We read the book “Brick by Brick” by David Robertson and Bill Brin and identified 5 interesting facts from the history of the legendary company.
What does the word LEGO mean?
LEGO is an abbreviation for the Danish word “leg godt”, which means “play well”. The name reflects the company’s philosophy: “good play” promotes the development of creative abilities of children, which will be useful to them in adulthood. Another core value laid down by Christiansen, founder of the company, is the principle of continuous improvement and raising the bar: “the best is never too good”.
One of the most serious ones arose in the 90s, when LEGO’s patent expired for its bricks, as a result of which everyone began to copy them. And selling your products is much cheaper than the original. Another important factor of the crisis is the emergence and widespread distribution of new technological toys and computer games. Virtual reality seemed to many children more attractive than a simple brick. For the first time in history, the company ended 1998 with a loss of $ 48 million. In 1999, the company had to lay off more than a thousand employees, and the management suddenly realized that now it would have to fight for survival.
LEGO might no longer exist
Eager to adapt to the demands of the times, LEGO was carried away by new innovative approaches. To catch up, she devised an ambitious growth strategy based on the then popular theories of driving innovation, and began to innovate intensively across multiple fronts. Many undertakings have brought nothing but losses, the uncontrolled innovation process led the company to a serious crisis. LEGO ended 2003 with the biggest loss in its history, sales fell 30 percent over the previous year, and began to lose ground in the most important markets. The next year did not predict anything optimistic. In 2003, the question arose about the possible sale of the company in parts.
Focus on innovation
During the recovery period, the company did not abandon the full range of innovations. Her most successful products – Star Wars, Harry Potter and Bionicle – have used a full range of innovations to complement the core sets. The company went on to develop a full range of innovations around its most successful products, making the most of them. The company implemented a new LEGO Development Process (LDP) – all projects related to the design of new products were divided into three-month phases. This helped to accelerate development momentum and respond quickly to emerging market opportunities.
Truth is in people
Until the end of the 1990s. the company was a rather closed firm, unwilling to share its intellectual property, but the crisis forced LEGO’s management to take advantage of the collective intelligence. The collaboration with fans proved to be successful, and the company came to the conclusion that it should more trust its fans and let them know their trade secrets.
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