Know Your Enterprise: Define Your Reason To Exist

A question as old as time – asked by many and confirmed by none – has caused more than the scratching of a few heads. From philosophers and physicists to bored kids on long car journeys, we’ve all had that ‘why are we here?’ moment. Its mysterious and unfathomable nature is what life is inextricably about – and precisely why we’ll never know.
Flip the proverbial coin into the business arena, however, and the exact opposite prevails. Asking why your business exists should be the easiest of questions to answer – especially as a leader – but for many, an oversight in leadership comes from avoiding the question entirely. Duck and dive around it, and you can bet your bottom dollar your brand’s focus and competitive edge will start to fray; something the Lego Group knew all too well back in 2004.

In an interview with Jorgen Vig Knudstorp, we talked about just that. Having taken the helm as CEO when the company was running at a loss and going through an identity crisis, a close friend asked him just after taking the position “Explain to me what went wrong with Lego?”

At the time Knudstorp didn’t quite grasp what his friend was getting at, but the penny soon dropped. “I realised that it’s about the most fundamental aspects of leadership,” he said. “Do you take responsibility or do you blame it on some external factor such as currency exchange, the financial crisis or poor weather? Because if that’s your major reason for how your business develops, what the hell are you doing in the job?”

A very poignant question, followed by the one that Knudstorp realises was his ‘a-ha!’ moment: “why does Lego actually exist?” Of course, he was being asked, as the Chief, what he thought made Lego unique. What was its core business value? Why was it created? What, above everything else, was Lego put on this earth to offer?

Before Knudstorp arrived, Lego had forgotten why it existed. It had walked too far into the forest of distraction and lost its way – and with no one asking why it was walking in that direction, it simply carried on.

Fast forward eight years, and Knudstorp has taken Lego by the hand, given it a compass and put it back on the right track; he’s taken the company back to the simplicity of itself. And what was the kicker? Understanding that simplicity – namely, their ability to create playing blocks that excel in their design and look like they’ve been “glued together – yet you only have to be a year-and-a-half to take them apart again.”

Yep, Knudstorp brought Lego back to their glory days as the “masters of moulding techniques” by asking the question. By being prepared to face the answer. To boldly go where no man has gone before (well, at least one man for a few years at Lego anyway). By being aware that “most companies don’t die from starvation, they die from indigestion”, Knudstorp had reverted to a streamlined diet of managed business systems and competitive advantages – and in doing so, gained a sense of Lego’s true core.

Ironically for Lego, the answer was always in plain view. After all, its name is Danish for “play-well”, a notion not missed by the cerebral Knudstorp: “Children…still want to have that physical Lego experience that cannot be replaced by digital play.”

And play is what they’ve been doing ever since, as Lego’s 2005 profit showed with a 12 percent increase in revenue – up from an extortionate USD$220 million budget deficit back in 2003 prior to Knudstorp’s entrance. Not too shabby for asking a simple question. Not too shabby at all.

Watch Knudstorp’s full interview here. Or click here to see why you should define your reason to exist.

Author: Nick Pryke

Topics:

Human Resources