RISING FROM THE BROKEN DOWN

 

How Lego Came Back From The Brink Of Bankruptcy

"The Lego Movie" premiered last Friday and made $69 million in its opening weekend, giving it the largest debut of the year so far. Yet only 10 years ago, the company was on the brink of bankruptcy, and such a massive undertaking (let alone a successful one) would have been out of the question.

When Jorgen Vig Knudstorp came in as Lego CEO in 2004, the company was struggling to give consumers what they wanted and effectively manage costs. Knudstorp finally brought fiscal responsibility to the Danish toy maker. He also tried something novel - handing over creative direction to the core fans of the brand.

It worked. Creativity combined with smart management ultimately saved the company.

Lego Designer Mark Stafford, a fan who was recruited to help rethink the company's products, recently took to Reddit to share some of the behind-the-scenes details of the turnaround.

When Stafford attended an AFOLCon (Adult Fans of Lego Convention) event in the United Kingdom a couple years ago, he heard Lego's chief marketing officer Mads Nipper speak about the terrible period between 1999 and 2003. Stafford writes of it:

The LEGO company at that stage had no idea how much it cost to manufacture the majority of their bricks, they had no idea how much certain sets made. The most shocking finding was about sets that included the LEGO micro-motor and fiber-optic kits - in both cases it cost LEGO more to source these parts then [sic] the whole set was being sold for - everyone of these sets was a massive loss leader and no one actually knew.