Organizational change is among the most widely discussed topics in business studies since positive change initiatives are associated with employee commitment, increased profits, and customer retention. Change in large companies such as the Lego Group discussed in the paper is often related to external or internal forces that impact common business practices and urge managers to design specific strategies to avoid losses. This paper is devoted to the management change, internal restructuring, and a competitive landscape as forces for change impacting the Lego Group.
External and Internal Forces for Change
The case study prepared by Robertson and Crawford is devoted to a difficult period for the Lego Group in 2003 when the company was not ready to meet the growing competition in the toy industry (1). Having invested a huge amount of financial resources to create a wide range of toy sets, the company found itself near bankruptcy at the beginning of the century. Therefore, “a sense of urgency for the change”, a factor that helps to design innovative practices and sort out priorities, was present in the case due to the impact of certain external forces (Euchner 10).
The organization’s decreased competitive ability and significant financial losses were mainly attributed to serious changes in the global toy market and the way that operations were organized in the company. To create an effective strategy, the newly-appointed CEO of the Lego Group needed to acknowledge the constant growth of the market and the changing needs of children all over the world. Therefore, when it comes to external forces for change, the company was highly impacted by the changing competitive dynamics.
In this situation, placing emphasis on the unique advantages of the company’s products and making its internal strategy less risky turned out to be an effective decision related to organizational change. Importantly, the force of competition seems to be the most challenging in the case since external forces can rarely be controlled. For instance, Lego’s activity could not prevent other companies from entering the market due to a range of development opportunities in the toy industry.
Continuing on the most important forces for change, it is pivotal to focus on the factors related to the internal organization of the company in question since the latter defines the way that companies react to external threats. The most important internal force is a change of leadership, the factor that is inextricably connected with the reinterpretation of organizational goals.
The introduction of clear goals related to the company’s innovation strategy was among the first tasks performed by Knudsen, a new CEO appointed in 2004, and his team (Robertson and Crawford 1). At the instigation of the new management team, it was decided to get rid of the company’s non-general assets and reduce labor costs to stabilize its financial position. (Robertson and Crawford 4).
Being a major internal force for change, the creation of a new management team helped realize the impact of other internal factors on the Lego Group and its operations. For instance, the key decisions of the Knudsen’s team were related to the workforce size, the proper relationship between “risky” innovations and the proven methods of revenue generation, and new duties for specialists in concept labs (Robertson and Crawford 3). Just like many organizations that have to improve their products to stay competitive, it focused on promoting change related to R&D activities (Sawhney 75). Therefore, the process of change in the company was highly impacted by the need for organizational restructuring, another internal factor.
In the end, the discussed company was expected to prioritize things differently and promote change by redefining its innovation strategy and mitigating innovation-related risks. In this case, the Lego Group was exposed to a number of forces for change, both internal and external. Due to the company’s limited ability to control the number of new incumbent players, the level of competition can be regarded as the most challenging force for organizational change.
Euchner, Jim. “Innovation is Change Management.” Research Technology Management, vol. 56, no. 4, 2013, pp. 10-11.
Robertson, David C., and Robert J. Crawford. Innovation at the Lego Group (A). IMD, 2008.
Sawhney, Mohanbir, et al. “The 12 Different Ways for Companies to Innovate.” MIT Sloan Management Review, vol. 47, no. 3, 2006, pp. 75-81.