Based on the following Case study on LEGO Answer the following 4 questions. 1. What are LEGO's values and corporate identity? (/3) How did these develop over time (prior to LEGO Media Int'l)? 2. How did Lego's organizational structures & policies permit int'l alignment (/2) AND explicitly reflect the company's belief in equifinality? 3. How did LEGO actively reduce barriers to communication? Give examples of some of their internal communication practices & indicate which communication barriers these practices helped to reduce. 4. Describe the organizational culture @ UK Lego (Lego media Int'l). (A) What is the evidence that it, too, believed in equifinality?

(B) When you compare it to the corporate LEGO identity, would you say that this (UK Lego culture) is an example of Corporate (Danish) LEGO's cultural dominance? Cultural avoidance? Cultural accommodation? Cultural Compromise? Or Cultural Synergy? Explain why it represents the form of c/c conflict resolution that you've said it does.

8 Case study 3 attitudes towards the company and as an intangible element of marketing programmes. Thus companies need a clear idea of their own identity in their `LEGO: transferring identity knowledge orientation towards employees and customers. Accordingly, the control of identity is a critical issue, which becomes more complex when the values, (ideal) behaviour and attitudes associated with identity are to be equitably diffused through an inter- nationally operating company. The case of LEGO is especially interesting in that its identity is constructed around, and is for, the future of the world - children. The structure of this case study is as follows: PROLOGUE . The company background Almost everyone knows the LEGO brick, the plastic building block in the bright . Methodology colours that provided many of us with endless possibilities for play as children. . The global mission The genius of the LEGO brick lies in its simplicity in that it can be used by children in ways that are only limited by their own imagination. The simple ingenuity of . LEGO values and identity the LEGO brick and its contribution to children's play and development the world . LEGO Media International over were recognized when Fortune magazine in the USA and the Association of British Retailers recently named LEGO the Toy of the Century over such other . The LEGO revolution in the USA toy classics such as Barbie and the Teddy Bear. Established in 1932, the LEGO . Cross-cultural management issues Group is today among the world's largest toy producers. To date it has sold some six billion construction elements in 140 countries, of which two billion are the . A knowledge management perspective famous bricks. Its largest market is the USA, which accounts for one-third of . Managing identity as cross-cultural knowledge transfer the company's sales. LEGO has production facilities in Denmark, where it is headquartered, the USA, Switzerland, the Czech Republic and Korea. In addition, . Managing identity from a knowledge management perspective there are marketing and product development centres in the USA, Germany, Italy . Afterword: a quintessentially Danish company nevertheless and the UK. In 1999, the LEGO Group had a turnover of approximately $1 billion and the company employed approximately 7,800 people worldwide. Perhaps best known for its famous construction toys, LEGO has, since the 1990s, strategically THE COMPANY BACKGROUND diversified into three new business areas: LEGOLAND family parks, media products, and lifestyle-branded merchandise. Humble beginnings A striking feature of LEGO's international strategy is to play down, if not The LEGO Company traces its beginnings from 1932 when a Danish carpenter, suppress, its Danish origins. If LEGO is in the USA or Germany, it wishes to be Ole Kirk Christiansen, opened a small workshop for making wooden toys in the perceived as a German company or US company, and so on. Behind this ethos is a town of Billund in Jutland in the west of Denmark. It was set up as a family simple notion: that play is universal. So it was logical that the company should be business and that is essentially how it has remained to the present day, and a globalized company in terms both of market coverage and the mindset of the Billund has always remained the headquarters of the company. employees. Thus, for LEGO, a key challenge is to ensure that the company values It was in 1934 that Christiansen called his small company, which then and corporate identity, which may both be regarded as knowledge resources to employed six or seven people, LEGO, which stood for both his company and the employees, can provide guidelines for aligning behaviour and actions in the toys it made. He can hardly have imagined that some 50 years later LEGO would company itself and vis-a-vis the marketplace. be a household name for toys throughout the world. Christiansen was a perfect Although a company's identity is expressed through everything it does, it is tionist in the art of toy-making and he made certain that all the carpenters he recognized that identity is important both as a focal point of employees' own employed shared his commitment to craftsmanship. Ahead of bigger and more 159 prestigious Danish companies in those pre-war days, Christiansen put up a wooden sign in his workshop for both his craftsmen and customers to read: 'Only the best is good enough.' His slogan should not be taken at face value. What hereally meant was 'only the best is good enough for children', for he believed that 1958 was also the year which marked the death of Ole Kirk Christiansen. He children deserved toys that were made with care and attention. And how lucky was succeeded as Managing Director by his son, Godtfred Kirk Christiansen, who for him, incidentally, that the word LEGO goes smoothly into the phonetic remained in this office until 1979 when he became Chairman of LEGO. In that year systems of most of the world's languages without connoting anything obscene, his son, Kjeld Kirk Kristiansen," took over as Managing Director. By this time derogatory or misleading. (In spoken Japanese it becomes REGO, but this is not a LEGO had long ceased to be just an operator on the Danish market. In fact its source of confusion as there is no remotely similar-sounding Japanese word.) The internationalization began in the 1950s when LEGO opened its first sales outlets word LEGO, as it happens, is a combination of the first two letters of the Danish abroad, in Norway and then in Sweden. Shortly after that LEGO was selling its words LEg Godt, which means 'play well'. LEGO clearly was a reflection of the products into Germany, whose economy was beginning to pick up following the founder's values, including his respect for children, which anticipate the modern catastrophe of the Second World War. According to company legend, Godtfred company's emphasis on the manufacture of high-quality toys that stimulate Kirk Christiansen stated that if the company could take on Germany, it could take childrens' creativity and imagination, whilst fostering their healthy develop- on the world. ment and learning through play. During the Second World War, when Denmark Under that conviction LEGO began to establish itself on markets in Western was under Nazi occupation from April 1940 to May 1945, the LEGO Company Europe on a country-by-country basis. For example, LEGO Vertrieb AG was managed to keep going. established in Switzerland in 1957, and LEGO UK Lid was established in the From wooden toys to plastic building bricks: first steps towards internationalization United Kingdom two years later. A sales and marketing subsidiary was set up in Australia in 1962. In a move to internationalize production and marketing opera- In 1947, Ole Kirk Christiansen, with remarkable perspicacity, saw the potential tions, a new Swiss manufacturing subsidiary, LEGO AG, was established in 1974; of a new material, which had undergone rapid development during the war: then, in 1980, LEGO Systems Inc. in the USA, which had been established in 1973 plastics. In that year he purchased the company's first injection moulding as a sales and marketing company, was expanded into a manufacturing facility. machine, and the LEGO Company began to produce toys in both traditional wood Prior to these developments, all LEGO's international sales were based on exports and still highly novel plastics. As early as 1949 LEGO introduced to the Danish from the LEGO production facilities in Billund in Denmark. market the forerunner of LEGO building bricks, as we know them today. These With production facilities on two continents and sales in most of the world, were the revolutionary 'Automatic Binding Bricks', which were hollow on the LEGO began, in the mid-1908s, to establish its identity as a global company. After inside and had four or eight studs on the top. Automatic Binding Bricks could he took over the company in 1979, Kjeld Kirk Kristiansen, as we shall see later, only be used for making simple stacked structures. It would be some eight or nine made some important contributions to the sophistication of LEGO values and years before LEGO devised its well-known coupling system. identity for the era of globalization. In the meantime, international operations By 1950 Ole Kirk Christiansen's workshop had been replaced by a little factory, continued apace. Following the fall of the Berlin Wall in 1989, LEGO made a the number of employees has risen to 140, and the company has developed a priority of establishing markets in Eastern Europe, setting up sales offices in successful business selling LEGO toys to retailers all over Denmark. In that year Hungary in 1992 and in Russia in 1996. Meanwhile, in the early 1990s, the his son, Godtfred Kirk Christiansen, became the company's assistant managing company recognized that it was in a crisis. It must give up its traditional go-it- director. Part of the LEGO legend is that Ole Kirk Christiansen made his son alone thinking which was too closely bound up with the famous toy brick.' So Godtfred promise him that LEGO would never make war toys when he inherited it began to further internationalize itself by placing product development units the company one day. The legacy of this promise lives on in the modern LEGO outside Denmark. In 1996 LEGO established its first independent company where the thought of producing war toys would be considered heretical. outside Denmark, LEGO Media International and in 2000 it took over a leading In 1954 there was a major development in the product concept. The Automatic American producer of smart toys. Binding Bricks were called the 'LEGO System of Play', and the bricks began to be marketed as this concept in the following year. But the truly significant break- through occurred in 1958 with the invention of the new coupling system for the METHODOLOGY LEGO brick. Tubular protrusions were added inside the hollow brick, which not The material in this case study was gathered by Esben Karmark, a PhD candidate only meant greater structural stability but also made combination possibilities at the Copenhagen Business School, who studied the LEGO Company between almost infinite. On the advice of the company lawyer, a worldwide patent on the 1997 and 2000. He interviewed key managers at the LEGO Company head- new coupling system was taken out in the same year. quarters in Billund, Denmark, about the issue of the cross-cultural transfer of theLEGO identity. All in all. 15 interviews were conducted. The informants included two members of the LEGO Company executive team, Kjeld Muller Pedersen and Christian Majgaard. managers in nance, marketing and the product development department, a mother of the LEGO Global Brand Development Team, and. the manager of the LEGO Idea House, an in-house resource centre for the development of the LEGO culture and identity. LEGO Media International in London was studied between 1999 and 2000. Here, interviews were conducted with the general manager as well as other members of the management team. Furthermore. an interview was conducted with a LEGO media manager at: LEGO Inc. in liniield, Connecticut, in the USA. LEGO Media employees who had experience in working at both the LEGO headquarters and- LEGO Media were also interviewed. All interviews lasted between 60 and 120 minutes. THE GLOBAL MISSION As was noted above, it was the aim of the LEGO Company in the 19505 to become (then) an international company; today it regards itself as a global one. It was and remains central to the philosophy of internationalization pm! globalization that no country has advantages over other countries when: LEGO has established its own companies. Noris Derunark excluded from this formulation. Thus it is a delib- erate business strategy tor companies and production facilities in the LEGO Company outside Denmark to be run by country nationals. And this polycentrir form of control is taken a stage further: the LEGO Company was conscious not to impose the company culture of the Danish headquarters on the companies outside Denmark However. the company rigorously ensures that a common standard is applied to its products and marketing. This means in practice that the LEGO brand itself is one of the key elements of corporate culture,- and in this respect the headquarters in Biltund takes centralized control by issuing brand guidelines to all companies outside Denmark. With the company's diversication into markets other than the toy market (or play materials market as the LEGO Company prefers to call it) and its dispersal across national borders, the LEGO Company has experienced a growing need to ensure that knowledge about its values and identity is shared by everyone in the company. As Executive VicePresident Christian Majgaard explains: 'When the brand only stood for one thing we were not so conscious of die LEGO values as we are now. We have seen the emergence of a strong consciousness of what the LEGO brand stands for throughout the 19905.' It is the LEGO Company's strategic goal to be the world's strongest brand among families with children by the year 2005. {Cocaola.. beware.) In order to realize this goal. LEGO decided to extend its product range from construction toys to include amusement parks, media products, and lifestyle products. The rationale here is to roadi a greater number of what the company considers to be its core customarsr children under the age of 16 and their parents. This diversication strategy was signicantly inuenced by the popularity of video games, which are absorbing demand away from the construc- tion toy market. Thus. in order to maintain its position as one of theI largest toy manufacmrers in the world, LEGO has had to expand and elabOrale the range of product it offers to customers. Underpinning the diversication plan, LEGO is tocusing on three strategic priorities, namely the LEGO brand itself, the 'Peopte and Culture' concept. and protable growth. The rst two priorities are inextricably bound up with the LEGO Company's valum and identity. which are so central to ils overall businss strategy. The implementation at the diversication strategy resulted in 1999 in a major restructuring of the company worldwide. Called the Fitness Program, this morgnniution regrouped its 30 sales companies into seven regional companies across the world. The aim was to create what Kjeld Kirk Kristiansen called in a CNN interview in February 2000 a global brand organization. The Fitness Pro- gram, which was intrrxluced shortly after LEGO, for the rst time in its history, incurred a nancial loss (1993]. rapidly produced positive results. The company was able to announce that sales for the 1999 financial year stood at $1.25 billion, yielding a prot of $60 million. The concept of the global brand organization means ensuring that values, which are well-embedded and taken for granted at headquarters in Billund, are also understood and respected in subsidiaries that were previously operating with a high level of Independence. As we shall see. the company set about achieving this aim through formulating clear identity guide- lines lor the products in the new businesses. This meant that the headquarters at the company was establishing a kind 0! identity quality control. In the meantime, to strongman all these developments. LEGO has developed a new strategy of being open both for acquisitions and alliances? The values and identity of the LEGO Company togezher constitute guidelin as to what types of product should be developed and made, and how these should be presented to customers. in order to specify exactly LEGO'B values and identity as they an: today and how they, ideally, shall evolve in the future, the LEGO Company has setup a 'Culture Board' and a 'Brand Board', which are made up of members oi top management. The Brand Board, for its part. is supported by a 'Global Brand Development Team\concerned with the quality of his toys: 'Only the best is good enough' ran a sign in his original workshop. The founder's son, Gotfred Kirk Christiansen, or GKC, be the company's most valuable asset. Thus, the characteristics are an expression as he is known in the company, added to the LEGO identity. He is personally of values through which the company in turn expresses its own identity. credited with the invention of the studs-and-tubes system. It is this concept of the It is the responsibility of the LEGO Brand Board, mentioned above, to establish the child's building brick that evolved into LEGO's core product since the early 1960s permissible ways in which the values and identity are expressed - and enshrined in a key company document, the LEGO Brand Book, which is the LEGO manager's and has remained the symbol of the company ever since. GKC also perceived that the toy bricks of his day lacked what he called Bible, wherever he or she works on behalf of the company. The LEGO Brand Book 'system', by which he meant the possibilities for them to be combined to create describes how the LEGO brand values are closely related to both LEGO cultural values that have evolved throughout its history as well as top management's vision structures more sophisticated than simple houses. So he formulated the principle of 'system in play' for all LEGO products. This meant that all LEGO bricks, regard- for the future, and states that the core essence of the LEGO brand lies in stimulating less of shape and size, were designed to fit together. With their bright, 'official" creativity. All in all, the LEGO brand should express both Ole Kirk Cristiansen's notion primary colours (blue, red, yellow) plus black and white, the bricks are LEGO, of good play, GKC's ten LEGO characteristics and Kjeld Kirk Kristiansen's vision for being frequently used as a standard corporate symbol in all company publications the LEGO Company. This LEGO Vision, as it has come to be known within the and web pages. They are also used decoratively in LEGO offices around the world. company, is plainly a direct evolution of the precepts guiding the company since the GKC was also responsible for formulating, in the 1970s, the 'ten LEGO 1950s. In its Brand Book (LEGO Company, 1999) it states that the LEGO name shall characteristics' that LEGO products were meant to embody. These characteristics become a universal concept associated with three notions: idea; exuberance, and values: represent a set of guidelines for new product development and marketing policy: Idea Exuberance Values . Creativity . Enthusiasm . Quality . Unlimited play possibilities . Imagination . Spontaneity Caring . For girls, for boys . Unlimited Self-expression . Development . Discovery Unrestrained Innovation . Enthusiasm for all ages . Constructionism . Consistency . Play all year round . Stimulating and absorbing play Components of the LEGO Vision . . Endless hours of play In yet further refinements, the LEGO Company expresses its values and Imagination, creativity, development identity through two corporate affirmations: its fundamental beliefs and its . Each new product multiplies the play value mission, which are presented in the boxes that follow. . Always topical . Leading safety and quality LEGO fundamental beliefs Children are our role models. The LEGO ten product characteristics They are curious, creative and imaginative. They embrace discovery and wonder. They are LEGO's top management considers these product characteristics to be as relevant natural learners. These are precious qualities that should be nurtured and stimulated for the company today as they were when they were written 30 years ago. But they throughout life. Lifelong creativity, imagination and learning are stimulated by playful are more than characteristics; they are also the foundation of the company value activities that encourage hands-on and minds-on creation, fun togetherness and the system. This means that LEGO is somewhat unusual as a company, as its value system sharing of ideas. People who are curious, creative and imaginative - who have a childlike urge to learn - are best equipped to thrive in a challenging world and be the builders of derives from its products and is not based on a set of precepts which explicitly our common future. specify (ideal) employee attitudes and behaviour. Consequently, the company's identity is very strongly associated with the LEGO brand, which is considered to LEGO fundamental beliefsThe LEGO mission To nurture the child in each of us. All LEGO product's appeal to children's imagination and creativity by altering them unlimited possibilities. The LEGO mission [I is a key concern for LEGO that the products today continue to live up to the Characteristics of creativity and quality. Regarding quality a recent publication, \"A Profile of the LEGO Group for the year 2903' (published by lite LEGO Com- pany on mulegaxom, 2001) noted three dimensions: In our largest business area, LEGO Flay Mammals, we associate quality Wlth the following requirements: Technical qualiry' Our play materials must have such properties as durability, stability, consistent colors and product safety. Consumer quality: Our play materials must provide unlimited opportunities, permitting children to play with them in many diflerent ways. Development quality: Our play materials must be attractive to children and retain their interest year after year. They must stimulate and develop children's senses, motor abilities, imagination, creativity and intelligence. II: is impossible to exaggerate the importance of children and their development within lhe LEGO Company. 'Children are our vital concern as a dependable partner for parents. it is our mission to stimulate drildren's imagination and creativily, and to encourage them to explore, experience and express their own world 7a world without limits.' it can all besummert up in the expression 'respect for children\Iime that LEGO was gong to permit a wholly owned subsidiary company to have global responsibility for the production and marketing oi LEGO-branded goods in this case media products. As such, it is the rst and only company in the LEGO Group outside headquarters with such a wide product mandate. LEGO Media International also operates in a rapidly growing, innovative industry with highly compressed cycle times. The issue we will address is. of course, the challenge of ensuring that the people working for LEGO Niedia international fully understand. the values embodied by the company identity and work with them accordingly. By entering into a new business area such as media products for children, the LEGO Company has opened up the potential to build on the company image. LEGO already has a strong position among the world's leading brands, but to become the bestvknnwn brand by 2005 requires that the LEGO Company reaches a wider target audience than can be achieved by the toy-based categories alone. One factor behind LEGO's entry into this new business area was the awareness that 'lcids are getting older younger\". This means thatchildren today lend to stop playing with conventional toys at an earlier age than in the past in order to direct their attention twards other things such as computer games and other media products. LEGO. as one at the world's bestknown suppliers of toys, had little option but to take up a key position in this market. But it does so with a very big advantage the power of the LEGO brand to reach out to children who may have already enjoyed LEGO bricks. As the London Media PR manager explains: 'One posihvebenelil that we can bring as inspiration (or LEGO to do things differently is that we can make LEGO into something for older kids. You know, if they m that something is available on Play Station they think it's cool - kids today want crossmedia mica-ewe! When it opened in 19%, LEGO Media employed seven people. It has now grown into an organization of more than 102) stall, most of whom come from the software or the publish'mg industry It has recmited ambitious young people, mainly British, with creative talent from a completely different business sector (Le. software]. many of whom offer tectmioal competences with limited commercial backgrounds. But many of the key marketing and commercial positions are held by people from various European and non-European backgrounds. All Ihe LEGO Media employees have something what Billund cannot otter: they bring pace to their activities and many have experience 01 the exceptionally last-moving software industry, where sometimes the lead-lime for developing a new software product can be as little as two months. All this contrasts dramatically wtt'h development times of up to several years for the company's traditional constanc- lion toys. Apart from one manager and four people in product development. none of the current employees has a LEGO background. The average age is 23 and the British managing director is in his early thirties. Thus LEGO Media personnel have created a corporate culture which is quite different from the culture of the group headquarters in the quiet town of Billund in Denmark. But, as we shall see, the age prole is but one factor, LEGO Media produces, but does not manufacture. LEGO Media in tact produces more than soltware titles. it also publishes a LEGO magazine and LEGO books and is now moving into the production of children's and iarnjly pro- grammes for television, lm and the 1ntemel. With expanding sales in the USA, LEGO Media has opened up an outlet in Connecticut and will strengthen its London-based film and Internet offerings with aproduclion unit in Los Angeles, In terms of employees, LEGO Media is a small company, but its sales are in the region of $160 million, making it a very signicant contributor to the group at large. There is no doubt that: the LEGO style of management. whidi is hands-off in the Danish way and erongly supportive of localization, has given the managEment learn at LEGO Media freedom of operation, and this may be a major factor in amount- ing for its success to date. But, the key question is: has this involved a compromise of the LEGO identity, the traditional childcentred glue of the company? THE LEGO REVOLUTION IN THE USA In spring 2000, LEGO made its first major purchase oi another company by taking over a high-technology toy rm. Zowie Entertainment, in Mateo, which is about 30 kms from San Francisco. The move is partly a mponse to the Danish concern that the company can no longer hold an to the 'goitalone' philosophy of the founding lather. The US company specializes in innovative smart toys and had earned from Newsweek the accolade of producing 'the IT toy of the year. The takeover suits both companies The American business secures massive investment [tom its new parent company and. was ll'l any case looking for a partner in the form of a major Toyama. LEGO was easily the most interesting match for the Zowie's founder, john Lemonchec'k, who Liked the idea oi the DaniSh company being unquoted on the stock exchange - one does not have to worry about grumbling nancial analysts and shareholders. LEGO now owns a company which can enable it to be a world leader in computer toys. After the deal was struck a joint oil-strong DanishU5 tasktorce was set up to develop joint projects, but the number rapidly swelled to 200. As well as software designers and engineers, the taskforce also has Child psychologists, whose task is to involve children, several thousand of whom already cooperate with Zowie Entertainment to help with the treat-ion oi new generations of the LEGO computer toys. The rst few months of the new arrangement have meant a consider-able amount of transatlantic travel, frequent video-corderencing and intensive E-mailing. The nine-hour time difference between California and Jutland is forcing changes in work patterns in both locations. A striking feature of the takeover is its relative smoothness and there can be no doubt that both companies' comma-lent to children was a positive factor. There can be no doubt too that Zowie Entertainment saw no problem is merging with the LEGO identity. The fact that the new entity is called LEGO Lab San Mateo speaks volumes for a so far remarkable collaboration. The LEGO identity in cross-border management Consistent values and a strong product idea have always been used in LEGO to bind the company's business units into an integrated whole. But hitherto those mot-rpm applied to physical objects: construction toys, media products for children, lifestyle products for children such as clothes and watches, and amusement parks. But software is, as it were, metaphyslcal. "there is nothing tangible from which to derive anything about the com pany's identity except through company name and logo on packaging materials. As we saw above, the traditional identity of LEGO and its value system have been based directly (and lovingly) on one quintessential product, the Famous toy brick. The nub of the challenge is reeded in this com- ment by Mark Livingstone, the General Manager at LEGO Media: LEGO Media spent oomiderable time discussing the concept of basing our products on the values. of the LEGO Group rather than the physical play materials. Our objective is to demonstrate how Ialeral and innovative we can be in the virtual world. We feel liberated rather than constrained by the LEGO Group's traditional values and concepts. which we are now extending into media products for children aged between two and sixteen. Behind Livingstone stands the central message from the company headquarters in the form of a guideline in the LEGO Brand Book: 'I'rod ucts and services marketed under the LEGO brand can take many forms . . . As a creative software as long as that software is loyal to the values of the LEGO brand, allowing children to explore and express themselves.' As LEGO considers both children and then parents as their core consumers, the idea is that any LEGO product, including software materials, should provide both groups with valuable benefits. As far as adults am concerned, LEGO wants the consumer to experience the benets of learning togetherness with their children: and, as for as children are concerned, LEGO wants them to experience play as self-expressive stimulation. The com, pany's wish is that in their different ways children and their parents will find innite opportunities for enjoying the brand. The challenge to LEGO Media is to develop and market its software products in a way that is oomistent with those values The challenge to the oompany headquarters is to make certain that this IS what happens, without imposing any kind of 'Culhrr'al impuriaiism' on its novel London subsidiary. LEGO Media has skilEuIly and sensitively taken over the core company values and adapted 'lem not to suit its own culture, but to reect the nature of software play materials. As we shall see presently, the company has modied the ten Characteristics of traditional LEGO products for this purpose, But let us consider rst the guidelines being evolved by LEGO Media in its own presentation maten ials. First it identifies itself with the Iong~standmg core values of LEGO: The central task of the LEGO Group is to stimulate children's. imagination and cro- ativity. By taking children's inlerES-ls seriomly, and by encouraging them bo explore, experience and express their own world, the LEGO Group has achieved market dominance in Europe and a leading position among the world's top ten manu- facturers. Now at LEGO Media International, we are Extending this philosophy, slimulating in fresh ways with surprising new media products. Then LEGO Media develops its own gloss on the traditional product philosophy: Unlike oonventional ready-made toys, LEGO products are components which can be combined, altered and dismantled in an almost innite variety of ways. This maklta them inspiring, challenging, edwcalinnal and fun for children all over the world. Children develop by testing their own limits and those who play with LEGO products derive growing pleasure as their skills improve. Similarly, parents come to regard the LEGO Group as a trusted partner whose products offer increasing value for money as they buy more. Our task at LEGO Media International is to inspire the same feelings at mumer condenoe as we develop the concept of constructive play through innovative media. Then LEGO Media explains its management philosophy, which is based on the LEGO Vision: The management team is backed by the LEGO VisiorL a formal set oi value-:1 that must be reected in all new product design packaging and marketing, as wall as in the way we conduct our business and communicate with consumers. LEGO Media General Manager Mark Livingstone explains: \"We tools. the LEGO Vision of idea, exuberance and values and then asked ourselves: what does that mean in a software context? The company was given considerable independence over the evolution of its own philosophy in order to develop its own corporate identity, but the process always had to unfold in consultation with senior managers at headquarters in Denmark in fact. the creation of the modied identity for LEGO Media was achieved with relatively little intervention from headquarters. As a result, LEGO Media was able to arhieve its objective of building on 'the natural :1 ' between LEGO play materials and media products. As stated in ne LEGO Media's presentation material: \"By faithfully applying LEGO design elements and the concept of constructive play, we are ensuring that traditional and contemporary LEGO ranges teed off each other's success.' One of the more remarkable instances of corporate headquarters not overriding its London subsidiary concerns the modification of its own mission as a new entity within the LEGO group of companies and the adaptation of GKC'r. ten product characteristics. LEGO Media recognizes that as a LEGO company it The character of our business is distinctive. LEGO Media International takes youthful must 'unlock childrens' imaginations and satisfy parents' wishes'. Accordingly, the flair and harnesses it to a framework of values that have proven their worth over London affiliate's mission is to 'make children's play more constructive': many years. The result is an enterprise that's responsive yet responsible, inspired yet never impulsive. . By inspiring them to be creative Our task now is to explore the LEGO experience from a cross-cultural manage- . By encouraging social play ment point of view, making use of statements supplied by company managers in . Through customized game play Denmark and the UK. Then we will attempt to interpret this experience from a knowledge management perspective. . Through a mix of structured and open-ended play Millennium meetings . Through mental and physical challenge In order to improve its global networking, LEGO has introduced the concept of Parents (or at least adult purchasers for children) can have reassurance about the 'Millennium meetings'. These take place periodically and involve executive board quality and performance of LEGO Media products: members from Denmark and senior managers working for LEGO in regions such . In our rigorous attention to product testing as Europe and the Americas. In 2000, some 90 members of the LEGO Americas management team particip- . In the helpful way we treat our customers ated in the first 'Americas' Millennium Meeting' which was held by the LEGO . In the clarity of our packaging and print Executive Team (corporate board) and involved CEO Kjeld Kirk Kristiansen and three executive vice-presidents - Poul Ploughmann, Peter Eio and Christian . In the consistency of our brand marketing Majgaard. The agenda included presentations by Kjeld, Christian and Poul who emphasized the importance of strategic planning, innovation, building brands and A notable feature of this case study about LEGO is that its managers outside dreams. The pronouncements of the company's senior officers give an illuminat- Denmark find it easy to identify with the company and its traditional values. A ing insight into how LEGO currently views itself. London-based marketing manager told us: 'What I love about the brand, as a Concerning strength of the brand, Majgaard stressed that, although the com- marketer, is that it stands above all for quality and an attention to detail.' LEGO pany operates a single-brand strategy based on the LEGO name and the LEGO Media's sales director for Europe and the Middle East commented: 'LEGO has logo, the challenge is continually to create new product ideas and business ideas high ethical standards. We don't put our name on just anything.' Again, in an which closely fit the core values. Such ideas would be measured by three criteria: expression of high regard for the company, the LEGO Media PR manager said: 'It is the only company that I have worked for where I really believe in the company . The accumulated awareness of our values and image story.' . Status on children's wish lists Thus the brand and the values that the LEGO Group have ensured that people have come to expect of it through decades of consistent dedication to quality . Customer satisfaction and wholesome play for children serves as a kind of beacon for LEGO Media Behind this aspiration stood the business realities. Although the company's most employees when developing software products. Accordingly, LEGO Media takes valuable asset was its brand, described as 'fantastically strong' by Ploughmann, great care to develop software for children that is creative and which can provide there was no room for complacency. The company was doing everything to children with a genuine learning experience. That the LEGO brand is vital to ensure that all its stakeholders were aware of the LEGO values and how these LEGO Media is acknowledged by the London company: 'In the crowded chil- were seen as the foundation for business growth and the corporate culture. Thus dren's software marketplace, LEGO values give us a unique point of difference. the company had set 2005 as the target year for LEGO to be most well-known Parents feel reassured by the LEGO name - it is their guarantee of carefully tested brand among families with children. Ploughmann saw the future and the products that combine fun with imaginative content.' company's overall profitability in terms of a novel trinity composed of 'ground- All in all, then, the LEGO heritage informs the LEGO Media identity, even breaking concepts, compelling stories and aggressiveness'. A ground-breaking though the latter has elaborated its own interpretation of the LEGO identity. This concept was anything from LEGO which seized the consumer with a sharp sense is acknowledged in the LEGO Media presentation brochure: of excitement and surprise.Ploughmann stressed the importance of the worldwide LEGO culture and with It's interesting to see the development that has taken place. When we started this we the year 2005 firmly in mind he introduced his own vision, a concept he called 'the were only a few people, and we had discussions about what sort of software we were Dream'. The Dream had three core elements: strengthening the brand, attaining going to make. The attitude then was a bit like, okay in the beginning we have to profitable growth and developing the corporate culture. Central to its realization make something that's related to LEGO, and we will make two or three games, and was the conviction that working for LEGO meant that employees were in an then we have probably run out of ways to relate them to LEGO. ... In the beginning it was a bit difficult because I was the only one from LEGO and the others were from excting, creative and happy environment where things changed, had to change. the software business. And it was like they knew what this was about, and I did not This necessitated the development of managers who were entrepreneurial in really know what it was about. I might have known about LEGO, but I did not know temperament and capability and diverse in national, linguistic and professional anything about software. But as they learn to understand LEGO, that LEGO is more backgrounds. Only managers such as these could create the key conditions for than plastic items you sell in a box; the deeper the understanding they got of LEGO, change and carry them through the company. and the more I learned to understand their world, the more both parties could At the end of the Millennium meeting Kjeld Kristiansen summed up every- appreciate each other. My role was very much to bring these values to LEGO Media, thing with these words: "It seems that there is much agreement. It is good that we and after a couple of months these values were internalized here. all share the same commitment and the same sense of what challenges we will In the early formative period of LEGO Media, considerable emphasis was have to take on in order to become a global brand-organization.' placed on creating a mission statement that reflected traditional LEGO values without constraining the scope in the new company. Kalcher explains: CROSS-CULTURAL MANAGEMENT ISSUES In the beginning we had a seminar with the aim of writing [the mission statement] Since the early 1990s LEGO has ventured into three new and strategically up. That is, what was our purpose, and how should we take values that stood for important business areas: the LEGOLAND parks, lifestyle products and media LEGO; which of the old ones should we not include, and which new ones should we products for children. In many cases these developments have entailed LEGO include to achieve what we wanted to achieve? .. . The vision with Idea, Exuberance and Values . . . we all know that we are low on exuberance - in what we are offering setting up a presence in countries outside Denmark. In each case the company has to the consumer from the toy category our exuberance is, perhaps not low but low in applied its philosophy of transferring its values, as symbolized in the philosophy comparison to the two other dimensions. That is, it is a strong idea, and there are associated with the famous toy brick. However, it would be mistaken to see plenty of values but exuberance, that is about running around shouting WOW! and the company policy of hands-off localization as a trustful detachment of head- that is not our strongest side on the toy front. And exuberance is what sells computer quarters. As Christian Majgaard, a member of the LEGO Company's executive games, it has to make a strong impression, it has to be fun, and there has to be plenty management, explained, a factor in this policy is to stimulate cross-cultural of action. That's why it was important for us to be 'hot' in that category. Overall we learning: really have spent a lot of time on, and talk a lot about, what values LEGO stands for, and what we should measure us against. LEGO has pursued a core model in our business development throughout the 1990s. When establishing new companies we have mixed employees from the old This emphasis on fun is a good example of cross-cultural learning. The idea of LEGO culture with new employees. The employees from the old culture act as culture fun as a core element in any LEGO product offering was wholly new. According carriers, and when the old culture meets new ways of looking at things we achieve a to Carsten Wammen of the LEGO global development team, the company has fruitful crossing of old and new. recently modified its mission statement to express a stronger emphasis on fun. Behind this was a realization that the LEGO values and identity were beginning to It is just as well that headquarters take this point of view, as LEGO Media be presented in increasingly cerebral ways; and there was a fear that the company considers diversity as one of its key strengths. Not only that: it regards the high might be losing its touch with children's way of thinking. concentration of one nationality - Danes - at headquarters as something of a The cross-culturally interesting point is that fun is not central to Danish life deterrent to creativity. (having a good time, yes, but a rib-tickling experience of pure mirth, no), whereas When LEGO Media was established in London, a local employee with ten English life is virtually inconceivable without references to having fun. So, if years' experience of working with LEGO, Conny Kalcher (now director of LEGO LEGO had not chosen the UK as the base for its software operations, it is very Media Film and TV production), was a member of LEGO Media's executive team likely that the Danish would have continued its unconscious, subliminal transfer with special responsibility for transferring knowledge of the LEGO values and of Danish seriousness. But the credit goes to headquarters for its willingness to identity to the London company:adapt its mission statement. As a result there has taken place not only a re- formulation of company values, but also a reinterpretation of them. This small example reveals very clearly how cross-cultural learning can prove to be :1 force for revitalization in a family-owned company which, like LEGO, is all loo cons scion: of le weight of tradition. It seems overall that the LEGO Media employees acoept the scope that they are offered, whilst conforming to company policy about developing what it regards as socially desirable products Kali-her again: We might start out with a game, which then is nude into a toy. What we cannot do. and what we should [10! do is to make mmerhing that does no! til our brand - tliatdoes not fit our value system. That means that we should not make 'slloot Ihem up' games, we should not make anything that racial or sexist. We should make something which is deeper and more inlellecturil in relation to children, somelhing that ts children's potential for development. There is one nal crosscultural point to be made. This concerns the contrasting image that LEGO has in Europe and the USA respectively. It might first of all be thought that LEGO has a. uniform image all over the world. But employees of LEGO Media do not entirely share this belief. In their experience. the LEGO image in die USA is significantly different from lhe image in Europe. [.1111 they suggest, is more of a lifestyle product in Europe, whereas the image in the USA is more closely connected to the traditional LEGO products of bricks and mini iiguresl Perceptions of the company image are strongly associated with how employees in the company interpret Ihe company's identity. The company may do well to investigate this contrasting image, as it suggests thal consumers in Europe, on the one hand, and consumers in the USA, on the other, may be drawing on different aspects of the corporate identity. That has implications for not only how LEGO differentiales llS appeal to consumers on both sides of the Atlantic, but also their stakeholders. among whom must be taunted millions of children and their parents. Awareness of differences in a company's image can lead to valuable knowledge of how to differentiate the way in which a company's identity is expressed towards the consumers and other external stakeholders. A KNOWLEDGE MANAGEMENT PERSPECTIVE ll is important to slate at the outset of this section lhal the general lack of fric- tion between LEGO headquarters and the London subsidiary 15 because English is the corporate language. Indeed. one could describe the English language as thoroughly domesticated within LEGO. This creates conditions for what Christian Majgaand calls 'sl'la-led mental spooe' belwam the M'oenh'. Unlil and unless there is shared mental space, Blane can be no adequate lransfer and sharing of know- ledge. Shared mental space is the guarantor of whal knowledge management experts call \"absorptive capacity', that is the presence of enough related knowledge to absorb new hiowledge. A common language is a form of shared mental space; differences between languages can be a severe occasionally almost total constraint on achieving this condition. As has already beennoted, LEGO does not wish to impose its management style on its foreign subsidiari, but does wish to transfer its notion of a children-oriented corporate culture and its emphasis on creativity and design. This otherwise 'unnal'ural" separation of powers, as it were, is made workable by the fact that LEGO has latched on to its identity, which is symbolized by the world-renowned my brick, as the focal point 0] the company euros and pivot of employee attitudes and behaviour. The identity therefore is a Spoc'ml kind of knowledge resource within the company. In LEGO Media, for example, knowledge about LEGO identity and associated values which back up the allsirnportunt brand has inspired and guided the development of new products and concepts, which might not have materialized at headquarters. All in all, messagoc about product design criteria, for example, are conveyed in the form of guidelines rather than directives. These guidelines are inlended to stimulate and not hamper creative impulses. As we nobed in the discussion earlier about the value of fun, the lack of tight control over identity from Denmark permits new ideas and therefore new knowledge about the identity. Thus, as also noted, the capacity of the company to admit new interpretations of the identity from outside corporate headquarters permits revilalizaon. In this sense lhe mister of identity knowledge within LEGO appears to be associated with operuiess, which makes CIOES-Cttural synergy a possibility. A: LEGO Media's PR director says: The brand promise is essential. LEGO Media is striving for conlinuous improvement - we are trying to do things better than anybody else. An analogy between the LEGO brick and software is lhal software is never finished 7 there is a similarity bemeen designing LEGO toys and designing software. And it is important that we do not become Mcrand.' This is a very interesting form of transfer of terminal knowledge resulllng in cross-cultural synergy. It works because designers saw analogies and similarities despite the fact that designing software would appear to be very remote from designing construction toys. 30 it is that LEGO Media is able to cleave to old values, such as the emphasis on product quality, and introduce a competely new value, fun, without 'the old guard' at corporate headquarters feeling that there has been a compromisa or deviation, In so far as knowledge management. whether consciously or unconsciously practised, is supposed to add value to company performance, the LEGO experi- ence demonstrates that in the case of LEGO Media employees feel good about working for the entire group, identifying with the values of the whole group and not focusing 'nan'owly' on their own company. This is well expressed by one London manager: 'What attracted me to LEGO was the reputation of the warmth learning atmosphere. If that is so, then the Danish - or at least LEGO - variation of the company, and it is a fantastic brand.' In a similar vein, the marketing on the theme suggests that cross-cultural learning has a greater chance of succeed- manager of LEGO Media stated: 'LEGO is very much about the brand, and to me ing when the nominally senior group in knowledge exchanges is not too concerned the LEGO brand stands above all for quality, and what I love about the brand is about imposing its values and thinking on others. the attention to detail.' MANAGING IDENTITY FROM A KNOWLEDGE MANAGING IDENTITY AS CROSS-CULTURAL MANAGEMENT PERSPECTIVE KNOWLEDGE TRANSFER Since the days of Ole Kirk Cristiansen the LEGO values have traditionally been The concept of the LEGO identity can be directly traced back to the philosophy of connected to more abstract values ('play well'). But it was the invention of the the company's founder, Ole Kirk Christiansen, in 1932. Christiansen's emphasis LEGO brick that caused the new values to become increasingly associated with, on respect for children and the importance of making them toys of good quality to and symbolized by, the brick. For example, the brick gave birth to the value of stimulate their creativity and overall development have always remained at the constructionism' which in LEGO lore means that LEGO products are designed core of the company value system. Consequently, from its very origin, LEGO has so that by building with the bricks the user can create something that is wholly linked together in the minds of its employees the concept of the brand more as a original. The notion of constructionism leads to the related value of creativity, set of values than a complex of consumer benefits. The brand, the values and the which encourages people to combine the bricks and colours in inventive ways. company history have commingled to create a special identity, with which, it These values extend to LEGO product developers, who have created the LEGO seems, employees readily identify (perhaps because the company can always watch, which has a studs-and-tubes-inspired design, comes in the LEGO colours, appeal to the child in each of them). but allows the wearer to change its look and colours. This identity has been both carefully groomed and controlled by the corporate With diversification into software, however, the company has entered into a headquarters. The company has been astute enough to appreciate that the identity market in which the products are 'virtual' in nature. Accordingly, LEGO has had cannot be frozen in time. It is probable that the emergence of educational software to re-evaluate its organizational identity to incorporate values that are not just in the early 1990s compelled the senior management to realize this. They realized associated with tangible products. The section above on LEGO Media Interna- that they would not be able to survive as a supplier of conventional toys unless tional shows how LEGO's 'object-related' values have had to be reinterpreted by they moved with the new media products. As we saw in the case of LEGO Media, the London-based employees in LEGO Media to suit the presentation of media the company in effect trusted their London subsidiary to reformulate the identity products to the children's market. This has been achieved in such a way that as long as it did not affect the power of the brand. As a result, a remarkable the fundamental, but also more abstract, values of good play, high quality and instance of cross-cultural learning took place: first, the software developers found creativity are all part of LEGO's media products. This reinterpretation has inspiration in the LEGO's design practices for conventional toys; second, the UK signalled to all the employees of LEGO and its customers that the values, even in team found it straightfoward to accept that socially undesirable software games more abstract form, are just as powerful and distinctive as those associated with were out of the question; and, third, the collaboration led to the introduction of a the LEGO bricks. One of the LEGO Media managers has suggested that the new' concept: fun. analogy between LEGO and software is that software is never finished. Software The processes of transferring ideas and practices are not explicitly managed has 'constructionism' - you can always build on it in a creative way. However, the by the company as a cross-cultural activity, nor as an exercise in knowledge challenge for LEGO Media is to develop 'constructionist' software into a product management. Yet both are key elements in these processes. From both perspect that is distinctively LEGO. Ives it is noticeable that the knowledge exchanges between Denmark and the UK The experiences traced in this case study show how the establishment of LEGO are characterized by relatively little resistance; the cross-cultural learning has Media has expanded the scope of possible interpretations of the LEGO values plainly taken place in 'shared mental space'. It was suggested above that this was (and it is likely that the same phenomenon will emerge from the LEGO Lab San attributable to the fact that the Danish colleagues possess an exceptionally good Mateo in California). This process of reinterpretation is a form of knowledge command of English. But there may be another factor at work. The Danish way management in the sense that each reinterpretation renews the company's of management, which stresses consensus and lack of confrontation and dislikes knowledge of itself. An interesting concomitant of this process is that LEGO has highhandedness, may have been conducive to the creation of a cross-cultural expanded its portfolio of core competencies, which are much concerned with thecommunication of a consistent identity both within the LEGO group of companies and with its stakeholders, including children everywhere. It is in fact hard to over- estimate the value of the LEGO identity as a source of inspiration to employees. Provided that they understand the immutable fundamental values of the companies, employees are empowered to apply them creatively and thus add to the company's core competencies, which may be seen as the collective learn- ing of the organization. The significant thing about the shift from a traditional form of management of identity to one that recognizes identity as a knowledge resource only took place after the company set up LEGO Media International in London in 1996. In other words, the willingness of the company to be genuinely open to foreign ideas has been a significant step in developing LEGO into a knowledge-based company. Thus, the LEGO Company provides a very clear example of how company identity can start life as a store of company values associated with the country of origin and then become a repository of expandable organizational self-knowledge through creative cross-cultural collaborations. AFTERWORD: A QUINTESSENTIALLY DANISH COMPANY NEVERTHELESS We learned that LEGO has a policy of playing down its national origins as a Danish company and that, correspondingly, it abhors 'cultural imperialism'. As we saw, it actively restrains itself from imposing its management style on local subsidiaries. But we cannot leave it at that. LEGO is in its own way one of the most quintessential of Danish companies. Its attitudes to children and the way in which the company wishes children to create their own world through its products draws striking parallels with the great Danish writer of fairytales, Hans Christian Andersen (1805-75). Andersen wrote fairytales which do not merely have a timeless quality, but do not always specify the location of the story. The Little Mermaid, the Tin Soldiers and Thumbellina may or may not be Danish. Nevertheless the writer was strongly influenced by Danish folklore. Children who read the stories enter a world of enchantment and use their imagination. So, whereas Andersen used words to enable children anywhere to create a fantasy world, LEGO makes products which appear not to be especially Danish and which serve children in an similar way. Has no one ever noticed before that LEGO is in the fairytale business and making a fortune out of it? Perhaps that it is why so many people, regardless of nationality, like working for LEGO