Product development and portfolio management processes at LEGO

Overview

LEGO as a well-known company has a great challenge to keep their role on the rapidly variable market, as the developer of one of the most innovative toy world-wide. The name of the company, LEGO was adopted from the Danish phrase “leg godt”, meaning “play well” in 1934. The main product from 1949 is their interconnected plastic bricks and brick sets, which are sold in more than 130 countries (Lego, 2015). Throughout of these decades LEGO released a wide-range of different brick sets and made an extremely large product portfolio within this type of toy. In the meantime, a unique product development process and organization of the project teams has developed, which is also called as the LEGO model. Moreover, the extensive product portfolio is around 250 different brick sets which are continuously optimized and renewed, as LEGO`s initiative is 60% novelty in their portfolio year by year.

Therefore, in the frame of this study the focus is on these special processes and models regarding the product development progress, the decision making process in the frame of portfolio management and also the design for manufacturability at LEGO. The relation of the organizational structure and the product development is also analysed in order to define how the different projects are relating to the existing and new product platforms.

The so called Stage-Gate Model is also an important part of the study, which is used by LEGO to ensure the process of ideation until its project implementation and the commercialization of the product. This portfolio management approach is a significant tool to support the project prioritization and early key decisions. Within this process the manufacturability will be also examined as one of the major requirements of the product development.

In addition, the portfolio management and its alignment of the LEGO main strategy is investigated regarding the product variety, market trends, expectations of retailers and customer satisfaction as significant aspects.

The LEGO model and the development process

Stage-Gate Model and its application

As it was mentioned above the requirement of a renewable, optimized portfolio year by year means a huge challenge for LEGO in case of product development and portfolio management. To understand how the LEGO model works and answer to this challenge the understanding of their organization in relation of project management and development process is indispensable.

In general, LEGO has a matrix organization profile as it is illustrated in Figure 1.

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