LEGO Group: From Bankrupt to Booming

Did you know that the LEGO Group was on the brink of bankruptcy in the early 2000s, before catapulting itself to its current 2015 position as the “World’s Most Powerful Brand?” I, for one, had no idea of LEGO’s struggles and failures, up until last week’s AMA Luncheon featuring LEGO Systems VP of Marketing Mike Moynihan.

As the presentation began, Mike immediately grabbed our attention by opening with some fun trivia facts before moving on to the denser content. For example, did you know that for each person in the world there are 62 LEGO bricks? Or that the LEGO Group is one of the world’s largest tire manufacturers? How about this one: LEGO’s mini figures are the world’s largest population! More cocktail facts here!

Moving into the heavier material, Mike explained how LEGO has always been a well-known brand, and is one of the top toy makers in the world alongside Mattel and Hasbro. However, huge deficits around 2004 led to significant changes in attempts to turn the company around. Referring to these hard times, Mike explained, “I remember it got so bad that for six to eight months I walked in thinking, ‘Today could be the day,’ and I remember there literally being a lightbulb in every other fixture.” Whoa.

Eventually, LEGO was forced to ask itself the question, “Why do we exist?” That’s when the current customer-centric strategy was created. LEGO began proactively listening and talking to fans, which led to its new mission statement: Inspire and Develop Builders of Tomorrow.

Mike joked that LEGO was indirectly responsible for the creation of Google, as Larry Page and Sergey Brinwere featured in an article around the same time discussing their childhood love for LEGOs and extolling the creative benefits of building with these small bricks. I know it was just a joke, but hey, I’m totally cool with LEGO claiming Google.

Moving into the depths of the brand, Mike displayed LEGO’s impressive brand framework, seen below, including its mission, aspiration, various promises, brand spirit, and values. It was highly captivating—and inspiring—to see a huge global brand operating in this way, in this day and age.

ama 3 17 lego 1

LEGO Brand Framework

Mission: Inspire and develop the builders of tomorrow
Aspiration: Globalize and innovate the LEGO system-in-play
Play Promise: Joy of building, value of creation
Planet Promise: Positive impact
Partner Promise: Mutual value creation
People Promise: Succeed together
Spirit: Only the best is good enough
Values: Imagination, creativity, fun, learning, caring, quality

Mike went on to discuss the way LEGO tracks the NPS (Net Promoter Score) of its communities, across platforms and engagements. The communities LEGO has developed are impressive to say the least. For example, let’s take a look at LEGO Ideas (fka LEGO Cuusoo, which exists only as a blog now). This concept was introduced to allow the community to be part of new product development. Awesome. So you’ll create an account, log in, and share your idea.

Lego Ideas

If your idea gathers enough support (10,000 supporters or more), LEGO will review your project and decide whether or not it’s worth creating. Basically, it’s a branded Kickstarter! As you can see below, popular projects can receive over 100,000 eyeballs in less than a month’s time! Projects moving on to review will typically see a quarter of a million views, with thousands of comments! Talk about a successful B2C collaboration campaign.

Lego Ideas reviews

Next, we learned more about the processes, and culture, of LEGO.

Culture
1. Exist to serve others (this ideology has directly led to average profit margins twice the industry average!)
2. Brand ownership
3. Leadership focuses: collaboration, not coordination
4. LEGO > EGO! (Self-effacement is inherently a part of Danish culture. Scandinavian societies operate according to the “Law of Jante,” a mentality that de-emphasizes individual effort and places all emphasis on the collective, while discouraging those who stand out as achievers.)
5. Execution > Strategy

Process
1. Start with insights
2. Co-create with stakeholders (Capture the passions and creativity of unfiltered children.)

Another couple of key takeaways are listed here:

Brand extensions must support the core function, e.g., The Lego Movie. Much to our surprise, it took Warner Brothers over two years of pitching to win the production rights to this film! Straight from Michael: “You’d be amazed by how little money LEGO made off of this.”

Always challenge conventional wisdom: Be laser focused on consumer needs: Kids = Mastering skills!

Think through a consumer-needs lens. For example, why are teens waiting longer these days to get their driver’s licenses? Historically, cars were important for social reasons. They were the method for transporting yourself to a specific destination, friend, or social gathering. But teens are not as anxious to drive these days as they were, say, five years ago, for one simple reason: smartphones! Analyzing and looking through this consumer lens allows you to understand your target demographic in greater depth.

Threats [such as digitalization] can be opportunities: Minecraft.

Know who you are, and who you aren’t; go to senior leadership with any questions or concerns.

Be all about serving your stakeholders. How can you help them? This is not about tricking anyone into buying anything, merely about helping out.

Don’t worry about competitors as much as you think you should.

Innovation flourishes in constraints.

Don’t wait for a “crash” to change your course! Be willing to make changes and take risks.

And, finally, with power comes responsibility. This speaks to the new CEO (although he’s no longer so new) and his vision. He’s been crucial in LEGO’s revitalization.

Audience Questions

Q: What is the typical role of an agency when working with LEGO?
A: LEGO has a few agency branches: consumer and shopper agencies (both in house), and media/”other” agencies (Starcom). In-house creates approximately 80 percent of LEGO’s design, while the media agency works with process and keeping up with the latest trends. Other agencies are sporadically consulted with needs like marketing to adult demographics, etc.

Q: How do you manage UGC (user-generated content)?
A: LEGO Clubs, which are independent and separate from the LEGO brand and operations, play a huge role in UGC. LEGO provides support to these groups, which often have thousands of members. The approach: stay in the background, step in to facilitate and provide assets when necessary. (Being a part of a LEGO Club offers you exclusive content and access to the latest products, often before anybody else.)

Q: What keeps you up at night?
A: Workload. It’s impossible to scale as fast as LEGO has required, and it’s even tougher to prioritize efforts and activities.

Q: What’s next?
A: Digital visualization and digital experience integrations. LEGO is doing its best to keep on top of trends and user experience innovations. This may mean new developments in the app world, along the lines ofMinecraft’s successful venture. Furthermore, 25 percent of LEGO profits are allotted to the LEGO Foundation. Leaders have finally pinpointed the future usage and potential of this foundation, and plan to utilize it for further education. Nice!

In Conclusion…

A cohesive change management philosophy is crucial, regardless of your company’s size or financial positioning. Treat your vendors as partners, let your customers have a say in brand ownership, and clearly define the role of innovation. Teach younger, up-and-coming generations about the lessons learned, historic brand values, and giving back to the community that made you.

Mike did a brilliant job with his presentation, and I was even able to connect with him following the discussion to ask some more personal questions regarding Denmark and working among Danish peers and culture. As a Dane myself, I was thrilled to have this conversation and hear such great things about the motherland. :)

Our team attending this event included Gregg Khedouri, Sarah Arrington, Kristy Higdon, and myself (Steffan Pedersen). As always, it was great to connect with our AMA Atlanta community and meet some friends, including Jonathan Graviss, Tangela Walton, and Jessica Cobbs. We enjoyed sharing our lunch with you!

 

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