Aligning Business And Customer Outcomes
Aligning Business And Customer Outcomes
Successful products deliver on both the customer and the business needs, but aligning the two can be challenging. Maintaining alignment while the team deals with the complexities of implementation even more so.
How can teams map their activities back to the business and customer KPIs?
And the discussion today was to present how we at Lego align business and customer outcomes. And I would like at the same time to present a little bit, you know, how we do our work and do our job at Lego, how the company is actually running. So I will have a lot of slides and I will try to be as quick as possible. I'm already probably late on schedule. So very quickly.
Who am I? I worked a long time ago at Intel, I worked for Kodak, I worked for Orange, I worked for Fujitsu and I joined Lego about seven months ago. The reason why I wanted to mention that is because any organization I've been working at, it's always been amazing to see the misalignment between business and actually user experience of products. Intel had for example, back in 2001, or something, a product called the new generation of information platform, a huge project of $40 million.
Internally, we were calling this project never going into production. At Kodak, well, you know the story. At Orange, I brought this screenshot because it was really a stupid thing. We had this launch of the very first setup box. Actually, I think in Europe, it was like a big thing. And super designed, super specification, super while everything was supposed to run smoothly. But then on the purchasing side, they went to China and bought some elements to put the box together. And some guy found out that the red lights were cheaper on the green lights. So the first model was actually blinking red when it was actually working fine. So we got like, I don't know millions of support calls for people complaining about the box not working. It was probably like 0.001 cent difference from the green lights. So yeah.
So any company you go to you actually think things in Fujitsu? I guess I don't know the number of times to explain that is not. We were doing like digital cameras. So the brand was not as strong as the current company I worked for. And the company I work for is the Lego Group. Why is Lego here today? I was a bit worried, wondering how you think about it. It's a bit strange to me because a lot of people came to our booth and said like, why are you here? But at the same time, everybody finds it okay. I think we have a very strong brand. And we'd like to go a little bit into it explain a little bit where we come from, how we yeah, foster this, this environment of work and this vision at every level.
So, Lego is a family-owned business. It's been grounded in 1932. We are celebrating a few years’ time the 100 years of Lego. And it's still same family that owns Lego, it was founded by someone called Ollie Kirk Christensen in a very smaller place called Billund, it's still a very small place. But that's actually the headquarters of Lego and today you can see actually still the workshop where it all started. The place is also holding all the Lego sets that were ever made by Lego. And it's just opposite our new like brand new headquarters very modern building. We are the number one toy company in terms of revenues.
We are in more than 140 countries. In fact, we have hubs in Billund in Denmark, in London, in Singapore, in Shanghai, and in Enfield in the US, and we have factories in Mexico and Czech Republic, Hungaria, Billund and in China. I'm one of the 17,000 people working for Lego. We have about 250 designers from over 40 countries designing the set that you know and actually, the company is renewing like every year 60% of the products so every year we need to innovate and put 60% of the products are new on the shelf.
And according to some survey, we are the number 2 reputable brand. So, it means a lot to us. We have definitely a vision that we have had for a long time, which is to inspire and develop the builders of tomorrow. That's, I guess what we what sets us apart from other businesses. We are definitely purpose-driven and passionate about what we're doing. So we want to yeah. We feel like we have a mission, we have to like teach children how to play and we want them to grow and become adults through play, we think, it's an important value. And we know that a lot of things happen through playing so you learn a lot through that.
So in 1932, the company started with the first wooden duck was actually not a brick. In 1958 the brick was created and the brick for 1958 still fits with a break from today, you can actually still fit them together. In 1978 came the mini-figures. And with the mini-figures came a lot of role playing with it. In 1998, we created the mind storms, which created like the fuller generation of robotics experience, and programming. And for those who don't know, Lego comes also from a Danish term now it's a short reduction of the term lag got, which is like play well.
So, the reason why I wanted to give that is because it hasn't been always like, blue sky for Lego. In fact, there was a turnaround happening in 2003, the company really was, like, close to going bankrupt, there was a bigger issue. There was no clear strategy, apparently anymore, we kind of became a little bit arrogant, I guess, at this stage. And we had to ask a lot of asking ourselves a lot of questions.
The answer we gave was, the reaction that was made at the time was, to create some partnerships. So you know, most of them, I guess, especially the middle one. We also, first of the user led innovation. And also, I guess, I don't need to explain too much of those project we have like this Lego IDs today that is running very nicely, we release like new sets fans, we call them afold. So adult fans of Lego have a huge community and they actually can propose new sets every quarter or people can vote for it and we will actually produce those sets, we say selecting those.
And we also had much wider consumer touchpoints. So we went through having just the Lego sets to also proposing games movies, obviously, and the parks and the T-shirts and shops, we actually growing the number of shops worldwide a lot actually, we opened like us 75 shops in China physical shops. And we are also, we are concerned that we need to treat the users and individuals. So some sets will have some specific features, for example, the Bugatti will have a unique plate number. And you will if you go to a legal account, you will now have a VIP programme that treats you as a person and not as any customer.
I wanted to mention this book because it was mentioned to me by probably someone in the audience a few months back and I had a good reading and that we also and probably the most important element in this turnaround. We also went back and met real users like interviews, on-site with proper users. And it happened in Germany, there was like a story you can read in this book that made Lego realise that we need to go back to the basics and that we went a little bit far away. In fact, in 1997, this is the way the fire truck was looking like in 2001 it didn't even look like a fire truck anymore. And if you look if you buy a Lego set today, you will get actually a proper fire truck looking set.
We have things ahead of us. So like, what we want to go next is to reshape the retail, digitalize the play and have more consumer engagement. We have also like to take care of a global economic and demographic shift. And we also want to focus on the environment, which is obviously, a company that's producing plastic, a big concern. This is our 2022 plan, and it was set a long time ago. So we are now nearly reaching it. And you can see that in terms of portfolio, get back into the innovator space, I think we did pretty well. And we will keep on going this way.
Taking control of our own brand across channels, it's also quite an achievement from 2003. Geographic expansion explained that we are like expanding massively. And on my side and more on these enablers' side, so ensure that the future a future proof foundation. I think it's important that you know, it's a very like a full legend story. And it's been used like 100 times. But I think it illustrates a little quite well, how we actually have a purpose-driven company at Lego anyone in the company feels like they, they know what they're here for. They know what the company's doing. And I think even Yeah, it was used by Facebook. Also this, this quote.
So what we have behind this Lego brand framework, and you can Google it and find it. So it's nothing like confidential, where we have a mission, inspiration, promises, spirit and values. And on the promises, but I would like to also show you an example of how we do like the planet promise. 25% of the revenue of Lego go to the Foundation, where we send, where we actually do a lot of charity work and help like refugees, for example, in camps.
We have our local community engagement helping worldwide 140,000 children, 26 countries, we use 100% renewable energy already and as of today, we are already producing 80 elements out of non-plastic elements are ingredients, like plants based things. So we're not quite there yet, but we have promised to be there by 2030.
I'm actually part of a department at Lego called Business Technology. And you saw the mission that the LEGO Group has and at my department-level business technology level. So what you would traditionally call IT, we also have a mission and, you will see that we have that at every level in the company down to the product level. So our mission of business technology is to maximize the value from the Lego group's technology investments. And we do that working actually in an agile way. So my boss, the COO is the product owner. And we make sure that we deliver things on a like a sprint basis.
We created recently, for example, a new version of our product line catalogue so that everybody at Lego can look at what we are doing, what we are promising to the organization, who's owning what and what technology we're using for that.
On our side, we also make sure that we have a nice UI layer, like a meaningful way of organizing those initiatives products. I think to give you an idea, we probably have about 190 products currently in it, product line catalogue, and we make sure that there is always a team behind the product that one team manage at least one product or these two products. Product line because we organize also by product lines. Those products should make sense for the business. Talking about the alignment with business. Products that mirror what the customer can buy and the products do not mirror how we organized that's also quite important.
And to give you also a little bit of an idea of how we report the success of this organization up to the executive leadership team, we also put our value creation. So outcomes are based on those four criteria’s. How did we help the organization drive demand, innovate for the future, strengthen foundation and energize everybody, everyday? That’s another aspect that I will come back to later.
I'm a senior director in charge of the UX mobile and portals team. We also have our team and organizational level, we say that we enable other product teams to succeed in implementing great UX and UI in their products by providing the platforms tools, techniques and guidelines. We own our own products. It's just a few, I mean, the couple of them I could not really share. But I'm happy to tell you that we are like owning the UX partner programme, the UX Academy, the enterprise call UX platform, internet experience, the service model experiments, web solution, and so forth.
So we actually help Lego employees to do their job, we are supporting all the applications for enabling the company to run the factories, to run the shops, Lego brand, retail stores, and but also the employees, applications for HR for procurement, and so forth. And for the internet. There's quite a lot. And the team is actually working hard but also having fun. So it's the team at work and the team at the off-site that we last one we had in Denmark a few weeks ago.
So now, I wanted to give you this introduction about Lego, I wanted to tell you a little bit about well give you my definition of how we see our outcomes. So an outcome for me would be a measurable change in human behaviour that creates value. And then, the next thing I think to get started in the topic, will be to tell you also what I see as a business value. And I can recommend this book from Mark Schultz, who is now working for Amazon at AWS. He used to work for immigration in the US. A very interesting position where he introduced actually Devops. And what Mark Schultz is telling us is that the business value is not a simple formula that is somehow known by the business.
And that it's something that should be discovered and not discovered only once but investigated on a regular basis. So we have a cycle of investigation, making sure on a regular basis that we are not going in the wrong direction. And I think I like this sentence, it says like, if you want to talk about business value, you will say like the business values business value. So I put it into like 10 things that I think matter. There were a lot of presentation over this a couple of days. And I don't want to go too deep into some specific topic. If you want, for example, information about the design sprint, you can Google it. And you know, you can find a lot of stuff that case studies or things that were already published by Lego not so long ago.
So things that were a little bit complementary to what has been said. The first thing would be to follow not some but the 12 agile principles. I think it's important to keep that in mind. Because you will probably think in terms of being agile with delivering frequently. It's not all I mean, it's doing agile, it's not like being agile. And there's a lot of other principles to take care of. Especially reflect and adjust. And, yeah, I think it's worth mentioning probably at the very first recommendation. If you do Scrum, you will also have to bear in mind that scrum, it doesn't tell you what to build it tells you how to build.
So number two will be like starting with a vision.
And I explained I gave you the introduction about Lego so I really wanted to make clear that we need a vision at every link literally every single time step down on the organization to business unit to the product level. And Jared Spool which I follow, I mean, quite a nice guy to follow says to us, that he is believing that design should be translated into at least one of the five business goals. So it's like increasing revenue, decreasing costs, increasing the money you bring in from new customers, increasing the amount of existing money, or increasing your overall long term shareholder value.
It tells us you should really in every business, you should actually follow the business goals, otherwise, what you're doing is just wrong. I was happy to see this morning that someone mentioned the OKRs do it, use the OKRs, they're really valuable. And it wasn't mentioned in the presentation I attended yesterday, I was a bit surprised, but it's actually a very powerful tool to make sure that you're already always like aligned with what you with the outcomes that you want to deliver.
And why is it like that is because it allows you to measure progress, it shows how far along you we are towards a desired business outcome. But I want to talk about OKRs will make too long. So, I assume that you know, we are fine with just mentioning that OKRs and you would like also plenty of documentation to do OKRs yourself what you can do is to define also a product vision, but if you prefer doing it in a more fun way you can also do a product drawing vision going and that will be the kind of drawing that we will be using for example in our factory world. So, not the most fun place you can imagine, but they actually do it in a very fun way by putting this product vision into a drawing.
You can also use this kind of template to put what you're actually bringing to the business in a proper format against it in your product vision. I think one of the key things to perform is the right research. And we have I have decided to take some examples not from the software world but from the actual product world. So, we work there is a department at Lego called the Digital Product Team DBT and that's the way they work to come up with for example a full concept. They put the brand, the business, the market, the user, the interaction, the design and technology and they will only look at or they will only go ahead with a full concept when they have covered every one of those elements and not everyone individually but in combination you will be first scouting for the technology, for example, mapping the options that are available to you and you will look into the relationship between for example the cost and the volume or the planet promise is the brand value.
Okay with the planet promise that we want to offer to customers is it is a combination of cost and yeah and business okay oh, we will it have an impact you will probably find have some iterative way of producing a concept together that will not be fully valid yet and you will have to adjust different parameters to make it become a proper concept. One thing that this department is very good at and we really like to learn from them is the reusability thinking of things. So they will only also develop a concept when they think that some of the stuff that they develop is actually reusable.
And that brings me to the next recommendation which is to anticipate needs. Try to think broader than the project that is on the table at the time. This is the Batmobile and this is what happened. There was a project called the Duplo train, they got the brief they had to develop a Duplo train for a specific product team. And he had to be ready and be released. And that's all the money or the budget they were getting was just for the Duplo train. And they anticipated and some of you, I guess, got his explanation about the way it was working.
They anticipated the coming needs by thinking, Okay, today we get to Duplo train that could happen next. We only have like these possible options, there will be some vehicle requests coming, there will be some creators, but how many types of vehicles can we think about, there's not just only a few. So you will have like probably a train, a car, a tank, a boat and maybe a function element vehicle and took them a bit of time to come up with a Duplo train. But when the Duplo train was released, they were able to actually welcome any new requests any new product, and we use the same remote control. So a train, we'll just have to press one, and it will just go on and keep running.
That's what you expect from a train. And you will show like plug lights. And it's also what you expect from the train. That is like making some nice lights. If you use the same, same component, so the same element here and plug, Moto for the car instead of the block that you need for the train, you can reuse the same remote, you don't need to do anything else. But when you press the remote and release it, the cars will start and stop. And if you have a tank, you have to put like two engines, one on the left side, one on the right-hand side. So you're really annoyed because if you just press up on both sides, your tank will start spinning.
So this remote will actually allow you to turn it around. And you can pilot as a child, you can pilot the tank in a very natural way. The reason why I'm mentioning that is because all of this thinking was not done later, it was done at a stage where they were just got on their table a request for a train. And all this is fantastic team did a tremendous job. And I was like thinking forward. And when the other requests came in the Batmobile. They were like laughing. They were like, Hey, we've got everything. We have all the elements ready. We just need to customize a little bit of things. And within weeks, they were able to release a Batmobile. Super return on investment, fast to market. Excellent example.
And we try to do the same in our way in a software department. We don't write any single line of code without thinking, how can we reuse it? Next thing we need to be brave, curious and focused. Our role models at Lego are kids, and we want to not forget how kids are thinking and how they behave, we want to also have those values like thinking about them. So being brave would be like being curious actually will be to first to run an experiment, to do like A/B testing. Being focused will be to reflect on what you've done and, yeah, prioritize the right things. And being brave would be able to say no and stand for what you really believe is good. It's important that everybody in the company feels they can do that. So that's what we also name and call energize everybody every day because it's something we want to reflect on a daily basis.
Another one will be like to think out of the box, and we promote something called mindfulness. That's something that a lot of companies, a lot of other IT companies I know I already do. But that's helping a lot actually. It's I mean, the idea behind is that when you graduate, you're super engineer, but you're an analyst and you actually can deliver things you clearly forget to be creative, to be innovative, and bringing this mindfulness in the company allows you to actually become more creative and more innovative.
It also helps with something else, 47% of the time, your mind is actually somewhere else. And it helps you like with just a little few exercises during the day, you can actually train and try to get more focused on what you're doing and become more efficient. There are even some meetings that start with mindfulness now. And they waste time with mindfulness at the start, but they realise they actually finished the meetings earlier than they used to.
Think big, start small, and will be the MVP way. Team diversity. We have a lot of, we really have like a very international people and different skills. The product teams will also like to have a broad range of people worldwide who have skills and will promote something that we call the Lego over ego, that we also as a team, think in terms of what is best for the company and not for me.
In our department, the UX, mobile and Portal departments, we also do something that we called the UX partnership and the UX Academy. The UX partnership is the idea of having a consultant in the team, talking to a senior director or director in different departments and helping them derive some strategy around UX. We're not enough to cover like the 190 products. But we can do something in terms of making sure that all the processes are actually thought about and that we can answer questions, address specific needs at a higher level. And we complete it together with something that we called the UX Academy, where we, our UX consultants take a bit of their time to teach and train people within the product teams across the big organization.
They will set some 25 weeks longer curriculum with having a mentor, so they will be available for specific people in product teams, they can reach out, those people will have like assignments to do during a cycle of two weeks’ time. And we hope for that, that most of the basic UX activities are proven to work very well actually can be performed, even when we're not there and involved directly on-site with a product team. So there will be someone in each product team capable of carrying the torch and performing basic user interviews, user testing, and these kinds of activities that we think are keys. The feedback is actually pretty good. And we get more and more trainees.
And the last one will be the continuous delivery pipeline, but also this topic to talk about this topic. And we're already over time. So we'll be probably another hour. So to sum it up, I wanted to say that to get this alignment done, we need to get a lot of transparency, we need to share the purpose and take time, use OKRs, use this vision exercise to actually align on what it is you want to achieve. Make sure that you get feedback loops so that you're not losing track and you can validate what you think is good, have clear priorities and have this organizational learning behind which I just explained.
The last slide which is probably the most heavy way of finishing the presentation, because this one is simple. I thought that it would be also quite interesting to illustrate it with this three gaps model that comes from Stephen Bungey. Expanding that stays in a gap between what we call the knowledge gap that is the gap between what we would like to know and what we actually know. There is an alignment gap between what we want people to do and what they actually do. And there is another gap called the effects gap. That is the difference between what we expect our actions to achieve and what they actually achieve. And they get our reaction to that would be to say, Okay, it's simple.
For the knowledge gap. I will just bring some more documentation. Or for the Alignment Gap, I will just make sure that people do their job. I will make more strict rules and more processes in place are for the action against the outcome, I will just have a dictator in place and make sure that the manager is telling people what to do. But we actually think that it's the other way you should think you should think that you should go in an explorative way to motivate people.
So be definitive customer focus and driven by achieving outcomes. So we'll see today is the knowledge gap, you will actually validate through experiments, you will ask you will treat your customers I mean, you will consider your users as your customers. For the alignment gaps, you will actually provide clear direction and priorities, invest in competencies, do small increments and get feedback early. And for the effect gaps, you actually measure on outcomes, not on output. Thank you.