The year was 2003. LEGO, the beloved company known for popularizing the little plastic building brick, was on the brink of bankruptcy. After overexpanding beyond their core business and taking on too much debt, the LEGO family felt they may have to sell their crown jewel. As a last-ditch effort, they decided to hand the keys to 35-year-old, former McKinsey consultant Jurgen Vig Knudstorp to turn around the company.
As he diagnosed the mistakes LEGO had made over the last decade, Jurgen kept asking himself a key question: Why do we exist? What makes us the best in the world at that one thing that nobody else can do? This framework is what led him to refocus on the brick, deleverage, and ultimately partner with experienced companies to grow the LEGO brand yet again. Today, LEGO is the most profitable toy company in the world, with ~28% profit margins and 10x larger profits than the next closest toy company. This episode is filled with lessons on the perils of overexpansion & overleverage, and how sometimes trimming down is the only way to grow sustainably. Enjoy!
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The LEGO Story - Jens Anderson
Brick by Brick - David C Robertson
LEGO: Jurgen Vig Knudstorp Interview - Guy Raz
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Recommendation of the Week: LEGO Concorde
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The Web of Ideas: Brick by Brick (my notes on the book)
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Show Notes:
5:00 - 1998: LEGO's first year in the red since founding
15:12 - Luke Skywalker, LEGO's temporary savior
19:11 - It's just a thick, fat layer of cosmetics...
25:28 - Jorgen Vig Knudstorp's action plan: deleveraging and prioritizing what LEGO can do better than anyone else
29:56 - Shedding off the fat & getting a boost of BIONICLE!
32:10 - Danny Meyer - what makes you different and unique???
36:09 - There are no points awarded for difficulty
39:10 - Adults Welcome :)
46:40 - Growing into the most profitable toy company yet again
53:00 - They may not be the biggest brand in the world, but definitely one of the best!
56:51 - The modern-day LEGO