The Danish toy maker Lego recorded a 23% increase in sales for the first half of the year, once again taking the position of the worlds largest toy maker. Lego has not always enjoyed this level of growth. Back in 2004 sales were so poor that the privately owned company nearly went out of business. With massive debts almost the size of its annual revenues the toy company seemed destined to end up on the universal scrap heap of broken, worn out and un-loved toys.
Yet against all the odds, Lego managed to pull itself back together. The reemergence came about through aggressive ‘back to basics’ cost cutting and creative thinking from CEO, Jorgen Vig Knudstop. He realised that to compete in a market that was obsessed with the media, the product needed to reflect current trends. Using bricks to build houses was not exciting enough for children who were brought up on a diet of Star Wars, video games and interactive toys.
Unfortunately, first attempts to enter this market failed miserably and contributed to the Lego downfall. Rather than concentrate on its core business, Lego tried to broaden its appeal by creating a ‘lifestyle’ brand through clothes, accessories and theme parks.Cash started to drain uncontrollably out of the business. Knudstop went back to the drawing board and devised a plan to sell off all non-core business and simply tune the ‘brick’ business to the film industry.
Lego flourished and is now perfectly aligned to the film industry. Their latest product line, launched at the beginning of the year was Jurassic World. Last year Lego released their own film,The Lego Movie which is still being shown around the world and doing very well in Asia.
Partner alignment is not new, two companies working together are generally stronger combined as compared to working separately. Lego this has proven this to be the case. Their latest venture is a partnership with the European Space Agency. Several Lego figures are now in space with Danish astronaut Andreas Mogensen who headed out from Kazakhstan on Wednesday to the International Space Station. At the moment, for Lego the sky is not even the limit!
