Over the past two weeks, since LEGO announced its intention to not renew its current partnership contract/arrangement with Shell, there has been a lot of discussion about the outcome. The long standing collaboration ended as a result of a very clever social media campaign by Greenpeace which claims that Shell is destroying the Arctic. Many have provided analysis and commentary. Readers have been very engaged with replies and counterarguments. A lively debate has certainly raised many questions for a wide range of areas. Environmental sustainability, economic prosperity, ethics and business, marketing, customer power, social media strategies … the list goes on. I am following the story and am fascinated by all its facets. The seemingly simple ‘yet another’ corporate story has all the qualities of a great drama in real time. My taste in drama aside, the real fascination is how this situation plays out in the field of collaboration.
The complexities that are constantly emerging in the marketplace as a direct result of changing consumer trends, tastes, attitudes as well as needs, is at the crux of the matter. This means that collaborative strategies are also not safe from emerging complexities. Collaboration is principally a form of business strategy aimed at creating value in a more efficient and competitive way. As in any strategy formulation, knowledge of environmental (as in socio-economic) factors is paramount. This leads to very critical conclusion; collaboration is not for gamblers! Risk taking and being entrepreneurial is one thing; assuming that collaboration can be done quickly and cheaply is wagering with poor odds.
I say this because what seems to be the case in LEGO – Shell collaboration collapse is eerily resemblant of the factors that affect businesses – well established and mature market players – when they are faced with the so called “innovator’s dilemma”. When Clayton Christensen wrote this classic book he explained in great detail what happens when big organisations choose ‘sustaining’ innovation as opposed to ‘disruptive’ innovation. When it comes to collaborations of various kinds, including the formal and longstanding partnership chosen by LEGO and Shell, it seems that they simply did not see it coming. It may be worth noting that the partnership would have made sense when it first started some 50 years ago. In fact it may still make sense to some degree, purely on one simple basis; LEGO relies on the oil that Shell and other oil giants produce. LEGO bricks are produced by oil-derived plastic.
Perhaps the two giants could have reinvented their collaboration and invited Greenpeace to the table. Perhaps the valuable longstanding collaboration could have been used to better all three parties; especially when it is estimated that the deal was worth close to US$120mil. The accumulative knowledge gained by the LEGO-Shell teamwork may have been squandered. No doubt some of these answers will emerge over time. For now, it is not quite clear who’s gained from the episode. The smart social media campaign by Greenpeace certainly helped the organisation to refashion itself and find an alternative to their old style public awareness campaigns. The very cause for which Greenpeace campaigned is not questioned as such. However, I remain sceptical about the choice of strategy. As idealistic as it may sound, a clash of interests can still be negotiated collaboratively.
Online comments by readers across numerous websites are interesting. In fact they are almost entertaining and add some extra edge to the drama. (I personally only read them for research purposes … hmmm.) For instance, one comment in support of the Greenpeace triumph was; ‘Yeah, that’s awesome! I guess Lego will have to buy its crude oil from someone else now’. Another comment said it was a ‘bizarre waste of time’. Now, to me that does not indicate any real change on the ground. LEGO will not stop building plastic bricks and risk losing its status as the largest toy maker in the world. Shell is not likely to cease its oil production. The opportunity to make changes is somewhat lost because collaboration is being pushed off the table. For now at least.