and mechanism’ (Smith, 1978).



Methodology

INTRODUCTION

This research seeks to provide an in depth analysis as to what extent Design Management theory aided in the recovery of The LEGO Group between 1999 and 2009. The adapted research onion below (Figure 5) highlights the research pathway of this paper. The use of a pragmatic philosophy, argued by Patton (2002) and Barbour (2007) to provide a more flexible strategy, dictates the use of both qualitative and quantitative data to coherently service the research question (Barnard, 2012).

The cross-reference of claims made by participants with analytical financial data measures will act as complimentary methods, adopting a hybrid approach to actively quantify the rich, descriptive data (Silverman 2010, 2011; Gilbert, 2008). By including both qualitative and quantitative data the details and features of the business’s restructuring initiative maybe explored and validated to improve the quality of analysis. Individual design management objectives may then be earmarked and measured on the basis of their economic success using financial annual reports and employee feedback.

This mixed method study is important for several reasons. A gap exists in the literature describing the design management principles that were included in the recovery plan for the LEGO Group. The available literature focuses namely on


Figure 5: Adapted Research Onion; Thomson Jones (2014) (see Appendix 1 for original)


the physical restructuring of the supply chain with only narrow attention given to the design process reforms. The influence of the design management on this process are often over looked despite their central role. Although the majority of the literature is qualitatively based there is a lack of opinion from the designers; those believed to be the route of the problem. Secondary focuses of this study highlight the reactions and viewpoints of those directly involved and those affected by the reforms to gain a higher-yielding perspective of the initiative’s success, questioning the status of the Design / Control Paradox (Hands, 2011). The socialised focus and differing perspectives of the stakeholders requires the original research problem to be viewed ‘through different lenses’ to ensure the most acute analysis methods are utilised (Silverman, 2010).

Thirdly this study will help to improve the knowledge of how design management strategies can help to benefit the performance and efficiency of the development process. Finally this research looks to provide the largely unexplored analysis of design management application from the anterior perspective of design restraint.

DATA COLLECTION

In order to gain a rich perspective of the Design 4 Business Initiative the intense sampling strategy (Patton, 1990) has been used. The strategy involves seeking those who have been in direct contact with this phenomenon in order to lend intense information to the inquiry, actively avoiding milder data. Potential interviewees were located and contacted via a personal LinkedIn Premium account. Using the available explicit search criteria options candidates were chosen based on two dimensions: their position within their respective establishment at specific time intervals, and the level of exposure to the initiative.

Interviews

Semi-structured interviews will be conducted with members of the creative and design departments both at LEGO and PARK Advanced Design Management, the two parties involved with the development and inception of the Design 4 Initiative. The interviews will have no time specific time bracket rather range between 45 minutes to an hour over Skype, an online video-calling service. All interviews will be audio-recorded with notes to be taken alongside, with both following a more informal and relaxed tone to allow greater researcher flexibility.



All participants will be subject to their own level of disclosure; Non-Disclosure Agreements, identity concealment and the privatisation of information shared will be discussed and agreed upon prior to the commencement of the interviews.

Two interview protocols were developed for the conducted interviews. The first is specific to employees of the PARK Design Management Consultancy Group with the second for LEGO-based employees. The PARK interview protocol (Appendix 2) seeks to generate a better understanding of the agency’s involvement with The LEGO Group and the Design 4 Business Initiative. This protocol consists of 7 questions, split into 5 sections concerning their initial evaluation/ prognosis of: the LEGO Group’s Design and Innovation process, where LEGO’s structural weaknesses lay, LEGO’s initial requirements from the agency, the genuine actions and process developments conceived by PARK for LEGO and finally regarding any information they believe important that may be overlooked.

The LEGO-based interview protocol (Appendix 3) consists of 9 questions, split into 4 sections concerning where employees believed LEGO’s structural weaknesses lay, questions regarding the Design/ Innovation Paradox, questions on the personal effects of LEGO’s design restructuring process and finally their evaluations of how successful this initiative has been. This interview protocol aims to extract a more personal interpretation of the restructuring initiative from the point of view of those who it may have directly affected: the designers.

Financial Performance Data Records

The use of financial records, available through The LEGO Group and Thomson Reuters archives, will produce an abundance of data to support the theoretical application of the design management tools and strategies that comprises the D4B initiative. Data present in these archives have a consistent obligation to the International Financial Reporting Standards be valid and reliable at all times.

DATA ANALYSIS

Before the data is put forward for analysis, the researcher will transcribe all interviews and field notes. Interview transcripts will be held in password-encrypted audio and text data format to protect any sensitive data enclosed. Field



notes will also be transcribed as well as scanned and held on a personal computer with access only to the researcher.

The data produced will be analysed using Braun & Clarke’s (2006) thematic coding procedure. Codes, ‘short-hand labels consisting of single words or phrases’ (Carpenter, 2008) will be highlighted across data corpus of the same protocol and categorised to provide a clear analysis for use in servicing the relevant objectives and proposed research question (Appendix 4 & 5).

OBSTACLES AND LIMITATIONS

The main obstacles included the ability of the researcher to contact the relative individuals able to provide intense and rich information key to the study. Alongside the potentially partial ability to quantify and analyse interview data, participant error would be considered the forefront limitation of this study. Indeed, interviewees may be influenced, acting and answering to convey positivity for their respective institutions.

RELIABILITY AND VALIDITY OF RESEARCH

The credibility of the research has been thought to have been achieved through three of Creswell’s (2003) validation strategies: member checking, triangulation and thick, rich description. All research produced, post-analysis, will be examined by interviewees included in the study to account for discontinuity. Data will be triangulated with other such sets to maintain consistency with thick, rich description providing detailed accounts thought to voice the opinion of the interviewees.



Findings

In the following section, data accumulated will be categorised and analysed according to the research objectives. Following the contextual summary of the events leading up to the realignment initiative, this section will highlight the reasoning behind the design process realignment, explicate the key components of the strategy, assess the internalised reactions to change and finally quantify the virtues of this strategy.

OBJECTIVE 1: TO IDENTIFY THE PROCEDURAL WEAKNESSES WITHIN THE DESIGN PROCESS AND REASONING BEHIND REALIGNMENT

The LEGO Group, founded in 1949 was at a significant milestone. Continuously poor sales and increasing costs saw the CEO, Jørgen Vig Knudstorp launch the reconstruction of the company by ‘managing for cash, managing for profit, and managing for growth’ (Selders, 2013). This proposed action sought to identify the critical weaknesses plaguing the company’s balance sheet, first by liquidating unnecessary assets to fund the restructuring initiative, utilising the reinvigorated processes to deliver market-aligned products and finally generating the required flexibility to assist future growth (Robertson, 2013).

‘Managing for cash’ made enough resources available to employ PARK DM to assess and initiate the ‘profit’ phase of the strategy, identifying and eliminating structural weakness (Robertson, 2013). Both Tim Selders and Martin Riber Andersen, creative directors at PARK DM, were directly involved with the formulation of Design 4 Business Initiative, The LEGO Group’s title for the strategy. This engaged in both the assessment of LEGO’s business practice as well as strategic implementation. Selders (2013), Andersen (2014) and Roberson (2013) all focus on the central theme that the design process was heavily disjointed with resources constantly misspent due to information disparity between the departments.

The interviewees stated the delivery pathway was lacking in the necessary channelling and connectivity between process stakeholders; design teams, financial auditors, market analysts and manufacturers present in Pugh’s (1990) Design Core Model (Figure 3). The subsequent projects progressed without clearly defined objectives or essential market traction. Robertson (2013) frequently holds the design teams responsible for the misallocation, focusing on



the designers ‘freedom’ and ‘power’ as criticisable traits due to the relaxed or non-existent structures surrounding them. Although there is some truth with the design function as an elevated independent (Figure 6) (Oakley, 2011), Selders (2013) stated that ‘design was not delivering the right stuff at the right moment’ signifying the misdirection of this asset instead of ‘running away with the lead’ (Selders, 2013). As mentioned previously, LEGO’s focus on the value of design has been central to the company, although this singular focus prioritised the maturity of the design department. Andersen (2014) concentrated on the theme that this department was at a more developed stage whereby some of the necessary structures were already in place. The rigidity of the cross-departmental bridges remained underdeveloped, however. Andersen (2014) continued to stress that the complexity of projects grew on weak foundations of the disjointed design process, especially given Kjeld Kirk Kristiansen's, the previous CEO, push for innovation (Selders, 2013).

Both Selders and Andersen considered the weakness of LEGO not merely as a result of the deficient nature of communication, but also due to the divisions being isolated and unacquainted with each other. Many stakeholders were unschooled in the procedural components, and practices and roles present within a single project, which further mystified the ideas behind ‘what are we doing, why are we doing it and how will we do it’ (Selders, 2013; Andersen, 2014). It is from these core weaknesses PARK DM targeted the process-wide realignment for Design 4 Business (D4B) to provide clarity to the otherwise chaotic design process.


Figure 6: Proposed Departmental Hierarchy at The LEGO Group; Thomson Jones (2014)


OBJECTIVE 2: PROVIDE AN IN DEPTH ANALYSIS OF THE KEY COMPONENTS OF THE DESIGN 4 BUSINESS INITIATIVE

The strategy LEGO essentially undertook alongside PARK DM can be summed up by the following combined quotation:

‘Design For Business represents a combination of LEGO’s overall corporate strategy and design strategy… to align our activities and focus them around the development of strong propositions where collaboration between functions [can become] better; the D4B methods and tools [will help] to leverage this.”

(Design Council, 2007) (The LEGO Group, 2013)

D4B was fundamentally implemented to correct the issues stated previously: departmental disparity, communication pitfalls, disconnected prioritisation and design illiteracy. PARK DM aimed to connect the ‘all the design work and processes… to the different faces and the different types of deliveries at each stage’ (Selders, 2013) to imitate and implement an advanced adaptation of Pugh’s (1990) ‘Design Core’ (Figure 3).

From those contacted and interviewed, all respondents stated the initiative was divided into three segments with three core procedural toolboxes enacting to fortify the design process. These core tools sought to target the management and conception of innovation through the Innovation Model, the Foundation Process and Document to visualise, monitor and evaluate projects and finally the Road Map to conceptualise the overall progress of a project incorporating every stakeholder’s input, output and result (The LEGO Group, 2010).

Returning to Stuart Pugh’s (1990) ‘Design Core Model’ in Figure 3, you can accurately apply the D4B core tools to Pugh's concept, where they can be accurately positioned in the order presented. The figure below thus represents one of the standardised components of the design process Best (2006) mentions. However, The LEGO Group like all others required the creation of specific best practices, which are were unique in this case due to the maturity of the design department being ‘ahead of the other departments implementing tools and processes’ (Andersen, 2014).



Adaptation of Pugh’s Design Core Model

Adapted from Pugh’s (1990) standardised model (Appendix 10) aiming to highlight the positioning of the D4B procedural strategies.

Legend:

Green – Double Diamond Structure Red – Stage-Gates Blue – Design 4 Business Structural Processes


Figure 6: Adapted Design Core Model; Thomson Jones (2014) (see Appendix 10 for original)


The LEGO Road Map

The road map ensures the synchronisation of the entire realigned design process. By providing an overview of the delivery operations through a concise poster, core teams can align objectives, seen in Figure 8 through a simplified communication channel. The road map includes every stage of LEGO’s newly defined design process facilitating a finer and more comprehensible framework for executives to understand and act upon.

Core Team Creation

The LEGO Group wanted to prioritise the cohesiveness of the company after their brand and direction and value had been diluted from previous strategic wrongdoing. The group’s first task was to get these individual stakeholders together, to begin understanding each other, build those relationships the subsequent strategies may be founded upon. Andersen (2014), Selders (2013) and Larsen (2014) conceded that these core teams: a ‘marketer, design lead, project lead, engineer’ all sitting together encouraged a rich dialogue before projects were underway. The teams were coaxed into sharing the workload, the responsibilities, building that level of trust the CEO required to ensure LEGO reinvigorated its ‘play’ core (Andersen, 2014).


Figure 8: Snapshot of LEGO Roadmap; Authorised by The LEGO Group 2010 (Appendix 15 for original). Disclaimer: The authorisation from The LEGO Group allows the use of non-detailed snapshots of individual components however restricting large, more detailed illustrations to prevent to disclosure of sensitive information.


The LEGO Innovation Model

The initial challenge within the design process was the ‘chaotic’ ideation or innovation phase that Robertson (2012) consistently refers to. The CEO, Jørgen Vig Knudstorp, sought to reduce the level of ‘radical’ innovation instead placing a greater focus on current ‘play’ experience (Robertson, 2009). The Innovation Model is comprised of a basic Design Matrix (see Appendix 11) format use to record and visualise past and future activities (Gorb & Dumas, 2011). The Innovation Matrix comprises the first two stages of Pugh’s (1990) Design Core (Figure 3) both Market – what the customers want and need, and Specification – which of these desires can be ingrained in the innovation.

This matrix (Figure 9) seeks to incorporate all design process stakeholders and fundamental business areas signified by the four coloured column categories Business (Green), Product (Red), Communication (Yellow) and Process (Blue). Each column contains categorised activities explicit to this business area. For example the green business column (Appendix 13) – How do consumers buy & pay for LEGO products & experiences?’ is separated into the Sales Channel and Revenue Model. Four action segments horizontally intersect each of these columns: No Change, Adjust – ‘Continually adjusting known parameters of category to optimise existing potential by own experience and relevant insights’; Reconfigure – ‘Reconfiguring know parameters to create unique propositions by thorough consumer and business insights’; Redefine – redefining new parameters of category to provide never before seen offerings by entrepreneurial business mind-set’ (The LEGO Group, 2010).


Figure 9: LEGO Innovation Model; Design Council Denmark (2013) (see Appendix 12)


The completion of the matrix ensures cross-company dialogue at the earliest stage ensuring very possible aspects of the coming delivery has been covered. The dialogue is represented as the circulation iterations surrounding the design core (Pugh, 1990). All stakeholders will be interacting to define the project and business objectives, as well as the approach required for the specific innovation; identifying and coordinating which resources need to be allocated and to where. The resulting clarity acts to minimise the risk of misallocation and stakeholder misinformation allowing all departments equal say in each delivery.

Central to D4B is the frequent use of stage-gate processes, one of several common design management practices highlighted by Gorb & Dumas (2011). All interviewees emphasised the reliability of the most simplistic management models, regularly referring to the ‘tools and templates’ and ‘hoops’ one had to jump through to progress. The stage-gate technique exists as the reference core of each new process visualisation but also exist externally, between the process phases (Red lines in Figure 7 & 10). The prevalence of these structures act to reinforce the rigorous assessment of the resulting actions, consequently preventing the redesign / replication iterations of innovations customary in the stagnation of creativity.


Figure 10: Snapshot from Adapted Design Core Model (Figure 7) highlighting red stage-gates; Thomson Jones (2014)


The LEGO Foundation Process

The LEGO Foundation Process overlaps the Innovation Matrix including the colour-coordinated procedural framework of the matrix so as to maintain the visualisation of, and reference to, the specified objectives. This system provides the conceptualisation of the entire LEGO Development Process (Figure ?: in the form of posters and a series of PowerPoint Templates); divided into prototyping and manufacturing phases, layered over a continuous stage-gate structure.

The prototyping and manufacturing processes were each broken down into a series of four and five gates respectively. The prototyping phases, P0 to P3, have been listed below (see Appendix 14 for expanded):

• P0 Portfolio Initiation (Featured in the Innovation Matrix): Business objectives are defined from Innovation Matrix; what are the critical issues that should be solved for product groups/lines across the portfolio?

• P1 Opportunity Freeze (Featured in the Innovation Matrix): Team assesses opportunities used to solve issues identified in P0; which should be taken forward for development into concepts? Marketing team reintroduced to apply market and customer insights into the business case.

• P2 Concept Freeze: Design team (see LEGO Design Process p?) involved to generate and evaluate concepts. Initial prototyping may be undertaken with first full business case prepared and detailed market analysis identifying market opportunities for the new project.


Figure 11: Snapshot of LEGO Development Process; Authorised use by The LEGO Group (2010) (see Appendix 15 for original)


• P3 Portfolio Freeze: Team establishes concepts ready for manufacturing process. The full project requirements established: staff, tooling, design costs and the full business case is put forward for approval.

Adapted from the Design Council (2007)

The project concepts commence the manufacturing phases, M1 to M5, following validation from all stakeholders via the

• M1 Project Initiation: Designers and PMDs collaborate refining product definition and business plan used to bring it to market, ensuring that all design activities (Design Process) will be focussed on fulfilling the precise business brief.

• M2 Business Freeze: Business case is finalised and product design can be completed to meet the business requirements.

• M3 Product Freeze: Product design completed and attention turns to the packaging, marketing and communication aspects of the project.

• M4 Communication Freeze: Physical aspects of the product, packaging and communication materials are finalised and LEGO’s manufacturing specialists begin the process of building the supply chain to deliver the product to market.

• M5 Procurement Freeze: the supply chain is completed, manufacturing is started and the product is launched.

Adapted from the Design Council (2007)

By adding the layered framework and consistency of gates, The LEGO Group sought to further reduce the number of iterative phases, rife within the prototyping phases, to enhance delivery times. All stakeholders included within this phase are able to ‘manage their expectations following each gate… [helping] to connect all their work in an essential and easy-to understand format’ (The LEGO Group, 2010).



The LEGO DNA Profile

As previously mentioned, The LEGO Group emphasise their corporate strategy of a ‘Shared Vision’ and how designers can instil the element of ‘Play’ into each product. The profile is generated in the initial Innovation Matrix, which highlights the long-term characteristics and guidelines for new and existing product groups (The LEGO Group, 2010) and how they can be achieved (Figure ?). The characteristics and design language are cemented in the foundation process and document, as well as heading the LEGO Design Process to avoid deviation, and allowing each product group to remain distinct.

The LEGO Design Process

The interviewees regularly mention the maturity of the design department with other departments remaining ‘design illiterate’, not fully understanding designer actions or activity. The LEGO Design Process, referring to the purely aesthetical actions of designers and not the entire process, was developed to both improve non-designer’s understanding of the process and designer orientation through division into smaller, simplified tasks and deliverables.

The strategy again utilises a stage-gate structure separating the ‘chaotic’ design process into four gates: Objectives, Insights, Proposals and Recommendations and three actions: Exploring (Researching objectives), Developing (Mock-ups) and Validation (Assessment) (The LEGO Group, 2010). The gates here act to maintain the direction of the designer focus reducing the need to for lengthy


Figure 12: Snapshot of LEGO DNA Profile ; Authorised use by The LEGO Group (2010) (see Appendix 15 for original)


iterations whilst still allowing flexibility for creative thinking. The procedure is signified by the centre-point of the Design Core Model, ‘iterations’ (Pugh, 1990). This, however, is a simplification that can be better understood using the Double Diamond (Design Council, 2007). The pliability of the diamond allows for explication of differing numbers of iterative phases (Green lines in Figure 13),

especially in the ‘pure design’ phase where LEGO’s best practices are most significant (Figure 14). These can thus be acknowledged and tracked by non-designers and management alike via consistent validation.

The design process tool structure is used to formulate the classification of LEGO’s Best Practice, previously highlighted by Best (2006) as a necessity in defining the design overall design process. The individual best practices are held


Figure 15: Snapshot of LEGO Design Practice Deck; Authorised use by The LEGO Group (2010) (see Appendix 16 for original)

Figure 13: Snapshot from Adapted Design Core Model (Figure 7) highlighting green iterations; Thomson Jones (2014)

Figure 14: Snapshot from Double Diamond Model (Figure 4) illustrating the shape necessary of the iterations in Figure 13; Design Council (2007)


on a continually expanding set of cards (Figure 15) providing some reference to gamification in that designers may trade, share, and collect them (Deterding et al, 2011). The added play value of the deck facilitates discussion between the stakeholders on how to be effective as well as efficient in their daily work routine.



OBJECTIVE 3: REVIEW THE EXTENT TO WHICH LEGO HAS ACHIEVED THE OPTIMUM DESIGN-BUSINESS EQUILIBRIUM

In order to comprehensively analyse the implementation of the components of D4B, the following section uses thematic analysis of the interviewee transcripts (Appendix 7-9). This attempts to highlight common themes of both their views, and experiences of the strategy implementation and the extent to which The LEGO Group have improved the internal working environment. The design-business equilibrium refers to the balance of structural processes and the ability to stimulate creative undertakings, the central theme to Hands’ (2011) Design/Control Paradox.

Design Structure Fears

In relation to the relationship of structure on design proficiency, all interviewees were in agreement that there is a clear correlation between the level of structure and individual processes or ‘hoops’ one has to jump through. From the detailed analysis of the design process in the previous section, one can assess the elevation of the procedural documentation of ‘templates’, ‘tools’ and ‘PowerPoints’ the departments, most notably the design department, which had to completed in order to progress with the delivery. Andersen (2014) and Larsen (2014) brought attention to the added pressure ‘for a designer to work within tight frames and briefs’ (Larsen, 2014), where they can be ‘hit by the workload of going into too much of a detailed process… sometimes killing the creativeness’ (Andersen, 2014).

Hands’ (2011) research focus is largely tied to the effects of business compliance on creative processes much like those occurring at The LEGO Group. Larsen (2014) states that, although the increase in procedural assessment and validations was and continues to be challenging, the depressive qualities ‘when we start talking about money and balancing the creative[ly] fun LEGO models’ should be emphasised. Larsen (2014) continued to draw attention to the fact that placing an emphasis on ‘reducing cost in a product…does not benefit the product…as it will hurt the design of play value’, the design of play being the beating heart of the LEGO ideology. Larsen (2014) is thus in agreement with Hands (2011) regarding the effects of business iterations on creative thought. The resulting outcries of this realisation lead The LEGO Group to actively restrict



the financial dialogue with the core teams, and to consequently implant them into the foundation document and concept objectives instead.

Habitual Change Resistance

Despite his initial accordance and observance of the fragile design equilibrium, Andersen (2014) states that although this paradox has some significance, there was in fact habitual resistance to change: ‘You have people supporting, people resisting’. Indeed, the new strategies effected numerous stakeholders housing ‘huge role[s]’ in the design process: the designers were not principally resistant as could have been expected. Although he recognises case of such opposition, Andersen believed the stakeholders were very willing to accept the new changes, albeit only on a strategic level.

Overcoming Resistance

Andersen (2014) continually alludes to the structural changes being implemented at the ‘right time’ remarking stakeholders as ‘ticking’ along. Although this seems vague, he conveyed The LEGO Group’s approach of implementing change as a slow, iterative process; ‘brought up gradually [with] a lot of communication, a lot presence, a lot of attention was placed on it from management’ (Andersen, 2014). The LEGO Group and PARK DM sought the iterative implementation to quell resistant forces as they arose. The intimate nature of communication transfers from the ‘top’ signified the importance of stakeholder value to the those involved. They wanted to avoid the ‘now everything stops and were going to do it differently’ (Andersen, 2014) instead bringing in processes and tools ‘gradually’, communicating changes through workshops, allowing the departments to merge slowly, it was not a by-product of severe resistance, Andersen (2014) states it was part of the project planning. Selders (2013) suggested that the implementation of the D4B tools required a three year period with ‘150 designers and design managers working to connect it to the system’.

Value-Added

Despite this, resistance to D4B existed as stakeholders questioned the value of numerous documents and papers being filled out, deeming the new tools as nonsensical (Andersen, 2014). However it was only until the comparison was



made between this new strategy and that of the old, that it was appreciated how much of an impact it made on the delivery and clarity of the project timescale. It was only at this stage, post-implementation, that the stakeholders truly understood its value. All interviewees were in concession that despite the reduction of creative freedom and the injection of more rigid structures, stakeholders, especially the designers, were approving. Andersen (2014) described there was relief amongst the designers that ‘things got put into process descriptions, templates and smaller boxes’ (Design Process) not just for their own benefit but because it simultaneously allowed other departments to witness the tangibility of their outputs, instead of remaining as a ‘black box’ that needs ‘ticking’.

Strategic Balance

The stereotypical views of ‘the need for creative freedoms’ were deflected by both the LEGO design directors: Andersen and Larsen stated that although restricted freedoms may deduct from one’s own creative persona, this potential deficiency is replaced with material clarity. Interviewees consecutively highlighted the essential need for structure, on the basis that communication culminates from its existence. John Henry Harris (2010), a design director at LEGO, expressed that ‘rather than being reductive, ‘deadlines help the creative process’. Andersen (2014) states that ‘when you have structures it is clear for the individual designer and its clear for the organisation when you are in open and closed book’ suggesting how knowing the beginnings and endings of individual phases allow one to track and quantify the outputs at each gate.

The interviewees concentrated on five efficiencies and activities that have materialised as a result of D4B. Homogenous reference points now consistently maintain the direction of the deliveries through the narrowly defined objectives and roadmap. Troublesome iterative loops known for extending projects beyond their planned incubation period have been reduced as well as concentrated to ensure stable productivity and maintain focus. The delivery timescale has been condensed from two years to roughly six months (Selders, 2013).

Stakeholders believed that new relationships were built as the result of the increased cross-departmental touch-points and communication. The emphasised interaction caused individuals to think more holistically, understanding more



areas of the delivery cycle facilitating mutual role appreciation. Larsen (2014) stresses that the formulation of diverse core and on site teams was pivotal to the success of D4B. The generation of synergies and the value separated individuals begun to place in other areas allowed the initiative to coalesce with the current system with relative ease. Most importantly however was that ‘design is much more aware of the business now’ (Larsen, 2014). OBJECTIVE 4: UTILISE FINANCIAL DATA TO BETTER QUANTIFY THE EFFECTIVENESS OF THE DESIGN 4 BUSINESS INITIATIVE

The LEGO Group Financial Data Charts


1999

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Danish Krone (DKK)-7500 0 7500 15000 22500 30000

Revenue Net Profit Expenses

Chart 1: The LEGO Group Financial Highlights 1999-2013 Horizontal Bar Diagram compiled using financial data from

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Chart 2: The LEGO Group Financial Highlights 1999-2013 Line Diagram compiled using financial data from Appendices 17-20


By analysing and compiling the data the from The LEGO Group’s annual financial reports (Appendices 17-20) into the graph below one can visibly comprehend the effectiveness of Jorgen Vig Knudstorp’s new strategies and D4B. Since his appointment to CEO in 2004, fiscal tranquillity was finally brought to the company after the turbulent period between 1999-2003 (Red zone). The coloured zones laid over Chart 1 represent the execution period of his ‘managing for cash, managing for profit and managing for growth’ strategy phases respectively with the linear course of the Chart 2 acting to better visualise their financial ramifications.

Managing for Cash

As previously mentioned, the managing for cash phase between the end of 2003 and the end of 2004 sought to sell off assets cut production lines to free up capital for the managing for profit phase (Yellow zone in Chart 1). This stage notably sold off a 70% stake in the LEGO theme parks for a sum of $400 million as well as outsourcing numerous factories to their cheaper counterparts (Robertson, 2013) represent by the sharp decline in Chart 3.

Managing for Profit (D4B)

The blue zone of Chart 1 highlights the ‘managing for profit’ phase, the most crucial juncture as both the conception and implementation of the D4B initiative occurred here. From its completion and successful administration by the end of 2005 both revenue and profits can be seen to be rising slowly with expenses remaining stagnant. Despite its slow implementation, D4B reverberated efficiency


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Chart 3: The LEGO Group Total Continuing Assets 1999-2004 compiled using financial data from Appendices 17-20


and cooperation through the LEGO Design Core and by 2006, the company was named the sixth largest toy manufacturer, with revenue at DKK6 billion (£717 million), an 11% increase from the previous year. Net profit for 2006 was DKK 1.15 billion (£123.5 million), a considerable jump from making consistent loses three years previous. Four years after the implementation D4B, The LEGO Group’s revenue stream had completely recovered alongside consistently growing profit margins due to the stagnation of costs. Once can clearly see there is not only a correlation between these two phenomenon instead a strong and noticeable mutual relationship.

Managing for Growth

The third and final stage of Knudstorp’s strategy, following the successes of D4B in replenishing the company’s financial reserves, was to look to growth. Selders (2013) finalised his interviewee by stating the strategies employed in 2004-05 were no longer covering the company’s new vision and reality of growth. New segments and the rapid growth of the emerging markets such as China, India and Brazil saw LEGO begin to target and expand their existing lines but most importantly, innovate.

Despite its previously endangering connotations for the company, the design process was now rigid and accommodating allowing LEGO to break into those markets attempted back in 1999-2000. By observing Charts 1 and 2 post 2009, the design process has remained a strong foundation for growth, revenues have soared, costs have been increasing detained. The LEGO Group currently observes a 7% share of the global toys and games market, 63% of the construction toys market generating revenues exceeding DKK25 billion (£2.6 billion) (Marketline, 2013). The company still holds the prestigious crown for the ‘Toy of the Century’ with few likely to challenge in the near future.



Conclusions

This thesis has now explore and analysed how The LEGO Group redefined and realigned their design process through design management theory implementation. The underscoring of the structural weaknesses, exploration of the Design 4 Business initiative and internal reactions and also the evaluation of historical financial data has revealed the success this company has enjoyed through this change phenomenon.

OBJECTIVE 1: TO IDENTIFY THE PROCEDURAL WEAKNESSES WITHIN THE DESIGN PROCESS AND REASONING BEHIND REALIGNMENT

The LEGO Group were shown to have considerable weaknesses in both their top level management and their overall delivery structure. The ‘innovation binge’ sought out by Kjeld Kirk Kristiansen, the previous CEO, redirected LEGO’s core values attempting to morph them into something modern and undefined (Robertson, 2013). The monumental change saw the misdirection of many departments resulting in the prioritisation of stakeholder groups and certain areas of the design process.

The notion that the then design department and innovation teams brought down the company through uneven power and the ‘I want to design what I want to design’ philosophy can be discarded. These departments were prioritised. The top level management devoted considerable resources to ensure the growth of innovative and blue ocean products. The designers effectively attempted to answer the enormous question the CEO had given them, with the other departments, underdeveloped and under financed, failing to process their demands. Process was responsible, not power.

OBJECTIVE 2: PROVIDE AN IN DEPTH ANALYSIS OF THE COMPONENTS OF THE DESIGN 4 BUSINESS INITIATIVE

Leading on from the Kristiansen’s quest for innovation, the Design 4 Business, acting as centre point for Knudstorp’s Three Stage Strategy, sought to reel in ‘blue ocean’ practices and refocus on LEGO’s core offerings. The initiative thought to reunite stakeholders facilitating the much needed collaboration and peer-assessment. The components of D4B provided a consistent monitoring



system to ensure the LEGO’s core values were instilled in each of the product groups, and that every project undertaken had market and financial suitability. The focus of the mass realignment also on placed considerable self-evident value on the stakeholders to smooth the implementation of the new strategies. Despite the presence of the design / control paradox, sure to intensify resistance, stakeholders were able to observe the impact of the processes both on the timescale of their deliveries and the quality of the relationships they have since established facilitating a smooth implementation.

OBJECTIVE 3: REVIEW THE EXTENT TO WHICH LEGO HAS ACHIEVED THE OPTIMUM DESIGN-BUSINESS EQUILIBRIUM

The thematic analysis of descriptive, semi-structured interviews with stakeholders sanctioned a richer, internal perception and reactions to management changes otherwise lost in quantitative data. All interviewees were in accordance that despite LEGO employing a strategy with the potential to provoke opposition (undoing the ‘innovation binge’), all stakeholders, notably the designers have reacted cooperatively to the change. The inclusion of these strategies effectively reinforced the structure establishing a more appropriate working environment. The overall project administration increased; instead of challenging, designers observed notable changes through the reduction of iterative phases and design repetitions.

OBJECTIVE 4: UTILISE FINANCIAL DATA TO BETTER QUANTIFY THE EFFECTIVENESS OF THE DESIGN 4 BUSINESS INITIATIVE

The analysis of the financial standing of The LEGO Group does, however, act to convey the effectiveness of the initiative. The correlation between the introduction of the new management structures, to extent of specific initiation dates, and clear variations in data charts calls in favour of D4B’s extensive influence over LEGO’s rehabilitation. It is therefore understood an explicit causal relationship is present between the use of design management theories in Design 4 Business and the business recovery of The LEGO Group.



Recommendations

The unique nature of this case study and the success of the realignment strategies therein may declare recommendations inconsistent and unfounded by The LEGO Group and PARK DM. Instead, this research and case study analysis should be utilised as reliable literature involving the application of design management theory in formal business structures. The use of internal sources at both organisations and formal literature from the Design Council and Design Management Institutions has aimed to assure the conception of a reliable source of literature, perspective and theoretical application.

Limitations

Despite the use of coherent sources and detailed analysis, two limitations exist. The first concerns The LEGO Groups restricted use of large, detailed images of procedural components to avoid sensitive data transfer. The use of original and up to date images would add density and more visual direction to the research.

The second limitation concerns the use of individuals directly involved with both The LEGO Group and PARK DM allowing for some degree of bias. However this concern is difficult to avoid due to the complex nature of the initiative components and the need for an internalised perspective.



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Elmansy, R. (2010). Learning More About Creativity And Innovation From LEGO - Smashing Magazine. [online] Smashing Magazine. Available at: http://www.smashingmagazine.com/2014/08/08/learning-creativity-innovation-from-lego/ [Accessed 11 Oct. 2014].

Feloni, R. (2012). How Lego Came Back From The Brink Of Bankruptcy. [online] Business Insider. Available at: http://www.businessinsider.com/how-lego-made-a-huge-turnaround-2014-2?IR=T [Accessed 14 Oct. 2014].

Privco.com, (2013). PrivCo | LEGO's Private Financials: Privately-Held Toymaker Raked in $5.2 Billion, with $2.2 Billion in 2013 Holiday Loot (Up 21% from 2012 actuals). [online] Available at: http://www.privco.com/how-lego-earned-52-bn-in-2013 [Accessed 15 Nov. 2014].

Robertson, D. (2011). GOVERNANCE-DOES YOUR COMPANY HAVE GOOD INNOVATION GOVERNANCE?Lessons from the LEGO Group. [online] Imd.org. Available at: http://www.imd.org/research/challenges/TC064-09.cfm [Accessed 12 Nov. 2014].

Robertson, D. (2011). Innovation Almost Bankrupted LEGO - Until It Rebuilt with a Better Blueprint - Knowledge@Wharton. [online] Knowledge@Wharton. Available at: http://knowledge.wharton.upenn.edu/article/innovation-almost-bankrupted-lego-until-it-rebuilt-with-a-better-blueprint/ [Accessed 8 Nov. 2014].

The Independent, (2012). We just click: How Lego keeps building on its success. [online] Available at: http://www.independent.co.uk/news/business/analysis-and-features/we-just-click-how-lego-keeps-building-on-its-success-7848527.html [Accessed 11 Oct. 2014].



Appendices

APPENDIX 1: THE RESEARCH ONION

Saunders, M., Lewis, P., & Thornhill, A. (2003), Research methods for business students, 3rd, Pearson Education, England



APPENDIX 2: LEGO EMPLOYEE INTERVIEW PROTOCOL


Semi-Structured Interview Questions

HOW DESIGN MANAGEMENT THEORY INFLUENCED THE RECOVERY OF THE LEGO GROUP?

For LEGO Employees

1. What were the main factors that you believe constituted the restructuring of the LEGO design process?

2. Do you believe there is a relationship between the level of structure within the design process and the ability of designers to create?

3. Do you prefer to work under a stricter, more structured design process or the opposite?

4. At what level of control or structure do you believe a designers ability to create begins to diminish?

5. To what extent do you believe LEGO’s near-bankruptcy was down to the companies relaxed design process structure allowing designers to create complexity where they liked?

6. Has the Design 4 Business initiative effected your ability to create or your relationship with the company?

7. To what extent do you believe The LEGO Group have created a design environment that maintains the balance between creative freedom and necessary control. Do you think this has been improved by the Design 4 Business Initiative?

8. What aspect of the Design 4 Business Initiative do you believe has been the most useful for the The LEGO Group and its employees?

9. Would you regard this feature as key in aiding the recovery of the company?

a. LEGO Innovation Model b. LEGO Foundation Process c. LEGO Foundation Document d. LEGO Roadmap e. LEGO Design Strategy f. LEGO Design Process g. LEGO DNA Profile h. LEGO Design Practice i. LEGO Development Model

For PARK DM Employees

1. What was Lego’s Design and Innovation process or model like before PARK DM were involved?

2. Where did their weaknesses lie that led to their near-bankruptcy

3. What did LEGO originally ask you to do for them - how did they word why they required your assistance?


APPENDIX 3: PARK DM INTERVIEW PROTOCOL



APPENDIX 4: THEMATIC CODING ANALYSIS DIAGRAM SECTION



APPENDIX 5: THEMATIC CODING ANALYSIS DIAGRAM SECTION



APPENDIX 6: STUART PUGH’S DESIGN CORE PROCESS MODEL

Pugh, S. (1999). The Engineering Design Process. In K. Huart, Design Principles (p. 10). London: Elsevier Science & Technology Books.



APPENDIX 7: SKYPE INTERVIEW TRANSCRIPT: TOM THOMSON JONES & TIM SELDERS, PARK DESIGN MANAGEMENT

Tim Selders currently presides as a Director at PARK DM having been an active functionary within the development and implementation of the Design 4 Business initiative. This interview was conducted with the purpose of providing accurate details of the Design 4 Business initiative as well the rationale for the project. Interviewees grammar has been left unedited to maintain it reliability.

Tom: Hi Tim, thank you for taking the time out to speak with me.

Tim: Not at all Tom, we are always very happy to help someone trying to tell our story.

Tom: It is my pleasure.

Tim: Would you like to give a brief background of the situation and then you can ask questions later?

Tom: that seems perfect for me.

Tim: Around 2004, at that moment they were looking for someone to help them build a design process. We were amongst other agencies that were considered and luckily we got the job. At that moment design was a powerhouse in LEGO meaning that it was like a black box with a lot of power, a lot of money and some extremely creative things happened at LEGO but few were successful. I think with the new CEO he turned around the company by saying that we need to start managing for: Firstly CASH, the Secondly for PROFIT and the Thirdly for GROWTH. Over a period of roughly 8 to 9 years, so each phase was roughly 3 years. The first phase was managed for cash, built on a survival mode; they needed money in the bank and thus sold off some non-core activities such as the parks. The second phase, managing for profits, where we came in in 2005 where we were looking back at the core of their business. This is the strategic context in which everything happened, so having a design process that was a bit wider than just design that was just probably the initial assignment that we got.

Tom: What was Lego’s Design and Innovation process or model like before you began to act as a consultant?



Tim: At that moment you have to imagine the cool designers came into the design process in the early stage of the process, which is normally 'What should we be doing' instead of 'how it should look like'. They came in with the most fancy CGI and computer graphics and great models and final design work at the earliest stage which meant that a lot of managers were going in there like 'I don’t like it / I like it' therefore a lot of design resources were spilt here. We helped them to be smarter in the way in which they manage their deliverables. What you need at this moment what you don’t need at that moment.

Tom: What did you think they needed?

Tim: At that moment they were creating the LEGO development process and we were trying to connect to that all the design work and processes in relation to those different faces and the different types of deliverables at each stage. This was the core of the work that we did, with all types of tools like templates, innovation models and metrics as well as many discussions and training. But you could say at that moment design was not delivering the right stuff at the right moment for the process and certainly not for the process in relation to the strategic process, managing for cash or managing for profits

Tom: So you would say that there was a gap or a concrete link between the two houses, creating a slight mismatch!

Tim: There were many cool designs, but with the large business design managing for cash, it was completely disconnected. To really ensure design is helping business and business objectives instead of a small side-house consultation.

Tom: Do you, after you consulted them for 9-10 years, think there are any other aspects that you feel you could improve or any other areas that could be tightened up at Lego?

Tim: Well, first of all we used 3-4 years to work on D4B, that was a big job because that had over 150 designers, design managers working with them to connect it into the system. The D4B system moved into the



marketing, and project management as well, it was called D4B but actually it was an Innovation for business.

Tim: Part of it was for design half of it was for the other areas of the company. A tool that the whole core teams consisting of marketer, design lead and project lead, all are accountable for their work so we created tools for deliverables on specific moments and those deliverable weren’t only design but one innovation in general would say that is the first expansion of our job after that other teams asked us e.g. their concept lad and concept centre (innovation house for supply chain) they asked us to help them apply similar developments to these departments, so we have spread our work to other areas in doing I believe we have established our name, afterwards we were asked for many other projects and activities we are currently still working on three to four other projects with LEGO however I cannot reveal the nature of these!

Tom: You've had great success with LEGO, their huge turnaround in the last ten years, how much of this would you consider to be down to the design management related strategies you have established?

Tim: the question was how much of this could be down to us, likely small; it is extremely difficult to point out however we feel we’ve played our part in the their resurgence

Tim: The interesting thing for your dissertation is the theory says that there’s a clear link between corporate strategy and the way which you manage design. Sounds like an open door, if you need your corporate strategy to enter new markets, china, then your design managements choices, the way you work with internal or external resources, how you brief them etc. depends on the corporate structure.

Tim: The last couple of years say 4 years, they are managing for growth meaning the template and tools and processes installed in 04-05 weren’t actually covering the needs to answer the new corporate reality. The new reality was now we have now our cash flow in order we have our profitability level we focused back to our core now we have to focus on growth we need to expand on new products and market so we now need



to open our minds and have new fresh designers we need to focus on new innovation areas we need to solve the digital agenda there are new topics to really open up to answer the need for managing for growth means you need to organise design or manage design differently. You need to ensure that designers have more space for creativity that they are involved earlier in brainstorms about new businesses this requires new processes, this mean we are now involved in changing that along the way and almost undone some of the work we have done in phase one and two that was really about making the machine more efficient and effective, now it’s about laying down new concrete foundations. Maybe in four or five years there we be new corporate reality in which you will have to once again restructure your design process again.

Tom: Well Tim I can't thank you enough for taking the time out to talk to me and answer my questions

Tim: Not at all Tom, if you have any further questions about LEGO or our involvements please do not hesitate to contact me.

Tim: I will also send you over the relative models we used for our LEGO work, which you can input. Going back to your queries earlier regarding privacy, please mention us in your work, the more the better.

Tim: Great to talk, good luck and enjoy the rest of your piece.

Tom: Thanks Tim



APPENDIX 8: SKYPE INTERVIEW TRANSCRIPT: TOM THOMSON JONES & MARTIN RIBER ANDERSEN, PARK DESIGN MANAGEMENT & THE LEGO GROUP

Martin Riber Andersen is currently a Design & Innovation Management Consultant at PARK DM previously serving positions as Senior Business Developer, Creative Director, Design Manager and Designer at The LEGO Group between 1999 – 2005. Martin’s elevated positions at both PARK and LEGO have made him a rich source to provide detailed accounts of the restructuring initiatives from both the point of view of the principal and recipient. This interview was conducted to provide additional clarity on the internal reactions of those directly affected by the restructuring intitiative.

Tom: I spoke to Tim Selders at park design management a while ago but I find the topic very interesting, trying to obtain views from every perspective.

Martin: Yeah

Tom: It’s going well so far

Martin: That’s good

Tom: I’m just at the moment trying to get the perspective of the designers of the design 4 business restructuring initiative

Martin: Yeah

Tom: Because I’m doing a design management degree at the moment, so

Martin: At business school or design school

Tom: At business school

Martin: Oh cool

Tom: So the structure of my dissertation is basically firstly to explore why the restructuring of LEGO occurred, moving on to what the components of



the design 4 business initiative were, following with a review of the extent to which LEGO have achieved the business/design equilibrium. The idea of how the more you increase the stages of control on design the less effective it can sometimes become. That’s the focus for the dissertation with myself trying to acquire a greater understanding of your experience with the whole operation.

Martin: When you say it the effectiveness dropping, can you elaborate more on this?

Tom: The notion that creativity spurs self-expression, the idea that in order to be creative, to design, they need to have the necessary freedoms within a business. To elaborate on that because from what I gather from the design 4 business initiative it is placed more controls on the designers to link up the design and business departments

Martin: Yeah

Tom: I just want to get a better understanding for how these changes might've affected yourself and your relationship with the company?

Martin: It’s a cool starting point, where are your conclusions taking you?

Tom: They are bringing me to positive conclusions; you can see the turn around that has occurred. It’s an interesting topic as you can visibly see the revitalization of the company between 2002-2003 and have since then completely turned it around. It is regarded as a notable success story.

Martin: Yes. Well Of course I will be biased on the whole take with my interactions with PARK and LEGO. I think from, I'd say from the top level of course, and I don't think it is necessarily wrong to name design as the cause whatever you see, you have a situation where you want to go from... I wouldn't say unstructured, as before the design 4 business things were running in structures

Tom: Yes



Martin: But you know not having rigid structures, let's call it that, and then you go through a process of building those more rigid structures, tools and templates and descriptions. Of course at first they are all that PARK uses was this why are this, is this really needed? Why are we filling in all these documents and writing these papers and doing all this work so. So that’s of course the first. Okay, we hear what you are saying, it makes sense. But then you are hit by the workload of going into too much of a detailed process. This is challenging, which of course all change management processes are, then you get to the first iterations, tools are being implemented, we start doing it, we start using them, but you don't really see the value. But then going through all the iterations you starting to see, 'Okay this is making an impact, it is making a change'. And then because of the successful implementation it’s becoming a huge success story. that is almost getting to a point where things can sometimes take over, so we get too many instructions, you get too many templates and less creativity

Tom: Yes, of course.

Martin: Then you go to the implementation phase where it really is about finding the right balance. In an organisation like LEGO where, also at that part of time it was starting to have the.... Well my history is slightly different because I did the whole LEGO Bionicle Project and that was very different from the rest of the organisation but at the time of the introduction of the design for business it was starting to have core teams where you had marketing and engineering and design working totally together with a lot of sharing responsibilities. But basically the whole design 4 businesses in this situation started with design because it hit the organisation at a point in time that whereby the whole organisation was also looking at 'how could we organize ourselves around this'. You could say that one of the key components in also making the core teams structures really work was the you got the process descriptions, you got the tools needed to facilitate that collaboration also so again its wrong to say that its.

Martin: Well the turnaround was many things but looking into the ingressive department it was not only the design 4 business initiative for me it was the fact that the organisation was ready and open to work with.



Okay we might want to work in a different way and the, normally the problem is more form the business side but then here the design department was a bit ahead of the other departments on implementing tools and processes so you have also got to create some best practices in creating a foundation for how to actually get to the point where the whole thing organisation and the making of the other departments are really working, I say it was partly also coincidence that it started with design that was because design was more steps ahead...

Tom: On the forefront stage of the company?

Martin: On the forefront on this process than some of the other departments.

Tom: So was it more about bringing the business departments and instruments of LEGO up to speed with design since design is the centre point of the company. It's core competence?

Martin: Yeah but you have to bear in mind that the design effort that LEGO is marketing and engineering takes a huge role in that as well. So it not only the 'crazy' design department doing all this and making all this happen its a collaboration between the design and engineering and marketing and that is what makes the big change really tick in the narration (?) department. Another part which you will also know of course is the turnaround was also looking into the supply side set up linking innovation with supply chain. That was another key aspect of the runaround of course. but one f the main factors was definitely that you could say again at the right point in time in the design department it was a mature department with the mission and the willingness to try to implement tools and structures... Everything just seemed to tick at the right point in time.

Tom: Everyone was very willing for these changes, these structures to be implemented?

Martin: Yes, on the strategic level, but of course implementing is a massive change management task. You have people supporting, people



resisting it but that’s just the nature of the restructuring. It happened at the right point in time.

Tom: How long did it take for the initiative to be implemented? what were the first stages on the implementation and how did the design department react to this new structure?

Martin: Well I think the first was, it took a long time implementing it and an iterative connotation was that 'okay now everything stops and were goanna do it differently' it was more iterative than that. Of course it took a long time before everything was up an running according to the intent but that was also part of the project planning. it was well received especially among the stakeholder within the design department. So realise that 'okay design is not that black box now we actually have some structures some tools and we have some methodologies'. It was a big relief for the stakeholders among the design department that things got put into process descriptions, templates and smaller boxes, it made it more tangible. That was the design organisation operating. Among the design department it was slightly mixed, and again with change management some bodies are pro other resist. But for me the success was this iterative implementation. It was outdone, brought up gradually, there was a lot of communication, a lot of presence, a lot of attention was placed on it from management so there was both a push from the top there was a requirement from stakeholders then core iterations of the design department realised it was about value.

Tom: Does your agency, PARK, utilise any specific design management theories in building these initiatives, these processes. A specific part of my dissertation comprises of the application of design management theories to the design 4 business initiative to place a more descriptive yet theoretical dissection.

Martin: My answer to that one is not really helping you on that one a such a project is such a mix of many different theories and many different best practices as it touches on so many different aspects, as how do you need how do you present that there is communication, there is design leadership, there’s design management, there’s structures, tool boxes,



how do you, how do you do that... well I would say its just design thinking theory basically, not any specific theory or school.

Tom: So It was just a generalist collection of all of them?

Yes. But then closely of course you have a theoretical background for why you are doing something and not another thing. Then you have, then your reigning in best practices form outside of LEGO and then you are looking into LEGO, the best practices internally. Its that mix, that triangle really. I cannot unfortunately place ratios on how much of each but I'd say that majority is definitely coming from combining external and internal best practices.

Tom: What was LEGO's structure at the start? Was it quite loose or quite strict for designers?

Martin: Yeah you could say that the design process was actually a bit more structured, it was the getting from A to B, getting from idea to final project, that was relatively structured so the project was very much more about linking that with the rest of the organisation, so the other processes. So you could say that it was very much about linking the design process to the overall game plan of the company, linking it to supply chain, linking it to engineering. That was a big part of it.

Tom: Was there any specific area of the design 4 business that you thought stood out from the other tools and structures? The defining point that held a greater influence over LEGO's recovery?

Martin: The tool box, meaning that its not one tool, its a collection of tools, its the visualisations of the processes, getting people's minds around those visualisations. Its the tools and templates that you would use to, I think that’s the more tangible parts that not only a PowerPoint presentation instead there’s also a whole toolbox to convey these projects and bring them to life for all the departments.

Tom: What do you personally prefer as a designer, do you prefer more structure or do you enjoy more freedom to release expression?



Martin: I think it’s not an either or it that set up that when you have the structures and then it’s clear for the individual designer and it’s clear for the organisation when you are in open book and when you are in closed book. So for me it’s not an either or it’s the combination of the fact that things are structured and that there’s sufficient communication.

Tom: Well, Martin I don't want to keep you any longer than I should have to, so thank you very much for taking the time out to talk to me and answer my questions.

Martin: Oh no worries, not at all Tom.

Tom: Would be happy for me to reference you by name in my dissertation?

Martin: Yes please feel free to do that, of course I would like to see what you are doing out of interest and also how you might be using me in you dissertation so I would love it for you to share it with me you would be very welcome.

Tom: Of course, I will send it over to you before it is submitted so you can look through and make any observations.

Martin: Perfect

Tom: Well thank you very much for your time Martin.

Martin: All the best.



APPENDIX 9: TEXT-ONLY EMAIL INTERVIEW QUESTIONS RESPONSE FROM KIM YDE LARSEN, SENIOR DESIGN DIRECTOR, THE LEGO GROUP

Hi Tom,

Please see my answers below;

What were the main factors that you believe constituted the restructuring of the LEGO design process?

Before we had a structured design process, the design organization and teams worked in many different directions, which made the development and launching of products very challenging.

So the design process was linked up to the overall LEGO development process, which put all the creative processes into a context with the overall business.

Having design and designers working structured and within tight processes is challenging, but in the end it has helped comparing projects, teams and products. This way we could focus on both heightening the concepts, LEGO DNA in all products and securing the business directions.

Do you believe there is a relationship between the level of structure within the design process and the ability of designers to create?

We know it is hard for a designer to work within tight frames and briefs, and that it sometimes are ‘killing’ the creativeness. But after a while we saw that it actually gave many benefits. There is a clear difference between being an artist and then a product designer, as the designers have to work within a certain number of frames, briefs and timings. The positive side was, that the briefs to the designer became much more clear and sharp, as there were many directions and creative corners which they didn’t have to explore, as they were out of scope. This way the loops could be reduced and effectiveness improved. Our lead-time was reduced a great deal. Still there will always be designers that are challenging on the frames and processes.



Do you prefer to work under a stricter, more structured design process or the opposite?

Asking me might be wrong and not give a general answers, as I am in person very structured and cannot do with ‘chaos’ in unstructured processes. So the answer is clear from me on this.

At what level of control or structure do you believe a designers ability to create begins to diminish?

When deciding on having a design process, one must also acknowledge the need for creative loops and chaotic concept development. So we have secured that we have room for these parts in the process. But what we see the most is, that when we start talking about ‘money’, and balancing the creative fun LEGO models with reducing cost in a products, it starts hitting the creative ideas. Then the designs put their arms up, and feel that it does not benefit the product if one have to save too many money on the model, as it will hurt the design of play value with the box.

To what extent do you believe LEGO’s near-bankruptcy was down to the companies relaxed design process structure allowing designers to create complexity where they liked?

It was very much linked but many factors were contributing to this. In general complexities in the company had increased and with no processes to control these increases in almost killed us. So both the design processes, the overall LEGO development process and cleaning up in the company helped it.

Has the Design 4 Business initiative affected your ability to create or your relationship with the company?

Working with D4B has initiated the need for thinking more holistically on across departments and areas. Now design need to interact even more with supply chain and marketing to create the best product, and even



more create good handovers. This has of course also build relationships in the company across areas. With people knowing the other areas it has had positive benefits.

To what extent do you believe The LEGO Group has created a design environment that maintains the balance between creative freedom and necessary control. Do you think this has been improved by the Design 4 Business Initiative?

Yes it has indeed. Before the process was introduced, the design, operation and marketing was very separate, and today the project teams are sitting together in on site teams. I think the balance is there. We have divided the LEGO development process into strategic direction setting where ambitions are set, and then the creative freedom is starting where marketing is on the side, making sure the business case can be built.

What aspect of the Design 4 Business Initiative do you believe has been the most useful for the LEGO Group and its employees?

Two things I would highlight. First of all the overall flow in the development process, where we secure that the concepts are brought from A to B and that all creative and innovative thoughts are built-in to secure strong concepts. Second, that we now have core teams and onsite teams that works much more together and synergies are made. It has also besides this, created much more acknowledgement of, that the concepts need to lead to products, and that they have to sell in the end. Design is much more aware of the business now.

Would you regard this feature as key in aiding the recovery of the company?

It is surely one of the keys. Main key was maybe the reduction of the complexities, but introducing more aligned processes surely helped the company becoming more efficient and effective.

I hope you can use some of this Tom



APPENDIX 10: STUART PUGH’S DESIGN CORE PROCESS MODELPugh, S. (1999). The Engineering Design Process. In K. Huart, Design Principles (p. 10). London: Elsevier Science & Technology Books.



APPENDIX 11: STANDARDISED DESIGN MATRIX

Gorb, P., & Dumas, A. (2011). Silent Design . In R. Cooper, S. Junginger, & T. Lockwood, The Handbook of Design Management. London: Bloomsbury.



APPENDIX 12: THE LEGO GROUP INNOVATION MODEL

Dcdr.dk. 2013. LEGO Innovation Model. [online] Available at: http://www.dcdr.dk/dk/materiale/mind-design/no-37/d4b-innovation-modelexample.gif.img



APPENDIX 13: THE LEGO GROUP INNOVATION MODEL BUSINESS COLUMNDcdr.dk. 2013. LEGO Innovation Model. [online] Available at: http://www.dcdr.dk/dk/materiale/mind-design/no-37/d4b-innovation-modelexample.gif.img



APPENDIX 14: DESIGN COUNCIL’S NARRATION OF THE LEGO DEVELOPMENT STAGED PROCESS

Design Council. (2007). Eleven Lessons: Managing Design in Eleven Global Companies. London: Design Council .

Prototyping:

1. In P0 (portfolio kick-off) the business objectives for the project are defined. At this stage, the key question asked is: What are the critical issues that should be solved for product groups/lines across the portfolio? This takes about two or three months.

2. In P1 (opportunity freeze) the team assesses what opportunities would solve the issues identified in P0 and should be taken forward for development into concepts. The marketing team becomes involved to build market and customer insights into the business case and begin to define product requirements.

3. In P2 (concept freeze) the team establishes what the concepts are about in the context of overall business, product, communication and process requirements. The design team becomes involved, concepts are created and evaluated, some initial prototyping may be undertaken, the first full business case is prepared and detailed market analysis is used to identify the market opportunity for the new project.

4. In P3 (portfolio freeze) the team establishes which concepts are ready to be turned into projects. The full project requirements are established, including staff requirements, tooling and design costs and the full business case is put forward for approval. Some concepts that arise at this stage may not be LEGO-based and can be taken to other areas of the business for further exploration.

Manufacturing:

1. In M1 (project kick off) designers and product managers work together to refine the product definition and the business plan that will be used to bring it to market, ensuring that all design activities will be focussed on fulfilling the precise business brief.



2. In M2 (business freeze) the business case is finalised and product design can be completed to meet the business requirements

3. In M3 (product freeze) product design is complete and attention turns to the packaging, marketing and communication aspects of the project

4. In M4 (communication freeze) all physical aspects of the product, packaging and communication materials are finalised and LEGO’s manufacturing specialists can begin the process of building the supply chain necessary to deliver the product to market

5. In M5 (procurement freeze) the supply chain is completed, manufacturing is started and the product is launched.



APPENDIX 15: LEGO’S DESIGN 4 BUSINESS INNOVATION TOOLS AND PROCESSES OVERVIEW

The LEGO Group. (2010). LEGO Design 4 Business Poster. Retrieved 08 1 0 , 2 0 1 4 f r o m D e s i g n M a n a g e m e n t E x c e l l e n c e : h t t p : / /www.designmanagementexcellence.com/wp-content/uploads/2013/07/LEGO.pdf



APPENDIX 16: LEGO’S DESIGN 4 BUSINESS DESIGN TOOLS AND PROCESSES OVERVIEW

The LEGO Group. (2010). LEGO Design 4 Business Poster. Retrieved 08 1 0 , 2 0 1 4 f r o m D e s i g n M a n a g e m e n t E x c e l l e n c e : h t t p : / /www.designmanagementexcellence.com/wp-content/uploads/2013/07/LEGO.pdf



APPENDIX 17: LEGO FINANCIAL DATA HIGHLIGHTS 1999-2001

The LEGO Group, (2000). The LEGO Group Annual Report 2000. Billund: The LEGO Group, p.4.


design management theory

Documents

lego group thomson jones

design management theory

design directors

design process figures

park design management

design core model pugh

snapshot of lego roadmap

green iterations thomson