The Real LEGO Story
Remember New Coke?
Volkswagen’s $60,000 Phaeton?
Every once in a while a major brand makes a major blunder: ignoring what its customers want.
No one knows that better than LEGO Systems President Soren Torp Laursen [pictured above], who saw his company pushed to the brink of bankruptcy before the remarkable rebound that made it the world’s number-one toymaker last year.
“We had simply lost our way in wanting to be too much, too fast,” he said.
Laursen was the keynote speaker at the 2015 Economic Summit & Outlook in Hartford last week, which drew 500 business executives from around the state.
Hosted by CBIA and the MetroHartford Alliance, the event brought together business analysts, economists, and leaders representing various industries for a morning of discussions on Connecticut’s economic health, challenges, and progress toward becoming one of the top 20 states for business.
Back from the Brink
In a globally flat toy market, LEGO recorded 11% consumer sales growth in 2013, the most recent year for which figures are available.
Over the past decade, the company’s revenue has grown 400%, and since 2002, employee growth in the Americas has surpassed 520%—all at a time when many businesses have suffered losses and layoffs. Today, LEGO products are sold in 130 countries.
“The last 10 years have been pretty awesome,” said Laursen.
Of course, it wasn’t always that way.
Fifteen years ago, the maker of the iconic plastic brick was nearly bankrupt after venturing into markets as diverse as children’s clothing, watches, Hasbro-type action figures, and computers—“areas we knew absolutely nothing about,” said Laursen.
The company went from a period of no growth into a trajectory of decline between 2000 and 2007.
“Our company was not listening to its customers. We were so enthusiastic about those other areas that we neglected what we were good at.”
‘A Relentless Focus on Our Core’
The turning point wasn’t a change in leadership or personnel, said Laursen.
“The team that fixed LEGO’s problems is the same team that screwed them up 15 years ago,” he said.
The turnaround came when the business decided to go back to what it’s good at, rebuilding its brand brick by brick.
“We placed a relentless focus on our core,” said Laursen.
“We had product developers live with families to get insights that helped drive innovation—products that appeal to girls, storytelling, becoming a bigger player in the digital space.”
(LEGO’s animated TV series Ninjago is a Cartoon Network staple, and The LEGO Movie was nominated for a 2015 Golden Globe award.)
LEGO is also focused on globalization.
“Seventy percent of our current business comes from the western part of the world, where only 30% of future growth is occurring,” said Laursen, noting that his company is looking to increase its presence in China, Latin America, and Africa.
Though they closed their Enfield manufacturing plant in 2000 and distribution center in 2006, LEGO’s corporate sales, marketing, and financial services operations are still anchored here.
“This is our hub,” said Laursen. “Would we like lower taxes in Connecticut, and a better infrastructure? Of course. But it’s not all as gloomy as that.
“Connecticut has an excellent strategic location. It has a well-educated workforce. We’ve brought on 100 new employees in Enfield each year over the last four years—into higher-paying jobs—and we expect to continue that trend well into the foreseeable future.”
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