The man who saved Lego: When life gives you bricks, build something

Jorgen Vig Knudstorp has turned Lego around by going back to basics: making and selling bricks. As James Moore reports, the strategy works

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The Independent Online

Is he the world’s most – to quote the film – awesome chief executive? To children, Jorgen Vig Knudstorp might just be.

The 46-year-old Danish economist is known as “the man who saved Lego”, having turned around what was a loss making company suffering a severe case of over-reach.

He’s now riding the crest of a wave. Last year saw a 10 per cent rise in sales to 25.4bn kroner (£2.5bn) when the toy market as a whole was shrinking (slightly).

“What I found I joined was an incredibly enthusiastic, completely engaged company. For me the deduction was that it’s not about the brand, it’s not about the product, it’s because we’re not managing it well. Our strategy was to focus on the strength of the brick and get out of things where we’re not world class,” he explains.

“What basically happens is that when a company becomes great, and I’m being a bit rude here, people think they’re some kind of genius. So now we can move into all sorts of other businesses because the net, bottom line is, it’s because we’re just geniuses. They become overconfident and expand too far.”

But isn’t there danger of that happening again? After all, Lego is everywhere at the moment. Shoppers in yesterday’s unseemly Black Friday ruck could buy Lego DVDs, video games, clothes, clocks, stationary, books, even toys.

“I wouldn’t say it’s over-reach,” he says. “The big difference is that when someone makes a Lego movie, someone makes a computer game, it’s not us. It’s people who are world class in doing that. Yes we are moving through other people into some spaces where it might make sense. But we’re just not doing it ourselves.

“Where we are spreading ourselves is in geographic terms and that’s a challenge many companies can recognise. Life gets a little more complex.”

Fortunately for Lego, and the family that owns it, Mr Knudstorp also turned around the company’s logistics, as well as vastly expanding the range of its core offering. “At the time we didn’t have, for example, many Lego City sets and they weren’t selling that well. Today we have a huge range.

“In many turnarounds you’ll, say, have people in shipping and they’ll move into aerospace,  and that’s the turnaround. We haven’t done that. We haven’t changed the brand, and that’s unusual. We’ve had no change of control, no acquisitions, but we’ve continued to grow for more than 80 years. For a company, that’s very far at the end of the probability distribution.”

Is this relentless focus on plastic bricks a lesson he learned while at Mr McKinsey, the management consultancy where he earned his spurs? “Well I certainly saw a lot of companies,” he says. That holy brand is impossible to escape at the new offices. Instead of bowls of sweets in the meeting rooms, there are bowls of bricks you can build with. The executives’ business cards are little Lego mini-figures made in their image (although they have the regular cardboard kind too).

The Lego office in London

Dotted here and there are various one-off creations – Shakespeare’s Globe is a particular favourite – and bricks, bricks, bricks.

One of the criticisms Lego has faced is that all this branding, combined with a vast range of increasingly intricate kits, is stifling children’s creativity rather than encouraging it. Mr Knudstorp likens it to “playing the piano”. That might sound a bit of a reach, but he explains: “You can play at many levels. You can just hammer the keys as may kids like to do. You can learn to look at the keys and then really play a beautiful piece of music that others have written. Or you can eventually become a virtuoso and play your own. Lego allows all levels of complexity. But a child can do their own thing at any level. They can built a pirate ship, for example, and then mash it up with completely different things.”

It must be awesome for his kids. “Well, now the oldest is 13 and he’s into soccer, he cannot believe I’m not going to be the CEO of Adidas or something.”

All the staff at Lego’s London HQ – I also speak to Samuel Johnson who famously wrote a letter asking how to become a designer while a child, and then successfully followed that kit’s instructions – seem starry eyed about the company they work for. Fans as much as staff.

Why London, though? It can’t be for the capital market – Lego doesn’t need it. And the “no acquisitions” policy isn’t changing (bad luck, corporate financiers).

“We wanted these global main offices in all parts of the world. We wanted another in Europe, and London was the clear winner in all the places we looked, which were Prague, Paris, Amsterdam, Munich. They are great metropolitan areas but they don’t have the diversity that London has.

“Here we get gender diversity, functional diversity and national diversity. Children of all nations can go to school in London, and that’s more difficult in many parts of Europe. There are also more women in management than in many parts of Europe.”

Lego has some way to go itself here, with just three women among its top 25. ‘We’re on a journey. Ultimately our objective is a balanced gender composition,” says Mr Knudstorp, firmly.

Diversity as a virtue, and a source of strength. That’s not a message that is finding much currency in parts of modern Britain. Mr Knudstorp’s message – and his colleagues’ – says that, to quote The Lego Movie again, it’s awesome. Perhaps we should listen to him.