Lego’s next big challenge: exporting its unshowy culture

November 9, 2013 Leave a comment

Lego’s next big challenge: exporting its unshowy culture

By Leo Mirani @lmirani November 7, 2013

revenue-net-profit_chartbuilder

It’s already the second-biggest toy maker in the world, after Mattel. Now Lego wants more. In 2014, it will go from having one global headquarters, in Denmark, to five. The company is expanding its offices in London, Singapore, Shanghai and Enfield, Connecticut to form a network of global hubs. The reason is simple. Lego cannot hope to be a global company from its offices in Billund, says one Lego employee. With a population of just 6,155 and a journey of more than three hours on the train to Copenhagen, Billund is an unlikely base for a world-beating firm. Its claim to fame, apart from Denmark’s second-busiest airport (which really isn’t saying very much), is Legoland.Lego has been growing by double digits for at least the past decade. In FY 2012, the last full year for which numbers are available, the company’s global sales hit 23.4 billion Danish kroner ($4.2 billion), up 25% from the year before. Its net profit margin stood at a healthy 24%, twice that of Mattel’s in 2012. But it needs to expand if it is to continue this sort of growth. China, for one, is high up on Lego’s list of priorities. It’s building a new manufacturing and distribution facility there that it hopes will supply China’s growing middle-class, CEO Joergen Vig Knudstorp told Bloomberg earlier this month. Besides, the company wants to avoid a re-run of the late 1990s and early 2000s, when its business nearly collapsed due to a series of bad management decision.

Yet expanding across the world poses a challenge for what remains at heart an essentially Danish operation—something the company hopes to export to its new offices. Within the company, according to the employee, there is a policy of not being too showy or brash. This is characteristic of Scandinavian culture. Called “Jante’s Law,” it boils down to remaining humble and not calling too much attention to yourself. It’s unlikely to be an easy sell to Lego’s new employees schooled in American exuberance or Chinese confidence. Making sure the pieces fit together will the biggest challenge as Lego continues its march to global dominance.

Filed under Life

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a comment