How Lego Clicked: The Super Brand That Reinvented Itself (theguardian.com)

managerialslime shared an article about how Lego executed "the greatest turnaround in corporate history." The Guardian reports: By 2003 Lego was in big trouble. Sales were down 30% year-on-year and it was $800m in debt. An internal report revealed it hadn't added anything of value to its portfolio for a decade... In 2015, the still privately owned, family controlled Lego Group overtook Ferrari to become the world's most powerful brand. It announced profits of £660m, making it the number one toy company in Europe and Asia, and number three in North America, where sales topped $1bn for the first time. From 2008 to 2010 its profits quadrupled, outstripping Apple's. Indeed, it has been called the Apple of toys: a profit-generating, design-driven miracle built around premium, intuitive, covetable hardware that fans can't get enough of. Last year Lego sold 75bn bricks. Lego people -- "Minifigures" -- the 4cm-tall yellow characters with dotty eyes, permanent grins, hooks for hands and pegs for legs -- outnumber humans. The British Toy Retailers Association voted Lego the toy of the century.
It's a good read. The article describes how CEO Vig Knudstorp curtailed the company's over-expansion -- at one point, Lego had "built its own video games company from scratch, the largest installation of Silicon Graphics supercomputers in northern Europe, despite having no experience in the field." And he also encouraged the company to interact with its fans on the internet -- for example, the crowdsourcing of Ninjago content -- while the company enjoyed new popularity with Mindstorms kits for building programmable Lego robots.

Comments

Let's not go too far with the Apple comparisons.

[dwywit]

Lego still allows the user to exercise their own creativity. You might buy a Star Destroyer kit, but you can build other things with it.

Re:They turned around by finishing the compromise

[hipp5]

their original goals (no weapons, internally developed IPs, doing good by their employees, etc.)

They outsourced their manufacturing and assembly plants to malaysia and similiar, gutted their American and some of their European workforce, eliminated many of their general purpose parts in exchange for special purpose parts, etc.

And technically all this stuff was already going on back in the late 90s (Star Wars LEGOs anyone?)

The big difference post-'03 is they started 'Disneyfying' themselves, theme parks everywhere, LEGO stores set up with a minimalist kid-friendly feel, local club activities to help reinforce that 'cult' feel.

They actually turned themselves around by doing the EXACT OPPOSITE of everything you just said. In the early 2000s their parts catalog ballooned with special-purpose parts, they were opening theme parks left and right, they blew their wad on all sorts of ill-thought-out side projects, and they lost their handle on their supply chain. This is where the $800 in debt and weak sales came from.

They were lucky that at the same time they started making the Star Wars sets, which provided the cash to float them through this otherwise-disasterly period. They saved themselves by really clamping down on special purpose parts, by shuttering or selling most of their theme parks, and by focusing on building a quality core brand.

Re:Everything is awesome?

[mspohr]

I agree. I miss the old simple Lego.
The new kits don't leave any room for creativity. Just put the parts together (only one way to do that) and look at it.
They have all of these unique parts that can't be used to build anything else.
My granddaughter got a "Frozen" Lego kit for Christmas. It came with a 50 page instruction book and lots of little parts. I tried to put it together but gave up. I felt like a slave in a sweat shop.