Building a digital business, brick by brick

Key Concepts

Digital Transformation, LEGO Group, Digital Operating Model, Agility (Value, Flow, Quality), Digital Roadmap, Federated Product Organization, Cloud Migration, API Platform, Data Democratization, Security Transformation, User-Centric Design, Personalized Experiences, Automation, Upskilling/Reskilling, Innovation, Focus.

LEGO Group's Digital Transformation: A Case Study

Introduction

Atul Bhardwaj, the Chief Digital and Technology Officer of the LEGO Group, discusses the company's digital transformation journey, initiated four years prior. This transformation represents the largest investment in the company's 93-year history. The goal was to address creaking technology infrastructure and unlock the potential to help children learn through play.

The Six Bricks of Transformation

Atul uses the analogy of six LEGO bricks to represent the core components of their digital transformation strategy:

Mission: The North Star was to inspire and develop the builders of tomorrow by helping more children learn through play.
Model (Digital Operating Model): Defined what they did (product engineering, quality, reuse) and how they did it (agility).
- What:
  - Delightful Experiences: Creating products that are enjoyable and engaging.
  - Quality Engineering: Ensuring high-quality software development.
  - Reuse: Architecting systems for component reuse.
- How (Agility): Anchored in three pillars:
  - Value: Delivering value to both users and the business.
  - Flow: Removing impediments to accelerate feature delivery. This involved reducing governance, documentation, and simplifying workflows.
  - Quality: Ensuring high-quality output through small batch cycles and continuous feedback.
Instructions (Digital Roadmap): A comprehensive plan outlining the scope, approach, and plan for the transformation. This involved changing everything that had been done for the last 30 years and putting in place a new way of working for the next 30 years.
Minifigures (Teams): Building and supporting a high-performing team.
- Grew the digital team from 600 (mainly IT support) to 1,800 (software engineers, agile coaches, program managers, security specialists, network engineers, designers).
- Established a new digital center in Copenhagen with 420 software engineers.
- Created a training platform for reskilling, upskilling, and continuous learning.
- Implemented a Federated Product Organization by hiring 200 product managers deployed across the business.
Foundation: Establishing a robust technology infrastructure.
- Modernized the network infrastructure across all factories, stores, and head office locations.
- Migrated to the cloud, moving from 1% to 100% cloud-based infrastructure. The speaker closed down their own data center in July.
- Built an API platform with over 500 APIs to connect different systems.
- Deployed generative AI tools, with 80% of engineers using them for code development.
- Developed a world-class data platform with a self-service UX for data democratization.
- Transformed the security posture to a world-class level.
Experiences: Building user-centric experiences for consumers, shoppers, partners, and colleagues.
- Consumers (Kids, Adults, Families):
  - Partnered with Epic Games to create Lego Fortnite.
  - Launched the Lego Play immersive app (3 million downloads).
  - Developed a new Insiders Club.
  - Integrated physical and digital experiences (e.g., Super Mario).
  - Enhanced the Lego Builder app (13 million downloads).
- Shoppers:
  - Implemented new point-of-sale software in stores.
  - Built the Lego Insiders Club for loyalty rewards.
  - Improved customer service with AI-driven chatbots.
  - Invested in supply chain improvements.
- Partners:
  - Automated interactions through a virtual showroom, B2B web shop, and content hub.
- Colleagues:
  - Implemented new tools for stock management in operations and manufacturing.
  - Provided retail teams with technology for product assortment.
  - Introduced AI-driven skill-based technology for career management.

Key Arguments and Perspectives

Digital Transformation as a Business Enabler: The transformation shifted the digital function from a support role to a key enabler of the business strategy, directly contributing to the top and bottom lines.
Importance of Agility: The agile operating model, focused on value, flow, and quality, was crucial for adapting to changing needs and delivering value quickly.
User-Centric Approach: The LEGO brand is at the heart of the digital transformation, with a focus on building what users (consumers, shoppers, partners, colleagues) need and want.
Culture of Continuous Learning: Building an organization anchored in curiosity and continuous learning was essential for driving innovation.

Lessons Learned

Be Brave: Make bold decisions and embrace change.
Be Curious: Foster a culture of continuous learning and exploration.
Be Focused: Prioritize and avoid distractions to stay on track.

Results and Conclusion

The digital transformation achieved its 5-year objectives 18 months ahead of schedule. It has enabled new possibilities, brought play to more children, and laid the foundation for future growth. The speaker emphasizes that the journey has been amazing, with many possibilities ahead.