Legeplads

Background
Problem Solving

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 Hilda and her husband Bob, now the chief operating officer, formed
the company 13 years ago in Chicago.
A former second grade teacher, Hilda conceived the company as a
Legeplads company designer and manufacturer of safe, stimulating playground
equipment for children from ages 5 to 18.
history
The company’s first portfolio consisted of three playground systems,
one of which was constructed and displayed at the annual U.S.
Superintendents Conference. Hilda walked away from that
conference with $5 million in prepaid orders.
A year later, Scandinavian Partners, a venture capital firm based in
Oslo, invested $3 million to get the operation up and running.
In the years that followed, Legeplads expanded steadily, until
numbers peaked about 24 months ago and began to turn downward

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Project charter from Hilda (1 of 3)

To: Ana Quiroz, Strategy team lead

From: Hilda Ostergaard, CEO
Ensuring long-term profitability
As you know, my hope for the new strategy team is that you can support Legeplads in improving its long-term profitability.
This short memorandum outlines:
My understanding of the current situation and the performance challenges Legeplads faces
Proposed objectives for the strategy team
The current situation
I know much of this will not be new to you, but I feel it’s important to assess where we’ve come from as we determine where we’re headed.
For the last 13 years, Legeplads’ groundbreaking equipment and design principles have changed the way schools across the United States
think about space, recreation, and learning. During that time, we used our expert understanding of children’s educational and developmental
needs to expand business rapidly. For the first 10 years of operation, Legeplads grew by just over 40 percent and increased profits by 30
percent per year. Today, in addition to designing and manufacturing a line of 17 pieces of playground equipment, we offer customized
equipment design and production, equipment installation, and broad education-focused sales consulting services for prospective clients.
However, Legeplads’ revenues have fallen by five percent over the last two years, while costs have risen by six percent annually. While our
commitment to designing and producing the most innovative, educationally useful equipment on the market remains firm, I am undecided as
to whether we should keep providing some of the services we now offer. Moreover, given the inability of our nearest competitors (Safe-T-Play
and Harris Totter) to produce comparable products or gain market share, I’m concerned that the elementary school market may be saturated

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Project charter from Hilda (2 of 3)

I believe that Legeplads’ innovative products give us an exceptional opportunity to secure lasting, robust growth. Our dedication to
custom craftsmanship is essential to our mission, as it allows us to tailor each solution to individual client needs. Moreover, I know
you share my belief that Legeplads can capture additional profitability without sacrificing that craftsmanship or quality.
Objectives for your team
During our discussion, I articulated my vision for the next 18 months: to return to a profitability target of 25 percent operating
margin, and to achieve a sustainable double-digit annual rate of growth. The distinctive nature of Legeplads’ products and the
manufacturing needed to create them precludes growth through acquisition—most competitors in this space rely heavily on mass-
production and wouldn’t have the expertise to manufacture our products. Also, I don’t think we should consider markets outside of
North America at this stage. While I’m enthused by the idea, it just isn’t going to be feasible given our time frame.
Therefore, achieving these goals will require a thorough assessment of our current product strategy and lines of business.
Ultimately, I would like your team to deliver a well-designed and executed recommendation for action that will achieve significant
growth and secure 25 percent operating margin.
Specifically, your team should:
Assess the long-term financial impact of the existing lines of business and services
Identify and prioritize attractive growth options
Define realistic recommendations for achieving the target growth and profits
Build top management enthusiasm and support for this study

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Project charter from Hilda (3 of 3)

Approach and Deliverables

Project Timing
You should first identify and prioritize Legeplads’ most promising opportunities to grow its business and to streamline its
operations. You should develop an aggressive product strategy by assessing where and how we should compete. Your team
should also assess how each of our four divisions (design, manufacturing and distribution, sales and consulting, and
installation) is organized and determine how effectively its operations contribute to bottom-line profitability. We expect this
phase to take about six to eight weeks.

After this, your team will develop specific recommendations to capture the value of these opportunities. We will focus on
recommendations for action over the next 18 months.

Project Organization
My vision is that your team will work together with Bob and me to achieve sustainable impact. I will lead the steering committee
to provide overall direction for the project, secure resources as necessary, address any organizational bottlenecks, and review
interim progress. As chief operating officer, Bob can also advise your team. As you know, I’ve been careful to include
representatives from the sales, manufacturing, and installation staff on your team so you have a truly cross-functional
perspective on our company.

Legeplads has tremendous growth opportunities and ambitious goals. I look forward to seeing what your team proposes.

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Modern Education magazine “The Business of Play” (article
excerpt)
Interview with Hilda Ostergaard, Legeplads CEO

Q: I understand you’ve pretty much built this company from the ground up. Could you tell me something about that?

Hilda: Well, Bob, my husband, really gave me the idea about going into business 17 years ago. He was trying to design a titanium pencil sharpener. That turned out to be an
unprofitable idea, but Bob’s entrepreneurial spirit got me thinking. Four years later, I had designed my first three playgrounds.

Q: And those were the designs you took to the U.S. Superintendents Conference in Chicago?

Hilda: That’s right—my three systems made quite a stir, and by the time I left, I already had $5 million to set up a workshop and start producing. Jan Johnson, my shop foreman,
was my first hire. He helped me set up our workstation design and explained the importance of treating the production staff as craftsmen rather than workers. His dedication to
quality systems is just like mine.

Q: What do you mean when you say “system”?

Hilda: A system isn’t a bunch of equipment, no matter how good the equipment is. You see, that’s our mission—to make systems rather than equipment. You have a system when
you break down the barriers between the work inside the school and the play outside it. The pieces of equipment work together with each other, but they also work with the rest of
the school. That’s why our sales consultants talk about everything from textbooks to room design. Legeplads helps schools redesign the whole educational environment from the
outside in.

Q: Do you think your mission might change over time?

Hilda: I don’t expect it to. Well, I suppose I might change one thing. Sometimes I get so frustrated with the schools that can’t see how fundamentally we want to change the
educational environment. Someday, I might like to open up my own schools. Just start with the playground and work our way back into the classroom.

Q: Would you consider going public if the additional capital could help you expand?

Hilda: We certainly don’t have any plans to do that. Bob and I like the little family we’ve built up with this company. We see this as our legacy to keep this as a family business.

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Ana Quiroz interview with Bob Ostergaard, COO

Ana: I’m really excited about joining this team. Hilda is such an inspiring person. You have obviously worked with her for a long time. How would you describe her
working style?
Bob: Hilda is a true believer. She’s not loud about her beliefs, but she is passionate about them. And she is incredibly innovative. As I’m sure you agree, nobody can
touch Legeplads’ workmanship or educational value. Hilda has been changing the game since she opened her shop.
Ana: So you would say you and Hilda are very comfortable with risk?
Bob: I think it depends on what you are asking us to risk. Hilda is open to innovation and change, but she is driven by values, and her chief value is furthering
education. We’re not interested in making money if our product doesn’t educate.
Ana: I’m getting the feeling that our objectives are going to have to include more than just numbers.
Bob: Exactly. Financial objectives must be consistent with shared values. We have to find out how the different business units view themselves and how they feel
about the way they do business.
Ana: You said Hilda’s chief value is educational quality. What else does she value?
Bob: Good question. Legeplads is still a family business, and it’s important that Hilda and I agree on any recommendations your team comes up with, before we
implement them. We have pretty good business instincts after running this company for so long and we’ll want to be kept in the loop throughout your process.
Ana: Absolutely. Anything else?
Bob: Yes. Hilda feels very close to her employees, particularly the craftsmen in her workshop and the sales consultants. She’s willing to make tough choices, but
she must feel everyone is being treated fairly. Staff cuts would be difficult, but she understands they may be necessary. Keep in mind, though, that we have a lot of
union employees here with long-term contracts.
Ana: That makes sense. Well, thank you for the insight, Bob. I’m looking forward to finding some great solutions for Legeplads

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