How Lego Became The Number 1 Toy Company In The World

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I find the Lego story very inspiring as they were 1 month away from bankruptcy losing over $1 million every day, $800 million in debt and had a negative profit margin of -30%. A company by all accounts dead in the water, but no they survived and flourished because they empowered the right people to make the decisions ignoring their business advisors and the rest is history.

Have you ever wondered how Lego stayed so relevant and was growing faster than Apple?

First lets see what is currently taking place and why kids find Lego so much fun. I have never watched anyone build a Lego set before and today I spent a fun filled hour with my grandson building a Lego Ambulance. This inspired me to read up on Lego because this has always puzzled me how they managed to still be around today.

My grandson got a late birthday present this week and this afternoon borrowed my phone so he could follow the instructions and build the set. I watched him fascinated how he was so diligent following the instructions. Most males do not do that and why we always end up with left over screws or bolts from whatever we assembled.

The family member that bought this for him definitely gave thought to this preset as he had recently had his own medical scare and travelled in a real ambulance. The emergency staff even asked if he would like the siren on which obviously being a kid said yes. This experience made the medical scare even more special for him and I do not think he will ever forget this.

The Lego build took about an hour and the only help he needed was finding two parts with one being left in the packet ad the other having fallen on the floor. I said he should check if the missing part is in the packet he had not opened yet and was told the instructions have not told him to open that one yet. These Lego builds teach many skills and I am amazed that Lego is still around let alone growing in popularity. My grandson is a huge fan and this was his fourth build in the last month.

Most kids his age will be watching a tv program or playing a game either on a phone or a laptop yet ere e is using a phone to see the instruction manual. I found this refreshing and he knows I am a sucker so will definitely find some bigger sets for him to build.

I know Lego have some sets which can actually move which I guess would be battery powered as I have seen some of Galen's builds in the past. Lego has definitely upped their game over the last 10 years as wo would have guessed plastic building blocks in 2025 would still be in demand. If was a betting man I would have placed a bet they would have gone the same way as Kodak and closed down long ago.

Lets rewind back to 2003 because Lego was going through a Kodak moment losing $1 million dollars a day. Business advisers told Lego their business was finished as kids were no longer interested in their plastic bricks. Computer games was the threat and a known toy company killer.

The Lego patent for plastic interlocking blocks fell away in 1989 and the company has come under fire from competitors offering a similar product for way cheaper. This would have killed most companies, but Lego at the time still fought back and one a few court cases on the grounds these competitors muddled the marketing campaigns of their products. When you think that Lego had never posted a loss until 1988 having been founded in Demark in 1932 this is quite incredible.

Back to 2003 with Lego sales in freefall a new CEO was appointed in 2004 and he literally turned Lego on it's head. the irony is the new CEO was a business advisor and consultant who saw the opposite of what everyone else was saying. He sold off the theme parks and reduced the Lego inventory by half from 13 000 blocks to 6 500. He was not interested in the business advisors saying Lego was dead and bought the fun aspect back concentrating on what his core business required. He needed to make Lego fun for the kids and adults that were his customer base. By reducing the number of bricks he challenged his developers to be more creative and when the box sets slowly started to appear.

I 2003 the company lost $300 million and in 2004 they were projected to lose $400 million and continue to slide into oblivion. Lego turned things around so much that during the 2008 -2010 period they had quadrupled their profits and were growing faster than the likes of Apple.

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Today Lego is the number 1 toy company in the world surpassing the likes of Mattel in 2014. The chances of Lego surviving were stacked up against them because without the new CEO and his vision Lego would no longer be around. It is true stories like this that you realise people is what makes things work and how many other companies could still be operating if they had the right people in charge.

Posted Using INLEO