Recently, I was sent a copy of a new LEGO book called Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry written by David C. Robertson with Bill Breen. Robertson was a Business Professor at the International Institute for Management Development in Lausanne, Switzerland and was given the privilege to interview LEGO’s management team. Breen has co-authored and published many other business management books including this one. The book is published by Crown Business and has 320 pages.
Roberson’s intention was to write a typical business book but when got to interview the management team from LEGO, he had an idea on how the Brick by Brick would be written. By reading this book, he hopes that businessmen and entrepreneurs can use LEGO as an example of how a company can revive itself while facing the brink of failure.
Brick by Brick is split into two main parts, the company’s decline and the turnaround of LEGO as a company. LEGO’s decline started in 1996 and in 1998, LEGO had it’s first loss in the company’s history. The company was facing competition with kids leaning towards video games as their choice of entertainment. Plus on top of that, LEGO had some major failures in some of their sets including Znap, Scala, and CyberMaster. Robertson talks about “The Seven Truths of Innovation” in which Poul Ploughman came in to LEGO to reinvigorate growth and help turn the company around. These truths of innovation uses popular strategies that many business use worldwide.
1. Build an Innovative Culture.
2. Become Customer Driven.
3. Explore the Full Spectrum of Innovation.
4. Foster Open Innovation.
5. Attempt a Disruptive Innovation.
6. Sail for Blue Ocean.
7. Leverage Diverse and Creative People.
However by using these strategies, LEGO was nearly ruined and almost went into bankruptcy. One of the strategies was to diversify into different types of products and licenses. Some things went very successful such as the LEGO Star Wars theme which was introduced by Peter Eio but was frowned upon by LEGO executives. Eio’s tenacity proved to be a fruitful one because the Star Wars theme is LEGO’s most successful licensed theme. Other themes became ultimate failures such as the Jack Stone, Galidor, and Exlpore lines. The company needed a new direction.
In 2003, Jørgen Vig Knudstorp hired as the head of strategic development and ultimately replaced Ploughmann in 2004 as The LEGO Group’s CEO. To get the company back to the green, Knudstrop had to know what cause the downfall in the first place. He found out the reason for the decline was that it had lost touch with their customers and retailers. Soon after that, LEGO went back to their core business and introduced a couple of themes that revived the company; Technic, Bionicle, and Mindstorms. LEGO also wanted to re-innovate the LEGO City line which also proved to be another factor in the company’s growth. Knudstorp also got feedback during a three-hour question and answer session from the AFOL community at BrickFest in 2005. Knudstorp called the session a “crucial meeting” and he knew what he had to do to keep the company going in an upward direction.
Later in the book, Robertson talks about The LEGO Group’s three phase “Shared Vision” plan to create a future business platform for the company. In the end, Knudstorp did manage to master the The Seven Truths of Innovation and as we may all know, LEGO makes a remarkable turnaround in a few years and now is today’s world’s most valuable toy manufacturer.
As a LEGO fan who did not come back to the hobby until 2011, I didn’t get to see firsthand of what LEGO was going through during their decline. By reading David Robertson’s Brick by Brick, I got to experience that. It was a very well written book and I thoroughly enjoyed it especially when LEGO made their turnaround. I would definitely recommend it to anyone who has a business of their own and want to have a better understanding on how a business can be successful even at the face of failure.