How Lego came back from the brink

Posted on by Guy Cookson

Ole Kirk Kristiansen at his desk, 1934

News that Lego is now the world’s biggest toy company will not be a surprise to anyone who has ventured into a toy department recently.

Lego occupies more shelf space than ever, with 18 different product themes designed to appeal to just about everyone, from Duplo and Ninjago to Friends and Technic.

At home my two sons – aged 9 and 5 – seem to talk of little else. At Christmas they both asked for Lego sets, and when they are not building with Lego bricks they are flicking through Lego magazines or asking if they can play a Lego app or watch the trailer for the forthcoming Lego Batman film.

The place they would most like to visit again? Legoland.

It was all started by Ole Kirk Christiansen, a Danish carpenter who had scraped a living making wooden toys in the tiny town of Billund during the Great Depression of the 1930s.

After naming his company Lego, from the Danish term “leg godt” – which means “play well” – Christiansen took a gamble after the Second World War and bought a plastic moulding machine. By 1949 he had started producing interlocking plastic bricks, and quickly realised he was on to something.

But it has not all been smooth sailing. Just 15 years ago things looked bleak for the company as it faced bankruptcy.

Problems had started in the 1990s when cheaper copycat toys with compatible bricks had started eating into Lego sales. As video consoles exploded in popularity it looked like Lego was about to be be packed away in a dusty attic alongside Meccano, Hornby and Dinky.

Lego fought back hard with a dizzying array of new launches, from clothing lines to theme parks, and licensing deals with blockbusters like Star Wars and Harry Potter, but the company was losing its identity and burning through cash in the process.

The turnaround came after the appointment of a new CEO in 2004, Jorgen Vig Knudstorp, who sold off or closed the bits of the business that were a distraction, and inspired Lego employees to be creative again by focusing back on the brick, and building up from there.

Lego is still a family owned business. And with annual sales of over $5 billion that plastic moulding machine turns out to have been a pretty good investment.

This article first appeared in the Lancaster Guardian where I write a weekly column.

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