Lessons from LEGO – what brought them back from the brink
By Ella Overshott, Co-Director of Pecan Partnership
In 2003 LEGO was on the verge of bankruptcy – twenty years later it is still smashing double-figure growth year on year. Here we share how their deliberate focus on purpose and culture transformed the organisation and continues to underpin their success today.
In August, CEO Niels B Christiansen announced LEGO’s double-digit growth on the top- and bottom-line in the first half of 2024, significantly outpacing the toy industry and growing market share.
With nearly 20 consecutive years of sales growth, it’s easy to forget that back in 2003 the company was on the brink of bankruptcy. Though he would give credit to LEGO’s employees and customers, the organisation’s turnaround was largely credited to CEO Jᴓrgan Vig Knudstorp (JVK), who took over in 2004 and took what, at the time, was considered a novel approach to transformation.
Lessons from LEGO is still one of Pecan’s most popular Insights and they are still relevant to organisations today, so we have updated our reflections to share with you here.
JVK described culture as the “execution mechanism” by which he delivers strategy. Reading, watching and listening to recent stories about the LEGO culture, it is clear that the Board still recognise the value of investing in culture as a strategic advantage and continue to work hard at defining and embedding this into their DNA across the world.
Four themes come through strongly in their success story: reconnect with customers, put purpose and values at the heart of decision-making, develop emotional intelligence and lead by example.
1) Reconnect with customers
When JVK joined the company he knew that there was waste in the operation and that costs needed to be cut, but instead of rushing into a ‘slash and burn’ exercise as is so often the case, he headed to a BrickFest convention to meet his customers face to face and listen to their experience of LEGO.
The sheer, simple pleasure of constructing something from their imagination was clear. He discovered that Google employees saw LEGO as instrumental in shaping their young minds, teaching them how to think systematically and creatively, and he found research to back up the founding philosophy that children can learn through play. ‘Children are our role models’ has become the core belief at the heart of LEGO’s brand and culture definition.
The customer and the product are now ever-present across the sites. New products are designed in collaboration with customer focus groups and the product itself is everywhere, from signs in the canteen to personalised mini figures used instead of business cards.
2) Put purpose and values at the heart of decision-making
Feeling under-threat from the rapid growth in video games the organisation had lost its way, instead of focusing on doing more of what their customers wanted, they were pursuing too many new avenues such clothing ranges and theme parks.
Having reconnected with customers, JVK and the team were able to define LEGO’s true reason for being and articulated this as their mission – ‘to inspire and develop the builders of tomorrow.’ This provided a yardstick against which to measure all strategic decisions, guiding what the company would and wouldn’t do. More recently they have added a vision – ‘to become a global force for Learning-through-Play’ – giving them an ambitious future destination to strive for.
JVK’s process of “philosophical renewal” included values that defined the culture needed to deliver and sustain the new direction. The six core values remain in place today: Creativity, Imagination, Fun, Learning, Quality and Care.
They are hard-wired through day-to-day ways of working in the organisation, regardless of which of the international hubs you work in. Take Quality for example, the attention to detail is such that if a brick is 4/1000th millimetre out then it is rejected because they do not want to risk a customer not being able to build.
The recruitment process for designers assesses not just their Creativity and Imagination but also how they will fit in with the team – whether they are Fun and Caring.
LEGO has an advantage over many businesses in that working there is a dream job for many people. But the culture at LEGO is more than a great place to work, it is purposeful, and this goes beyond making money. They feel pride for what they do, they feel part of something meaningful and this can be fostered in any organisation.
3) Develop emotional intelligence
As a family-owned business, it is perhaps unsurprising that the quality of relationships is important to the culture and Caring is one of its values.
Fostering relationships and the health of the family runs from the moment a new recruit is met by their team at the airport, through social activities like the Hub Pub Club in London, a “no-sugar” policy in vending machines and colour-coded healthy eating in the canteen. The Rules of Engagement posted up in London’s activity hub sum up this balance between freedom and social conscience: “Work in whatever way makes you most effective providing it does not impact the effectiveness of others”
This emotionally intelligent approach to relationships extends to customers. Training in the call centre in the run up to peak trading focuses on the emotions customers will be feeling at Christmas and the critical role LEGO plays in putting a smile on a child’s face at this time. A multi-lingual call centre team with at least 14 first languages between them see empathising with the customer as key to their role. When there is a problem, they can’t change the product, but they can show understanding for their situation.
4) Lead by example
When JVK led LEGO’s transformation he placed huge importance on role-modelling the values ‘from the top. He held true to the mission and values and expected others to do so and fostered responsibility in everyone to uphold ‘the deal’.
LEGO have expanded this spirit of leadership to include everyone. Their Leadership Playground creates a common language of what leadership means in practice: Be Brave. Be Curious. Be Focused.
These are the foundations of a learning culture – something many organisations aspire to. The programme ‘de-risks’ stepping out of your comfort zone, encouraging people to take on difficult or different tasks. Everyone is expected to give guidance, to listen, to give and seek feedback on a regular basis. Showing that it OK to get things wrong and creating space to learn and improve is fundamental to embedding their values and delivering their mission.
If you would like to explore how to develop a culture that helps your organisation thrive, find out more from Pecan’s, Culture Change That Works service.
About Ella:
Ella is a culture change expert with over 30 years of experience, including leadership roles in retail and financial services. Ella specialises in helping organisations achieve a healthy performance culture, using a range of tools and services.
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