LEGO is one of the most powerful brands in the world today; its story is now one of legend; with corporate giants Sony, Boeing and Adidas to name but a few looking to emulate LEGO’s success.
In the first half of this year LEGO reported a staggering 14% increase in consumer sales as per the same period last year, and 7% revenue growth (€2.1bn) despite COVID-19 lockdown measures and restrictions. This success did not come overnight however; in 2004 LEGO posted a record loss of ~$292 million which sent the company to the brink of bankruptcy.
In the early 2000s; new technology was disrupting commercial markets, similar to today. LEGO responded to this challenge by transforming its business and operating model to allow for rapid innovation and new product development.
The result? After an onslaught of new products to the market only 6% of these innovations were making money. LEGO realised that aligning its operating model to respond to digital disruptions in the market was only part of the story and this alone could not keep the toy manufacturer relevant in an ever-evolving digital world.
In response, LEGO looked inward to its Organisational Design – how it organised, categorised and sequenced its work and workforce, to build a culture of innovation and continuous improvement that would stand the test of time; all the while staying true to its core purpose and philosophy.
Going back to its roots - the humble brick - LEGO realised that the secret to achieving enduring market success was not just about putting the building blocks in place to allow the company to innovate; but rather, placing equal if not more focus on building the right culture, capabilities, processes and team structures around this model to align it with the company’s core purpose, values, and ultimately its business strategy.
Today, the 4th Industrial Revolution ploughs on; callously ignoring the on-going global pandemic and the unprecedented challenges now facing organisations. Some of whom are scrambling to normalise remote working regimes, while others are fighting for their very survival with cumbersome and inflexible business operating models.
As with LEGO in the early noughties; we are all living in a world with prolonged uncertainty and ambiguity; and we are in a very real way, re-inventing the nature of work right now, without a roadmap, plan or playbook. The next wave of the future of work has arrived, and organisations must adapt, or risk being left behind with a business model that can no longer meet the expectations of its workforce, customer base or society at large.
The reality of the COVID-19 pandemic has meant that digital transformation timelines of many companies have been expedited from ~3 – 5-year roadmaps to a mere matter of months.
While this may seem like a daunting reality; there is immense opportunity to be gained for businesses of all sizes. Business leaders are now in a position of choice - what kind of organisation to build for the future? We know organisations have been under increased scrutiny even prior to COVID-19, with workforce expectations changing around how work is structured and organised, how it is performed and even where and when it is carried out. The arrival of COVID-19, while unwelcome, has brought these topics to every executive board table in the country.
In the midst of the ever-evolving Future of Work and in the wake of COVID-19, we are naturally seeing increasing numbers of organisations turning to their operating models.
Aiming to understand where they can drive efficiencies from their core processes in a valiant effort to stay relevant, reduce operating costs and streamline operations.
However, as mentioned, the operating model alone tells only part of the story. In addition to the tangible design elements that shape the physical form of an organisation; it is now more important than ever to consider the less tangible design elements that influence the essence of an organisation; such as the culture, values and behaviours that comprise the beating heart and very DNA of the organisation.
These elements coupled with people structures, capabilities and workforce shaping form the core components of modern Organisation Design.
They are the levers that enable organisations to achieve and sustain business strategy and performance goals through their digital transformations and beyond. At their core, organisations are complex social systems, not machines; and therefore, cannot thrive without a human centred culture, as machines increasingly permeate the workforce.
One definition of Org. Design is a deliberate process of designing structures, roles and responsibilities to create an organisation capable of achieving its strategy. A decision-making process with numerous steps and many choices. In reality, however; it is really about the people, and how they are equipped to do their jobs – involving everything from structure and hierarchy, to talent and development, to trust and empowerment.
It is clearer than ever before, that machines and technology will play an ever-increasing role in organisations as we move forward through the COVID-19 pandemic and look to “build back better”.
With rapid sophistication of commercially competitive AI and RPA solutions, organisations must look at how to build an operating model that facilitates these new technologies; but equally must apply an organisation design that aligns the strategic purpose, ambition and strategy of the organisation with this model.
If we are to learn one thing from LEGO’s success it is that, in order for an organisation to stand the test of time, business leaders must look beyond the building blocks of the operating model. Design with intent; look to the workforce, and how that workforce is organised, engaged and empowered to deliver the strategic ambition of the organisation.
- Organisational design is more than just boxes on a page. It can be appropriately deduced from the capabilities, processes and right-sized team structures within a business, but ultimately it must reflect the business strategy and reinforce the culture & purpose of the organisation.
- COVID-19 has resulted in uncertainty and ambiguity becoming everyday challenges. As organisations seek to ‘build back better’, the required levels of strategic agility will be displayed through a continuous re-examination of the way in which work is done.
- In the 4th Industrial Revolution, organisations must evolve their operating model (and their organisation design) in parallel with the introduction of new technologies, but also with a deeper understanding of the interplay between machines, technology and talent.