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….? !