LEGO Development Process - Iva

iva.dk

LEGO Development Process - Iva

Danmarks Biblioteksskole &

Danmarks Biblioteksforening

Innovation temadag

27. maj 2010

Torsten Bjørn


• Leadership development:

• Pathfinder 2001-2002…..Leadership and coaching

• Managing Corporate Resources (MCR) /IMD – 2005 Lausanne

• MBA – Strategic Leadership & Management 2006-2008 Aalborg

Torsten Bjørn –

Gift med Susanne siden 1991 – folkeskolelærer (LEGO Design manager/

designer i 18 år)

2 – børn – Astrid 17 år adopteret fra Kina - 1994

Anthon 16 år adopteret fra Vietnam – 1998

Fritid – Fodboldcoach/konsulent, løb, tennis, golf, familie-ferie i Frankrig (helst),

kunst/kultur

• Senior Director – LEGO Group (1989…..) – Product & Marketing Dev.

* Design Manager, Chef-designer, Project Manager, Director/senior

director Concept & Design Management


Agenda

LEGO Shared Vision

LEGO Innovation

LEGO Development Process (LDP) - 2004

LEGO Innovation Model - 2006-2009

122 millioner stk. pr. år

- 4 milliarder totalt

LEGO Innovation next step…..

•-------------------------------------------

•Case 1 – (gruppe + plenum)

•MBA speciale– Next Gen. LDP – version 2 - 2008-2009

•Case 2 - (gruppe + plenum)

•Opsamling


Strategic direction of LEGO


Shared Vision –

At blive den førende

legetøjsvirksomhed ved optimal

udnyttelse af vores kerneværdier

Mere end 400 millioner børn og voksne vil i år lege med

LEGO elementer


Overlevelse Profitabel kerneplatform Organisk vækst

Turnaround

Forretningstransformation

Styrkelse af brand

LEGO er verdens største dækproducent med 300 millioner stk. pr. år.


Mission

Oplevelser og

forventninger

At inspirere og udvikle dem, der skal bygge fremtiden

Play Promise

- vores legeløfte

Glæden ved at bygge. Stoltheden ved

at skabe.

Planet Promise

-vores løfte til omverdenen

En LEGO autentisk, positiv påvirkning.

Partner Promise

- løftet til vores samarbejdspartnere

Fælles værdiskabelse baseret på LEGO

varemærket

People Promise

- vores medarbejderløfte

Vi lykkes sammen.

Motto

LEGO værdier

”Det bedste er ikke for godt”

Kreativitet – Sjov leg – Læring – Kvalitet – Omsorg – Fantasi


Innovation = Leadership

*MWB= Must-Win-Battles

Strategisk dialog

Corporate Man.

Corporate

Growth

Strategy

MWB 2010

AAR

MWB*

2011

Opportunity

platforms

2011-2015

Business Units

BU-Plan

2009-11

New

Innovation

focus


LEGO Development Process – LDP

2004 -……


High Speed portefølje

- Start your engines! -

September 2004

12


Change management

LEGO Development Process Principles

Projektets hovedformål:

”Vi skal skabe en betydelig forbedring af udviklingsprocessen på tværs af

porteføljen ved at:

•Reducere udviklingstiden for porteføljen til 12 måneder

•Øge reaktionsevnen på input fra detailhandlen og forbrugertrends

•Skabe mindre og mere effektive projektteams

•Øge den overordnede organisatoriske effektivitet

•Skabe en performancekultur på tværs af organisationen”


LEGO Development Process – portfolio milestone overview

The strategic part of the development of the portfolio

Launch Year 2008 TOTAL

2008 Novelties - for subsequent years

Novelties Carry Over Total 2009 2010+ Product Life

Consumer Sales 542.0 500.0 1042.0 180.7 60.2 782.9

Gross Sales 650.4 500.0 1150.4 108.4 24.1 782.9

- CTT and Cash discount -75.0 -59.6 -134.6 -12.5 -2.8 -90.3

Net sales 575.4 440.4 1015.8 95.9 21.3 692.6

- FMC Costs -179.4 -133.5 -312.9 -29.9 -6.6 -215.9

- Kirkbi royalty -20.1 -15.4 -35.6 -3.4 -0.7 -24.2

Gross Contribution 1 (GC1) 375.9 291.4 667.3 62.6 13.9 452.5

- Full Distribution Costs -41.2 -31.6 -72.8 -6.9 -1.5 -49.6

Gross Contribution 2 (GC2) 334.7 259.9 594.5 55.8 12.4 402.8

- Direct Marketing spending -38.0 -10.0 -48.0 -38.0

Gross Contribution 3 (GC3) 296.7 249.9 546.5 55.8 12.4 364.8

- Market overhead costs -62.0 -48.0 -110.1 -10.3 -2.3 -74.7

Gross Contribution 5 (GC5) 234.6 201.8 436.5 45.4 10.1 290.2

- Project Costs -13.9 -13.9 -13.9

- Cost of Capital Employed -7.8 -5.4 -13.2 -1.2 -0.3 -9.3

Earnings Before Allocations 212.9 196.5 409.4 44.2 9.8 267.0

Calculated EBA % of Net Sales 37.0% 44.6% 40.3% 46.1% 46.1% 38.5%

Gross Sales /FMC Factor 3.63 3.74 3.68 3.63 3.63 3.63

Project Outgoings (Mill DKK)

Costs Total Investments Total Grand Total

Concept & Development 2.9 Mould 1.9

Technical Development and purchased samples 1.7 Equipment 0.4

Packaging & Insp. Materials 3.8 Ext. purchased 2.6

Campaign 4.5

Project support 1.0

Total project costs 13.9 Total invest. 4.9 18.8

Year x-2

March

May

SEP

NOV

Portfolio

milestones

P0

P1

P2

P3

Focus

area

Strategic

scoping

Strength

Opportunity

freeze

Opportunity 1

Concept

portfolio

freeze

Project

portfolio

freeze

Issue

Opportunity 2

Opportunity 3

Weakness

Opportunity 4

Opportunity 1

Opportunity

Issue

Opportunity 2

Opportunity 3

Opportunity 4

Threat


The Project Milestone phases are more organic and the projects decide when they are

ready to pass a gate, but we have last date that a gate should be passed

Year 2007 TOTAL

2007 Novelties - for subsequent years

Product

Amounts stated in Mill DKK Novelties Carry Over Total 2008 2009+ Life

Consumer Sales 376,4 105,6 482,0 188,2 87,8 652,4

Gross Sales 451,7 126,7 578,4 150,5 50,2 652,4

- CTT and Cash Discounts (50,2) (14,2) (64,4) -16,7 -5,6 -72,5

Net sales 401,5 112,5 514,0 133,8 44,6 579,9

- FMC Costs (134,2) (41,7) (175,9) -44,7 -14,9 -193,9

- Kirkby royalty (14,1) (3,9) (18,0) -4,7 -1,6 -20,3

Group Contribution 1 (GC1) 253,2 66,9 320,1 84,4 28,1 365,7

- Full Distribution Costs (27,0) (8,7) (35,7) -9,1 -3,0 -39,1

Group Contribution 2 (GC2) 226,2 58,2 284,4 75,3 25,1 326,6

- Direct Marketing costs (27,6) (1,0) (28,6) xxx xxx -27,6

Group Contribution 3 (GC3) 198,6 57,2 255,8 75,3 25,1 299,0

(41,7) (11,7) (53,4) -13,9 -4,6 -60,2

Group Contribution 5 (GC5) 157,0 45,5 202,4 61,4 20,5 238,8

- Project Costs (11,1) (11,1) -11,1

- Cost of capital employed (4,0) (1,2) (5,2) -1,29 -0,4 -5,7

Earnings Before Allocations (EBA)141,9 44,3 186,1 60,1 20,0 222,0

EBA % of Net Sales 35,3% 39,3% 36,2% 44,9% 44,9% 38,3%

NIP / FMC Factor 3,36 3,04 3,29 3,36 3,36 3,36

Operating Profit 1119,1 316,7 1435,4 417,0 139,3 1674,6

Calculated ROS % 248% 250% 248% 277% 278% 257%

Project Investments 0,7 0,7 0,7

Capital employed 30,4 9,4 39,8 10,1 3,4 43,9

Capital

Return on Invested Capital (GC8)1115,1 315,5 1430,2 415,7 138,9 1668,9

Calculated ROIC % 3588% 3344% 3530% < Launch year - Project life > 3744%

ROI Factor (GC 5/Total outgoings) 13,3 17,1 20,2

Project costs Total Investments Total Grand Total

2,2 0,6

0,8 0,0

2,6 0,1

4,6

0,9

Total project costs 11,1 Total invest. 0,7 11,8

Time

NOV

Year x-1

JAN FEB MAR APR MAY JUN JUL Aug SEP OCT NOV DEC JAN

Project

milestones

M1

M2

M3

M4

M5

L

Project

kick-off

Business

case freeze

Product and

packaging

freeze

Communication

freeze

First Procurement

date

Launch

Project

team

Novelty Project Financial Business Case

Project . . . . . . . . . . . . . RACERS . . . . . . . . 2007 . . . . . . . . . . . .

Year . . . . . . . . . . . . . . . . . . . . 2007 . . . . . . .

TV spot

Packaging graphic

Key visual

Campaign tool box

Employed 31,1 9,4 40,5 10,1 3,4 44,6

Project Outgoings (Mill DKK)


Change management

LEGO Development Process Principles

Det skal vi gøre ved at implementere fem grundlæggende principper:

• Fokuserede og sammentømrede teams (færre men bredere og mere

dedikerede roller)

• Parallelle processer

• Fleksibel beslutningsproces

• Én virtuel udviklingsplatform

• Fokuseret mindset


The key pillars of the LEGO Development Process


The process is based on a flexible stage-gate model


Overall

process

logic

Year X-1

P phase

Year X

FEB NOV DEC JAN

M phase – 1 st half projects

APR

M phase – 2 nd half projects

Year X+1

JUN

Year X-1

Year X

Year X+1

Time

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP OCT NOV DEC

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN

Mileston

es

(1 st half launch)

P0

PORTFOLIO

OBJECTIVES

P1

OPPORTUNITY

FREEZE

P2 P3 M1 M2 M3 Selling-in M4 M5

CONCEPT

FREEZE

PORTFOLIO

FREEZE

KICK

OFF

BUSINESS

FREEZE

PRODUCT

FREEZE

COMMUNICATION

FREEZE

PROCUREMENT

FREEZE

Product.

Launch

Funnel 50+

ideas

30-35

opportunities

20-25

concepts

18-20

projects

180-220

products

10-15

campaigns


And it is based on continuous interaction with

key stakeholders …

Year X-1

Year X

Year X+1

Time

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP OCT NOV DEC

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN

Milestones

(1 st half launch)

P0

PORTFOLIO

OBJECTIVES

P1

OPPORTUNITY

FREEZE

P2 P3 M1 M2 M3 Selling-in M4 M5

CONCEPT

FREEZE

PORTFOLIO

FREEZE

KICK

OFF

BUSINESS

FREEZE

PRODUCT

FREEZE

COMMUNICATION

FREEZE

PROCUREMENT

FREEZE

Product.

Launch

Market and

customer

interaction

points

MPLT

STRATEGY

MEETING

MPLT

BUSINESS PLAN

MEETING

= Lead Market prep. meetings

= Including external customers

MARKET LT

PORTFOLIO

MEETING

1 st HALF

PRODUCT

INPUT

WINDOW

1 st HALF

PACKAGING

INPUT

WINDOW

1 st HALF

SELLING-IN

STARTS

IN US

2 nd HALF

PRODUCT

INPUT

WINDOW

2 nd HALF

PACKAGING

INPUT

WINDOW

2 nd HALF

SELLING-IN

STARTS

IN US

2 nd HALF

TOY FAIRS

NÜRNBERG,

NEW YORK

ETC.

Supply Ch.

and Market

Operations

interaction

points

STRATEGIC

CAPACITY

REVIEW

STRATEGIC

CAPACITY

REVIEW

STRATEGIC

CAPACITY

REVIEW

Monthly S&OP Development Reviews

PP1 PP2 PP3 Monthly FC’s


Focused and close-knit teams build around

a dedicated core …

- Team structure -

- Staffing profile – example

Packaging

Equip.

Driver

Prototype

driver

Equipment

driver

Packaging

engineer

Packaging

designer

Logistical

Masterdata

Mould

driver

Project

Supporter

Tool

constructor

Account

manager

OFF-SITE

TEAM

CORE TEAM

Graphic production

manager

Engineers

Marketing Lead

Project Manager

Creative Lead

3D artist

ON-SITE

TEAM

BI instruction

developer

Global

Purchasing

Production

driver

Art Director

3D

modeler

Designers

Virtual

producer

Product

Coordinator

Legal

Market

Intelligence

Web

producer

Resource

Project manager

Marketing Lead

Creative Lead

Designer

Art director

Pack. designer

Project supporter

Engineers

Mould driver

Tool constructor

Pack. Engineer

BI instr. developer

Account manager

Equipment driver

Graphic Proj. mgr

Sourcing network

Production. driver

M1 M5 M1 M5


HOT TEAMS – High Performance Teams


All project teams are located physically

in few buildings


John P. Kotter:

Ottetrinsprocessen til at skabe større forandringer:

•1. Etablering af en oplevelse af nødvendighed (konkurrence-sit. – potentielle kriser etc.)

• 2. Oprettelse af den styrende koalition (etablere stærk gruppe/team)

•3. Udvikling af en vision og en strategi

•4.Formidling af forandringsvisionen (konstant kommunikation – adfærd )

•5. Skabe grundlag for handling på bred basis (fjernelse af forhindringer – ændring af systemer)

•6. Generering af kortsigtede gevinster (planlægning af synlige præstationsforbedringer)

•7. Konsolidering af resultater og produktion af mere forandring (opstramning af processen)

•8. Forankring af nye arbejdsmåder i kulturen (bedre lederskab, midler til at sikre udvikling og

kontinuitet i lederskabet


Design For Business –

Innovation Model


DESIGN FOR BUSINESS

PROJECT OBJECTIVES:

to improve the contribution to business of the

design function

by increasing their effectiveness & efficiency

without losing creativity

with a series of relating tools & processes

including coaching & implementation

for creative directors, creative leads,

designers, marketing leads, project

managers, PMD-LT, etc.


WHAT ARE THE BENEFITS OF A SHARED MODEL FOR INNOVATION

Shared understanding & vocabulary across entire company

• Facilitate strategic dialogue, setting clear direction and objectives

• Company level

• Division level

• Portfolio level

• Project level

• Task level


Takeaway 1: Develop an Innovation Model that is tailored to your

business and development needs - to secure a broad and holistic

approach to development….


The LEGO Innovation Model takes a natural starting point in

business and experience objectives…..

Business


The LEGO Innovation Model takes a natural starting point in

business and experience objectives…..

Experience


It talks about 4 different TYPES of innovation…….

Business


It talks about 4 different TYPES of innovation…….

Product


It talks about 4 different TYPES of innovation…….

Communication


It talks about 4 different TYPES of innovation…….

Process


It comprises 3 different LEVELS of innovation…..

Adjust


It comprises 3 different LEVELS of innovation…..

Reconfigure


It comprises 3 different LEVELS of innovation…..

Redefine


We can draw an “Innovation profile” for a project……


….or an entire portfolio of projects…….


….or an entire portfolio of projects…….


And it can help us establish a picture of risks, resources and competencies

needed to drive forward a project/portfolio of projects……

What does

It take?


INNOVATION DEFINITION – TEAM DYNAMIC & PROFILE vs PROJECT PROFILE

Core Team

PL


P3 2008

P3 CONCEPT FOUNDATION

PG X: NAME OF CONCEPT

P3 concept foundation contains:

1. concept objectives

2. business rational

3. experience rational

4. innovation objectives

5. business profile

appendix A: launch & support overview

appendix B: assortment overview

6. product profile

7. communication profile

8. procurement profile

appendix C: risk log

9. recommendations & key tasks

10. resources profile


Design process and………..Project process


Takeaway 5: If you do not keep a scoreboard you are only practicing……

make sure you constantly measure performance up against set targets…..

GO TO NXT GATE

DESCRIPTION

NO GO TO NXT GATE

DESCRIPTION

1.

1.

REASONS

2.

REASONS

2.

3

3

EVALUATION

CRITERIA

PROGRESSION

OBJECTIVES

BUSINESS

PRODUCT

COMMUNICATION

PROCESS

RESOURCES


Innovation Workshop

We want to lift

THE POWER

TO INNOVATE!


Innovation Workshop

INNOVATION ◦ OUT OF THE BOX ◦ INSPIRATION ◦ TIME TO REFLECT ◦ BEYON EXPECTED

GETTING SERRIOUS ◦ TALKING STRATEGY ◦ SETTING AMBTION ◦ SETTING DIRECTION


Innovation Workshop 2

LT STRATEGY WORKSHOP :

ONE PAGER DOCUMENT:

• Gather all insights, foundation and material

from P0 and Innovation Workshop 1

• Foundation for LT discussion and workshop

• Briefing for PG1 Core Teams

IT WORKS!


Vinder - Innovation Cup 2009

”Store innovationsmestre

LEGO, Gabriel og Oticon

ligger alle meget højt, men

nogenlunde på linje, når det

gælder de fundamentale

forhold for innovation samt

innovationsprocesser.

LEGO viser sig dog noget

stærkere indenfor den sidste

fase i innovationsprocessen,

nemlig implementering.

Det er nok en del af årsagen

til, at når det kommer til

innovationsresultater, så er

der dog ikke noget at rafle

om – her er LEGO i en

klasse for sig selv.”


Innovation leadership (summary):

•Facilitation

•Diversitet (kompetencer)

•Kultur (adfærd-attitude)

•Strategiske ”pejlemærker”

•Skabe merværdi i værdikæden


Work smarter – not harder


THANK YOU….? !

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