On a restructured episode of All Sorted Jeff and James look at the turn around of LEGO:
In case you missed them, listen to the other parts of this series:
- The LEGO Group and Ferrari launch an agreement to make LEGO sets based on the iconic race cars.
- The DUPLO trade mark is relaunched as a result of consumer requests.
- LEGO Digital Designer is released.
New CEO Jørgen Vig Knudstorp launches a five-year strategy plan for the LEGO Group. The plan focuses the company on three main areas:
1) Direct dialogue between the LEGO Group and LEGO consumers to drive innovation:
- LEGO launches the LEGO Factory at lego.com enabling consumers to design their own sets, and then buy the LEGO elements needed to build it.
- Product development will take place in closer dialogue with LEGO fans, who should have the possibility of presenting ideas to the Group’s designers.
- LEGO begins to recognize their many adult fans and collectors, which for years had been seen as odd and superfluous to the LEGO cause.
- LEGO launches the Ambassador Program to create closer ties between the company and LEGO Fans, and to encourage interaction in the global LEGO communities.
- LEGO launches the Certified Professional program.
- American artist Sean Kenney becomes the first LEGO Certified Professional.
2) Strengthened approach to sales and distribution channels to drive earnings and sales:
- Recognizing the increased level of competition at the retail level, LEGO strives to listen more intently to their retail partners and more efficiently meet the wishes and requirements of the retailers, while continuing to supplement product with strong marketing measures.
3) Continued streamlining and optimization of Group operations to improve earnings and service level:
- By modernizing, rightsizing and optimizing the operating processes, LEGO hopes to ensure material improvement of the supply chain at a lower cost.
- LEGO will refocus the business on their core, the LEGO system, and to divest themselves of any area of the business that does not directly relate to that core.
- The LEGOLAND parks are sold to Merlin Entertainments.
- As part of the deal, KIRKBI, the holding and investment company of the Kirk Kristiansen family, gains a 15% stake in Merlin Entertainments.
- These changes, especially the sale of the LEGOLAND theme parks allows LEGO to post a profit again.
- LEGO has already started to climb back to stability as they post profits three times greater than the year before, around 1.5 billion Danish Krone.
- CEO Jørgen Vig Knudstorp publicly announces an action plan for the company that will run until 2010.
Stage 1: Survival (already complete)
- This stage had the goal of Stabilizing the company between 2004 and 2005.
Stage 2: Profitable core platform (begins in 2006 and will last until 2008)
- Over this three year period LEGO plans to focus on its core business, the LEGO system: DUPLO, LEGO and TECHNIC.
- Through this focus, LEGO hopes to bring true its motto: ”Only the best is good enough”.
This second stage has three priorities:
1. Transition of the supply chain
- As competition from other toy companies has increased, the need for supply cost reductions have intensifies, so LEGO announces plans to outsource production to a number of partners in Eastern Europe and Mexico.
- The most specialized and difficult to mould LEGO products will still be manufactured at the Billund factory, not only to retain quality, but also to protect trade secrets and competitive advantage.
2. Improving product portfolio profitability
- Low selling products and themes are phased out: LEGO BABY, LEGO QUATRO and LEGO CLIKITS.
- LEGO begins to work more closely with retailers to increase the effect of campaigns and promotions and to reduce the scope of price campaigns.
3. Preparing for growth
- LEGO begins to streamline their product development and design channels to decrease the time between initial design and hitting retail shelves.
- LEGO also begins to gain more input from the AFOL community, and begins to actively look to hire product developers and designers from this group.
- LEGO.com grows to 8 million unique visitors per month, each spending an average of about 28 minutes on the site.
- MINDSTORMS NXT is launched as a new and considerably improved version of the LEGO robotics system.
- LEGO releases a board game: LEGO Parcheesi or LEGO Ludo depending on where you live.
- LEGO celebrates its 75th anniversary (73 years after the LEGO name and 91 years after Ole bought his first wood shop. I promise this is last time I bring up this issue, at least until 2032).
- LEGO falls to 4,199 employees, it’s lowest number since the early 1980s.
- All distribution for the European and Asian markets is gathered into one centre in the Czech Republic. A distribution centre in Texas handles all North American Retail distribution.
- Approximately 70% of the LEGO Group’s packing activities and approximately 20% of the moulding activities have been transferred to external partners in Eastern Europe and Mexico.
- To accommodate this change, 90% of the LEGO packing equipment was in transit at some point during the year.
- 10179: Ultimate Collector’s Millennium Falcon is released.
- It is the largest LEGO model produced for sale, with 5,197 pieces.
- LEGO enters a license agreement with Lucasfilm Inc. To produce Indiana Jones sets.
- Power Functions are released.
- The LEGO brick celebrate its 50th anniversary.
- After a couple of years outsourcing production, packaging and distribution, LEGO begins to realize that the costs of these changes were more than they expected, as well as coming to the determination that LEGO needs more control and flexibility in their supply chain, so they decide to take back the majority of their production.
- LEGO takes over production activities in Kladno, Czech Republic, and in Nyíregyháza, Hungary.
- LEGO also establishes production in Monterrey, Mexico.
- LEGO jumps back up to 5,388 employees worldwide.
- While overall toy sales continue to fall, LEGO sees double didget growth in nearly all markets.
- 10189: Taj Mahal is released.
- Becoming the largest LEGO set ever released, containing 5,922 pieces.
- Kjeld Kirk Kristiansen is inducted to the Toy Industry Hall of Fame (US).
- The LEGO Group is now the world’s fifth largest toy manufacturer in terms of sales.
- LEGO posts another year of double digit sales growth.
- The number of LEGO employees grows to 7,058 the highest level since 1999.
- The LEGO Group announces a multi-year partnership with Disney Consumer Products obtaining exclusive rights to construction toys based on the entire portfolio of Disney and Disney Pixar properties.
- LEGO Games – is launched. The line consists of a series of board games that can be played by the whole family.
- Warner Bros. and the LEGO Group announce plans to develop the first-ever feature film based on LEGO bricks and icons.
- LEGO releases a Massive Multiplayer Online game, LEGO Universe.
- LEGO continues to expand its production capabilities to keep up with increasing worldwide demand.
- LEGO experiences double digit sales growth in ALL territories LEGO is sold!
- The World’s largest LEGO Mosaic is assembled in London.
- It measures 15.3 x 6.4 meters (50 x 21 feet) and is made from 384,000 LEGO Bricks and 1,500 building plates.
- The image is, of course, several Star Wars figures.
- Prince of Persia sets launch, giving us ostriches and camels and little else.
- LEGOLAND Florida opens. It is The world’s largest LEGOLAND Park.
- LEGO launches its first “appcessory” “Life of George”.
- The app challenges you to build a model as fast as you can. You then place them on the play mat and use the app to scan and score your model.
- Over the last two years LEGO has jumped from #5 to the third largest toy manufacturer in terms of sales.
- LEGO Ninjago launches, both as a theme and an accompanying Cartoon Network show.
- LEGO revenue has grown to 23.4 billion Danish Krone, or more than double their revenue from 2009!
- The company has passed the 10,000 employee mark.
- To prepare the LEGO Group for future growth and to make it more adaptable and competitive. Corporate Management changes from 6 to 22 persons.
- LEGO Friends. A new line targeted at girls aged 5-8 launches to some controversy and massive sales.
- The MMO LEGO Universe closes.
- LEGO DesignbyME, which launched as LEGO Factory in 2005, stops production because the product line is not sustainable.
- LEGO manages to almost triple their sales from 2007, hitting 25.4 billion Danish Krone.
- LEGO MINDSTORMS celebrates their 15th birthday with the release of the EV3 – powered by the new EV3 Intelligent Brick.
- The LEGO Group opens a sales office in Beijing, China and a new main office in Singapore.
- LEGO Brand Retail Store number 100 opens in White Plains, USA.
- LEGO launches Legends of Chima, along with another Cartoon Network show to support it.
- LEGO The Lone Ranger sets release
- As part of the strategy to expand the company’s global presence, the LEGO Group announces that in addition to the headquarters in Billund (Denmark), main offices will be established in London (England), Enfield (USA), Singapore and Shanghai (China).
- In less than 10 years, the company has quadrupled its revenue.
- LEGO’s annual profit is now as big as Facebook’s.
- Three new themes launch:
- LEGO Juniors
- LEGO Mixels
- LEGO Disney Princess
- Billund’s population is now 6,194.
- LEGO employs more than double that with 12,582 workers worldwide.
- The LEGO Movie premieres in a number of countries.
- The movie is written by Phil Lord and Chris Miller and produced by Warner Brothers.
- The movie earns a “certified Fresh, 96% rating on Rotten Tomatoes and almost 1/2 a billion dollars worldwide.
- LEGO is named the world’s most powerful brand by Brand Finance
- LEGO introduces the following themes:
- LEGO Dimensions
- LEGO Elves
- LEGO BIONICLE (re-launch)
- LEGO Jurassic World
- LEGO products are now sold in more than 140 countries.
- The first elements are moulded in the new LEGO Group factory in Jiaxing, China.
- The first packing lines are put into operation in September 2015 and the first box packed in Jiaxing is the LEGO City Police Station.
- LEGO Revenue grows by another 25% to 35.8 billion Danish Krone or around $5.2 billion.
- In the 12 years since Jørgen Vig Knudstorp took over as CEO of The LEGO Group, annual revenue exploded, leaving LEGO poised to stand alone as the number one toy manufacture in the world.
- What is truly amazing about that is that LEGO has reached these heights on the strength of one product line, whereas Mattel, their closest rival in terms of sales, has more than 80 product lines from Barbie to Hot Wheels to LEGO Clone Mega Blockls.
Finally, we ask:
- Can LEGO continue this astronomical growth, or are they about to plateau?
- Has LEGO grown too big?
- Did we miss anything important about these redefining days of LEGO?
Let us know. Please leave a comment below or hit Jeff up on twitter, he’s @StillSorting.
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