Brick by Brick - How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry

October 1st, 2014

This year, LEGO passed Barbie doll manufacturer Mattel in the battle for the title of the world’s largest toy manufacturer. And while the average Danish family fortune has grown by 50 percent over the last ten years, the coffers at the Kirk Kristiansen estate are brimming with valuables now worth 1,000 percent more than a decade ago.

In being granted unprecedented access to the confines of the LEGO Group’s Danish headquarters, author David C. Robertson presents a captivating account of how the company, constantly innovating yet simultaneously set in its ways, was forced to re-invent itself by re-imagining its use of the same paradigms which had previously brought it close to collapse.

In 1932, in the small town of Billund in Denmark, carpenter Ole Kirk Christiansen took the words “Leg godt” (“Play well”), stuck them together and created LEGO. Kirk Christiansen initially used his carpentry skills to craft high-quality wooden toys, but a series of setbacks both personal and professional saw him relaunch LEGO a decade or so later.

When his became the first Danish company to acquire a plastic injection molding machine, his son Godtfred spent years perfecting the revolutionary stud-and-tube coupling system that would become such an integral part of the LEGO System of Play of compatible sets, allowing customers to expand their creative universe with each purchase.

Later Godtfred’s son Kjeld Kirk Kristiansen (his surname was misspelled on his birth certificate) would take over as president.

The first approximately 60 years of history are the focal point of the first couple of chapters of the book, and author David C. Robertson paints a picture of a company that, while initially enjoying many years of success and growth, eventually experienced slumping sales due to increased competition and a lack of focus on running a business as opposed to simply coming up with new products.

In 1998 LEGO hired Poul Plougmann, former chief operating officer of Bang & Olufsen, a Danish manufacturer of high-end audio and video equipment, and the Plougmann era was to be a pivotal period in the company’s history. His plan to save the sinking ship included what became known as the “seven truths of innovation.” I won’t list them here, but these points would come to greatly influence every aspect of LEGO’s operations from them on, and the author quickly establishes them as a basis for his further analysis of the company’s more recent history. Thus, the remaining chapters concentrate on the company’s efforts over the last decade and a half.

The company followed the seven truths concocted by Plougmann in their endeavor for constant never-look-back innovation. In opening new divisions as well as theme parks and retail stores worldwide, striking licensing deals with Hollywood, branching out into tv series, video and computer games, and releasing a slew of resource-draining product lines that failed to make an impact on the market, LEGO would stretch itself thin and in the process forget the core product that made them unique, the LEGO System of Play.

In January 2004, when Plougmann was fired and Jørgen Vig Knudstorp took over day-to-day operations, Knudstorp would utilize the same seven truths which looked so good on paper but had ended up steering the company astray. His refocused application of the seven truths in conjunction with his own three-step, multi-year “shared vision” plan would shape the company over the next decade. In the book’s final half-dozen chapters, the author chronicles LEGO’s evolution since Knudstorp’s inauguration by studying how a number of the company’s initiatives make use of these ideas.

We learn how development times were halved through simplification and streamlining overhaul of the LEGO Development Process; how breakthrough lines such as Bionicle and Mindstorms would influence and shape these development processes and contemporary product lines; how tapping the enormous wealth of creativity held in the fan community massively strengthened the company’s relationship with its customer base; and how an experiment in disruptive innovation failed when the company couldn’t quite shake its long-held “the best isn’t good enough” motto.

In the end, the book almost becomes a sort of how-to guide to running a company. It is by no means written as a manual, and while peppered with financial numbers and the occasional statistical graph, there is a clear albeit not entirely chronological narrative throughout. Simply put, it’s an engrossing story featuring people possessing a child-like joy of play and a palpable wish of sharing that joy with the masses.

The fact that David C. Robertson was able to write this book is a testament to the opening-up process undergone by the LEGO Group. The public wouldn’t mind seeing LEGO opening up even further, though: A poll conducted in 2012 showed that 27 percent of Danes chose LEGO when asked to name the one company they would most like to see tradeable on the open stock market.