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LEGO: A Comeback, Bricks Will Fall and Rise Again

Author: The Tipp Jar

August 12, 2016

LEGO: A Comeback, Bricks Will Fall and Rise Again

Author: The Tipp Jar

August 12, 2016

In The LEGO Movie, released in 2014, an unlikely hero saves the world from imminent disaster and wins the girl. It’s a familiar trope echoed, however faintly, in the real life story of the company that inspired the film. While LEGO CEO Jorgen Vig Knudstorp (known as Vig) may or may not have succeeded in romance, he certainly saved the brand after coming on board in 2004. It all inspired an unconventional movement towards an innovative kind of user-generated or fan-driven branding.

What went wrong in the first place?

The five years preceding Vig’s arrival were catastrophic for LEGO. There was little fiscal accountability—the company had no knowledge of its costs versus revenue on certain actual LEGO bricks and sets, and even lost significant money on one particular set by selling it for less than what it cost to produce. In addition, the decision to replace many veteran toy designers with younger talent plucked out of top European design schools proved to be a poor one and resulted in a dilution of the brand. If not resolved, the loss of the brand’s recognizable look and feel could have been fatal.

The number of parts used in the LEGO sets more than doubled and created more problems without contributing additional revenue. Numerous, disjointed licensing agreements splintered the company and too many sub-brands were created that were inconsistent with what the LEGO fans knew, loved and wanted.  Although now disbanded, some of these can still be found on eBay today (the Galidor series is one example).

Organizing, streamlining and reinvigorating

When Vig came along, he took action immediately and slashed the number of parts back down to 6,000. He then worked with a team to analyze and scrutinize all costs against revenues and make adjustments accordingly. The core construction sets became the company’s lifeblood once more, and the peripheral sub-brands were quickly eradicated. Following this necessary step of streamlining and optimizing costs, the brand needed new life.

Instead of the explosive brand fracturing that got the company in trouble, LEGO began expanding in new, meaningful ways through smart and strategic partnerships. In this capacity, LEGO was able to target and recruit new audiences while remaining loyal to its longtime fans.

Revolutionary consumer-generated branding

After some stabilization, Vig launched a creative and ultimately very successful new initiative. The company engaged its biggest fans to become its newest designers by hosting “designer recruitment workshops.” During these sessions, avid LEGOers were invited to interview and submit ideas and portfolio samples. Individuals were hired on the spot. In addition, the company started the LEGO Factory, which allowed customers the ability to design and share virtual models through their social media networks, then order their custom set from the website. On the heels of this came LEGO Universe, a virtual game world where customers could build, play and live among their unique creations in an online game.

LEGO’s phoenix-like transformation—from brand fracturing to brand extending, from uninformed and unmitigated creativity to adoption of customer innovation, from dilution and confusion to co-creation of brand meaning—is a significant example of how the lives touched by a brand might just be the best option for giving life back to it in a fuller, richer way.

 


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