H
oled up in his Michigan University dorm room in 1995, a young Larry Page puts the finishing touches to his latest project – building a working inkjet printer out of Lego. An impressive feat, no doubt, but it would not be the most impressive thing that he would create – Larry Page, of course, went on to co-found internet giant Google. During a now famous interview with Time magazine in 2006, Page revealed his love for Lego and attributed a lot of his understanding and ability with mechanical devices to growing up playing with the tiny multicoloured bricks. What isn’t as well known is how, just 18 months before that interview, the much-loved toy company was on the brink of bankruptcy. “We are on a burning platform,” declared a company report written by young Danish businessman Jørgen Vig Knudstorp in 2003 after Lego had posted a loss of $350 million – the biggest loss in its history. Of the hundreds of different Lego products available in stores, only three were actually making the company money: sci-fi Lego spin-off Bionicle and movie franchise tie-ins Lego Harry Potter and Lego Star Wars. The company was haemorrhaging cash and its credit rating was through the floor. But how could this be possible? The family-owned company was, and still is, an instantly recognisable global brand that rivals the likes of Mattel and Hasbro in the popularity stakes. In fact, just three years previously in 2000, Forbes magazine named Lego its “Toy of the century.” It beat Barbie and the Teddy bear to the prize. The small multi-coloured bricks are so ingrained in 20th century culture that most people will gleefully tell 78 lego
you about their favourite childhood set, while even people who have never played with Lego recognise its trademark bricks and miniature, smileyfaced, yellow men (known as minifigures). Celebrities such as Brad Pitt and Will.I.Am have confessed their love for the brand. David Beckham once revealed that when injured during his stint at Italian club AC Milan he used to pass the time by working on a Lego replica of the Taj Mahal – at the time the largest Lego set in the world. There are few toys that provoke such a strong emotional response. Following Knudstorp’s report there was lots of finger pointing, and several suggestions as to how Lego had let itself get into such a desperate position. The resurgence of the videogame industry, the rise of the internet and the growing number of cheap knock-offs on the market due to the expiration of the Lego brick patent were all blamed, but while all of these factors contributed to the changing landscape of children’s recreational habits, ultimately, Lego’s biggest enemy turned out to be itself. The Lego story began in 1932 when a carpenter named Ole Kirk Christiansen decided to start making high-quality wooden toys after his more traditional carpentry business had all but gone bust during the Great Depression. The name comes from combining the Danish words ‘leg’ (play) and ‘godt’ (well). However, completely unbeknownst to Ole, the word ‘Lego’ in Latin fortuitously translates as ‘I put together’. Based in the nondescript village of Billund in west Denmark, the young company would twice suffer inventory-destroying fires – once in 1942 and a second time in 1960. After the second blaze, the company made the decision to move away from wooden toys and focus solely on the several small plastic products they had started creating.
One of those was a durable and colourful plastic brick. The idea behind the brick was that it was versatile enough to allow children to build anything that their imagination could think up – a sort of everytoy. In fact, so versatile are the bricks, Lego has since calculated that by using just six eightstud bricks there are a mind-boggling 915,103,765 different ways that they can be assembled. Initially, the bricks were very basic and did not hold together well. This inspired Ole’s own son, Godtfred, to attempt several redesigns in order to unleash the full potential of the brick. He would go on to develop the ‘clutch power’ interlocking system that would hold the bricks together yet
the bricks can be taken apart by a child still allow them to be taken apart easily by a child. This simple underlying principle would go on to form the bedrock of consistency that would allow the company to grow, and this same system is still in use today; in fact the bricks produced today still interlock with the first sets that were produced back in 1958.
The secret to Lego’s early success was the simplicity and versatility of its products. All it had to do was provide the tools, and children everywhere could build, dismantle and rebuild the toy with countless outcomes. Jonathan Gay, the inventor of the computer programme Flash, attributes his career to Lego. “As a child, I grew up playing with Lego. Those coloured bits of plastic taught me the basics of engineering design, how to choose a design problem and the process of iterative refinement. Even better, they helped me express my early passion for building things.” The Lego brick struck a chord with a primal element in the development of children. “Lego really gets children’s minds going. They become creative in a way that is very hands-on and real,” explains Sean Kenney, a professional artist who has made Lego sculptures for the likes of Google, Mazda and Nintendo. “Other crafty activities like drawing and finger-painting do the same thing, but with Lego, when a child is done creating, they can then actually play with their creation.” Lego would continue to grow slowly over the next few decades, expanding beyond Denmark, with sets being sold across Europe and even as far afield as Canada. This prompted the company to build its own private airstrip in Billund in 1962 to facilitate the rapidly growing business. Today, Billund airport is one of the busiest in Denmark. Such was Lego’s popularity that businessmen would travel from all over to the tiny Danish town just to see where the bricks were made, leading to the unorthodox, but ultimately moneyspinning, decision to create a Legobased theme park in Billund. In 1968, Legoland was born and in its first year it attracted 625,000 visitors. lego 79
In 1978 Lego hit the jackpot. As well as introducing baseplates and road plates that entire towns could be built on, it also introduced the now unmistakable symbol of Lego – the minifigure. The tiny figure with moveable arms and legs and that wonderfully simple smile were an instant success. The mini-figures remained smiling away for another decade until the introduction of more advanced features with the Pirate range in 1989. The next 15 years would see Lego grow at an average annual rate of 14 per cent, doubling in size every four years. But this is where things started to change. In the mid-1990s, Lego’s profits stagnated. The company seemed to have reached its limit and was unable to sustain its remarkable previous growth. The company had never in its history reported a period of torpor, and Lego’s management decided that the best course of action would be to grow the brand into new areas: ones where it had little experience. 80 lego
Soon it began manufacturing action figures, clothing ranges, hotel chains, electronic toys for toddlers and even Lego-building computer software in an attempt to grab a slice of the market dominated by other toy manufacturers. Perhaps the best example of this departure was the creation of the illfated Galidor line. Built around the exploits of its hero, Nick Bluetooth, the company started creating large action figures. The toys seemingly paid little regard to the principles of what had made Lego so endearing throughout its history – keeping things simple and providing the basis for children to express their creativity – and, perhaps unsurprisingly, they flopped. During this time even Lego’s core business – the Lego sets – were being tampered with. Management ordered the designers to push the envelope and and come up with more elaborate ideas, giving them wider scope to create evermore fantastic and complicated products. As a result the Lego sets being produced were becoming more intricate and specialised. There was only one problem; the products were not selling. It was evident that by being overly creative the company had lost sight of the clever-yet-simple designs that had formed the foundation on which the company had been built. The toys were becoming too stylised for children to relate to, and on top of that, production costs of all the new pieces (the number of individual Lego pieces rose from approximately 7,000 to 12,400 between 1998 and 2004) were costing the company a small fortune to manufacture. By 2003 sales had dried up. In 1942 and 1960 those fires at the Lego workshop had threatened the company’s sur vival. In 2003, the ‘burning platform’ report put them in danger once again.
The author of that report, Jørgen Vig Knudstorp, was appointed CEO the following year – making him the first head of the company who was not a member of the Christiansen family. With his appointment came a new modern mind-set focused on stopping the rot, and saving the company. “When I joined the company the challenge was that for many children all over the world Lego had become something of the past – a bit old fashioned,” Knudstrop explained to the BBC earlier this year. “My challenge was to reconnect with the vitality and the energy of something that was, and is, endlessly creative. I had to reposition the brand and repackage it as something very cool in the opinion of children around the world.” Knudstrop soon realised that the main issue facing the company was that it had lost its way. The values that it had been built upon were no longer clear, and a serious overhaul was needed. “We were developing a lot of products that weren’t delivering on the joy of building and the pride of creating things,” he explained.
from 1989 lego grew 14 per cent every year
star wars was key in the rise of lego to the top The new focus was on people who were already in love with the brand, rather than trying to entice a new audience who had no interest. “We cannot pretend to be something we are not,” declared Knudstrop in an interview with Monocle in 2007. “It is more important to stay true to your core principles than to grow. If by doing that there is growth, then good, but if we decline then we will have to adjust to that.” And grow Lego most certainly did. Having steadied the boat, Lego’s sales revenues increased by a staggering 25 per cent each year between 2007 and 2010. To start the recovery Lego outsourced many of its non-traditional products to specialist firms. From the Legoland theme parks to its video game franchises, it stripped the company right back. Initially it was a cost-saving move, but whether by chance or by some savvy planning, it allowed other companies to breathe new life into the once powerful Lego brand. Its Jedi knight in shining armour came from an unexpected source – the Star Wars franchise. 82 lego
During the bad days, the Lego Star Wars line had seemingly bucked the trend. LucasArts, the licensee, now had more freedom and decided to team up with games developer TT Games to create a Lego Star Wars video game. The Lego brand was set to explode. The Star Wars sets alone dominated a good portion of Lego sales for the next decade, with the Lego Star Wars and Lego Indiana Jones video games, which offered cool, non-violent and childfriendly gaming, surpassing all expectations. Lego Star Wars: The Complete Saga videogame has sold more than 12 million copies globally.
William Reed, an avid Lego collector and contributor to thebrickblogger. com, believes that Lego’s decision to associate itself with other well-established brands has helped restore the cool factor with younger generations. “Within the past decade, Lego has discovered the potential draw of using licenses such as Star Wars, Harry Potter and Batman to attract new customers,” he says. “It is very possible that many people would not be interested in Lego if it wasn’t for these specialised lines.” The key was to find a way to adapt Lego so it fitted into the playtime of the
modern era. “Children today navigate without prejudice between physical and digital play – they do not see these two things as opposites – it’s all about playing and being creative,” says Lego Press Officer Roar Rude Trangbæk. “Our belief is that physical play will forever be relevant for children. We don’t see the digital area as a substitution for physical play, but an addition and therefore an opportunity to add to the physical experience.” The latest successful Lego line is Ninjago. This line of ninja Lego figures offers its audience both physical and digital playing platforms, while still centring on the core Lego principles of construction and the Lego brick. Perhaps the best example of how Lego has adapted to the internet age doesn’t come from the Lego brand at all. Fabian Moritz, a 21-year old German became an internet sensation early this year when he teamed up with the Guardian.co.uk to reproduce memorable moments of the London Olympics. From Usain Bolt winning the 100m to Michael 84 lego
lego turns 80 this year and is worth $1bn
Phelps shattering the all-time individual medal tally – Moritz’s stop-motion videos were created entirely out of Lego and have been watched more than 450,000 times by viewers around the world. “I think people are fascinated by my videos because everyone knows and loves Lego,” says Moritz. “Older people like my videos because it reminds
them of their childish side, while children can relate to this because they play with Lego too. You should have seen the glee in some of my Guardian colleagues’ eyes when we worked on the Olympics.” And that’s just it. The little plastic brick that managed to capture the imaginations of three generations of children was always there – the company just lost track of its vital importance, and it wasn’t until Lego refocused and adapted to the habits of today’s children that it instantly found its way back to the top of the pile. This year Lego turns 80. Its operating profits from the first half of the year have already passed $500 million and in turn it has re-established itself as the number one toy manufacturer in both Europe and Asia. Type Lego in to Larry Page’s Google, and you will be rewarded with 440,000,000 results. Not bad for a plastic brick. Matt Priest is Open Skies’ staff writer who has been playing with Lego since the age of five.