Assignment: Movie‐making Business
Assignment: Movie‐making Business
The culture of Lego changed to one that refused to accept nonperformance. The company ’ s past showed a tendency to focus on innovation and creativity, often at the expense of profi ts. But that changed. “Knudstorp . . . made it clear that results, not simply feeling good about making the best toys, would be essential if Lego was to succeed. . . . Its business may still be fun and games, but working here isn ’ t,” 20 describes the current culture at Lego .
Some of the most drastic changes came from within the Lego organization structure. After its massive losses in 2004, Lego switched its employee pay structure, offering incentives for appropriate product innovation and sales. Key performance indicators encourage product innovation that catalyzes sales while decreasing costs. Development time dropped by 50%, and some manufacturing and distribution functions were moved to less expensive locations, but the focus on quality remained. The creation of reusable parts alleviated some of the strain on Lego ’ s supply chain, which in turn helped its bottom line.
Lego also expanded into the virtual world, extending into video gaming and virtual‐interaction games on the Internet. Thinking outside the company ’ s previous product concepts cut costs while encouraging real‐time feedback from customers across a global market. Additionally, Lego created brand ambassadors who organized conventions across the world to dis- cuss product innovation and to build communities of fellow customers. With increased revenue, Lego managers considered entering the movie‐making business—a risky proposition for a toy company. However, Lego ’ s success with Hollywood‐type action fi gures fueled its interest in a movie‐making endeavor.
The growth put strains on the IS supporting the business. Order management and fulfi llment were particularly affected, resulting in the inability to meet customer demand. Employee management systems were stretched as new employees were added to support the growth and additional locations. Product design and development, especially the virtual and video games, required new technology, too.
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