COPENHAGEN: Danish toy maker Lego has announced a management shake-up to develop the brand beyond its iconic plastic bricks under the leadership of its veteran chief who brought the company back from the brink of bankruptcy.
CEO Jorgen Vig Knudstorp took over Lego when it was on the verge of collapse in 2004 and transformed it into one of the industry’s biggest success stories, but he will step down by the end of the year to head a new unit focusing on the Lego brand, called Lego Brand Group, the company said.
“With our recent growth and globalization come new and exciting opportunities for the brand,” deputy chairman and fourth generation owner Thomas Kirk Kristiansen said in a statement.
“We establish the Lego Brand Group to look into these new opportunities,” he said.
Lego’s colorful toy blocks have proved resilient to the rise of digital devices which is battering the traditional toy industry, but the company has also been adept at using different channels to engage with children.
The group has allowed partners to develop branded video games, a Hollywood blockbuster, television shows and theme parks.
The company has grown over the years, but has always remained owned by the family of creator Ole Kirk Kristiansen since its founding in 1932.
Its sales have increased five-fold in the past 10 years, to 35.8 billion kroner (4.8 billion euros, $5.1 billion).
The company shake-up should be seen in the light of its loss-making expansion into non-core businesses before Knudstorp took over, said Niels Lunde, editor of Danish business daily Borsen and the author of a book about Lego.
“Lego uses its brand in more channels now than it used to, and that is what Jorgen Vig Knudstorp will oversee in the new role,” he said.
Knudstorp was the first non-family member to take the helm of the group.
He will be replaced at the Lego Group by 14-year Lego veteran Bali Padda, currently the company’s chief operating officer.
Padda, a Briton, will be the first non-Dane to head Lego Group, which will manufacture the plastic bricks.
“Lego has become so big that it’s hard for one chief executive to carry out all of the tasks,” Lunde said.
“The CEO’s role (of Lego Group) will become smaller now than it has been,” he added.
The new unit, Lego Brand Group, would work with the Lego Group as well as other units, including Lego Education and attractions at the Merlin Entertainments-controlled Legoland theme parks.
Knudstorp will also become chairman of Lego Group.
Lego builds new company structure to grow brand
Lego builds new company structure to grow brand
Private sector is crucial enabler for PIF, official says
RIYADH: Saudi Arabia’s Public Investment Fund is increasingly relying on the private sector to drive value across its portfolio, a senior executive said, as the sovereign fund expands operational partnerships.
The fourth edition of PIF’s Private Sector Forum concluded on Feb. 10, bringing together executives from the local and global private sector across strategic industries, alongside 121 companies from the fund’s portfolio.
PIF’s Head of MENA Direct Investments Raid Ismail spoke to Arab News about the Operational Value Creation Group, digitization in the private sector, and the government’s role in partnering with businesses.
He said: “If you look at PIF from one side, it’s a private equity firm. If you look at it from another side, it's a national economic development arm. You look at it from another side, it’s an asset manager, but in our essence, we are a sovereign wealth fund.”
He explained that achieving returns requires going deep into portfolio companies and enhancing operations beyond initial business plans. “The only way you can really get the returns you want is by going deep into the company and exceeding the business plan that they had by operational enhancement. So that’s the premise of it.”
According to Ismail, modern private equity firms must embed operational expertise. “Today, any private equity firm that does not have operating partners, like an operation value creation group, within it will not be able to raise funds. Versus 20 years ago, if I was a finance guy who wanted to raise money for private equity, I would have been able to do that without having the operational background.”
A core component of this approach is procurement and direct spending. By pooling demand across portfolio companies and negotiating collectively with suppliers, PIF achieves cost efficiencies.
“We’ve seen that there is anywhere between 10 to 30 percent enhancements in costs from negotiation and from specification enhancement. So that’s the functionality of procurement. Digital and AI is a theme that we can apply by doing diagnostics into these kinds of things,” he said.
The fund focuses on three key cross-portfolio functions: procurement and direct spend, digital enablement, and human capital development.
PIF’s value creation strategy centers on targeted deployment across 13 critical sectors aligned with Vision 2030. Once gaps are identified, investments are made either through existing portfolio companies, partnerships with private firms, or the creation of new entities.
Governance structures — including boards and committees — ensure strategic execution. After governance is established, an enablement plan is rolled out, where the OVCG plays a central role.
He said: “Operational enablement, in summary, (is) how do we help our companies to enhance revenues, profitable revenues, faster, quicker, more profitable. How we optimize costs, how we ensure digital as part of our DNA, and how we use (digitization) more effectively and efficiently. How we ensure human capital is enabled through the right targets and the right reward systems are the key drivers for what we look into from an operational perspective.”
“There is a way that, company by company, where we sit down, understand what is your ERP, or what are the digitization tools you have, and then share ideas. Also, there is a thematic way of how we use it, in the form of a data and AI maturity test, where we roll it out into the portfolio companies,” he said. “There has to be a return on investments in AI and digitization if they solve for three things: increasing or accelerating revenues, optimizing cost, or mitigating risk.”
He described the private sector as a critical enabler for PIF, making the forum a key meeting point between public and private actors. He cited Acwa as a leading example.
“We had, as a Kingdom, a green initiative, a renewable initiative, for power, and we found that Acwa was the best partner in that. By then we increased our ownership in Acwa and enabled Acwa to be that national champion. And today it is a global champion… (it’s) one company that I'm extremely proud of, and it enabled us to reach our aspiration.”
Local content remains a cornerstone of PIF’s supplier strategy. Portfolio companies are required to adopt policies favoring domestic suppliers and talent.
“We ensure that all our portfolio companies have a local content policy which favors local companies with local talent in it to drive that. And you can get marked more if you have a stronger local content. So, that's another way we leverage the private sector,” he said,” he added.
