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The empire strikes back

Business book documents toy giant Lego's return from near bankruptcy

Posted: 07/27/2013 1:00 AM | Comments: 0

Last Modified: 07/28/2013 12:41 AM | Updates


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When we think of successful empires in the world of toys, names like Hasbro, Mattel and Disney come to mind.

But towering above all of them in terms of longevity is Lego, which was born 80 years ago in the rather remote community of Billund in Denmark.

The story of the famous interlocking plastic bricks is detailed in Brick by Brick, by David Robertson, a professor at the Wharton School of Business in Philadelphia.

Young readers looking for secrets about new brick creations will likely be disappointed. This book is more of a business text, chronicling the history of a remarkable system of play, which has survived a major downturn in recent years, and remains a vital player in the world of toys.

Lego was originally the brainchild of a carpenter, Ole Kirk Christiansen, who began making wooden toys in his workshop in Billund in 1932.

The company name Lego was coined in 1934, Robertson reports, from Danish phrase leg godt, meaning "play well."

It expanded to producing plastic toys in 1947. Two years later, the first interlocking bricks were produced.

It took until 1958 for the design of the modern brick to be perfected, and another five years to settle on the right kind of plastic, an acrylonitrile butadiene styrene polymer or ABS.

The company patented the modern brick in January 1958, Robertson notes, and bricks from that year are still compatible with today's multi-coloured variety.

The Lego Group has been the focus of a lot of buzz in business circles for more than a decade.

Much of the chatter was caused by the near-bankruptcy of the company and its strong comeback. They posted record profits in 2012, so it appears that the brick is now doing just fine, thank you.

Robertson takes readers deep inside the company and the world of Lego. He explains much of the history that led to rise, the fall and ultimate resurrection.

Quite a bit of his terminology will likely be unfamiliar to folks who don't pay attention to TV shows like Dragons' Den.

But what we have is good storytelling, with considerable insight into Lego's efforts at innovation, including both successes and failures.

Brick by Brick provides a good overview of how European business, especially the toy business, has evolved in the decades following the Second World War.

Lego is an extremely insulated company, and Robertson says the right hand often did not know what the left hand was doing.

The 1990s were the pivotal decade for the company. They branched off into many different markets and ventures, most notably the partnership with the Star Wars empire in 1997.

Robertson says this was one of the moves that ultimately ensured the survival of Lego in the new millennium, but it could easily have been a death blow.

He says the main leadership were never really asked to make sure the concepts were marketable, or even if they had anything to do with Lego.

It was a huge departure by the Danish family, who made remarkably few mistakes in earlier years.

Other points that Robertson explores include the loss of control that the leadership experienced in the 1990s by moving too rapidly outside Lego's fields of expertise, and not establishing reliable accountability or tracking of costs.

He claims that the leadership didn't even know which product lines were making money and which were not.

Certain key innovations worked well in the long run, after some shaky beginnings. Lego Universe and Galidor failed, and other innovations became overnight sensations, including Ninjago, Mindstorms NXT and several Lego video games and board games.

Today the Legoland theme park in Billund is a child's idea of heaven. Miniature replicas of Copenhagen's waterfront and the Millennium Falcon, Han Solo's spaceship in Star Wars, are on display, along with all manner of rides aimed at Lego's prime target group, which is boys between the ages of five and nine.

Legoland attracts more than one million visitors a year. The family-owned company is the world's most profitable toy maker and vies with Mattel for being the largest in terms of sales.

Roger Currie is a Winnipeg writer and broadcaster. He is being educated about the world of Lego by his eight-year-old grandson.

Republished from the Winnipeg Free Press print edition July 27, 2013 A1


Updated on Sunday, July 28, 2013 at 12:41 AM CDT: Edits formatting.

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