Lessons learned from the LEGO turnaround

Lego_marina_bay_sands

As part of my Strategic Management course at the Nanyang MBA, I did a strategy report on LEGO’s turnaround in 2004. I grew up building LEGO and I have been following LEGO’s business for many years. When it came to pick a topic for my strategy report LEGO seemed like the natural choice.

LEGO is a fantastic case study of a successful turnaround of a failing organisation, attributed to selecting the right strategy. The LEGO management took less than 5 years to almost bankrupt what had taken 3 generations 70 years to build. In 2014, the LEGO group announced record net profits of DKK 7 billion after having turned around a net loss of DKK 935m and DKK 1931m in 2003 and 2004 respectfully.

These are my main findings and the key lessons learned from studying the LEGO turnaround.

If you are not familiar with the background of the LEGO turnaround, Economist and expert in Corporate Strategy John Ashcroft has done a very nice case study which is free to download online. www.thelegocasestudy.com

  • Know your core competencies and keep perfecting them. You core competences should be your competitive advantage and you don’t want to forget that. In the late 1990s LEGO experienced stagnating sales and stated to divest into new areas outside of its core competencies. The new product lines generated short term sales {DKK8,379m in 2000 DKK10,116m in2002 DKK9,475m in 2001}. However, the massive divesting was followed by large costs {DKK(9,000m) in 2000, DKK(8,554m) in 2001, DKK(9,248m) in 2002}. When the short term sales eventually failed to DKK 7,196m in 2003 and DKK6,704m in 2004, LEGO was carrying costs that it couldn’t bear.
  • Stay focused on your core business and ensure that your core business will always be your main attention. In case of divesting, don’t lose track of your cash flow and what puts money in your pocket. LEGO didn’t lose because it divested, but because it lost track of its core business.
  • Ensure you have the right measures to manage your business. LEGO’s accounting standards deceived the management and didn’t provide them with the necessary information to make strategic decisions. Instead of tracking the performance of individual product lines, the management was deceived by tracking country specific performance, hereby hiding alarming performance results of new product lines.
  • Listen to your consumers, but keep retailers first. LEGO has experienced impressive growth by constantly being close with their consumers. However, they don’t forget to keep their retailers happy with good margins and a well-structured supply chain. By ensuring that you vendors have the right quantity at the right time, you save them money and they will be happier customers.
  • Control you value chain. The value chain is where you create value for your customers and your consumers. Keep improving and optimizing your value chain to stay ahead of the competition.
  • Keep your organisation transparent and encourage communication. LEGO’s management was acting on wrongful information, due to lack of communication. As Jorgen Vig Knudstorp says: “a CEO needs every avenue to the truth that he or she can find”.

8 secret tricks to write your CV

Writing a CV can be tricky. Therefore, have I made a short list of 8 secret tips that I have learned working side by side some of Denmark’s greatest recruiting agents.

1.     You got 10 seconds!

You only have 10 seconds to make a good impression. Always keep that in mind!

Most job postings will have more than 300 applicants applying for the same position. This means you will have to stand out to get noticed. A professional recruiting agent will on average spend just about 10 seconds on each CV during the first sorting process. Do you make it to Second Round; you have made it very fare, because the recruiter will now take the time to get to know you, reading your CV. If you keep that in mind when writing your CV, you are good on your way to get a good job.

2.     Your picture says it all!

Should I use a picture or not? There is only one answer and that is: “YES!” You should always have a photo of yourself, but not just any kind of photo.

There is an old saying :“a picture is worth a thousand words” and this is really true when we speak about your resume. Therefore, put always a great deal of care into selecting your photo.

  • Make sure to look professional in respect to the job you are applying for. If applying for a sales position, please dress business like. What happens is that you are assisting the recruiting agent imagining you working as a sales person.
  • Make sure that your picture, still looks great printed in black and white. The majority of recruiting agents print your resume, which means that colourful details vanish and so does your face. So make sure your picture appears great printed in black and white.

It often makes sense to have a professional, doing some good profile shots of you. The skill that a professional photographer has is to makes you look as good as possible and that will make a big difference to the look of your CV.

3.     Make contact easy!

Don’t leave out your contact information. Make it easy for the recruiting agent to contact you, or to find more information about you. Don’t hide your birthday. For certain positions, age might be important. If your date of birth is not visible, you risk missing an interview.

4.     Highlight the competences that make you unique!

 

This is the secret trick that too few people use. We have already established that you only got 10 seconds to make an impression. Which means you only got 10 seconds to sell your very best competences that make you stand out from the crowed.  For example: if you speak 4 different languages, you should mention it in the very beginning and highlight the text as Bold and Italic. This naturally draws the attention of the reader and gives you a head start.

5.     You have all the pages you need!

A lot of people think that they must fit their CV into one page or two. That is simply not possible if you just got a bit of skills to show off. Therefore don’t limit yourself by pages. Just keep in mind that first page is the most important one.

6.     Make it chronological and structured!

There are a lot of different ways to structure your resume. However, there tend to be one preferable way and that is very simple and chronological. Help the recruiting agent easily read your CV in a chronological order. Don’t use too many unnatural sub-headings, as they tend to destroy the flow.  Keep it to three sub headings: Languages, Work, and Education, and maybe a fourth one to cover awards, courses and events, which are of significance for your profile.

7.     Don’t leave blank spots!

When the competition is rough, you can do so many little things that count as terrible mistakes. Therefore, try not to!

You might have been unemployed for half a year or more, and that usually isn’t very attractive for recruiting agents. Not that is has to matter, but it counts as deductive points. Therefore make sure just to use years when you structure your CV. For instance: from 2009 – 2011 Account Manager – from 2011 – 2012 Division Manager. In reality you were unemployed from February 2011 until November 2011. However, I as recruiting agent don’t know and then won’t care. Should you be asked doing an interview, you will of course answer truthfully. However, no reason to advertise it.
You should always be truthful about your CV, but too large blank spots are just naturally less attractive. So keep that in mind.

8.     Sell your references!

A natural part of a recruiting agent’s job is to check your references. By references I mean former employers, teaches, or other people that in one way or another have worked with you and can give you a recommendation.
Because your resume should be a public paper and hopefully be changing hands of CEO’s and different potential employers, you might want to protect the contact details of your references. However, that doesn’t mean not mentioning them. Keep it to name title and company, and then kindly mention that contact details will be given on request.  The more prominent references you have vouching for you, the more attractive you are to potential employers. Should you have a well known business man on your list of references. Then move references to the top and highlight the name, title, and company.

 

That was 8 simple tricks for you you to get ahead of your competitors. Applying for jobs is just like any other sales job. You got to stand out and you got to be Wise, however, don’t ignore the basic rules of simplicity, structure and readability. Good luck job hunting!

Thought-Leader Series

Alexander Hold - Thought Leader Series

During my time at Aarhus University Institute of Business and Technology I founded and hosted a range of popular guest lectures under the name of the Thought Leader Series.

The concept of the guest lecture series was to invite CEO’s from the business community around the University to speak for the students about their way up the career latter, as well as giving a realistic image of how the theory taught at the university is practiced in the real market.

The guest lecture series was arranged next to my daily studies in my spare time, and I consider the Thought Leader Series as being my entrepreneurial hobby project. The project did not serve to earn money and was a total non-profit arrangement sponsored by Aarhus University.

Read about the CEO’s guest lecturing in the Thought Leader Series here.

The project was supported and sponsored by Aarhus University Institute of Business and Technology, and the Thought Leader Series was recognized by the management.

The Thought Leader Series had great success and experienced its largest audience with its last guest lecture held by Georg Soerensen CEO of MCH.

Georg Soerensen CEO of MCH

Georg Soerensen - Thought-Leader Series

Before I am beginning this article, I must admit that retelling the message and giving the energy of Georg Soerensen’s guest lecture at Aarhus University Institute of Business and Technology is close to mission impossible. However as Tom Cruise is making it in the movies, I will do my best to make it today.

Yesterday the 23 of March 2011, Georg Soerensen the CEO of MCH in Herning visited me in the Thought-Leader Series at Aarhus University Institute of Business and Technology. I had been really excited up to this event, and especially excited about the outcome. Would the students show interest? Would I be able to fulfil my promises? And in total would the event be a success?

I have until today managed quite a few guest lectures, and in general quite successful once. However there was something about this event that made me a little more nervous than usual.

Georg Soerensen is perceived as one of the greatest business icons in the area around the university, and is a highly respected CEO, Board member, and public speaker. Therefor were the expectations for the lecture also high and everyone wanted the lecture to go well.

Georg opened his lecture by drawing a large clock on the blackboard, symbolizing “time”. Time is one of the greatest factors of need, in the modern society, and more or less everyone is hungering for more time. At least this was the perception and the opening of the lecture, leading to the conclusion that life must be lived in the moment.

Next drawing on the blackboard was a great heart capsuling one of the main messages on the lecture. The letters MMS, was listed on the blackboard, translated to English CGC, standing for Courage, Goal, and Cooperation. These tree words are essential for the rest of the articles, as well as they was essential for the guest lecture.

The heart is symbolizing the actual heart of you as human being. Only by following your heart, can you be truly honest, truly yourself and really good at what you are doing. Georg Soerensen said: “you will only become good at the things you like to do.” An acknowledged philosopher stated; “if you have made a mistake once, you have already made the next, until you have learned the lesson form the first.” This is not stating that it is wrong to make mistakes, but that making the same mistake twice is stupid. From hear we get the first C, Courage. Because you need courage to end up in the situation where you have made a mistake that you will have to learn a lesson from, and then move on. All this is only possible if you have the courage to take the first step, and jump into it.

Georg Soerensen is setting demands for his 230 full time + 1000 part time employees, but he is also aware that he must set demands for himself, and often take the lead to make people follow. As he said: “Make your own agenda, then you will not become a part of others. “

Georg was really good a visualizing his message and he showed how the referee in a football match is always deciding who gets to start. When the referee flips the coin, he either show the coin as he catches it, or he will smack it on to his other arm, to turn the coin in favour of the other team. This can also be related to doing business and it is important always to turn negative situations, into positive.

Even though Georg in the public sphere seems like a tough businessman, he convinced the audience that he actually was a really sensitive person. The audience was asked if it was strength to show weakness? Usually we don’t perceive weakness as strength, but Georg argued that weakness shows truly honesty and that there exist a real person underneath the surface of toughness.

Already at the beginning of the lecture Georg Soerensen stated that his teaching all was based on real life experience. It was not based on theory developed by some writer, but it was real life experience.

Georg Soerensen is known as the man behind the Vision 2025, which is the vision for MCH in Herning presented the 1 of November 2000. The Vision is a 6 step plan stating the wanted future development of MCH as a business. The first 4 steps have already been completed, and only two more are yet to be broad to life. Georg sees vision as the dream you see when you close your eyes. However on thing is dreaming it, another is living it. Here comes the G, of the CGC model. Goals are important to realize that vision, and without, there will be no clear defined way, which will result in confusion and frustration.

The reason why MCH has experienced success is because of its ability to connect four important elements. We all know that a four-leaved clover is seen as the symbol of luck. Georg Soerensen drew one on the blackboard, and filled each leave with a letter. Four letters symbolizing four important factors that had made MCH successful: P for politicians, C for citizens, B for business, and I for important people. These four elements are the key aspect that is combined under the last C in the CGC model, Cooperation. If you can make the four-leaved clover cooperate in the pursuit on the same vision, you have the foundation for a successful corporation.

The lecture started with the drawing of a heart capsuling the four letters CGC, and this was also where the lecture ended, with the heart of people and with the heart of you. Because what it takes are the passion and the will power to actually do it. It takes Courage, Goals, and Cooperation to become successful. What is important to understand is that the line between success and failure is paper thin. It can be great symbolized by a fire burning through a paper. It might burn through, but it is so very close to burn out.

Georg Soerensen CEO of MCH and Alexander Hold
Georg Soerensen CEO of MCH and Alexander Hold

 

Lotte Littau CEO of Creativ Company

Lotte Littau - CEO of Creativ Company

Wednesday  9. of march, Lotte Littau the CEO of the successful Danish company: Creativ Company visited me in the Though-Leader Series. Creativ Company is a 125 employee’s large company producing and selling hobby items for use in public institutions, as well as private companies with focus on creativity. Creativ Company has been rewarded the honour of being the second best place to work in Denmark, and on a European scale the 9th best place to work. These rewards are what define Creativ Company as an organization.

Creativ Company was founded out of a failed fusion from a former partnership, and the motive for establishing the company was pure revenge. As Lotte said, there are a lot of great different motives for starting a company, but one of the greatest is revenge. Usually revenge is considered an evil thing, but what revenge did for Creativ Company was to give the necessary drive to keep working hard for achieving the goal.

The first step of the start-up was a trip to the USA, attending trade-fairs to find interesting product and solutions for the foundation of the company. Lotte Littau’s husband is a farmer and one of the barns was cleaned out to make room for the first stock of Creativ Company. It took one month from idea to reality and in year 2000 the company was in business.  Since then the Company has grown out of the barn and is today in 6,500 m2 large building located in Holstebro.

One of the first success stories Lotte Littau remembers from being an entrepreneur was a record sale of DKK 6,500 on one single day. DKK 6,500 does might not seem like a lot of money, and Lotte could also admit that 6,500 is not quite enough for running the business today; however the experience had made an impact on her.

Since 2000 the company has grown to a 125 employee’s large body and the values of being a start-up has developed into organizational values. This is a challenge for every growing organization, but Creativ Company has done quite well due to great focus on the work environment. One of the reasons why Creativ Company has been rewarded honourable prices for their work environment is due to Creativ Company’s effort in creating a diverse work environment with employees of many different qualifications. At Creativ Company they have created a workshop, where 15 employees that would usually not be able to carry out a job are being helped to have a meaningful work day, while they create value for the company. Because as Lotte Littau believes; it is every company’s duty to take responsibility in the local community.

Lotto Littau presented and interesting aspect on the perception of rules: “If a rule is stupid, break it”. This statement seems to be quite representative for the way Creativ Company is doing business. The company is focused on doing things as smooth as possible and the organizational structure is very flat. The way Lotte is managing the company is with care but with demands. She expects each of her employees to take responsibility in the common wellbeing of the company. And only if the company is doing well Lotte has the opportunity to pay back the employees with social benefits. “It is short term thinking not investing socially in the employees,” that might be the greatest definition of the organizational believe that is held by Creativ Company. Not just is Lotte and Creativ Company challenging the statuesque, they do also do what others say cannot be done, and is criticised for being an unhealthy way of doing business. However Creativ Company has been steady growing since it foundation back in 2000 and is not ready to change, but ready to do better.

The students have given a lot of positive feedback on the presentation carried out by Lotte Littau, and even though Lotte explained that she is not the usual public speaker of the company, she did a very inspiring job. As Creativ Company is growing they will experience challenges, and one of them is how to remain and spread the organizational values of the company to new departments at new locations.

Lotte Littau CEO of Creativ Company and Alexander Hold
Lotte Littau CEO of Creativ Company and Alexander Hold