|“Our family ownership is deeply rooted in the LEGO Idea, which is about learning and development through play and a unique, creative play system that offers endless possibilities.” – Thomas Kirk Kristiansen, fourth generation owner of the LEGO Group.|
In February, 2017, Lego was named the world’s most powerful brand for the second time by Brand Finance. LEGO first topped the branding power list in 2015, overtaking Ferrari when it announced profits of £660m, and is the number one selling toy brand in Europe and Asia. It is hard to believe that this company was on the brink of bankruptcy and had lost its focus in 2003 when the financial report showed LEGO to be $800 million in debt.
LEGO’s turnaround as a brand to become profitable and more innovative yet maintain its core values, is the biggest corporate success story of this century so far. However, as we are so accustomed to LEGO and its place in society, we tend not to focus on why this company has been so successful in its recovery.
The change of leadership in 2004 instigated the change in strategy of the company with the appointment of Jørgen Vig Knudstorp as the CEO in 2004:
Return to core products – Knudstorp abandoned the diversified strategy which was failing he dumped the LEGO jewellery, the theme parks were sold to Merlin Entertainment, and the video games section became independent. The number of the type of bricks was halved from 13,000 to 6,500 and the colours returned to the bold primary and secondary colours simplifying the basic product to be developed by new designers.
Encouraging Lego’s fans to design the future products – Knudstorp led the new strategy of working with the adult fans of Lego to take on new designers such as Mark Stafford who developed the Legends of Chima series. The old designers had been out of touch with LEGO’s history and lacked the dedication of the hardcore fans to the LEGO brand. In 2006, LEGO held a designer recruitment workshop where a new team was hired and developed in-house. The new recruits were a mix of top design graduates and adult LEGO design fans. These were consumers who were passionate about LEGO, and believed in its core values of play, learning and creativity.
Embracing the fans as valued consumers – As well as taking on Adult Fans of LEGO as in-house designers, the company has led crowdsourcing competitions with winners taking 1% of the product’s net sales from their design. They have also started the social network LEGO Life where younger fans can share their designs and have them reviewed by other children and characters in a safe online space. The Minecraft virtual reality has expanded to the realm of internet games, interactive designs, and a return to the physical toy products.
Driving strategy based on the diversity of the consumers – LEGO Friends has been a phenomenal success in the past five years for Lego. Aimed primarily at girls, the range has introduced a whole generation to LEGO as a product, who may not have become fans before. Until the Friends range was introduced, LEGO’s consumers were 90% boys. The Friends range was designed after four years of research which included observing how girls and boys play together and separately, and discussing with a wide range of children why they enjoy playing with different toys. Overall, girls explained their different appreciation of LEGO figures – to be more relatable and have characters with names and marketed personalities and stories rather than the bulky generic LEGO minifigures were. Friends has succeeded by being character driven as requested by the consumers, and in scenarios they found relatable. LEGO adapted to gain a whole new range of consumers.
Building partnerships with movies, television and other media – in 2003, before Knordstorp took over as CEO, the only recognisably successful brands within Lego were the Star Wars division then the Harry Potter division. He recognised the potential to link partner with movies and tv series to introduce new fans to LEGO who would then step out of their comfort zone of their favoured movie. LEGO has also been able to diversify again to other media with the LEGO movie and Lego Batman Movie introducing new fans back to the core product of the LEGO bricks.
LEGO started 2017 as the world’s most powerful brand; the main aim of the leaders of the company is now to protect this brand in the next stage of its development.
“The LEGO Group has always been more than just a company to me. We have a very clear purpose with our family enterprises, which is about the importance of play to the development and wellbeing of children. The passion for play and learning has always been a driving force in my family, and it is important for me to carry on this heritage.” Thomas Kirk Kristiansen