Idesign museum in london, an ongoing exhibition by Chinese artist Ai Weiwei includes a 15-meter-long work called “Water Lilies #1” based on Claude Monet’s triptych. If you look closely, it’s made up of his 650,000 Lego bricks, integrating Monet’s Impressionism into what Ai calls “a digitized and pixelated language.” This is often compared to Lego itself. The Danish toy maker is on a long-term mission to digitize and pixelate the source of human creativity, the plastic he bricks.
Three digital experts from management consultancy McKinsey have launched Lego as part of their new book Rewired, outlining the dos and don’ts of reinventing themselves for the digital age. It outlines the transformation. Beware: The language of digital transformation is a betrayal of common English. Sounds more like corporate yoga than a software development marathon. Executives need to keep pace. A team is a pod. Be nimble. Defines the downward domain. McKinsey has taken lessons from 200 companies to provide clear, albeit highly vague, information. For the sake of simplicity, however, Schumpeter uses Lego as a guide to illustrate some of McKinsey’s insights. Call this the yellow brick road to generative artificial intelligence (AI).
First, it’s a long, hard road full of failures. Lego is a rare success story. The company’s journey began with his near-death experience in 2003. Then, in the midst of the rise of video games, he panicked and innovated recklessly to the point of bankruptcy. One of the major problems, he implemented a single global enterprise software system to solve the supply chain disruption. This system has survived to this day and has grown in scale as Lego has expanded into new markets such as China, new formats such as e-commerce, and new factory locations such as the United States and Vietnam. To prepare for the pixelated world of play, Lego launched Star Wars-themed digital games and developed its own franchises such as Ninjago and Chima, which combine video games, movies and games. bottom. tv set A hit show.
In 2019, LEGO embarked on a new five-year transformational drive aimed at adapting to the world of direct-to-consumer, online versus big retail, and digital play in the age of screens. The timing was inspired. It started just before the world went into lockdown as a result of the COVID-19 pandemic, when having a digital strategy became a matter of life and death. It gave immediate results. It’s hard to take out the exact contribution of digitization, but since 2018, Lego’s sales have nearly doubled to more than $9 billion, surpassing those of main rivals Mattel and Hasbro. there is In 2022, his number of visits to online portals increased by 38%. We’re partnering with video game company Epic to explore the Metaverse.
But the journey remains a difficult one. The hard part is moving from a system where success is measured by store-by-store sales to a system where success is measured by how well a company sells online worldwide, how it ranks on Google and Amazon, and how effective its software is. It is included. The McKinsey authors highlight such challenges on the first page. A recent McKinsey survey found that about 90% of companies had some kind of digital strategy in place, but it fell short of a third of the expected revenue growth. Furthermore, success rates are more heterogeneous within industries than between industries. The best retailers can be more digitally productive than your average tech company, and the worst retailers can be as bad as the worst government agencies.
To do this successfully, we need to learn a second lesson: having a McKinsey top-down strategy and a roadmap (or, in Lego terms, a clear instruction manual). For Lego, it’s helped that the family-run company has long taken a command-and-control approach. The company’s digital strategy included a single, organization-wide plan written by a 100-person executive team and approved by the board of directors. McKinsey believes that when change stagnates, as co-author Rodney Semmel puts it, it’s often the case that executive conversations go hand in hand, projects of their own, and the scope of investments out of reach. It is either too thin or “more than the number of pilots on an aircraft carrier,” he said. that. It also needs to be ambitious enough to generate momentum while constantly evaluating financial results. McKinsey’s rule of thumb is that digital transformation should aim to increase earnings before interest, taxes and depreciation by 20% or more.
Third is the question of whether to build or buy a new digital infrastructure. The answer is primarily to build. Like his 8-studded blocks in Lego (6 of which can be combined in 915 million ways), there are many software applications on the market that can be combined to create unique systems. But the job of coordinating them should not be outsourced. Taking Lego as an example, the company started its latest digital transformation with engineers who make up less than 30% of his staff. Since then, the number of system and software engineers he has increased by 150%. Five years ago, Semmel said, the tendency was to hire from Silicon Valley. It was “a good way to change the company’s dress code, but not a good way to change the company culture.” Since then, more companies have retrained their existing technology workforce and placed them in more front-line roles across their organizations.
How to do gen-AI Weiwei
Some of these lessons also apply to generating AI. Semmel says it’s relatively easy to start piloting with human-like chat and other technologies.GPT.the problem is embedding AI Build models across your organization in a safe and equitable way. A top-down strategy is required. When it comes to building and buying, Semmel said it may be a “waste of time” for the software industry to build its own model. The key is to work internally to deliver a decisive advantage in the market. For Lego, AI is still in the future, but some brick enthusiasts are already using Chat.GPT-It’s like a program that comes up with new ways to build things. Most of them fail, but maybe one day everyone will be able to make Monet. The yellow brick road goes on forever. ■
Read more from global business columnist Schumpeter:
Introducing the world’s flimsiest sovereign wealth fund (June 29th)
Beer’s new king is a Mexican-American success story (June 20th)
What Tesla and Other Automakers Can Learn from Ford (June 13)
https://www.economist.com/business/2023/07/06/a-lego-lovers-guide-to-preparing-for-the-ai-age A Lego lover’s guide to preparing for the AI age