The unshakable magic of the plastic block

Lego is expanding its brick empire and, if the deal goes through, will open an amusement park in Wallonia in five years. This is how Apple lands the gaming world, with a lot of government aid, in our country with sheer oomph.

Jack Stone looked like an action doll from a discount store promo box, whose hanging hands only suggested it had something to do with Lego. However, the Danish company released the number 20 years ago as an attempt to cash in on the superhero hype.

The decision was like a panicked move in times of acute crisis. Lego experienced a losing year for the first time since its founding in 1932 in the late 1990s, and with the dawning of the digital age – Tamagotchi was the rage of the moment – everything had to change to turn the tide. It has taken inspiration from competitors like Fisher-Price, ditched the Duplo line for toddlers, and pumped millions into new theme parks but is taking a heavy toll.

But with all those trials, Jack Stone turned out to be a failure. In 2002, about a year later, it disappeared from the shelves again. A year later, the popular gaming company, amid a 30% revenue crash and $800 million in debt, was on the brink of bankruptcy. what happened? “They thought the plastic mass was getting old,” says American innovation professor David Robertson. They have lost faith in their base.

What followed is known as one of the most successful comebacks the company has ever had. Lego streamlined its offering, focused again on building sets of fire trucks and police stations, consulted its fans, threw itself into developing markets and returned to the formula for success: endlessly stackable blocks with large 4cm yellow minifigures. Sales tripled between 2008 and 2015, and in that last year, just over a decade after the impending crash, the company overtook Ferrari to become the world’s most powerful brand.

Robertson teaches about this shift at MIT Sloan School of Management in Boston and is the author of “Brick Brick: How LEGO Rewrote the Rules of Innovation and Conquering the Global Game Industry.” On a video call, with a Lego world map on the wall behind him and Lego flowers on his desk, he made the comparison to Apple. “Before Steve Jobs came back, Apple made one mistake after another, from game consoles to digital cameras. He flipped this around and took the Mac as a springboard for innovation. Lego learned from Apple and applied that principle at least as well, but then from the block.

About the fund

In management parlance, Robertson calls what Lego created “around the box”, not “inside the box” (which would amount to a better plastic block) or “outside the box” (which they did in a crisis period by trying things out). It has nothing to do with construction. This resulted in a multimedia empire in which toy blocks form a well-known foundation for games, amusement parks, movies, TV series, books, magazines, clothing, and 830 Lego stores worldwide. Another 150 will open this year. Lego also builds on successful licensing deals to build sets based on perpetual entertainment such as Star Wars, Harry Potter, and Super Mario. In 2021, with the help of the epidemic, it set records: sales increased by 22 percent to 55.3 billion DKK (7.4 billion euros). Operating profit increased 32% to 17 billion kronor.

I always ask my students if anyone has been able to go to the Lego Discovery Center or the theme park and not buy anything. I never heard yes.

David Robertson

Professor MIT Sloan School of Management

A growing part of this universe is amusement parks, such as the one scheduled to open in Gossels in five years. It will be the fourth park in Europe and the first new park in 20 years. There are already ten worldwide, with three under construction in China. In the crisis years, Lego sold its garden division to the British company Merlin Entertainment, because it was bleeding cash. But after the resurrection, Kirkby, the investment vehicle of the LEGO family Kirk Christiansen, along with some private equity partners, bought Merlin for about 7 billion euros. “Because they were convinced of the importance of creative control in the future,” says Robertson.

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According to Robertson, the popularity of parks can largely be traced back to the target group they serve: 5- to 10-year-olds and their high-spending parents. Legoland doesn’t compete with other theme parks for the coolest roller coaster possible, but it does focus on family-friendly fun. And on Lego: In the primitive garden in the original Lego village of Billund, which has been around since 1968, the massive Lego store remains open an hour after attractions close, and is full. Robertson: “I always ask my students if anyone who has been to a Lego Discovery Center or theme park has been able to buy anything. I never got a yes.

Lego’s strength is also attributed to the Danish company’s extensive research around the world on how children play and what attracts them. Lego is said to conduct the largest ethnographic studies of children’s behaviour, with teams keeping an eye on children in the living room. The data this produces is the starting point for designing new products. For example, in 2012, Lego launched the Friends group, with lower angle characters and scenes aimed specifically at girls, which had been almost ignored in the past. This was preceded by four years of research. For the Ninjago series, researchers have learned that ninjas work very well as superheroes and skeletons as enemies. It’s one of the ways Lego carefully embraces feedback from its huge community of users, young and old.

Parents know Lego as representing the analog dream and creative activity of their children. It has become the world’s largest gaming company at a time when competitors such as Hasbro or Mattel are struggling to compete with smartphones and tablets. But the boundaries between physical and digital also blur with Lego. There is a kid-friendly social medium, Lego Life, which is a collection of programmable robots and apps that are an extension of plastic toys.

Walt Disney

In April, it was revealed that Kirkbi and Sony have each pumped $1 billion into Epic, the creator of the insanely popular video game Fortnite. It is by far the largest digital investment the company has ever made. CEO Nils Christiansen announced that the intent was to create a safe path for children together. Lego opened a digital center in Copenhagen early this year, and aims to triple the number of software professionals in its ranks to 1,800 by 2022.

Will this physical and virtual entanglement inevitably become Lego’s future trend? Robertson likes to characterize it. “Lego is constantly asking itself: Should we be like gaming companies like Sony or Electronic Arts? Or more like the hyper-entertainment giant Disney? And it seems to me that customers are pointing: Give us the latter. Fans reward this strategy by spending their money on it en masse. Theme parks and movies are an opportunity Big, and Disney is playing in a much bigger market than Lego, so there’s a lot of room for growth in this area.

“Walt Disney left Mickey Mouse in the 1950s for a self-promoting world of television, movies, music, comics, merchandise, and more,” says Robertson. And that continues to expand. This model also applies to Lego, but about its yellow characters. And about the plastic mass.

915103.765 group

90 years after its founding, Lego is still in the hands of the Kirk Christiansen family. The shares are split between Kirkby (75%), the family’s investment vehicle, and The Lego Foundation (25%). It all started with paterfamilias Ole Kirk Christiansen who began making wooden toys in 1932 in a workshop in the Billund countryside and chose a diminutive of the Danish words ‘leg godt’ (‘toy’) as his name. In the 1940s, he and his son Godtfried invested in a plastic machine that they used to make the blocks. In 1958, the iconic clickable block was born and marketed as a system that could be expanded infinitely.
This date is celebrated in the small town of Billund, where, in addition to the first Legoland in recent years, there is also an impressive and interactive Lego House, designed by Danish architect Bjarke Ingels. As a souvenir, visitors are given a bag with six red four-by-two cubes, a number between 1 and 915103.765, because that’s how many possible ways to click them together.
Today the third and fourth generation is in power. Kjeld Kirk Christiansen, grandson of founder and former CEO, controls Kirkby with his three children.

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