How the Lego Group Built Culture Change: From the Ground Up

From 2004 to 2015, the Lego Group was on a tear, growing revenue an average of 17% per year. Then growth stalled and sales flattened. In 2017, an outside CEO joined the toy company and chief commercial officer Loren Shuster transitioned to the role of chief people officer. The new leadership team, Shuster recalled, had a classic realization: “‘What got us here won’t get us into the future’ — which led us to develop a new business strategy.”

At the same time, the top leaders also “embarked on a journey to define what leadership culture we need to operate in the world today,” Shuster said. The team began to think through what type of culture it wanted and what to take forward or leave behind. The Lego Group had accumulated dozens of different leadership models and change programs over the decades, and Shuster wanted to take a unified approach. “Like many organizations, particularly ones that have been around for 92 years, there are … different models and processes and artifacts and articulations. We wanted to clean all that up,” he said.

The process produced the “leadership playground,” which Shuster described as the “articulation of the leadership culture that we are looking to nurture and develop within the Lego Group.” Three core behaviors — being brave, focused, and curious — are “represented in the language and the principles of how children operate or feel free to operate in a playground, an external environment, where it’s relatively safe to experiment,” Shuster said.

Prioritizing these behaviors enabled the Lego Group to execute its new business strategy, which required “choices that could be considered brave, or maybe we hesitated [over] before, like going after [sales to] adults in a big way. Would that sacrifice our kids business?” Shuster noted. Some of those decisions were not self-evident and required a lot of curiosity and bravery. The leadership playground became an “integral component” of executing the strategy, Shuster said.

Backed by these changes, the company has rekindled its growth, with revenues increasing an average of 10% annually over the past five years (compared with 3% for Disney, Mattel, and Hasbro) while maintaining industry-leading profitability. Shuster tips on articulating and embedding updated leadership behaviors throughout a large, global organization are:  Articulate the organization’s leadership principles from the bottom up.  Use simple rules to guide the process of defining culture.  Embed the leadership principles widely, using volunteers.  And avoid a mechanistic approach to evaluating leadership performance.