Did you know the biggest toymaker in the world almost went broke?
From their inception in 1932, till the end of the 20th century, Danish toy manufacturer Lego never once posted a loss. From the beginning of the 2000s however, they began to notice a marked downturn in income. “We’re on a burning platform,” said newly appointed CEO Jorgen Vig Knudstorp, speaking to colleagues at the time, “We’re running out of cash… [and] likely won’t survive.” An internal audit revealed that the company had failed to make any significant innovations for over a decade and that sales were falling by 30% every year. By 2003 they were $800 million in debt, and fresh out of ideas.
What Lego badly needed was an inspired new direction that could change the company’s trajectory. A new product that would revive its fortunes. But how would Lego develop this new product, if they had failed to make any significant innovations since the early 90s? Turns out they didn’t just need a new product; they had a bigger problem.
There is more to work, than just work
One of the biggest obstacles to innovation is time. Or rather, the lack of it. We have all heard that old yarn about, “I would have done XYZ, if only I could find the time…”. We operate on the assumption that innovation is something that happens outside of regular workings hours, an extra-curricular activity.
But successful organizations today have realized that innovation can and should be made a part of the daily routine. It is difficult to allocate headspace to come up with new ideas and finding creative solutions to problems when all our energies are dedicated to dealing with the day-to-day. This is why companies like Google, 3M, Ericsson, and others, encourage employees to spend a part of their day away from daily responsibilities, learning something new and working on their own ideas.
Surfing with Patagonia
California-based outdoor clothing company Patagonia has found a unique strategy for fostering innovation at work. Sometimes described as founder Yvon Chouinard’s Let My People Go Surfing policy (the title of his memoir), Patagonia actively encourages its employees to set aside time every week and indulge in outdoor activities such as surfing, cycling, or hiking. The logic behind the move is two-fold—first, as a retailer of outdoor clothing, this gives employees a chance to test products and generate quality control feedback; second, by setting aside time, Patagonia is helping employees think about their primary business and how customers use their products. Taking time away from the desk to think about the product from new perspectives drives innovation.
The Patagonia way of doing business has worked wonders for the company, reflected both in the bottom line and in job satisfaction. In the period between 2008- 2012, Patagonia tripled its profits, declaring an income of $600 million in 2013. By 2019, this had almost doubled once again and they were making roughly $1 billion in sales per annum. Patagonia also has some of the lowest employee turnover rates in the U.S, less than 4%, which is remarkable when you consider that the national average is above 20%.
Stop, collaborate, and listen
Most recent literature about innovation h