Lego Brandmanagement

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The Cycles of
Corporate Branding:
THE CASE OF THE
LEGO COMPANY

Majken Schultz
Mary Jo Hatch

T

op managers face many managerial and organizational challenges when they incorporate corporate branding into their strategy formulation process. When implementing corporate brand strategy, companies move well beyond even the most sophisticated prescriptive models for strategic branding—such as those that focus on how to design brand identity and architecture or that offer brand-planning systems.1 The LEGO Company provides an excellent example of the managerial complexity and organizational dynamics that go into developing a global brand. The framework for LEGO’s branding effort expanded from its initial marketing focus into a company-wide reorganization that involved several change management programs and an ongoing initiative to create and manage global brand coherence. Several major companies use their global corporate brands as reference points for formulating corporate strategy. As top managers implement these strategies they find that they need the support of their entire organization to realize the strategic vision they have created. For example, the strategic global expansion IKEA is undertaking involves creating a global internal culture and business system that connects their brand and human resource strategies via shared democratic company values. Others, such as audio-visual manufacturer Bang & Olufsen and Levi Strauss, have learned that it takes a combination of brand-driven retail concepts and innovation programs to implement their corporate brand vision. Still others have found that strategic branding not only requires the support of the company, but that implementation of brand strategy We thank CEO Erich Joachimsthaler of VivaldiPartners and Senior Vice President Francesco Ciccolella of the LEGO Company for insightful comments on early versions of this article. We also thank Phil Mirvis, Fabian Csaba, and the members of The Corporate Branding Project. Finally, thanks to David Vogel and an anonymous reviewer, who helped us tighten and contextualize our story.

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CALIFORNIA MANAGEMENT REVIEW

VOL. 46, NO. 1

FALL 2003

The Cycles of Corporate Branding: The Case of the LEGO Company

can alter other elements in the strategic mix. Sony’s brand focus forced the company to engage in culture change efforts that have had repercussions on the rest of their corporate strategy. As Sony CEO, Nobuyuki Idei, stated “We have to change our culture from the manufacturing industry to knowledge-based global culture. . . . Kind of a reinvention of the business model itself.”2

A New Brand Strategy for the LEGO Company
The LEGO Company corporate brand was created in 1932 when Ole Kirk Christiansen, a carpenter from rural Denmark, created a company for the manufacture of wooden toys. For decades it acted as a strong umbrella brand, guiding LEGO through extensive international growth as well as product innovation. However, in the late 1980s, and particularly in the mid-1990s, brand extensions into software, lifestyle products, and accessories fragmented the LEGO brand. Combined with fluctuating financial performance, brand fragmentation presented top management with the dual challenges of maintaining a focus on the substance and distinction of LEGO Company heritage, while allowing for continuous innovation and expansion into new businesses. In response, LEGO top managers decided to reintegrate the company via a corporate brand strategy that was tied into the deep roots of LEGO’s heritage.

A Brief History of the LEGO Company’s Corporate Branding Process At its founding, the company took the name LEGO, a combination of the Danish words “leg” and “godt,” meaning “play well.” Only later did the company discover that the Latin root of its name refers to construction, a happy coincidence for a company whose core product is an interlocking system of building blocks.

Majken Schultz is Professor of Management
In...
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