Real-life resilience - LEGO

LEGO is a Danish brand, founded back in 1932. It was created by Ole Kristiansen, a Danish single father of four.

The name ‘LEGO’ is an abbreviation of two Danish words: “leg godt”, meaning “play well”. It’s not just the name though…it’s also the company’s ideal. Interestingly, the word LEGO in Latin also means “I assemble” which is a just a lucky moment of alignment which they discovered after the fact!

From day one, LEGO was always a toy company, initially specializing in small wooden toys with exceptional quality. It wasn’t until the late 1940s when the company launched the plastic brick. The first bricks couldn’t snap together strongly and would collapse with any sort of nudge, so Ole developed the idea of building bricks with a small tube underneath so that the bricks could snap into place. He patented this in the late 50s.

From there, the company began it’s phase of enormous growth, expanding into amusement parks, merchandise, games, and more. And from 1932 - 1997 LEGO made money.

However, in 1998, they recorded their first loss.

It was the start of a dark period for the Danish business in which it suffered massive financial losses. In 2003, LEGO lost around $300 million and was sitting on around $800m of debt!

Where to from here to avoid total collapse?

They needed new blood and fresh perspective. They recruited Jorgen Vig Knudstorp in 2001 and appointed him CEO in 2004. Knudstorp’s approach was to get crystal clear on a revitalized mission to reduce costs and get back to being hyper-focused on what mattered most: helping kids “play well”. The company sold off properties, theme parks, gaming businesses, and merchandise options, and then restructured their production to go from 12,000 brick pieces down to 6,000.

In 2005, LEGO started getting input from enthusiastic fans to assist product development and Knudstorp even started regularly meeting with adult fans of the brand. The company recognized that, while they had hundreds of staff designers, they potentially had over 100,000 volunteer designers they could access outside of the company to help invent new concepts.

“You don’t think yourself into a new way of acting. You act yourself into a new way of thinking.” - Jorgen Vig Knudstorp (LEGO CEO 2004-2017)

In Q1 of 2024, LEGO reported a strong financial performance, with $2.2B in revenue. A long way from the ~$1B revenue result for the entire 2004. It is also now regarded as the most valuable toy brand in the world with a valuation of $8B!

Resilience is about advancing despite adversity. Not only did LEGO survive the dark times, but the adjustments they made allowed them to thrive in the following years.

Here’s how we see resilience in action with the story of LEGO:

1. Focus. Knudstorp and LEGO realized that it was mission critical and success would rely on hyper-focus. They had to let go of initiatives that weren’t true to the original mission. While they focused on getting back to the core mission, they outsourced to experts (such as Warner Bros for the wildly successfully LEGO movie in 2014).

2. Empathy. They talked to customers to understand how they felt about the brand. This allowed them to build new products while never losing sight of their core purpose.

3. Perspective. Knudstorp was a brilliant leader. He saw the opportunity to solve business problems the same way as a child sees an opportunity to create. He recognized that when we give responsibility to others, to let them come up with the solution, we’re opening up a whole new world of perspective. LEGO is an amazing example of this. When we give a child the task to build a car, there are millions of different interpretations of that. Its important to let people come up with new solutions and new ways of looking at things.

4. Mindset. They had to adjust the entire mindset of the business to get back to helping kids ‘play well’. To emphasize this shift in mindset, LEGO introduced new metrics to focus on. One example was a metric that was focused on how many children they could reach globally, rather than just profitability.

5. Lastly, action. When interviewed about the resurgence of LEGO, Knudstorp has a great quote about action. He says: “It’s not what you say you do. It’s what you actually do.” You can have all of the ideas in the world, but if you can’t actually put them to use, it’s all for nothing.

I teach workplaces and individuals the strategies to improve resilience to succeed personally and professionally. These are preventative ideas and practical tools, so that we can thrive when obstacles come our way. Book a free discovery call today. 

Until next time friends, stay resilient!

Carre @ Resilient Marketing Minds