Research-Technology Management

ISSN: 0895-6308 (Print) 1930-0166 (Online) Journal homepage: https://www.tandfonline.com/loi/urtm20

Agile Transformation at LEGO Group

Implementing Agile methods in multiple departments changed not only
processes but also employees’ behavior and mindset.

Anita Friis Sommer

To cite this article: Anita Friis Sommer (2019) Agile Transformation at LEGO Group, Research-
Technology Management, 62:5, 20-29, DOI: 10.1080/08956308.2019.1638486

To link to this article: https://doi.org/10.1080/08956308.2019.1638486

Published online: 05 Sep 2019.

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FEATURE ARTICLE

Agile Transformation at LEGO Group

Implementing Agile methods in multiple departments changed not only processes but also employees’ behavior and mindset.

Anita Friis Sommer

OVERVIEW: LEGO Group launched an Agile transformation of its corporate digital departments in early 2018; this trans-
formation included the introduction of a new digital operating model. One year into the transformation, the impact of the
new model is beginning to show in a significant reduction in the time required to respond to change—from months to
weeks—in the company’s core functions. This article describes how the Agile transformation was orchestrated and Agile
values and principles integrated into the process to avoid implementing a set of Agile processes and tools without changing
behavior and mind-set.

KEYWORDS: Agile transformation, LEGO group, Digital transformation

Recent years have seen increasing interest in adapting Agile LEGO has just begun its Agile transformation—the trans-
processes to larger organizations, and especially what hap- formation began only a year ago. However, LEGO’s journey
pens when the Agile way of working is scaled to the depart- offers some key lessons for other companies contemplating
ment organizational level. Rigby, Sutherland, and Noble such a change.
(2018), describing examples of Agile organizations (teams of LEGO’s experience demonstrates that an Agile transfor-
teams), argue that Agile transformation can make companies mation can be successfully executed by applying Agile val-
more responsive to change. The Agile transformation at ues and principles to the transformation efforts themselves,
LEGO Group (referred to simply as LEGO) provides a unique enabling Agile behavior rather than prescribing a particular
case study to explore this claim further, as well as an in-depth method or model. This in-depth case study of LEGO’s jour-
study of a novel approach to managing an Agile ney shows how an Agile transformation can be executed
transformation. using Agile values and principles, through a change
Agile transformation in LEGO’s two large digital depart- approach that follows Agile principles of empowerment.
ments has improved responsiveness of digital deliveries, and The transformation story illuminates successes and also
early results show significant improvement in speed of highlights challenges, such as those related to changes in
response to change in many areas, from market engagement the role of leadership and in the emphasis on prioritizing
to digitalization in production. Project delivery time has been deliveries. Overall, the insights from the LEGO Agile
reduced from months to weeks compared to the traditional transformation provide both inspiration and an action
development approach. But perhaps most importantly, the plan for others considering implementing Agile in their
new way of working has improved motivation and satisfac- organizations.
tion among employees in the two departments that kicked
off the Agile transformation—contributing to a significant Background
positive increase in the yearly employee motivation and sat- As the pace of change in most markets increases, companies
isfaction survey score. find that responsiveness—the ability to respond swiftly to
change—is a key competitive capability. For instance, in the
toy market, an increasingly digital marketplace has seen a
much higher rate of change; the market can be altered by
Anita Friis Sommer is a senior innovation manager at LEGO Group. She holds
a postdoctorate on process modeling at the University of Cambridge and a fast-developing, unpredictable developments, such as the
PhD in product development management and a Master’s in engineering fidget spinner, which for a short time in 2017 attracted more
management from Aalborg University, Denmark. She is a double recipient of than 17 percent of the online toy market (Fu 2017). To stay
the Maurice Holland Award (2016 and 2019) for articles on the use of Agile in
competitive in such markets, companies must increase
physical product development. anita@anitasommer.com
responsiveness, not only in product development and sales,
DOI: 10.1080/08956308.2019.1638486
Copyright © 2019, Innovation Research Interchange. but also in enabling departments, such as marketing, R&D/
Published by Taylor & Francis. All rights reserved. innovation, and IT.

20  |  Research-Technology Management  •  September—October 2019

 A promising approach to increase responsiveness in both
IT and product development is found in Agile methods. In Agile in a Nutshell
software development, Agile methods have improved qual-
ity and speed to market, while increasing employee moti- Agile originates from the Agile Manifesto for Software
Development (Beck et al. 2001). The Agile Manifesto was cre-
vation and satisfaction (Rigby, Sutherland, and Takeuchi
ated by a group of leading experts in software development
2016).
who originally came together to create a common methodol-
Agile processes adhere to the Agile Manifesto (Beck et al. ogy for software development. The outcome of that gathering
2001). The Agile Manifesto is not a methodology, but rather was a common set of values and principles for “being Agile.”
a mind-set, a way of thinking that supports certain behaviors. Today there are well over 30 documented Agile approaches,
The Manifesto contains 12 principles; all Agile methods are methods, and frameworks, all built on the values and princi-
built on these bedrock beliefs. Those principles emphasize ples of the Agile Manifesto. Examples of such methods and
customer engagement, flexibility, collaboration, and rapid frameworks include Scrum, Kanban, Extreme Programming,
delivery of working products. A true Agile enterprise follows and DSDM (Rigby, Sutherland, and Takeuchi 2016; Schwaber
the Agile values and principles throughout its development 2004; Scrum Guides 2017).
organization (Rigby, Sutherland, and Noble 2018). The prin- Agile methods were originally developed as a rebellion
against traditional software development methods—broadly
ciples are enacted via any of several Agile practices (see
referred to as “waterfall” methods—which were linear and
“Agile in a Nutshell, right)
siloed. Problems with waterfall methods arise largely from
Agile is increasingly being adopted by physical product their overemphasis on documentation, strict discipline
manufacturers, who are seeing similar benefits as those around prescribed process and tools, and general lack of
seen in software development (Cooper and Sommer 2018; space for experimentation and collaboration. To counter
Sommer et al. 2015). Following on this success, some com- those characteristics, the founders of the Agile Manifesto
panies are now exploring the potential to scale Agile across developed four value statements that restructure the balance
the entire organization (Rigby, Sutherland, and Noble between governance and collaborative development (Beck
2018). Such an effort represents a large-scale transforma- et al. 2001):
tion. Creating a fully Agile organization requires integrat- • Individuals and interactions over processes and tools
ing the principles of Agile in every element of the company. • Working software over comprehensive documentation
Key ingredients in an Agile enterprise include centrality • Customer collaboration over contract negotiation
of Agile values and principles, a modularized operating • Responding to change over following a plan
architecture, employee motivation through continuous A number of methods adapt Agile principles and tools for phys-
feedback and coaching, and flexible planning and ical product development, such as Lean Startup (Ries 2011),
budgeting. Lean product development, and Agile–Stage-Gate hybrid pro-
As of yet there are no empirical guidelines for creating cesses (Sommer et. al. 2015; Cooper and Sommer 2018). For
such a transformation. However, Rigby, Sutherland, and project management, PMBOK and PRINCE2 (methods from two
Noble (2018) outline the changes required. Based on that dominant project management institutes) now include sections
on Agile project management, as well (Project Management
work, we deduced a framework for Agile transformation that
Institute 2013; Axelos and Bennett 2017).
includes five categories:
Some scaled Agile approaches, such as SAFE, NEXUS, and
• Organizational structure—Evolve from existing struc- LeSS, explain how Agile methods—mainly Scrum—can be syn-
ture (such as functional or matrix) to a product-oriented chronized across teams, while maintaining the focus of shared
team structure.1 delivery in one product group or across one portfolio (Alqudah
and Razali 2016). Common to these methods is the focus on
• Mandate—Shift mandate and ownership of deliverables
single teams or groups of teams in the context of either one
within the strategic frame from managers to product
product (software or physical) or one project or portfolio.
teams.
• Financial processes—Move from traditional yearly bud-
geting processes (fixed) to frame-based dynamic budget-
ing (venture-capital style) based on strategic aims.
In addition to a guiding framework, transformation also
• Performance measures—Redefine from traditional key
requires a change management approach. Organizational
performance indicators (KPIs) or similar measures that
change either is imposed on the organization from the top
focus on process adherence to value measures, product
or emerges from the bottom (Todnem 2005). In top-down
measures, and team measures.
change management, the details of what needs to change
• Delivery processes—Change from end-of-project deliv-
are decided by leaders and imposed on employees. The pri-
ery based on specifications to continuous delivery in iter-
mary challenge in top-down change management is resis-
ations based on value added.
tance to change; entire theories are built on how to manage
such resistance (Ford and Ford 2010). The alternative
1
The “product” need not be an actual physical or software product; it can approach is bottom-up change, or emergent change, which
also be a service offering or another artifact, such as a marketing addition
(Agile marketing) or an improvement to a business process (Agile occurs when employees decide themselves to change behav-
consultancy). ior and that change reshapes the organization. Bottom-up

Agile Transformation at LEGO Group September—October 2019  |  21

change can challenge the status quo without strategic direc- 3. Communicate and sustain change. Employees talk
tion from company leaders and thus may jeopardize the openly about change rather than being the target of com-
company’s strategic aims. munications rolled out through planned, top-down
Neither of these approaches is viable for an Agile transfor- campaigns.
mation. Top-down change management runs counter to Agile
This approach improves change efforts by reducing time
principles, telling employees what to do and how to do rather
employees spend waiting to be told what to do, misdirected
than empowering teams to make decisions on their own. On
efforts toward wrong activities, and resistance to change
the other hand, the bottom-up approach lacks the direction
(CEB 2016). An Agile transformation is more likely to suc-
needed to proliferate change across an entire enterprise.
ceed using the open-source change approach, since it is con-
Open-source change theory, a novel change management
gruent with Agile principles, empowering employees to make
approach, offers a middle way (CEB 2016). In open-source
decisions and cocreate change.
change management, employees are not told what to do or
when to do it. Instead, they are called to make changes for
the benefit of the company. This framework seeds change in The Study
three stages: The case study set out to explore how an Agile transforma-
tion can be conducted in practice, and the data provides
1. Create strategy and vision. Employees cocreate strategy
various perspectives on the phenomenon. Because the pri-
rather than leaders setting the change strategy.
mary researcher was part of the Agile transformation team
2. Implement the plan. Employees own implementation
during the period described (and is still an employee of
planning instead of leaders creating the plans and telling
LEGO), an action research approach was used (Van de Ven
employees what do.
2007). This approach, which is designed to support case study
research in which the researcher is also
TABLE 1.  Data sources
an active participant, can help avoid pos-
itivity bias, by following the principles of
Category Data Type Description
the engaged scholarship diamond model
Pattern-Matching Emails Emails from department leaders describing (Van de Ven 2007). Action research is an
Analysis transformation decisions and approach
iterative process (within the context of
Transformation 100-day plan, descriptions of transformation the research perspective) between
presentations process, and decisions and documentation of
communicated approach
research design, theory building, problem
formulation, and problem solving. It
Transformation Details on transformation progress through Agile
sprint data sprints and biweekly sprint planning/adaptation to
emphasizes reliance on collected facts,
change/learnings including hard data such as documents
Yammer posts Posts from employees throughout the
and written statements, as well as
and videos transformation, asking questions and sharing news, employee accounts collected through for-
success stories, and challenges and concerns mal interviews. In this case, data took the
Assessments Agile Three high-level maturity assessments conducted form of company documents, surveys
assessments across departments by team leaders and/or product and assessments, and interviews and
owners within all product areas observations (Table 1).
Change Thematic analysis of 20 internal Yammer threads, Analysis began using the five catego-
readiness involving 48 employees, on topics such as Agile ries derived from Rigby, Sutherland, and
assessment advantages and transformation concerns Noble (2018) to frame the essential con-
Competing- Assessment of senior leadership team members’ structs of an Agile transformation. The
values perception of company’s current values* data were sorted by these categories and
framework
assessment
analyzed to see how decisions made at
LEGO within each of the categories led to
Interview and/or Culture study Five semi-structured interviews and a three-month
observation study observation study of teams during the transformation
particular outcomes.
period. Interviews transcribed and analyzed from a The transformation process itself was
culture perspective. analyzed using the Agile manifesto values
Project method Focus group interview and three in-depth interviews (Beck et al. 2001) as a framing structure.
study of senior project managers to explore the connection Data were initially structured according to
between project success and project management the relevance to the themes of the Agile
approach. Focus group and interviews were values using pattern matching. The analy-
recorded, transcribed, and analyzed.
sis was evaluated in two steps, and each
*
Leaders were asked to respond to a set of questions about the company’s values and then to draw their
time independently by two managers on
views of the relative weight of those values on a competing values matrix. (See http://changingminds.
org/explanations/culture/competing_values.htm for the competing values matrix.) All answers were the transformation team. These reviewers
captured together on a whiteboard, which was used as a springboard for a discussion on how to modify critically evaluated the conclusions in rela-
company values to enable the Agile transformation.
tion to their experience and checked the

22  |  Research-Technology Management Agile Transformation at LEGO Group

data for accuracy. In the second step, the analysis was also • Performance measures for bonuses were immediately
evaluated by the senior vice president funding the transforma- changed for all departments involved in the change, from
tion. Both rounds resulted in removal of conclusions that could individual to team-level KPIs, to foster a focus on team
be perceived as overly positive or conclusions that were not performance. Traditional, process-focused KPIs used at
supported by multiple data sources. This process resulted in an the local level were exchanged more gradually for value,
objective, fact-based account of the Agile transformation. product, and team measures.
As a whole, the data show that LEGO’s Agile transforma- • Changes in delivery processes came more slowly. Deliveries
tion, using the open-source change approach to implement in existing projects still had to be completed before the
Agile across all five categories of transformation, was suc- organization could move to a product-oriented approach,
cessful in creating a product-oriented team structure with which delayed change in some teams.
team ownership of deliverables, frame-based budgeting,
Searches for success stories on the company’s social media plat-
value product and team measures, and continuous value
form provided more detailed accounts (often in the form of
delivery in iterations. The primary analyses are pattern
video statements from internal customers) of successful results.
matching on key documents of the transformation and a set
Four of those success stories (chosen because sufficient evidence
of assessments examining the organization’s status in the
was available to support them) were included in the pat-
context of Agile, change readiness, and competing values
tern-matching analysis. These stories highlighted and supported
frameworks and tracking its evolution.
Agile transformation results, such as increased speed to market,
product quality, team productivity, and team motivation.
Pattern-Matching Analysis
Results of the pattern matching analysis of key documents
show the progress of the open-source change approach. Agile Assessments
Initially, some teams struggled to cope with uncertainty Three Agile maturity assessments were conducted across
around choice of methods and the lack of direction. The departments to follow the progress of the Agile transforma-
introduction of local team coaches reduced these challenges tion: after the first month, after the first four months, and
over time. Documents show that Agile transformation con- after the first year.
structs were implemented across the five categories of the The first assessment, conducted after the first month of the
framework, although at varying paces: transformation, showed that over two-thirds of teams had
initiated Agile value delivery, either fully or partly (Figure 1).
• The organizational structure was changed to a product-ori- This assessment also showed that allowing teams to freely
ented team structure. choose which Agile tools to implement had enabled teams to
• The mandate shifted more gradually. Local managers trans- use no less than six different types of tools (Figure 2).
ferred ownership of deliverables, with support from senior Analysis at the department level showed huge differences
leaders, over about six months. Six months into the trans- in maturity across departments at this early stage. While some
formation, the majority of teams were defining their initial departments had all of their teams working Agile to some
products. extent, other departments had few or no teams doing Agile.
• The financial process shifted gradually to frame-based bud- Some of these differences were driven by department-specific
geting across the first transformation year, mixed with factors. The open-source change approach allowed depart-
traditional budgeting by departments and projects. ments to initiate change when the timing was right for them.
By the end of the first four months, at the
second assessment, all teams had started
their Agile transformation.
The second assessment looked further
into impediments to transformation, cat-
egorized as culture, leadership, teams
and roles, and delivery/action. The
assessment showed that although Agile
methods had been deployed, teams were
still too far from their customers, and
team members struggled to believe lead-
ers really had empowered them to fail
fast. The assessment also showed chal-
lenges at the leadership level, in under-
standing what Agile leadership entails
and how to best support newly empow-
ered teams without interfering.
The third assessment assessed the
FIGURE 1.  Agile assessment: Have you started using an Agile way of working in your team? teams’ ability to “be Agile” as opposed to

Agile Transformation at LEGO Group September—October 2019  |  23

 finding enabled a discussion of how Agile
behaviors could be encouraged by senior
leaders and provided insights into how
leadership dialogues catalyze changes in
governance structures that enable behav-
ioral change.

Culture Study and Project Method

Study
The purpose of these two studies was to
verify the assumptions derived from the
pattern-matching analysis. Each study
was conducted by an independent
researcher not directly involved in the
Agile transformation. Both studies sup-
ported the assumptions of the prior anal-
yses and offered deeper insight into some
FIGURE 2.  Agile assessment: What Agile software tools is your team currently using? of the challenges in the change
journey.
just “do Agile” through a set of 14 statements to which The interview and observation data demonstrated the
respondents were asked to indicate their agreement on a presence of overall cultural support for the Agile transfor-
scale of 1 to 5. The results showed that after the first year, mation, as well as challenges in coping with the lack of clear
teams were still struggling to varying degrees to create clear direction for how to change. The culture generally supported
product definitions, sustain close engagement with custom- change efforts, the appropriate resources were allocated to
ers, and prioritize deliverables appropriately. the transformation, and employees had both motivation and
competencies to execute the change.
Change Readiness Assessment This evaluation helped illuminate project management
This assessment analyzed activity on the company’s social and process selection practices. The interview data revealed
media platform. The analysis broke down #goingAgile con- that the likelihood of project success within corporate IT at
versations on internal social media around eight themes: LEGO was influenced by the fit between the project type and
change journey; customer collaboration; common termi- project method. This finding led to the recommendation that
nology; empowerment of teams; Agile values and princi- teams perform an early project assessment before choosing
ples; culture, structure and processes; and IT strategy. a specific project execution method. The results also rein-
Results show that the Agile transformation was following forced the Agile principle that methods or processes should
the open-source change approach; conversations around not be prescribed from the top, but should be chosen by
change strategy included both employees and leaders as teams to suit the needs of the project and the team.
active participants. Information and conversation about
change planning was shared between teams, demonstrat- Agile Transformation at LEGO
ing team ownership of the process, and communication The LEGO Group is a family-owned company famous for its
around the change journey was open to all on the core product, the LEGO building system (see “LEGO Group
platform. Fact Sheet,” p. 26). Founded in 1932, the company is now
globally present, with manufacturing sites and offices all over
Competing Values Framework Assessment the world, although the headquarters remain in the rural
This assessment (Pogorzala 2018) is a tool used by Agile town of Billund, Denmark (LEGO Group 2018). The LEGO
coaches to assess the maturity of an organization and initiate Group’s core philosophy is that good-quality play enriches
dialogue around company values. The assessment showed children’s lives and enables creative learning. The company
that hierarchies and hierarchical behavior were generally is strongly committed to its core values: imagination, creativ-
viewed as an overly favored behavior in the company. This ity, fun, learning, caring, and quality. As the company’s vision
statement says, the LEGO Group aspires to invent the future
of play. Such a vision cannot be achieved via a one-off solu-
tion; rather, it is a dynamic, moving target. To succeed,
To succeed, employees must be able to employees must be able to innovate—test and learn—fast in
a world that is in constant flux.
innovate—test and learn—fast in a The groundwork for LEGO’s Agile transformation was laid
world that is in constant flux. a few years prior to its beginning by the company’s first Agile
pilots. Inspired by the Agile Manifesto and experiences with
Agile in other companies, a small group of digital project

24  |  Research-Technology Management Agile Transformation at LEGO Group

 becoming an agile change agent to accelerate the rest of
LEGO Group Fact Sheet the LEGO Group on the digital journey.2

Industry: Toys (fast-moving consumer goods) During the final months of 2017, employees and leaders
alike were given time to consider the change; communi-
Number of employees: 18,000
cate with each other about its possible impact and their
Revenue 2017: 35.0 Billion DKK ($5.2 billion) hopes and fears for the change; and ask the leaders ques-
Net Profit 2017: 7.8 Billion DKK ($1.1 billion) tions about the transformation. Following this early com-
Vision: Inventing the future of play munication, the company sought to generate buy-in from
all leaders; all 70+ leaders from around the world were
Mission: Inspire and develop the builders of tomorrow
summoned to headquarters for a two-day Agile onboard-
ing workshop one month prior to the roll-out of the
managers in the digital marketing team decided to pilot Agile changes to the teams. At this workshop, leaders with Agile
in their projects, using the Scrum methodology within the experience—from both inside and outside of LEGO—
existing Stage-Gate project model. The project managers and shared their perspectives and knowledge, and the LEGO
team members who participated in this experiment were team leaders had an opportunity to ask questions about
excited about the approach. Not only was this way of work- leading Agile and share their reflections and honest con-
ing much more motivating and engaging, it also produced cerns. They also had the chance to try out Agile ways of
value much faster and in closer contact with end users. working on their own using the LEGO Scrum city game
(Steghöfer et al. 2017).
The results of this onboarding quickly became obvious to
Preparing for Transformation
all involved. The leaders left with a clearer understanding of
In 2017, based on these positive experiences, the senior vice
Agile and—crucially—the knowledge that Agile ways of
president of corporate IT, Henrik Amsinck, decided to move
working, by enabling continuous value delivery and quicker
forward with an Agile transformation, including a new digital
response to change, would be critical for LEGO to maintain
operating model, new organizational structure, team empow-
its competitive advantage. At the same time, however, many
erment, and redefined delivery mandates, in two large depart-
questions were left unanswered, especially questions about
ments. Those two departments encompassed more than 500
how the leader role would change when responsibility for
employees located around the world. The roll-out of the trans-
product delivery was handed down to product teams. That
formation was carefully planned to allow team members and
question would be explored further throughout 2018, as the
leaders alike plenty of time to adjust (Figure 3).
Agile transformation unrolled.
The transformation was announced on August 30, 2017,
well before the kickoff, planned for January 2018. The direc-
The Agile Transformation Team
tion was communicated clearly, in an email from the CEO
At the center of the transformation process was a transforma-
to all employees:
tion team of three people responsible for orchestrating the
change journey. The team chose a transformation approach
We are going to organize ourselves around the products
or services that we provide to our LEGO colleagues . . . . inspired by CEB’s (2016) open-source change theory. The
This move to a product oriented, Agile setup is the trend change was not forced but encouraged, by making coaches
seen across the technology industry as digitalization of available, equipping leaders to support the change, and creating
businesses gathers pace. Digitalization is creating a com- real mandate and space for Agile teams to form and mature.
pletely new paradigm in business, where the pace of tech- The underlying principles driving the transformation were
nology change has increased dramatically, the landscape based on the same principles teams were being encouraged
is much more volatile as new digital concepts come and to adhere to—the Agile values laid out in the Agile Manifesto
go, and there is an increasingly blurred technology respon-
sibility. These factors offer IT—as the primary technology 2
Email from Henrik Amsinck to all employees in LEGO Corporate IT,
enabler—unprecedented opportunities to create value by November 9, 2017.

FIGURE 3.  Preparation timeline for LEGO’s Agile transformation

Agile Transformation at LEGO Group September—October 2019  |  25

(Beck et al. 2001). In other words, the transformation was through collaboration. Early and frequent feedback from
aimed at emphasizing: teams and their leaders ensured that the transformation
team delivered value and that issues were resolved as they
• Individuals and interactions over processes and tools— arose.
Specific methods or tools were not required or dictated • Responding to change over following a plan—The Agile
from the home office. Rather, teams were encouraged transformation was not subject to a detailed implemen-
to explore methods on their own as they learned the tation plan. Instead, the team created a strategic frame for
Agile principles and values through LEGO serious play, one year with an approved budget frame for just the first
training courses, coaching, and ongoing communication six months and a “First 100 Days” plan of major activities
via the internal social media. Training on the most to establish the direction of the transformation and build
generally recognized Agile methods, such as Scrum momentum. The transformation team used Agile artifacts,
and Kanban, was offered to employees at all levels. such as a backlog and kanban board, and Agile practices,
Information about tools such as JIRA, Microsoft teams, including two-week sprints with daily standups, reviews,
and Team Foundation Server (TFS) was shared widely. and retro meetings, to respond to changes and plan next
Most importantly, the focus on individuals and interac- steps based on new developments.
tions was strengthened through the appointment of local
Agile ambassadors, provision of local coach support, and The activity plan for the first 100 days consisted of four
support for ongoing peer sharing within and across teams streams: training, proactive knowledge sharing, leadership
and departments. and people processes, and value management. In each
• Working product over comprehensive documentation— stream, a set of high-level activities was defined and then
An Agile hub and Yammer site (internal social media) rescoped when appropriate, as the transformation unfolded.
were used to share knowledge and grow understanding
of the transformation. On the internal social media (which • Training included Agile basic training, Scrum master train-
ing, product owner training, Agile leadership training, and
was open to all employees within LEGO), videos quickly
Agile coach training.
became one of the primary ways of communicating and
sharing learnings from coaches, employees, and leaders • Knowledge sharing included social media activities; Agile
hub activities; self-organized Agile networks for Scrum
alike. There were no manuals or heavy processes; no
masters and product owners, called guilds; and biweekly
“book of truth” for how to be Agile at LEGO was created
Agile meetings with specific topics or guest speakers.
or circulated. Rather, a collection of good practices and
guidelines on where to acquire support and information • Leadership and people processes included exploring the
need for new job structures and leadership processes. This
developed, and continues to develop, via ongoing sharing
work is still ongoing in the second half of 2018, as the
of learnings, challenges, and success stories from working
company adjusts structures to make Agile roles attractive
Agile teams (the product of the transformation).
and relevant to the right people and to ensure all members
• Customer collaboration over contract negotiation—The
have an appropriate mandate, for instance, that product
transformation team involved core stakeholder groups
owners really have full product responsibility including,
(customers of the transformation) early on in active col-
for example, financial responsibility.
laboration to develop and form the transformation within
their areas. This was done through a network of Agile • The value management stream focused on establishing
product definitions and new performance management
coaches; local coaches for each product area supported
structures.
and collaborated on the transformation directly with
teams, while two or three Agile coaches in each product
area ensured local anchoring and dissemination of key The Agile transformation team took a central role in sup-
Agile competencies across the organization. No internal porting and guiding the transformation at all levels. Initially,
contracts were made to control transformation delivera- the lack of full implementation plans and KPIs was like para-
bles—local teams were simply trusted to create value chuting for the first time—an adrenaline-filled leap of faith—
but the approach quickly proved its value in supporting rapid
response to emerging issues at the local level. The team
worked to continuously improve the support and service it
The leaders left with a clearer offered to transforming teams and their leaders. At times,
the team and leadership considered whether it would be
understanding of Agile and the easier to prescribe a particular method, but these suggestions
knowledge that Agile ways of working were rejected as contrary to Agile values. This stand proved
valuable when several teams discarded Scrum (the suggested
would be critical for LEGO to maintain place to start with Agile) and moved toward Kanban or
its competitive advantage. hybrid Agile methods. Had the transformation prescribed
Scrum or SAFE, these teams would have been unable to
evolve to improve their value delivery.

26  |  Research-Technology Management Agile Transformation at LEGO Group

 The transformation team also provided a lever of commu-
nication with other parts of LEGO supporting the efforts of
the IT senior leader team. Although this account focuses on There were no manuals or heavy
changes within the digital departments, the Agile transforma-
tion in digital was also felt in the rest of LEGO. As such, com- processes; no “book of truth” for how to
municating with other parts of the company, and encouraging be Agile at LEGO was created or
those other groups to change processes and governance struc-
tures that impacted the digital departments’ ability to be Agile, circulated.
became part of the transformation team’s agenda.

Organizational Transformation
players rather than individual success. The change did pose
Although the Agile transformation was not mandated from
a challenge for leaders, who were charged with defining
the top, supporting it required changes in the company’s orga-
appropriate team rewards (together with the teams). Agile
nizational structure and operating model, as well as adjust-
principles guided the process toward value creation indicators
ments to performance and incentive systems and project
at the customer level. For example, a value-based measure
delivery processes. For instance, the organization moved from
for developers of a consumer-facing software platform was
functional towers to cross-functional product-based teams;
the customers’ net promoter score (NPS) for the platform (a
project (waterfall) delivery processes were shifted to contin-
measure of the customer’s willingness to recommend the
uous delivery models based on prioritization (Figure 4). To
platform to others). As this score became the reward measure
make this shift successful, a change in mandate was also effec-
for the backend platform team, the team’s focus shifted from
tuated, giving full responsibility to product teams that had
delivering according to plan to delivering shared value.
previously been coordinated across functions by middle man-
agement. The funding model was also changed (although
more gradually), from a yearly budgeting process to a frame- Progress toward Transformation
based funding approach in which funds were gradually Although the transformation is only a little over one year in,
released within strategic buckets as product increments added at the end of 2018, some results were beginning to show.
value to the business. Based on informal conversations with transformation leads in
Despite best efforts in the run-up to the transformation, other companies, the transformation team chose as the lead
not all teams were optimally organized for product-based indicator of transformation success increase in employee moti-
delivery at the onset of the change. Those teams were grad- vation and satisfaction within the digital departments. Based
ually morphed to more appropriate team structures over the on this measure, results from the yearly survey, administered
following year. Opportunities for improvement continue to at the end of 2018, show an increase in motivation and satis-
emerge. faction across the digital teams much above expectations,
The reward system was also changed radically to support indicating a successful launch of the Agile transformation.
the shift to a team-focused system. Before LEGO’s transfor- There are other indicators of success as well. Teams that
mation, individuals earned a significant part of their bonuses were able to transform early to Agile ways of working are
by meeting individual KPI goals. New structures made clear delivering value much more quickly, creating several early
the organization’s team focus and sought to reward team successes and benefits:

FIGURE 4.  Changes in organizational structure and operating model to support Agile transformation

Agile Transformation at LEGO Group September—October 2019  |  27

• Creating and opening new pop-up stores—With a large These stories represent only a few examples of the success
traditional toy store struggling financially, LEGO sales stories that emerged on LEGO internal social media through
teams had to find new ways to engage with shoppers the end of 2018. As a result, internal customers are changing
who prefer physical stores. The team decided to create a their attitude toward their digital colleagues and seeking new
series of pop-up shops to provide physical outlets at min- ways to add value through enhanced collaboration and
imal cost. Making this idea work required fast response relentless focus on key priorities.
from the digital teams to create the inventory manage-
ment and IT backbone for these stores. The improved
Challenges and Speed Bumps
ability to prioritize and respond provided by Agile
In spite of the undeniable successes, the Agile transformation
allowed the teams to support the sales teams and create
at LEGO has not been completely painless. Indeed, the path
positive shopper experiences while growing consumer
to a full Agile transformation is littered with challenges.
sales.
Some product teams are still not working Agile, either
• Developing a finance product in just two sprints—The
because they struggle to find the right setup as a team or
finance department had requested a specific product, esti-
because they find Agile ways of working unnecessary or
mated to require 8,000 hours of development time, under
limiting even after having tried several different methods.
the traditional project portfolio. Due to central prioritiza-
The teams that struggle seem to be those whose members
tion, the business case was never approved. Once the
have a diverse set of (often individual) responsibilities to a
Agile transformation shifted prioritization mandate to the
broad range of customers. When these teams try to define
finance team’s product owner, the product was made a
their products, they end with a broad product portfolio. In
top priority. The team developed and demonstrated a min-
many cases, they simply continue to service customers indi-
imum viable product in just two sprints—four weeks, and
vidually rather than forming a functional team with shared
less than 800 hours—one-tenth of the originally estimated
responsibilities. The solution to this problem is not simple.
8,000 hours.
For now, the solution is to enable organic reformation and
• Connecting production machines to the Internet of Things
flow between teams (without a change of manager) to allow
(IoT)—When a business team wanted to explore the value
for self-organization to eventually resolve it. This is only an
of coupling machines to an IoT platform to, among other
experimental solution, with no results to report as yet.
purposes, visualize production data for quality management
Other teams have been tempted to blindly follow a specific
purposes, a digital team quickly developed a pilot, which
Agile method—in many cases Scrum—without a correspond-
was not only used from day one at the shop floor but also
ing change in the fundamental principles or way of working.
resulted in the desired approval of a full-scale roll out. The
Suddenly everything becomes about sprints, backlogs, and
pilot took six months—three months longer than planned
demos. These teams end up doing Agile without ever being
due to the need to develop a new backend platform—but
Agile. The way to solve this problem was, in several cases,
the business team judged that the pilot would never have
to build the team’s awareness of Agile principles and enhance
been successful at all without the Agile approach, because
its ability to continuously improve through team retrospec-
the solution required close collaboration between digital
tives and related actions. In most cases, the role of a Scrum
and business teams and several learning iterations.
master or process facilitator was the key to successful change.
• Reshaping supply chain planning—The growing complex-
ity and unpredictability of market behavior has created a
need for simpler and more integrated planning tools. Managerial Implications
Digital teams and business teams from both the supply LEGO’s Agile transformation is a single case. But a single study
chain and marketing groups, working together using Agile of an Agile transformation can provide inspiration to managers
processes, created such a tool to meet the needs of both considering how to leverage the benefits of Agile in their own
groups. Following Agile principles, the teams chose to go organizations. Of course, a single case study must be approached
live with the tool when it was “good enough” to use and with caution and guided by the understanding that contextual
then continuously added functionality based on user feed- factors likely shaped the outcome. Understanding the particular
back. With this approach, users have started to get value context of any organization will be key in creating a successful
from the tool months (if not years) before the go-live date Agile transformation, as with any kind of transformation.
estimated under the traditional system. One key implication of LEGO’s experience is the need to
consider the managerial approach to a transformation—how
will the Agile mind-set be applied in management decisions
and transformation processes? Agile values must be at the
Agile values must be at the heart of any heart of any Agile transformation; each transformation will
be unique and highly complex. Some essential leadership
Agile transformation; each transformation behaviors are likely necessary to any successful transforma-
will be unique and highly complex. tion; above all, leaders must “walk the talk” on Agile behav-
iors. Teams cannot be empowered to make decisions
independently if they are still being told what to do by

28  |  Research-Technology Management Agile Transformation at LEGO Group

managers. Full adoption of an Agile mind-set requires that maintaining an honest and transparent dialogue, even when things
the manager steps aside on team decisions. Leaders will need got tough. Especially, thank you to the many Agile champions at LEGO,
to be more invested in setting the strategic direction and who continue to challenge and educate us all on being Agile.
providing the structural and governance changes needed for
teams to succeed in the change—without directing the pro-
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Agile Transformation at LEGO Group September—October 2019  |  29