Harvard Case - LKK Design: Rapid Growth of a Chinese Design House
"LKK Design: Rapid Growth of a Chinese Design House" Harvard business case study is written by Xiaoming Zheng, Ziqian Zhao. It deals with the challenges in the field of Organizational Behavior. The case study is 11 page(s) long and it was first published on : Nov 30, 2021
At Fern Fort University, we recommend that LKK Design implement a strategic plan focused on organizational development to address the challenges of rapid growth and maintain its competitive edge. This plan will prioritize leadership development, organizational culture, and talent management, while fostering innovation and cross-cultural business relations.
2. Background
LKK Design is a rapidly growing Chinese design house facing challenges stemming from its rapid expansion. Founder and CEO, Kevin Li, struggles to maintain control as the company grows, leading to internal conflicts and a disconnect between departments. The company's organizational culture, previously based on strong personal relationships and trust, is now strained by increasing bureaucracy and communication breakdowns.
The case study focuses on Kevin Li, the charismatic founder and CEO, and his struggle to adapt his leadership style to the company's evolving needs. He faces challenges in delegating authority, managing conflict, and fostering a cohesive company culture.
3. Analysis of the Case Study
Organizational Behavior: LKK Design's growth has led to significant changes in organizational behavior. The company's previously informal and collaborative culture is now facing challenges due to:
- Power and Influence: Kevin Li's centralized decision-making style is hindering the growth of other leaders and creating a sense of power imbalance.
- Team Dynamics: The rapid expansion has led to the formation of silos between departments, hindering cross-functional collaboration and communication.
- Leadership Styles: Kevin Li's entrepreneurial and charismatic leadership, while effective in the early stages, is no longer suitable for managing a larger, more complex organization.
- Communication Patterns: The lack of clear communication channels and processes is leading to misunderstandings, delays, and frustration.
- Organizational Culture: The company's culture, built on trust and personal relationships, is struggling to adapt to the increasing bureaucracy and formalization.
Strategic Analysis: LKK Design requires a strategic shift to address its growth challenges:
- Growth Strategy: The company needs a clear growth strategy that outlines its future direction, target markets, and competitive advantage.
- Corporate Strategy: A comprehensive corporate strategy should align the company's resources and capabilities with its growth objectives.
- Operations Strategy: The company needs to optimize its manufacturing processes, improve efficiency, and enhance quality control to meet increasing demand.
- International Business: LKK Design should explore international expansion opportunities to diversify its revenue streams and reduce dependence on the Chinese market.
4. Recommendations
1. Leadership Development:
- Leadership Styles: Kevin Li needs to transition from a charismatic, hands-on leader to a more strategic and delegating leader. He can achieve this through leadership development programs focusing on coaching, delegation, and empowering others.
- Executive Coaching: Kevin Li should engage an executive coach to help him refine his leadership style, improve communication skills, and learn to delegate effectively.
- Succession Planning: LKK Design needs to implement a succession plan to identify and develop potential leaders within the organization.
2. Organizational Culture:
- Values and Beliefs: The company should clearly define its core values and beliefs to guide its culture and decision-making.
- Communication Strategies: Implement clear communication channels and processes to facilitate information sharing and collaboration between departments.
- Employee Engagement: Develop initiatives to improve employee engagement, such as team-building activities, recognition programs, and opportunities for professional development.
3. Talent Management:
- Hiring and Recruitment: Develop a robust hiring and recruitment process to attract and retain top talent.
- Employee Performance Management: Implement a performance management system to provide regular feedback, identify development needs, and reward high performance.
- Compensation and Benefits: Offer competitive compensation and benefits packages to attract and retain talent.
4. Innovation and Cross-Cultural Business Relations:
- Innovation Strategy: Implement a structured innovation process to encourage creativity and foster new product development.
- Cross-Cultural Training: Provide training to employees on cross-cultural communication, business etiquette, and negotiation skills.
- International Partnerships: Explore strategic partnerships with international companies to expand into new markets and gain access to new technologies.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies: The recommendations focus on strengthening LKK Design's core competencies in design, manufacturing, and customer service.
- External Customers and Internal Clients: The recommendations aim to improve customer satisfaction and enhance internal collaboration.
- Competitors: The recommendations consider the competitive landscape and aim to position LKK Design for long-term success.
- Attractiveness: The recommendations are expected to improve the company's financial performance, enhance its brand reputation, and attract and retain top talent.
6. Conclusion
LKK Design's rapid growth presents both opportunities and challenges. By implementing a strategic plan focused on organizational development, leadership development, and talent management, the company can address its current challenges and position itself for continued success.
7. Discussion
Alternatives:
- Mergers and Acquisitions: LKK Design could consider acquiring smaller design firms to expand its expertise and market reach. However, this option requires careful due diligence and integration planning.
- Outsourcing: The company could outsource certain functions, such as manufacturing or customer service, to reduce costs and focus on core competencies. However, this option could impact quality control and customer satisfaction.
Risks and Key Assumptions:
- Resistance to Change: Employees may resist changes to the organizational structure, leadership style, or culture.
- Financial Constraints: Implementing the recommendations may require significant financial investment.
- Competitor Response: Competitors may react to LKK Design's growth strategy, potentially impacting market share.
Options Grid:
| Option | Advantages | Disadvantages | Risk |
|---|---|---|---|
| Leadership Development | Improved decision-making, delegation, and employee empowerment | Requires significant investment in training and coaching | Resistance to change, potential for leadership gaps |
| Organizational Culture | Improved communication, collaboration, and employee engagement | Requires time and effort to implement | Resistance to change, potential for cultural clashes |
| Talent Management | Attracts and retains top talent, improves employee performance | Requires investment in recruitment, training, and compensation | Difficulty finding and retaining qualified talent |
| Innovation and Cross-Cultural Business Relations | Expands market reach, increases revenue, and enhances competitiveness | Requires investment in research and development, training, and international partnerships | Competition, cultural barriers, and economic instability |
8. Next Steps
Timeline:
- Month 1-3: Develop a strategic plan, implement leadership development programs, and begin building a talent management system.
- Month 4-6: Refine organizational culture, improve communication channels, and enhance employee engagement.
- Month 7-9: Develop an innovation strategy, explore international partnerships, and implement cross-cultural training.
- Month 10-12: Monitor progress, adjust strategies as needed, and celebrate successes.
Key Milestones:
- Develop a comprehensive strategic plan.
- Implement a leadership development program for Kevin Li and other key executives.
- Establish a talent management system with clear hiring and performance management processes.
- Develop a communication strategy to enhance internal and external communication.
- Launch a structured innovation program to foster creativity and new product development.
- Explore strategic partnerships with international companies.
By taking these steps, LKK Design can navigate the challenges of rapid growth and position itself for long-term success.
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Case Description
This case is about the growth of one of China's top design companies. The design trade is a knowledge-intensive and traditional industry. The protagonist Jia Wei started LKK in 2004. Following the industry's traditional organizational model, over 10 years he managed to grow the company's staff size to over a thousand and reach the peak of the industry. Jia's understanding of how the organization structure could unleash output upgraded several times. Owing to the reorganizations, LKK was able to reach 100 per cent annual growth rate. The story begins with Jia graduating from college and tells of the founding and evolution of LKK's organizational structure step-by-step. It allows participants to clearly see the relationship between organizational structure changes and enterprise growth. The goal is to illustrate that there is no ultimate, static organizational structure that necessarily leads to rapid development. The authors also try to use this material to illustrate that organizational culture needs to evolve along with the organizational structure. In addition, this case features change leadership.
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