Lego Hit a Wall Because It Grew Too Quickly. Here's How to Pace Your Company

Lego holds a special place in millions of childhoods. The universal appeal of the bricks has endured for over 80 years and helped it dominate the global toy industry. So when Lego unexpectedly announced a percent drop in profits last week, and that it would consequently being laying off eight percent of its workforce, many people were left scratching their heads. What on earth went wrong?

After coming back from the brink Lego has being growing rapidly in recent years; reporting double digits for the best part of a decade. During that time it hired and spent aggressively while tripling its workforce. But as it grew it became more and more complex with new product lines and franchises.

Chairman, Jorgen Vig Knudstorp, says the whole company will undergo a “reset” featuring cost-cutting, both via layoffs and a simpler business model that will entail “a clean-up of inventories across the entire value chain.”

Lego was not pacing for growth; as they grew rapidly they added more and more complexity and eventually hit their maximum capacity. Their strategy was all about executing growth but neglected to build the capabilities that they would need to sustain that growth for the future.

Strategy is only strategic when it allows you to decide what to do and what not to do. Focus is only focused when it allows you to do less or say no more often.

Here are five ways you can use focus to drive lasting growth for your business

1. Use focus to drive absolute clarity.

Just because we have the people or capital we need to launch a new product, enter a new market, or roll out a new sales tool doesn’t mean we should do it. Focus requires saying no to opportunities, tasks, and ideas that have less merit than other opportunities, tasks, and ideas.

We have to decide if the effort needed to attain the outcome is worth the time and other resources. The right focus stops people from doing some things so that they can do other things.

2. Use focus to invest energy disproportionately.

Every business has limited resources. Even in a cash-rich enterprise or well-funded start-up, resources like time and deep expertise are often in short supply. When we focus the resources that most matter to driving growth, they have more impact.

We can only achieve this focus by stopping some activities. Growth leaders understand that you can only build capacity for growth by conserving time and energy by making tough choices.

3. Use focus to align vertically.

Top-down or vertical alignment ensures that all levels of the organization understand and focus on delivering what is needed today as they develop themselves for the future. This is not possible when the business, team, or individuals are always maxed out.

4. Use focus to align horizontally.

Horizontal alignment means reaching out across the business to ensure it is delivering the right product to the right customer in the right way at the right time. This chain of activities involves almost every function in the business.

Horizontal alignment allows decision makers across the chain of activities ending with the customer to make good decisions together–at the right speed–to maximize benefit to the company, not just their particular piece of it, and for the customer.

5. Use focus to conserve resources for growth.

We waste so much energy when we lack focus and alignment across the different functions of the business. By learning to focus and then align people and other resources to that focus, you can conserve time and energy that can be used to build new capabilities for growth.

Lego has a fantastic core product, an extremely strong brand and is company that knows how to pivot and make a comeback. Although there will be some painful times ahead, this new strategy of simplification will hopefully give them the focus they need to recover and find a more sustainable pace of growth for the future.

Tech

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