LEGO, the company, began its journey in 1932, initially as a standard workshop that dealt with furniture production. Ole Kirk Christiansen, the founder of LEGO, was born into a poor family as one of 13 children. He grew up and went to high school in a remote village 4.5 hours’ drive from Denmark’s main business center and received secondary education.
From the age of six, he worked in agriculture and helped support his family while attending school two days a week. In 1905, at the age of 14, he began working as an apprentice to a carpenter for his elder brother. In 1911, he left Denmark for Germany, where he specialized in carpentry for approximately five years.
During these five years, he was focused on work and saved his money to buy a carpentry shop in the village where he grew up. At just 19, in the late 1920s, the business focused on producing household items for the local community. During its first 25 years, the workshop burned down twice.
After World War II, there was a shortage of many traditional raw materials used for production, so he looked for other cheap alternatives. In 1947, the company acquired a plastic injection molding machine.
This transition to plastic toy manufacturing was challenging for him, as he had worked with wood all his life. The change in raw materials was demanding and costly in terms of the result.
Despite all the difficulties over the years, including the Great Depression and the occupation of Denmark by Nazi Germany during World War II, he managed to maintain his business and continue selling toys. In fact, this led him to focus his products on child development and toys.
The company began producing plastic building bricks, which were more durable and safer. Over the course of the course of three decades, the company grew at a staggering pace and became a global name.
In the mid-1990s, there was a turning point. The company accumulated debts of $800 million, sales were declining rapidly, and the future looked bleak. There are several explanations for this change: the old generation of designers retired and were replaced by a younger generation of designers who came with plenty of ideas and innovations that ultimately took the company out of its central focus.
(LEGO’s lesson: strong brands adapt without breaking. In a world where growth without stability is the real risk, foundations come first.)
Furthermore, they had very little experience in the toy and children’s worlds. They spoke a different language that didn’t connect with the target audience. In other words, the products lost their emotion and soul.
Another explanation for the change was the emerging electronic media culture with new games like Nintendo’s Game Boy, Sony’s PlayStation, etc. The new generation was born into a different reality, which made LEGO just a few more boring plastic bricks.
At the beginning of the millennium, the company returned to focusing on its core products as part of operational improvement. The manufacturing department expanded to Mexico, the distribution department expanded to the Czech Republic, and within less than a decade, the company’s global workforce was reduced from 9,100 employees in 1998 to 4,200.
Focused marketing and concentration on core products brought growth back to the company.
In the United States, the company’s sales soared by 32% thanks to a fruitful collaboration with the Star Wars series and Indiana Jones. Despite the big hit in 2008, LEGO continued to grow by 18%.
The company continued its strategic plan, and in 2013, it established a production plant in China as part of its strategy and desire to develop in the growing markets of Asia.
Another impressive step was the collaboration with Warner Bros. Studios in 2014.
The Lego Movie, an adventure film using computer animation, was a tremendous success in the US and Canada. The movie’s revenues totaled approximately $257.8 million, and in the rest of the world, the movie’s revenues totaled approximately $210 million.
The business world and the global economy are full of challenges; sometimes, solutions are right in front of us on the table. On the one hand, LEGO returned to its roots, to nostalgia, to a place where so many children connected with it.
In addition, LEGO managed to connect simplicity to the digital world; in LEGO’s case, it decided to lead an innovative project called Toys to Life, video games that combined real game characters that children could play with in reality and those that could be printed on catalogs and packaging.
In recent years, the company has returned to staggering growth rates. In 2020, the company’s revenues totaled €43 billion; in 2021, revenues jumped to €55 billion; and in 2022, revenues continued to grow, reaching around $64 billion.
The turnaround came thanks to global changes, such as the coronavirus pandemic, brilliant marketing moves, partner care, product accuracy, precise distribution management, and a common language among all organization departments.
Simply put, LEGO didn’t fight against video games that nearly destroyed the company in the mid-1990s; it developed and underwent digital adjustments and technologies.
New video games were based on leading characters like Batman, Super Mario, Sonic the Hedgehog, and more. At the same time, the company narrowed down its product line to basic products, whether physical or digital bricks.
The new manufacturing emphasized partnerships and brands that had already proven themselves—significant partnerships with leading brands such as Disney.
This collaboration succeeded in creating a series of minifigures, products, and accessories. In addition, the company signed another surprising and interesting partnership with Levi’s, and together they created a whole line of LEGO-themed clothing items.
By the way, the same application is used on Adidas products.
The main conclusion is that times change, and sometimes your brand must change in one way or another to remain relevant. Find a way to stay relevant, never give up on your brand values, and remember that tough times bring renewal and growth that are reserved for iconic symbols that receive acclaim.
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LEGO’s reinvention teaches that strong branding adapts without breaking. And in a world where growth without stability is the real risk, staying ahead means building foundations first. Ready for your transformation? →
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