7 Global Brands from the Happiest Country in the World

Queen Magrethe 2nd

For consecutive years Denmark has topped the World Happiness Index. When I share with people abroad that I am from Denmark, 9 out of 10 will ask me. Why are the Danes so happy? As a Dane abroad i can testify that people around the world have heard about the UN Happiness Report, but do not know an awful lot about Denmark.

Why are the Danes so happy?

Denmark is a small little country in northern Europe, with a population of 5.7million people. Denmark has one of the best work-life balances in the world with a work week of 37 hours. Everyone in Denmark enjoys free access to hospitals and surgery, and every citizen has free access to education all the way through university. Corruption is non-existent and the crime rate is practically zero. Senior citizens are covered by the public pension scheme, so they can enjoy a stress free retirement.

There is only one down side. The Danes pay effectively 50% of their income in taxes. A true capitalist would cite a theory that such a high tax burden is reducing incentives for people to work, thus decreasing overall innovation and negatively affecting business. What the world does not know is that Denmark is home to some of the world’s most successful companies.

LEGO

LEGO is the world’s largest toy company and ranks top 10 of the world’s most powerful brands. LEGO was founded by Ole Kirk Christiansen in 1932 in the little town of Billund and is today in the hands of 3rd generation of the Kirk family. LEGO is a global company with offices all over the planet and revenues of DKK 37.9 billion (USD 6.3 billion).

Carlsberg

One of the world’s largest beer brands that you can find on the shelves in almost any country in the world. Carlsberg was founded in 1847 by J.C.Jacobsen in Copenhagen. Today Carlsberg has 45.000 Employees, revenues of DKK 62.6 billion (USD 10.6 billion) and publicly traded at the Danish Stock Exchange.

Maersk

The world’s largest shipping company and Denmark’s absolute largest company. Maersk was founded by A.P. Møller Mærsk in 1904 in the small town of Svendborg.  The Danes have been telling stories about Mærsk for a hundred years. It is said that Mr. Møller once disqualified a candidate, as he found him resting against the wall near a staircase. “At Maersk we need people that can stand on their own feet”. The candidate was then send home. These stories has created a sense of mystery around Maersk that today employees 88,000 people and has revenues of DKK 219.8 billion (USD 35.5 billion). Maersk is listed on the Danish Stock Exchange.

Arla

Arla’s dairy products can be found all around the world. I have been eating Danish butter in Australia and Danish cheese in Singapore. The world’s best airlines serve Danish Lurpak butter in the air and the Middle East is one of the best export markets for Arla. Arla was founded as a cooperative of 12,500 farmers and has revenues of DKK 63.1 billion (USD 10.2 billion).

Bestseller

Bestseller is the company behind popular fashion brands such as Vero Moda, Only and Jack & Jones. Bestseller was founded in 1975 in the small town of Brande by Troels Holch Povlsen. Bestseller is today owned by Anders Holch Povlsen, who is also one of the richest men in Denmark.

Novo Nordisk

The world’s largest diabetes drug manufacturer was founded in 1923 in the little town of Bagsværd north of Copenhagen. The founders of Novo Nordisk brought back the idea from America after hearing reports that diabetes patients were being treated with this new drug known as insulin. Novo Nordisk has revenues of DKK 111.7 billion (USD 17.9 billion) and 41,700 employees all over the world.

ISS

The world’s 4th largest employer, employs more than 500.000 people. ISS is a facility service company and employs people in everything from healthcare to retail, to cleaning. ISS is literally everywhere. If you look out for it, you will start seeing the ISS logo on uniforms everywhere. ISS was founded in Copenhagen in 1903 and is today generating revenues of DKK 79.1 billion (USD 12.7 billion). ISS is traded on the Danish stock exchange.

 

Fact is that that the happiest people are also excellent entrepreneurs. For a hard core capitalist that can seem hard to believe, but reality is that a high level of social security allow people to think outside the box and take risks. Research shows that if you pay people enough, make them feel secure and give them a sense of purpose, they will create great things. This topic was very well explained by Dan Pink in his 2009 TED talk: the puzzle of motivation.

What is true for Google, Amazon, Facebook or some of the world’s most innovative companies is also true for societies. The Danish success model that makes the Danes so happy is also good for business.

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”.

Danish Export Day – 2009

Danish Export Day 2009

November 19th 2009 I participated at the event Danish Export day supported by “Dansk Erhvervsfremme” and the Ministry of Foreign Affairs. The event was hosted by LEGO in Billund, and was opened by the Danish Secretary of State, Per Stig Moeller.

During the day there were a series of lectures concerning foreign trade and globalization. Joergen Vig Knudstorp welcomed us at LEGO and introduced us to the new reality of LEGO, “Back to Basic”.

One lecture that I especially took notice of was Peder Oestbjerg from Green Team Group telling about how they exported their impressive production of Christmas trees all across Europe.

Another interesting Lecture came from Nuance, which had totally quitted all effort at their local market, Denmark, and had instead focused 100% at foreign export markets. Today Denmark only counted for a few percentage of their total turnover.

At the event I attended a workshop about how to choose markets, presented by Carsten Krogh Hansen and Jens Peder Jensen. The workshop was really interesting and I advanced in my knowledge and general understanding about export markets in particular.

Read the documentation of the program here (in Danish)