Lego case study questions:
1 How did the information systems and the organization design changes implemented by Knudstorp align with the changes in business strategy?
The company was under terrible crisis with its sales dropping by 40% when Knudstorp became CEO in 2004. The main aim of knudstorp was to stabilize the sales and cut the costs so as to deal with the new reality of selling 40 percent less than what Lego had done two years earlier.
Knudstorp encouraged designers to use the unused components in development of new products and design, thus reducing the number of unused components and reduced losses as the cost of production of each unit was very expensive.
The culture of Lego changed to “nonperformance is unacceptable”, based on which its organizational design was implemented. Lego’s pay structure was based on innovation in sales, products and reducing costs. The employees were paid accordingly which lead way to innovation and creative ideas flooding in the organization. Lego produced components using which the children can make anything that they imagine. They also extended their ideas into creating products based on movie characters, this new strategy widened the products and targeted new customer segments.
The drastic growth in sales affected the information systems which supported the business. They created a modularized and standardized architecture for their information systems, making it possible to expand more quickly and add capacity and functionality, as it was needed. They engaged the communities who had already set up thousands of Web sites and blogs. Which also related to IT technology improvement. They develop new technology to support the product design and development, also the virtual and video games. They use the technology to insist the real-time feedback from customers. They implemented an integrated enterprise system as well.