Researchers: Digitalization is critical to the continued success of the LEGO Group

A comprehensive digitalization plays a key role in the LEGO Group’s continued journey which stretches from near-death experience to record profits, according to a new paper by digitalization researchers Pernille Kræmmergaard and Omar A. El Sawy. The paper has just won first place in the 2015 SIM Paper Award Competition.

Collaborations Research management business Pernille Kræmmergaard

Written 29 October, 2015 09:00 by Vibeke Arildsen

In the years after the millennium, the LEGO Group was facing a serious crisis, coming close to bankruptcy in 2003. Today LEGO is the world's second largest toy manufacturer with 28.6 billion Danish kroner-revenues in 2014. While a focus on the core of the business was the explanation for this impressive turnaround, a comprehensive digitalization spanning all parts of the organisation, from top management to marketing and products, has to ensure that the journey continues. This is the conclusion of a new paper written in collaboration with the LEGO Group.

Comprehensive digitalization
According to Pernille Kræmmergaard, the LEGO Group's example can be an inspiration for other companies.

"The LEGO Group thinks digitalization on many fronts, both in terms of products, marketing and their own organisation and this combination makes them strong. The message to other companies is that you have to think comprehensively. You cannot achieve digital leadership just by going on social media, for example, that’s not enough."

Pernille Kræmmergaard believes legacy brick-and-mortar companies have a special challenge when it comes to digitalization, as the process requires a whole new mind-set. She finds the LEGO Group a good example of an established company that has managed to leverage digitalization to its advantage.

"Many start-ups perform extremely well digitally, but Lego is a classic production company that has been able to digitalize their organization successfully. In our paper we conclude that LEGO Group is very well positioned for future digital leadership based on the foundations they have built."

10 digitalization moves

LEGO thinks digitalization on many fronts, both in terms of products, marketing and their own organisation and this combination makes them strong. The message to other companies is that you have to think comprehensively.

Pernille Kræmmergaard, Professor of Digitalization and IT Management at the IT University of Copenhagen and Aalborg University

Pernille Kræmmergaard and Omar A. El Sawy identify 10 digitalization moves implemented by the LEGO Group over the recent years. On the product side, the company has focused on the combination of physical and digital play, for example with the LEGO Fusion universe, which lets customers see their constructions come to life in the virtual world.

Digitalization has also entailed more interaction with customers on a number of digital platforms, including social media websites for LEGO fans, ads, partnerships and apps. Internally, the company has developed user-friendly IT platforms and re-organised the IT organization.

Digitalization course for IT managers
In April, Pernille Kræmmergaard will teach the course ’Digital Transformation’ in collaboration with the IT University of Copenhagen. The course will provide participants with management skills and methods for digitalizing their company, putting the most recent research into practice.

If you are interested in reading the paper or information about the 'Digitial Transformation' course, please feel free to contact Pernille Kræmmergaard: pkrm@itu.dk.