lego turnaround case study

Innovating a Turnaround at LEGO

by David Robertson and Per Hjuler

Summary .   

Five years ago, the LEGO Group was near bankruptcy. Many of its innovation efforts—theme parks, Clikits craft sets (marketed to girls), an action figure called Galidor supported by a television show—were unprofitable or had failed outright. Today, as the overall toy market declines, LEGO’s revenues and profits are climbing, up 19% and 30% respectively in 2008.

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A Turnaround Case Study: How Lego Rebuilt and Became the Top

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• Rise of the LEGO® Digital Creator Rise of the LEGO® Digital Creator While you’ve always been able to build your own physical creations with a bucket of LEGO® bricks, the route to the same level of digital LEGO freedom for fans has taken a bit longer. The latest step in that effort sees the LEGO Group teaming up with Unity Technologies to create a system that doesn’t just allow anyone to make a LEGO video game, it teaches them the process. The Unity LEGO Microgame is the most recent microgame created by Unity with the purpose of getting people to design their own video game. But in this case, the interactive tutorial turns the act of creation into a sort of game in and of itself, allowing players to simply drag and drop LEGO bricks into a rendered scene and use them to populate their vision. Designers can even give their LEGO brick creations life with intelligent bricks that breath functionality into any model to which they’re attached. Users can even create LEGO models outside of the Unity platform using BrickLink Studio, and then simply drop them into their blossoming game. While this is just the beginning of this new Unity-powered toolset for LEGO fans, it’s destined to continue to grow. The biggest idea that could come to the Unity project is the potential ability for a fan to share their LEGO video game creations with one another and vote on which is the best, with an eye toward the LEGO Group officially adopting them and potentially releasing them with some of the profit going back to the creator. [Show full text]
• Cult of Lego Sample $39.95 ($41.95 CAN) The Cult of LEGO of Cult The ® The Cult of LEGO Shelve in: Popular Culture “We’re all members of the Cult of LEGO — the only “I defy you to read and admire this book and not want membership requirement is clicking two pieces of to doodle with some bricks by the time you’re done.” plastic together and wanting to click more. Now we — Gareth Branwyn, editor in chief, MAKE: Online have a book that justifi es our obsession.” — James Floyd Kelly, blogger for GeekDad.com and TheNXTStep.com “This fascinating look at the world of devoted LEGO fans deserves a place on the bookshelf of anyone “A crazy fun read, from cover to cover, this book who’s ever played with LEGO bricks.” deserves a special spot on the bookshelf of any self- — Chris Anderson, editor in chief, Wired respecting nerd.” — Jake McKee, former global community manager, the LEGO Group ® “An excellent book and a must-have for any LEGO LEGO is much more than just a toy — it’s a way of life. enthusiast out there. The pictures are awesome!” The Cult of LEGO takes you on a thrilling illustrated — Ulrik Pilegaard, author of Forbidden LEGO tour of the LEGO community and their creations. You’ll meet LEGO fans from all walks of life, like professional artist Nathan Sawaya, brick fi lmmaker David Pagano, the enigmatic Ego Leonard, and the many devoted John Baichtal is a contribu- AFOLs (adult fans of LEGO) who spend countless ® tor to MAKE magazine and hours building their masterpieces. [Show full text]
• LEGO® Strategy and Value Creation LEGO® Strategy and Value Creation The Lisbon EMBA 2019-2021 Group 6 Group 9 Christian Luwisch Ana Júlia Almeida Isabel Viana João Falcão Madalena Reis Luis Costa Nuno Sousa Nádia Jamal Pedro Teixeira Tiago Fonseca LEGO® – Strategy and Value Creation | The Lisbon MBA There are a lot of skills around resilience and problem solving and creativity that you learn through play. Niels Christiansen, CEO of LEGO® 1 LEGO® – Strategy and Value Creation | The Lisbon MBA CONTENTS 1 Executive Summary ....................................................................................................................... 6 2 Company Overview ....................................................................................................................... 7 3 Environmental Analysis .............................................................................................................. 10 3.1 Macro-environment .............................................................................................................. 10 3.1.1 Sociocultural Environment ................................................................................................ 10 3.1.2 Economics ........................................................................................................................... 11 3.1.3 Technological Environment ............................................................................................... 11 3.1.4 Ecological............................................................................................................................ [Show full text]
• The Story of LEGO City a Study of the Representation of the City in LEGO Catalogues Marjolein Breems S4467353 Radboud University The story of LEGO City A study of the representation of the city in LEGO catalogues Marjolein Breems S4467353 Radboud University Nijmegen Master Creative Industries Master’s Thesis First Supervisor: Dr. L. Munteán Second Supervisor: Dr. M.J.C.G. Stevens September 30, 2015 28.253 words Abstract This thesis is focused on the representation of the city in LEGO catalogues and explores what pre-existing norms and values are at work in such representations. The city is an amalgam of buildings and people and is full of diversity and differences, while LEGO is a toy that in a simplified and miniaturist manner, mimics various aspects of urban life. Toys have the powerful ability to teach children and to make them familiar with all kinds of societal norms and rules of conduct. Therefore, playing with LEGO City can teach the child about the city and what kind of behaviour is considered to be proper in the city. The city in this thesis is understood as both a spatial and a social phenomenon. The answer to the question as to how the city is represented will be given by observing 38 years of LEGO catalogues, from 1978 until now. As I will demonstrate, life in the LEGO revolves around work and various jobs, a lot of which have to do with the police and the fire department. Most of the buildings and dolls in LEGO have to do with those themes, although there have been other important themes throughout the years, like construction working, coast guard and transportation. There is not much diversity among the minifigures, since they all have the same skin colour and it took a while before there was any diversity in clothing and hair styles. [Show full text]
• A Fabled LEGO® Brick History A Fabled LEGO® Brick History The LEGO Group’s decision to hand off the development of LEGO® Star Wars™: The Video Game to an outside group in the early 2000s was both difficult to make and not well- informed, said Jørgen Vig Knudstorp, who was the CEO of the LEGO Group at the time and is now the executive chairman of LEGO Brand Group. “It was a very difficult decision,” he said. “And I think also a decision that unfortunately, was biased by having a management team – not least including myself and the board of directors – that actually knew relatively little about this massive market of video gaming.” In retrospect, Knudstorp said, the LEGO Group should have probably struck a deal similar to the one made about LEGOLAND, which included the LEGO Group maintaining an ownership stake. Kristiansen recreating, in 2008, an image of he and his sister playing with a LEGO set in 1958. Instead, Giant Interactive maintained not just full ownership of the 2005 game, but – for a time – had full global rights to all LEGO video games. Knudstorp said that ultimately the company learned a lot of important lessons through that deal. “I think from the beginning we should have taken an equity stake to be able to co-invest and co-influence and be part of that journey, while recognizing that we might not be the best operators of that company.” Importantly, he added, it wasn’t about the money, but rather the LEGO Group’s ability to better help shape the direction of the studio by being more directly involved. [Show full text]
• Deconstructing LEGO Deconstructing LEGO “In this insightful and engaging analysis of LEGO and its culture, Jonathan Rey Lee (de)constructs the ‘brick’ as a site teeming with cultural resonance. Exam- ining the LEGO phenomenon through such interlocking perspectives as peda- gogy, dramatism, digital culture, transmedia studies, and concepts of play, Lee’s work embraces the building block mentality for scholars, fans, and AFOLs alike. Accessible and erudite, Lee proves he isn’t just playing around.” —Paul Booth, Professor, DePaul University, United States Jonathan Rey Lee Deconstructing LEGO The Medium and Messages of LEGO Play Jonathan Rey Lee Cascadia College Bothell, WA, USA University of Washington Seattle, WA, USA ISBN 978-3-030-53664-0 ISBN 978-3-030-53665-7 (eBook) https://doi.org/10.1007/978-3-030-53665-7 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2020 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and informa- tion in this book are believed to be true and accurate at the date of publication. [Show full text]
• The Lego Story Is a Film Produced by Kim Pagel and the LEGO Group to Commemorate the 80Th Anniversary of Lego Non-fiction The Lego Story Cloze Passage 9 – The Lego Story The Lego Story is a film produced by Kim Pagel and the LEGO Group to commemorate the 80th anniversary of Lego. The short film presents the many (1) __________________ and tribulations faced by Ole Kirk Kristiansen from Billund, Denmark, the founder of Lego. From humble beginnings, Ole overcomes various challenges, including raising his four children as a widower when his wife passed away, facing financial difficulties during the Great Depression and the Second World War, and losing their workshop to fires on several occasions. commemorate – to mark or celebrate (an event or person) by doing M or producing something Ole was a man of integrity. When his son Godtfred started working for his father, he thought he was being clever by using less varnish on the toys. He justified his actions to Ole as saving time and money, but Ole was not impressed. Ole made Godtfred paint all the toys again, instilling in his son the belief that “only the best is good enough”. With the help of Godtfred, Ole eventually builds a successful empire and today, his grandson Kjeld Kirk Kristiansen continues the family tradition of producing these world renowned plastic toys – Lego. General Knowledge – The History of Lego Ole wanted to give the toys a name, so he ran a competition asking his employees to (2) __________________ of something. The reward was a bottle of wine. Ultimately, it was Ole himself who thought up of the name Lego. The word “Lego” derives from two Danish words, “leg” and godt”, which means “play well”. [Show full text]
• Inside the LEGO Group's Secretive Strategic Product Unit Darwin Inside the LEGO Group’s Secretive Strategic Product Unit Darwin The LEGO Group's biggest early exploration into the digitization of the brick was started by a group of friends and their wild dream to create a computer animated LEGO® movie at a time before Pixar's amazing films like Toy Story dominated theaters. Despite the lack of any high-end equipment, despite being years ahead of their time and initially getting a firm no from the LEGO Group, this band of friends persevered and were ultimately brought on to start a skunkworks LEGO Group R&D unit that would propel the company into its future of video games, movies, and an adept blending of the digital and physical. It all started in the crisp Swiss air above Lake Thun near Bern, The LEGO Movie (1994) Switzerland, in the early 90s. An eclectic mix of dreamers that included a NASA scientist, a rock and roll roadie, and a photography student were brought together by the singular vision of a nature-loving wandering scholar who called himself Dent-De-Lion Du Midi. A sort of Renaissance man, Dandi – as he was known to his friends – was consumed with the idea of remaking the LEGO brick in digital form and then using those digital creations to create a Pixar-like movie, instructions, commercials, even video games. Dandi and one-time photography student Claude Aebersold became friends over their love of computers and 3D graphics. "We went for long walks up in the mountains [in Beatenberg, Switzerland], harvesting wild blueberries and stuff like that for hours, just philosophizing and talking about this data and technology and where it all could lead,” Aebersold said, “and one day, we were talking about how everything in 3D looks like plastic. [Show full text]
• Interviews, Instructions and Much More! What’s NXT? Brick Journal�������������������� ����������������������������� THE EVENT ISSUE Reports from: AFOL Days BrickFestTM LEGO ®Fest LEGO® World Northwest BrickCon 1000 Steine®-land Interviews, Instructions and Much More! Now Build A Firm Foundation in its 3rd Printing! for Your LEGO® Hobby! Have you ever wondered about the basics (and the not-so-basics) of LEGO building? What exactly is a slope? What’s the difference between a tile and a plate? Why is it bad to simply stack bricks in columns to make a wall? The Unofficial LEGO Builder’s Guide is here to answer your questions. You’ll learn: • The best ways to connect bricks and creative uses for those patterns • Tricks for calculating and using scale (it’s not as hard as you think) • The step-by-step plans to create a train station on the scale of LEGO people (aka minifigs) • How to build spheres, jumbo-sized LEGO bricks, micro-scaled models, and a mini space shuttle • Tips for sorting and storing all of your LEGO pieces The Unofficial LEGO Builder’s Guide also includes the Brickopedia, a visual guide to more than 300 of the most useful and reusable elements of the LEGO system, with historical notes, common uses, part numbers, and the year each piece first appeared in a LEGO set. Focusing on building actual models with real bricks, The LEGO Builder’s Guide comes with complete instructions to build several cool models but also encourages you to use your imagination to build fantastic creations! The Unofficial LEGO Builder’s Guide by Allan Bedford No Starch Press ISBN 1-59327-054-2 $24.95, 376 pp. [Show full text]
• Exploring the Soundscape of LEGO® Universe Exploring the soundscape of LEGO® Universe When LEGO® Universe died in 2012, it didn’t just shut off access to the imagined worlds of Avant Gardens, Gnarled Forest, and Forbidden Valley; it also took with it the brilliance of an epic soundtrack. Composed by Brian Tyler with additional music by John Harman and Richard Dekkard, the LEGO Universe soundtrack was a gorgeous symphonic creation of orchestral arrangements designed to stand the test of time. The LEGO Group was so taken with the music that the company used it at the entrance to LEGOLAND parks around the world. But it wasn’t easily available to fans, at least not until the company decided to team up with Dekkard and Tyler to remaster and release the music in 2021. Now anyone can purchase a digital copy of the official original game soundtrack or listen to the entire thing as a single continuous mix on any of your favorite streaming services as well as YouTube. And there are even talks about a potential limited run physical release of the album. Tyler said in a recent episode of podcast Bits N’ Bricks that he decided to help out with the remaster because he always felt like the LEGO Universe soundtrack was the “one that got away.” “I was so proud of it, and still am of this score,” he said. “I love it. And you know, I get asked about it all the time. ‘Is that going to be available?’ I mean, it's 10 years of me fielding questions saying, ‘I don't know, you know? I hope it is, you know?’ I was earnestly feeling like, ‘Dang, yeah, I hope it is, you know? I really want that for the fans and also for new people. [Show full text]
• The Lego Group Kindle BUILDING A HISTORY: THE LEGO GROUP PDF, EPUB, EBOOK Sarah Herman | 272 pages | 29 Jun 2012 | Pen & Sword Books Ltd | 9781844681259 | English | South Yorkshire, United Kingdom Building a History: The Lego Group PDF Book Board Game Geek. Category Book. Lego Wear. About Sarah Herman. Retrieved 25 July One of the distinctive features of these new stores is the inclusion of a "Pick-A-Brick" system that allows customers to buy individual bricks in bulk quantities. In , Godtfred had become the junior managing director of the Lego Group. The Guardian — via www. Lemniskate67 added it Feb 02, Retrieved 7 September Ole Kirk Christiansen. The capabilities of the Mindstorms range have now been harnessed for use in Iko Creative Prosthetic System, a prosthetic limbs system designed for children. In addition, Legoland Sierksdorf was opened in , but soon closed in Godtfred decided that the plastic line was strong enough to abandon the production of wooden toys. Category Book. Ole Kirk Christiansen died that same year, and Godtfred inherited the leadership of the company. We failed to innovate enough. The TeleMark. From Wikipedia, the free encyclopedia. According to an article in BusinessWeek in , Lego could be considered the world's No. Sarah rated it liked it Dec 30, Retrieved 2 May CBC News. Lego pieces can be assembled and connected in many ways to construct objects, including vehicles, buildings, and working robots. Conde Nast. More Details In the late s, the Lego Group brought out a series of new and specialized ranges aimed at particular demographics. Building a History: The Lego Group Writer Like many board games, the games use dice. [Show full text]
• The LEGO Brick a Re-Construction of a Contemporary Culture Marta Hoffmann Jagiellonian University in Krakdiv The LEGO Brick A Re-construction of a Contemporary Culture It is extremely difficult to choose a symbol of contemporary culture, since contem­ porary man is surrounded by symbols. Analyzing the modem societies of Western Europe and USA, we can observe a peculiar explosion of things, ideas, words and even people have become symbols of something. An old concept of Ernst Cassirer, animal symbolicum' can be slowly changed into animal symbolicum symbolicum, which means that the process of using symbols is intensified nowadays. Among the reasons for such an observation we can enumerate the following: the process of globalization, the initiative of an information society, the deepening mutual in­ terdependence between societies, the popularization of highly developed technolo­ gies of communication and a fast lifestyle. Globalization was a consequence of the end of the Cold War international order and the liberalization of international trade, which has caused high pressure on interpersonal communication. This process made it easier to create and spread new ideas, attitudes or words, among which were to be future symbols. An information society, popularized by Manuel Castells as “the Network So­ ciety”, means a kind of society that is interconnected by the use of the innovative technologies of mass communication. The initiation of this trend can be observed from the beginning of 1980s, but it was to become fully developed from the end of the Cold War. It led to a new phenomenon: the almost fully realized ideal of an ex­ tremely open societal world, where the level of the circulation of information went beyond all expectations. [Show full text]

LEGO's great business model turnaround story

One of the biggest challenges large companies face is reinventing themselves and remaining successful. Sometimes they fail to do so and their business model expires like a yogurt in the fridge. Learn how LEGO escaped near-death with their amazing business model turnaround story.

In 1949 LEGO began manufacturing interlocking toy bricks in Billund, Denmark. This created infinite possibilities of imaginary worlds for generations of kids and LEGO grew over decades. Yet, LEGO almost faced bankruptcy ten years ago. Watch the video below to learn how LEGO pulled off a spectacular business turnaround, quadrupled its revenues in less than a decade and brought LEGO bricks back to households around the world.  Today, they occupy the top spot in the toy manufacturing business (take that Barbie! ;-).

How LEGO created more (value) with less (resources)

One could argue that LEGO turned its business model around by creating more value for customers while using less resources. They first reengineered their operations improving the backstage of their Business Model (Canvas) . Then, they turned to customers and boosted value creation.

Operations focus: streamlining activities and using the resources in the backstage of the Business Model (Canvas): 

• LEGO first streamlined its operations and decreased the complexity of its manufacturing processes. In particular, they reduced the number of different LEGO bricks by eliminating those that were difficult and costly to source. LEGO focused on a standard design of their bricks, which made their operations more nimble and allowed them to react quickly to market trends.
• LEGO also decided to get rid of LEGO branded products that were tangential to their business and weren’t profitable

LEGO expanded its business model only after establishing a robust operational base, ensuring a  profit on the sets they were selling. Then they turned to customers and designed new and improved value propositions that would create more value for their customers. ‍

Customer focus: creating more value with new value propositions in the frontstage of the Business Model (Canvas):

• Lego adapted their kits to the dreams and desires of kids in the 21st century  (e.g. LEGO Mindstorms include smart bricks with both software and hardware to build customized robots).
• LEGO expanded to new markets by designing sets for undeserved segments (e.g. LEGO friends targeting girls) and expanding to emerging countries where their growth was soaring.

Tools & techniques

• Business Model Canvas
• Story-telling  one sticky note at a time

Also, LEGOs are so cool that even Scotland’s police use them.

What are your favorite business turnaround stories?

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Strategic Startup Marketing

• On August 27, 2023
• In Business Strategy , Case Study

The Astonishing Turnaround of LEGO: A Comprehensive LEGO Case Study in Strategic Thinking

• Read Time 2 mins

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Introduction.

When we talk about business turnarounds, LEGO stands out as an inspiring example. This LEGO case study dives deep into how the iconic toy company transformed from being on the brink of bankruptcy in 2004, with $800 million in debt, into a global media empire. What fueled this incredible turnaround? A calculated shift in LEGO’s go-to-market (GTM) strategy is at the heart of it.

The Crisis of 2004: A Snapshot from this LEGO Case Study

Understanding the scale of the turnaround requires a look at how dismal the situation was for LEGO in 2004. Diversification had led the company away from profitability. This LEGO case study aims to explain how a well-thought-out strategy helped LEGO rise like a phoenix from its own ashes.

The Pivotal Moments in the LEGO Case Study: Back to Basics

The LEGO case study reveals that the turnaround can be attributed to crucial strategic decisions. The company decided to refocus on its core product: interlocking plastic bricks. Non-aligned product lines were discontinued, and LEGO involved their customers in new product development.

GTM Quadrant

To better understand the strategic choices made by LEGO, this LEGO case study uses the GTM Quadrant framework, based on Speed and Efficiency:

As revealed in this LEGO case study, LEGO opted for the ‘High Speed, High Efficiency’ quadrant, focusing on their core products. This decision was monumental in steering the company back to profitability.

Analyzing the Impact

Today, LEGO is more than just a toy manufacturer; it’s a media giant with movies, video games, and theme parks. The LEGO case study proves that a strong focus and strategic thinking can revive a failing brand.

Key Takeaways

• Strategic Focus : Less can indeed be more. A focus on core competencies turned LEGO around.
• Customer Involvement : LEGO’s consumer-driven approach provided invaluable insights.
• Decision Matrix Tools : Frameworks like the GTM Quadrant helped LEGO make pivotal decisions.

What Would You Have Advised? A LEGO Case Study Question

If you were in LEGO’s boardroom in 2004, what advice would you have given? This LEGO case study not only presents facts but also encourages you to engage in strategic thinking.

Strategic thinking skills are honed through practice and solving real-world business cases like this LEGO case study. If you find such analyses intriguing, don’t miss out on my weekly newsletter where I dissect similar cases to sharpen your strategic thinking skills.

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Ideas Made to Matter

Innovating in existing markets: 3 lessons from LEGO

Beth Stackpole

Sep 21, 2021

With the invention of the interlocking plastic brick, a favorite toy of generations, LEGO was a poster child for business innovation — that is, until it wasn’t.

The Danish toymaker’s trajectory from industry trailblazer to the brink of bankruptcy to sustained recovery shows there’s more to innovation than sheer luck or a wholesale focus on disruption.

“No innovation lasts forever,” said David Robertson, a senior lecturer in operations management, in a recent webinar hosted by MIT Sloan Executive Education. “Sometimes you get hyper growth for a couple of years, sometimes you get steady growth for longer. But innovations run their course.”

From its inception in the 1930s to its brush with bankruptcy in 2003 and its subsequent turnaround, LEGO tried every approach in the book to managing innovation, some resulting in spectacular success and others in great failure, said Robertson, author of “ Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry .”

Based on years of research and what he’s seen at LEGO and other companies, Robertson advocates for an expansive approach to innovation — helping customers get more value from existing products by offering innovative complementary products, services, and business models.

“It’s how Apple turned itself around, it’s how GoPro got five years of 90% growth, it’s how Sherwin-Williams gets twice the price per gallon of paint than other paints that are functional equivalents,” explained Robertson, who also teaches an executive education course on the topic . “Marvel Comics turned itself around in the same way.”

Among the innovation lessons to be learned from those firms: Have a variety of tools in the toolbox and don’t be afraid to use them, listen deeply to your customers, and prepare for a steady diet of continuous reinvention to remain relevant, even as an iconic brand.

LEGO’s brick-by-brick approach

LEGO was a small family business that grew steadily until the management reins were handed off in the late 1970s to the grandson of the founder and newly minted MBA, Kjeld Kirk Kristiansen, who quickly unleashed a wave of innovation.

Related Articles

With the younger Kristiansen at the helm, LEGO branched out into the Technic brand — a more sophisticated building system to attract older children — and launched the first mini figure and fantasy action play sets, fueling 15 years of growth during which the company doubled in size every five years.

Growth slowed in the 1990s for a number of reasons, including a rise in digital play experiences from companies such as Nintendo and Sony, the rise of Toys “R” Us and other big box stores, the expiration of LEGO’s brick patents, and the relocation of production of Mattel’s and Hasbro’s products to China, lowering the cost of their competitive toys.

LEGO responded in 1999 by refocusing its innovation efforts on revolutionary products that would reinvent the nature of play. “They became convinced that if all they offered was another box of bricks, they would become a commodity,” Robertson said. “They believed they needed to disrupt themselves before somebody else did.”

After a series of missteps that included the rollout of electronic toys for toddlers and a digitally connected action hero, LEGO found itself nearly bankrupt in 2003. In the rush to innovate, the firm lost sight of its core — physical construction-based play. After layoffs, emergency loans, and other measures aimed at staving off bankruptcy, LEGO turned those innovation miscues into a new strategy — one that precipitated a turnaround and laid the groundwork for further growth.

Among the key lessons that companies with a mature product line can follow to innovate:

Respect what made you great. Sometimes knowing where not to innovate is just as important as knowing where to innovate, Robertson said. LEGO learned that in a new digital landscape it was no longer enough to offer a box of plastic bricks — the brick had become a commodity. But the brick was still necessary, because that’s what customers expected of the brand.

Through trial and error and a number of failed digital-only initiatives, LEGO discovered customers wanted digital experiences that complemented core offerings, rather than replaced them.

Centering innovation around the brick-based construction experience through new stories, games, and experiences, exemplified by the fan-favorite Bionicle product line, is what drove customers back to the LEGO brand and returned the company to profitability.

“You try to understand who your customer is, what they care about — that’s the way we should think about innovation,” Robertson said. “You need to be dating your customer, not fighting your competitor.”

Maintain a customer-centric development process. When the big box stores took over from its ecosystem of small toy stores, LEGO lost an important channel for getting reliable customer feedback. LEGO began to evolve product development practices to support design thinking principles, empowering experts to come up with ideas for new products based on that critical customer input.

Today, LEGO regularly engages children in the process of character development, storytelling, and providing feedback on new playset ideas. “LEGO has a great expression for why they listen to kids when developing new toys,” said Robertson.  “Mads Nipper, the former head of marketing and product development, liked to say, ‘Kids will never lie to you about whether something’s fun or not.’”

Develop a family of complementary innovations to distinguish yourself from competitors. Innovation leaders need to lean on a range of different approaches for innovation, since tactics will vary depending on the scenario and business goals. It’s important to nurture a culture that’s able to shift gears if traditional methods don't deliver desired results.

“You need to learn how to play chords, not keys, on the innovation ‘piano,’” Robertson said. “Pursuing multiple, complementary innovations that harmonize to create something is much better than any one key alone.”

Technology and Operations Management

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• Assignments
• Assignment: RC TOM Challenge 2018

Open Innovation at Lego – The Back Beat in “Everything is Awesome”

After avoiding bankruptcy in 2003, LEGO has effectively used open innovation to align with customer demands and to become a global leader in toy innovation. Now, can LEGO’s use of open innovation maintain its growth with increasing digital competition?

The Interdependency Between LEGO’s Success and Open Innovation

In the face of digital competition, LEGO’s journey defending its market share has not been all fun and games. With 2017 revenues declining 8% (first decline in over a decade) and layoffs totaling 1,400 [1], LEGO needs a new growth strategy to compete in a slowing industry (the global toy market grew 1% in 2017) [2]. When faced with these pressures in 2003, LEGO’s initial response was to offer variety through new products, such as computer games and theme parks. However, these introductions had unintended consequences, adding complexity for the customer, inventory challenges for LEGO, and supply delays for retailers. [3]

LEGO’s famous turnaround strategy came from engaging its expansive customer base. LEGO utilized The Future Lab to develop low-risk, low-cost innovation techniques that led to rapid creation of minimum viable prototypes. [4] The goal was to generate customer feedback on a small scale before making substantial investments, illustrating LEGO’s philosophy that, “people don’t have to work for us to work with us.” [4] To further this practice, the company launched, LEGO Ideas , an online crowd-sourcing platform, allowing customers to share and to vote for ideas they wished to see as additions to the product line. LEGO Ideas yielded hundreds of suggestions annually, employing social media to generate actionable data. Focusing on products that would sell, LEGO was able to reach new audiences through its extensive physical footprint and brand awareness. Two successful efforts were LEGO Architecture (iconic building sets), which increased LEGO’s popularity with adults, and LEGO Friends, increasing its female presence. [5]

Open Innovation – Still the Answer

Now, to understand its next growth phase, LEGO is using open innovation to strategically increase its global footprint, widen its target audience and define its long-term product strategy.

Pathways to Just Digital Future

In the short-term, LEGO is expanding in China by partnering with Tencent (Chinese internet company) to create a safe digital platform for children, allowing LEGO to experiment with digital in a region where it has found some digital success. [6] At its Shanghai stores, LEGO is also launching its exclusive “Future of Shanghai” product. Utilizing a small-scale launch, LEGO offers four different spaces for consumers to build their own future city, generating immediate feedback. [6] Additionally, LEGO is utilizing Indiegogo Enterprise (an innovation validation platform) to test ideas through pilot projects, the first is LEGO FORMA , targeting adults looking for a creative outlet. [7] These pilots are being run in limited batches to crowdsource, to rapidly iterate and to ascertain demand.

In the long-run, LEGO is attempting to build a bridge between traditional toys and the digital world. [8] To lay the foundation for this middle ground, LEGO’s red Duplo train is an opportunity to test the market’s appetite for products that offer this in-between, with an optional mobile app. [8] Beyond bricks and toys, LEGO has been experimenting with a variety of play experiences in digital  – LEGO Life (children social media network) and LEGO Fusion (virtual mobile app) – and a variety of movie, television series and LEGO-themed playgrounds. [9] LEGO’s initial entry in the digital category has largely failed, while the later initiatives have found commercial success. [9]

Recommendation for the Future

With that lesson, LEGO needs to remember that while digital offerings not only increase competition, they also create a point of difference. LEGO’s value proposition to parents, the purchasers, is to provide children with an alternative to video games and to “do something physical that is good for fine motor skills, 3-D spatial realization, and creative construction.” [5] LEGO can leverage this in the short term and utilize open innovation to understand how it can better penetrate the educational market, increasing products targeted at developmental skills.  In a similar vein, Lego Serious Play , LEGO’s innovation seminars, use 3D models to help business professionals uncover deeper insights and increase performance. [10] LEGO can diversify its growth by expanding these non-play services.

To deepen its open innovation strategy long-term, LEGO should increasingly focus on outbound innovation, generating ideas with suppliers and retailers to foster successful partnerships. [11] This will combat the typical problem with open innovation and rapid prototyping – as products quickly enter the market, there is little time to innovate downstream processes. [12]

What’s Next?

While open innovation holds great promise for LEGO, the question remains – how do you consistently and effectively incentivize your partners to engage with your efforts? [13] Upon success in finding the right incentives, the question then becomes – what impact will virtual reality have on the toy industry and will open innovation be enough?

Word Count: 799

1)      The LEGO Group, 2017 Annual Report (Denmark: The LEGO Group, 2017), p. 5-6.

2)       “Toy Industry Sales Grew by 1% in 2017,” press release, January 25, 2018, PR The NPD Group, https://www.npd.com/wps/portal/npd/us/news/press-releases/2018/toy-sales-globally-and-in-the-us-both-grow-by-1-percent-in-2017-reports-the-npd-group/, accessed November 2018.

3)      Mocker, Martin and Ross, Jeanne. “The Problem with Product Proliferation.” Harvard Business Review . (May-June 2017): 5.

4)      The Leadership Network, “5 Sustainable Innovation Practices that Saved Lego,” Innovation Management, November 7, 2016, [https://theleadershipnetwork.com/article/lego-sustainable-innovation], Accessed November 10, 2018.

5)      Robertson, David. Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry (New York, NY: Random House, 2013), p. 8-39.

6)      “Lego Video Zone Goes Live on Tencent Video,” press release, May 25, 2018, on LEGO website, [https://www.lego.com/en-us/aboutus/news-room/2018/may/lego-group-and-tencent], accessed November 2018.

7)      “Lego Creative Play Lab Takes Pilot Project to Indiegogo for Open Innovation,” press release, September 27, 2018, on LEGO website, [https://www.lego.com/en-us/aboutus/news-room/2018/september/lego-forma], accessed November 2018.

8)      Milne, Richard, “Lego’s Niels Christiansen: picking up the pieces,” The Financial Times, August 19, 2018, [https://www.ft.com/content/955ec4de-8f3f-11e8-bb8f-a6a2f7bca546], accessed November 2018. – duplo

9)      Robertson, David. “Lessons from LEGO: What do you do when your current growth phase ends,” The Leadership Network – Innovation Management, June 1, 2018, [https://theleadershipnetwork.com/article/lessons-from-lego-what-do-you-do-when-your-current-growth-phase-ends], Accessed November 10, 2018.

10)   Dann, Stephen. “Facilitating co-creation experience in the classroom with Lego Serious Play,” Australasian Marketing Journal 26 (May 2018), p. 121-131.

11)   Supply Management, “Put procurement at heart of innovation, says Lego buyer,” October 16, 2018, [https://www.cips.org/en/supply-management/news/2018/october/put-procurement-at-heart-of-innovation-says-lego-buyer], Accessed November 10, 2018.

12)   Cina, Amelia and Cummings, Stephen. “Open innovation communication – improving strategy implementation in the public sector,” Policy Quarterly Volume 14, Issue 1 , (February 2018), p. 74.

13)   Bughin, Jacques and Chui, Michael. “The next step in open innovation,” The McKinsey Quarterly (June 2008), p. 3.

Student comments on Open Innovation at Lego – The Back Beat in “Everything is Awesome”

As a huge LEGO fan as a kid, I find this really fascinating. It’s noteworthy to see how LEGOs, which are predominately physical toys, have been able to leverage the digital world to get into open innovation. It’s interesting that your recommendation is to focus on the innovation with suppliers and retailers — my immediate thought would be doubling down on the connection with their end users, but I can see how the other folks in the supply chain play a big part.

To your final question, my bet is that LEGO attempts to bridge the gap between their physical toys and VR, not making the physical bricks entirely obsolete. It seems similar to the leap that was made by the LEGO Mindworks product that was released many years ago, which introduced motors and other mechanical items that allowed children to program the LEGO creations to move.

Along with Mike, I find it very interesting how this tangible product is venturing into the intangible. My main concern with VR and other purely digital platforms is that if you remove the blocks, is the product no longer LEGO? I believe part of why LEGO has continued to exist in the toy market is because of the universal satisfaction children get from the ability to physically create, destroy and create again. It’s hard to imagine how children could benefit from the motor skill development on a digital platform. To me, removing the blocks leaves you with just another digital game but with the name LEGO on it. Open innovation seems like an exciting method to learn how to better serve the interests of their suppliers, retailers and consumers, but I would caution against sacrificing what makes LEGO LEGO when exploring other digital platforms for their consumers.

Awesome article! I was also a big fan of LEGO as a kid, and was very interested to see how they’ve evolved and survived the bankruptcies of other peer companies like Toys-R-Us. As you cite that LEGO’s survival hinged upon their digital partnerships and open innovation platform, wanted to add one more consideration into the mix – as LEGO partners with more digital partners like Tencent, they should also be wary about the growing rise of anti-screen parents [1]. As kids have become more digitally dependent, parents have in turn become more strict, and we might see a decline in usage, which could force LEGO to pivot once again.

[1] https://www.nytimes.com/2018/10/26/style/phones-children-silicon-valley.html

Good point – I think this is why LEGO is targeting the middle ground between digital and traditional. Specifically, their digital offerings have been very strategically targeted in markets where they’ve previously had local success and strong partnerships, i.e the investment with Tencent and China. Additionally, in the Tencent example, LEGO is directly responding to Chinese parental desire for safer digital platforms for their children. In other offerings, LEGO has been quick to remove failed digital products from the market, keeping with the spirit of open innovation and the idea that “the customer knows best.”

Jaclyn – great work here. Though the product outsourcing seems like a great idea and it has worked well, I’m reminded of something we talked about during our Gap case in Marketing – consumers are very bad at predicting their own future preferences. The issue may be less prevalent here given tastes in toys may be less fickle than tastes in clothes. However, there will be a delay from the time LEGO sources ideas from customers to the time the products appear on store shelves. I wonder if they have much exposure to consumer preferences changing during the “throughput time” of the product. All in, though, it may still yield better results than creating products without consumer input.

That’s an interesting point. I think the beauty of LEGO’s offering is that within their traditional brick toy sets, the end design is ultimately determined by the user. LEGO should keep in might that concern as they offer more specialized products, especially in the digital area, that do not offer this original flexibility to customize output.

Awesome essay, Jaclyn! As a huge Lego fan, I found it very intriguing to see how Lego is trying to interact with the new generation of children. On your first question, I really liked your recommendation that they partner up with retailers and suppliers for further idea generation and product prototyping. That didn’t even cross my mind as I was reading this as I was so focused on the consumer. I think it would be extremely interesting to hear from toy retailers (maybe a store like Target) as they are seeing the daily reactions of children to toys and are also seeing what parents are pulled towards in the aisles.

To your second question, I worry about Lego venturing into VR for children because, as you mentioned, parents want Legos so that their children stay away from screens. Would they lose their current customer base if they moved towards VR? I think a crowd sourcing platform to hear from parents would be critical to ensure they are not losing any part of their customer base to keep up with new technology. One idea that I think could combine the best of Legos and new technology is for children to build a scene with physical Legos and then be able to explore the scene with a VR experience. I won’t lie, I am not sure if or how this is possible, but open innovation is supposed to draw out even the craziest ideas!

Thanks for the comment. I agree that VR is likely too far from LEGO’s core competencies to successfully implement and appreciate you elaborating on the point. My concern was that the impending increase in VR offerings in the video game industry more broadly may significantly increase the competition LEGO faces, challenging the capacity and resilience of Lego’s open innovation strategy to foster growth in the future.

Thanks! I think education is the front where LEGO could potentially succeed in terms of open innovation and commercial success. While LEGO seems to expand into various kids-related categories, I feel have tremendous potential to leverage on new technologies and their adoption by youth. Firstly, while 3D printing is a hot topic among adults, LEGO could easily mimic the learning potential through its existing products. By structuring the construction experience around designing and “printing” new structures with bricks, they can convey complex concepts at entry level. Secondly, LEGO has incredible resources and storytelling capabilities to move older kids into a VR-like experience where they could build larger structures and learn how things work in real life. Based on what kids end up building and learning most efficiently, LEGO can repackage this information into new products and services that tie customers closer to the brand.

I think open innovation is a very relevant alternative for mature and declining industries. The toys industry is a good example of that. The important consideration that LEGO should have in mind is that other industry players are also betting on it. For instance Mattel created My Mattel Ideas, which is a portal for people to contribute with ideas of products (see link below). This doesn’t represent a threaten per se but it is important that LEGO executes the right strategy so this can become a competitive advantage (as you mentioned above).

https://www.mymattelideas.com/ideas/myidea

This is an awesome article — also a childhood lego fan here. This is a fascinating case-study on how a company is using open innovation to grow their companies. Two things came to mind here: 1. How does Lego maintain engagement with Lego Ideas users? 2. Is Lego worried at all about competitors potentially stealing some of the ideas from the Lego Ideas platform? I’d be curious to know the distribution of people who source good ideas on the Lego Ideas platform and what kind of relationship/engagement Lego (the company) has with active users. With these open ideas platforms, how do people find these platforms and what is their average level of engagement. Presumably, you’d like to keep the active users for longer period of time but I wonder how companies incentivize users to stay engaged. On the competitor front, Lego has some unique brand qualities that other competitors cannot replicate but I do wonder to what degree competitors leverage the Lego Ideas platform for “inspiration” and what legal bounds there are about copyright/trademark -ing these open-platform ideas.

All in all, this was a fantastic move on Lego’s part that has clearly yielded positive results for the company and increased brand loyalty amongst its users.

I loved legos as a kid and would definitely consider trying out a product tailored to adults. I had no idea that they were pushing in this direction.

Do you have any insight as to how they’re handling the transition between minimally viable prototype / product –> full product release? I also recently saw that Lego was releasing products focused on teaching young kids to code. This interested me because it opened the door to partnerships with schools and local governments. Do you think that there is similar potential here where Lego could partner with organizations trying to spur creativity among children?

It is interesting that across industries, the challenge for open innovation remains long- term engagement of innovation partners. It may be than in LEGO’s case, there is a campaign or a reward they could provide their innovators (essentially their customers). Another idea is to create a platform for enthusiasts, and provide enough stimulating content to drive engagement. In addition, they may need to find new potential sources of innovation outside of their customer base.

Cool findings, Jaclyn! I’m also a Lego fan, and it breaks my heart a bit to think of them doing poorly. It would also break my heart if they steered too much in the direction of digital, and away from their physical building blocks. Though I agree with you that VR might be a stretch for them, I wonder if you could keep the blocks, and kids could one day “navigate” through the physical structures they build using VR. Or perhaps whatever they built, could be uploaded and inserted into a computer game. I mostly hope that parents are indeed steering their kids away from screens and back to physical toys, which I believe are generally better for their physical and social development. I did find it very cool that Lego let people way in on what they want to see in the future. Seems like the best way to make sure they give their customers what they want! At least the adults..

I agree with Mark’s concerns on the side of the customers not always knowing what they want. I would also like to know which customer age groups are providing this feedback. I remember loving LEGO blocks as a kid, but I am hesitant as to whether the feedback they are getting today is from kids as some of the ideas seem more as coming from adults (architecture does not sound like a child’s ask). If this were the case, I would be concerned that we would be neglecting the very customer base that has made LEGO a favorite toy brand. In this case what would you think would be the appropriate channels to ask for children’s feedback? Do you think balancing a “creative director’s” input and a customer’s suggestion would yield better toys for the future?

Great article. I think Lego has used open innovation effectively. However, from a customers perspective my inputs on innovation will typically be very marginal or in some cases not practical. Lego will have to manage the risk of listening to customers needs too easily. The company has to be rational in terms of what innovations are commercially viable. Also, Lego will need to invest in R&D to develop the next “big thing” in Lego given a customers recommendation is most likely limited to the products he or she has already seen. To really grow dramatically, Lego will have to introduce a product that the customer did not know they wanted in the first place.

Loved the article – thanks, Jaclyn! While I think that Lego has correctly identified the direction it needs to move in to keep up with the digital age and has used open innovation to produce products with known consumer demand, I also think that Lego, with it’s immense brand equity, is uniquely positioned to do something really disruptive in the toy industry. I like your idea of collaborating with the other parts of the supply chain to generate more ideas, and I think that relying on consumer feedback heavily for idea generation can prevent truly novel innovation.

Another random thought – with its digital focus, Lego has the opportunity to make its product a lot more collaborative in nature. I can envision a digital platform that allows children to team up with other children across the world in designing and building anything from a rollercoaster park to a fortress and gamifying the combined results. While I think there’s the very valid concern of Legos being the antithesis of video games, I believe Lego has the ability to add a hands on, tangible aspect to gaming in its quest to build connected toys.

Lego is a well-known brand around the world. It lends credibility on children related projects and has a large group of loyal followers. I would imagine this is why Tencent agreed to partner with Lego in China: Tencent is good at digital products in China while Lego is a major player in the kids’ market. The combination produces a powerful product for children in China. In a similar vein, Lego can seek partners in areas that both Lego and its partner wish to grow into.

As seen in the case of Toys R Us, rival manufacturing and digital distribution competition are bigger threats to brick and mortar stores than virtual reality in the near term. While VR may one day take over, it is difficult to see how parents will replace Lego products, physical toy that is proven to stimulate children’s brain activities, with virtual reality/computer, products that are traditionally known to slow down children’s brain development.

Thanks, Jaclyn. I was not aware of the troubles my beloved childhood toy went through and how they recovered. I’m a bit wary of the reliance on the strategy of crowdsourcing as the primary method for innovation. Mark B. mentioned above and was similarly my thinking as I read your story, it’s something that is exciting and working now but how is the company thinking about a potential trend away from consumer engagement? I’d be curious to see how they think of trends as an organization and how these match with the ultimate consumer. Against virtual reality, I do see the organization as insulated in some ways given their requirement for physical pieces. A move away from this would change who they are as a company and remove many of the selling points they currently have i.e. non-screen, motor development. Lastly, I thought your point regarding moving to non-play spaces would be worth exploring, I wonder how much their brand would stand in the way of business professionals taking them seriously.

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LEGO's Incredible Turnaround Tale: Lessons for Business Owners

LEGO, the Danish toy company, is a classic example of a business that faced a crisis and made an astonishing comeback. Back in 2004, the company found itself in a bind, experiencing a 40% plunge in sales and record losses. Fast forward to 2016, and LEGO had transformed itself into the world's most profitable toy company. This blog post is a deep dive into the lessons that business owners can take away from LEGO's staggering turnaround story.

Focus on Core Competencies

The missteps.

In the early 2000s, LEGO was far from the iconic brand we know today. The company had spread itself thin by diversifying into various products, ranging from clothing and watches to even theme parks . While diversification can sometimes be a viable business strategy, for LEGO, it proved disastrous. Quality was compromised, and the brand's essence was diluted.

The Realisation

Enter Jorgen Vig Knudstorp, LEGO's then-CEO, who identified this critical issue. He realised that the company was straying too far from what had made it successful in the first place — the humble building block. Citing the principle of sticking to one's core competencies, Knudstorp made the decision to refocus on LEGO's original product line.

The Turnaround

This move to focus on core competencies was instrumental in regaining consumer trust. By doing so, LEGO wasn't just selling toys; it was selling quality and a timeless experience of creation. According to various business analyses this refocusing was a pivotal moment in LEGO's turnaround saga.

Lessons for Business Owners

The key takeaway here for business owners is clear: don't lose sight of what made your company great in the first place. In an age where businesses are constantly advised to innovate and diversify, it's equally vital to remember your roots. Whether it's a unique selling proposition (USP) or a specific product, maintaining focus on your core competencies should never be underestimated.

Embrace Innovation

The challenge.

While reverting to its core competencies was a necessary move, LEGO understood that this alone would not suffice to remain competitive in the fast-paced market. Innovation had to be part of the equation. The business world is not kind to those who rest on their laurels, and LEGO knew it had to keep evolving.

Investing in R&D

The company allocated considerable resources to research and development. This investment was a calculated risk, but one that the leadership knew was essential for long-term sustainability. The result was groundbreaking products like LEGO Mindstorms, an advanced robotic construction set, and LEGO Friends, a line targeted towards girls.

The Outcome

These innovative products not only appealed to new demographics but also ensured LEGO stayed ahead of its competition. Industry experts and business journals, like MIT Sloan , have highlighted how LEGO’s commitment to innovation has been a key differentiator in its market.

Innovation isn’t just a buzzword; it’s a business necessity. The lesson here for business owners is to allocate time and resources to R&D, even when things seem to be going smoothly. Whether it's developing a new product or optimising an existing service, innovation can provide that critical edge in a saturated market.

Listen to Customers

The problem.

In the early 2000s, LEGO had lost touch with its core audience. It seemed as if they had forgotten who they were building for — the children. In an era of increasing digital distractions, the humble LEGO brick was losing its appeal.

The Solution

What did LEGO do to address this? They listened. They took customer feedback seriously, and that made all the difference. Based on input from their audience, they introduced new colours, themes, and even collaborated with popular franchises to create sets that flew off the shelves . For example, the Harry Potter LEGO sets were a hit among kids and adults alike, reflecting the company’s successful efforts to adapt to market demands.

The impact of these customer-centric changes was profound. LEGO was no longer just a toy company; it was a brand that understood its audience. Beloved Brands pointed out that one of LEGO’s major success factors was its ability to meet customer demands precisely.

LEGO's experience illustrates the importance of listening to your customers. Customer feedback is not just a vanity metric; it's actionable intelligence. Consider implementing regular surveys, social media listening, or even direct interviews to understand what your customers really want.

Manage Cash Flow

The precipice.

When Jorgen Vig Knudstorp took the helm at LEGO, the financials were precarious. Cash flows were negative, and the company was running on borrowed time, literally . In any business, liquidity is the lifeblood that sustains operations, and for LEGO, the absence of positive cash flow was an existential threat.

The Action Plan

Knudstorp recognised the importance of meticulous cash flow management in turning the company's fortunes around. This involved a multi-pronged strategy : reducing inventory levels, slashing costs, and optimising the supply chain.

Strategic Execution

Under Knudstorp’s leadership, LEGO executed its cash flow strategy with military precision. Old, unsold stock was disposed of, production costs were trimmed down, and the supply chain was tightened to ensure smooth, cost-effective operations. As highlighted by Harvard Business Review , this focus on lean management and financial discipline was instrumental in the company’s turnaround.

Cash is king in business, and managing your cash flow should never take a back seat. This entails not just looking at profits, but also at how effectively cash is flowing through the various facets of your business. Implementing a rigorous cash flow monitoring system can offer invaluable insights into your business’s health and show you where improvements are needed.

Strategic Partnerships

The synergy.

As LEGO streamlined its internal operations, it also looked outward for growth opportunities. Strategic partnerships became a cornerstone of their revival strategy. They collaborated with movie franchises, such as Star Wars and Marvel, which not only enhanced their product offerings but also expanded their consumer base.

A Win-Win Situation

These partnerships were a masterstroke. LEGO sets featuring popular characters became collectors' items almost overnight. In return, these franchises gained an innovative way to promote their movies and characters. A case study by The CEO Magazine examines how these partnerships were a win-win for both LEGO and their collaborators.

The strategic partnerships offer a lesson in symbiosis for business owners. The concept is simple: identify businesses or brands that align with your goals and values, then work together to achieve mutual benefits. In doing so, you’re not just sharing resources; you’re broadening your audience reach.

Employee Engagement

Internal catalysts.

Turnarounds don’t just happen at the strategic or financial levels; they begin within the organisation. At LEGO, employee engagement was identified as a catalyst for change .

Culture Shift

Under Knudstorp’s leadership, a cultural shift occurred. A work environment was fostered that encouraged creativity, ownership, and a real sense of purpose among employees. This resulted in not just happier employees but also more innovative solutions, as noted in a piece by The Guardian .

The message is clear: never underestimate the power of an engaged workforce. Employees who feel valued and are aligned with the company’s mission can be your greatest asset in effecting a turnaround or scaling your business.

The Role of Leadership

The conductor of change.

Leadership is often the defining factor in any turnaround story, and LEGO’s case is no exception. Jorgen Vig Knudstorp, LEGO's CEO at the time of the crisis, was the driving force behind the company’s revival. He navigated the company through its darkest hours with visionary leadership and radical strategic shifts.

Management Style

Knudstorp’s management style was transparent, inclusive, and focused. He sought inputs from all levels within the organisation, from the factory floor to the boardroom. As discussed in a piece by MIT Sloan , he was known for his problem-solving capabilities and the ability to build a team around common goals.

Good leadership is not about autocratic decision-making but involves creating a shared vision that encourages team members to perform at their best. It requires resilience, adaptability, and the wisdom to take calculated risks.

Sustaining Success

Beyond the turnaround.

While achieving a turnaround is commendable, sustaining that success is an entirely different ball game. LEGO has managed not only to come back from the brink but also to sustain its market leadership. Through constant innovation and evolving its product offerings, LEGO has continued to stay relevant.

Adapt and Evolve

LEGO’s continual reinvention, seen in their collaboration with digital gaming and even artificial intelligence in their products, is a testament to their commitment to adapt and evolve. Business Insider explores how LEGO’s commitment to continual improvement is a key factor in its sustained success.

Sustaining success requires continuous effort and a willingness to adapt. The market is ever-changing, and resting on your laurels is not an option. An appetite for continuous improvement and innovation is crucial for long-term success.

Conclusion: The Essence of LEGO’s Turnaround Tale

LEGO’s incredible turnaround story provides a masterclass in business resilience and adaptability. Its journey from near bankruptcy to becoming the world’s most profitable toy company offers valuable lessons for business owners in any industry. From focusing on core competencies, embracing innovation, listening to customers, and managing cash flow, to the importance of strategic partnerships, employee engagement, leadership, and sustaining success — the story of LEGO serves as an exemplar of business transformation.

As a business owner, the key takeaway is to approach challenges as opportunities for growth and transformation. It’s about seeing the glass as half-full and being willing to take the measures needed to fill it up.

LEGO's story is not just an inspiring business case study but also a compelling narrative of how perseverance, strategic thinking, and a customer-centric approach can turn the tables in your favour. If LEGO can build a multi-billion-dollar empire out of little plastic blocks, imagine what you can achieve with the resources at your disposal. So, what’s your next move?

Thank you for joining us on this in-depth exploration of LEGO's turnaround tale. If you found this blog insightful, feel free to explore our other business-related articles to further expand your business acumen.

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