How the Lego Group Built Culture Change: From the Ground Up

From 2004 to 2015, the Lego Group was on a tear, growing revenue an average of 17% per year. Then growth stalled and sales flattened. In 2017, an outside CEO joined the toy company and chief commercial officer Loren Shuster transitioned to the role of chief people officer. The new leadership team, Shuster recalled, had a classic realization: “‘What got us here won’t get us into the future’ — which led us to develop a new business strategy.”

At the same time, the top leaders also “embarked on a journey to define what leadership culture we need to operate in the world today,” Shuster said. The team began to think through what type of culture it wanted and what to take forward or leave behind. The Lego Group had accumulated dozens of different leadership models and change programs over the decades, and Shuster wanted to take a unified approach. “Like many organizations, particularly ones that have been around for 92 years, there are … different models and processes and artifacts and articulations. We wanted to clean all that up,” he said.

The process produced the “leadership playground,” which Shuster described as the “articulation of the leadership culture that we are looking to nurture and develop within the Lego Group.” Three core behaviors — being brave, focused, and curious — are “represented in the language and the principles of how children operate or feel free to operate in a playground, an external environment, where it’s relatively safe to experiment,” Shuster said.

Prioritizing these behaviors enabled the Lego Group to execute its new business strategy, which required “choices that could be considered brave, or maybe we hesitated [over] before, like going after [sales to] adults in a big way. Would that sacrifice our kids business?” Shuster noted. Some of those decisions were not self-evident and required a lot of curiosity and bravery. The leadership playground became an “integral component” of executing the strategy, Shuster said.

Backed by these changes, the company has rekindled its growth, with revenues increasing an average of 10% annually over the past five years (compared with 3% for Disney, Mattel, and Hasbro) while maintaining industry-leading profitability. Here, Shuster shares tips on articulating and embedding updated leadership behaviors throughout a large, global organization.

1. Articulate the organization’s leadership principles from the bottom up.

“If you’re trying to build culture at scale within a system,” Shuster said, “it can’t possibly come top-down exclusively.”

The benefit of a bottom-up approach, Shuster said, is that leaders “signal to the organization that this is something that actually came from colleagues: It came from you; this is built for you, by you, and not by a bunch of executives who may or may not be in touch with what’s happening in every part of the organization. It has a built-in mechanism of representation.”

In contrast, Shuster said, if a culture change is “not fully bought into by your staff or [is] seen as window dressing … people will sniff it out and there’ll be a lack of integrity, at least at a subconscious level, and maybe a defense mechanism from the system.”

At the Lego Group, a cross-functional working group of 15 employees was charged with articulating the leadership principles. To ensure broad representation of the employee base, Shuster established a team that embodied gender, geographic, and tenure diversity.

2. Use simple rules to guide the process of defining culture.

Shuster managed the process of defining a new culture with a light touch, giving the team a broad mandate: “Tell us what type of leadership culture you believe we need to face the opportunities and the challenges ahead of us.” Rather than micromanaging, Shuster and the CEO held a half-hour meeting to set three broad guidelines for the working group.

First, the working group was asked to articulate a set of leadership principles that would be anchored in the Lego Group’s mission to inspire and develop the builders of tomorrow. Shuster wanted to encourage leadership behaviors that were “unique to the Lego Group — not something that could be pulled off of our wall and put on Procter & Gamble’s wall.”

Second, the principles needed to be enduring. And third, Shuster explained, “We wanted something that ended up being what we refer to as an inspirational or a contextual model and not a prescriptive, mechanistic model. So we wanted to avoid all these 3-by-3, 9-by-9 … matrices trying to narrow down human beings into a matrix or a formula.”

Over the next six months, the working group solicited feedback from about 200 colleagues and synthesized their input into the leadership playground. “When [the culture proposal] was presented, it just landed so well with everyone because it captured the essence of who we are, and it captured some behaviors that all of us could recognize very intuitively as being the right ones for the journey ahead of us and for our articulated strategy,” Shuster said.

3. Embed the leadership principles widely, using volunteers.

A bottom-up process is a powerful way to not only articulate leadership principles but also embed them throughout the organization. “You need buy-in,” Shuster said, and “there’s only so much you could do at the top of the organization.” You need as many employees as possible to be truly committed to upholding the organization’s purpose and executing the strategy, he said.

So Shuster asked for volunteers from 1,200 teams within the Lego Group to serve as “playground builders.” Those volunteers didn’t need to work in HR or be the most senior person on their team. “We said, ‘Whoever is interested in shaping the leadership culture of the Lego Group for the next strategy round, please raise your hand.’ And then those individuals became a community,” Shuster said.

The Lego Group brought the playground builders together, introduced them to the leadership principles, and trained them in facilitation skills. Then those individuals went back into their teams and started the discussion around the new leadership model, Shuster explained, tackling topics like what bravery means for a consumer services team in China versus a store associate team in a shop in the U.S. The leadership behaviors were particularly crucial elements in discussions about difficult trade-offs between, for instance, sales targets and environmental impact, Shuster said.

But volunteering to be a playground builder is not a one-way street, Shuster explained. The company’s promise to employees: “If you do this, you’ll learn new skills, you’ll be able to engage differently, and then, hopefully, you could advance your career on the back of that,” he said.

4. Avoid a mechanistic approach to evaluating leadership performance.

The leadership playground has succeeded, in large part, because it provides guidance on desired behaviors without dictating exactly what people should do in every situation or reducing cultural values to checklists, Shuster said. Employees throughout the organization “can interpret the model in a way that’s relevant to their environment,” Shuster said.

Some colleagues initially struggled with how to evaluate a colleague’s behavior without detailed guidelines, Shuster noted. One example: “Operations is a function that is highly mechanized and has to be because you need to deliver efficiency, safety of product. … So for that organization to get used to operating with a [people] model that is more contextual or inspirational … there was resistance and confusion, and reskilling or reorientation was needed.”

Evaluating leaders against nonmechanistic criteria requires judgment. In the company’s annual review process, managers are prompted to have discussions with employees rather than rating them using a scoring model. Shuster explained that questions may include “What were you most curious about in the last period of time?” “What brave decisions did you make?” or “When weren’t you as brave or curious as you would have hoped to be?” The Lego Group wants to hear the results of these discussions, Shuster explained, rather than “trying to simplify [leadership] down to a single score.”

Want to hear more advice from Shuster? Watch this conversation and the entire series on the CultureX YouTube channel, on Spotify, or on Apple Podcasts.