Agile Transformation at LEGO Business Technology

Introduction

The LEGO Group, a family-owned company renowned for its LEGO building system, has a global presence with manufacturing sites and offices worldwide. The company’s core values focus on imagination, creativity, fun, learning, caring, and quality, and it aspires to invent the future of play. To thrive in an ever-changing world, LEGO initiated an Agile transformation in its Business Technology departments, led by the senior vice president of corporate IT, Henrik Amsinck.

Background

The groundwork for LEGO’s Agile transformation began with successful Agile pilots a few years prior, initiated by a group of project managers from the digital marketing team. Impressed by the Agile Manifesto and experiences from other companies, they conducted Agile pilots using the Scrum methodology within the existing Stage-Gate project model. These pilots yielded promising outcomes, with increased motivation, faster value delivery, and enhanced end-user engagement, setting the stage for a broader transformation.

Preparing for Transformation

Building on the positive experiences, the senior vice president of corporate IT, Henrik Amsinck, decided to progress with the Agile transformation in two large departments comprising more than 500 employees worldwide. The company announced the transformation well in advance to provide ample time for employees and leaders to understand and adapt to the changes. To ensure the success of the transformation, the leadership team sought external help and enlisted the expertise of Bent Myllerup and his team of Agile coaches to assist with the journey.

The Agile Transformation Team

The Agile Transformation Team played a central role in orchestrating the transformation process. Comprising three individuals, the team collaborated with the external experts, who brought a wealth of experience and knowledge in Agile practices and principles. Drawing inspiration from CEB’s open-source change theory, the transformation approach emphasised encouragement rather than force, with a focus on making Agile coaches available and empowering leaders to support the change effectively.

Organisational Transformation

The Agile transformation required significant changes in the company’s organisational structure, operating model, and performance management systems. The organisation shifted from functional towers to cross-functional product-based teams and adopted continuous delivery models over traditional waterfall project processes. Product teams were given full responsibility for delivery, and the funding model was changed to align with Agile principles. The reward system was overhauled to incentivise team collaboration and value delivery over individual achievements.

No Heavy Processes or Manuals

An essential aspect of LEGO’s Agile transformation was the absence of heavy processes and manuals. Instead of imposing rigid guidelines, the company embraced a culture of self-discovery and exploration. There were no “book of truth” or extensive manuals dictating how to be Agile at LEGO. Teams were encouraged to explore Agile principles and values through LEGO Serious Play, training courses, coaching, and ongoing communication via the internal social media platform. This allowed teams to find Agile methods that best suited their unique context, fostering a sense of ownership and commitment to the Agile practices they adopted.

Progress toward Transformation

By the end of 2018, the Agile transformation at LEGO had already shown remarkable progress. Employee motivation and satisfaction within the digital departments witnessed a significant increase, indicating a successful launch of the Agile transformation. Early adopters of Agile ways of working, mentored by the transformation team, demonstrated improved speed of value delivery and numerous success stories, such as creating pop-up stores, developing finance products in just two sprints, connecting production machines to IoT, and reshaping supply chain planning.

Challenges and Speed Bumps

Despite the undeniable successes, the Agile transformation encountered challenges. Some teams struggled to fully embrace Agile practices, particularly those with diverse individual responsibilities. To overcome these hurdles, the Agile coaches focused on building awareness, providing ongoing coaching, and supporting self-organisation within the teams.

Managerial Implications

LEGO’s Agile transformation provided invaluable insights for managers contemplating Agile adoption in their organisations. Key implications included embracing Agile values, investing in Agile leadership training and coaching, and finding the right balance between Agile adoption and areas where traditional approaches may still be effective.

Conclusion

As the Agile transformation journey continues at LEGO, more parts of the company are becoming interested in Agile ways of working. The external Agile Transformation Team, led by Bent Myllerup, has played a pivotal role in guiding the transformation and fostering a cultural shift. Together, they continue to inspire pilots of Agile practices across various areas within the company. Despite ongoing challenges, the focus remains on upholding Agile principles and values to drive continuous improvement and deliver value in an ever-changing digital world.

(Note: The text of this case study is based on the article: “Agile Transformation at LEGO Group” by Anita Friis Sommer. Better Change co-founder, Bent Myllerup, provided his first Agile coaching services to LEGO in 2009 and since then, he has served LEGO by operating under various brands. He led this transformation from the vendor side).