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How LEGO built its toy empire

A new book on the Danish firm LEGO charts its initial success, fall and then spectacular rise to become the fastest growing company in the toy industry. Author David Robertson says LEGO rewrote the rules of innovation.

DW:The Danish toy company, LEGO, has had a chequered history – just ten years ago it nearly collapsed; so how did the company not just survive but become so successful again?

David Robertson: Well it almost didn't survive. It was very close to bankruptcy about 10 years ago. It had tried to innovate and over innovated. It tried lots of different experiments, most of which didn't work so in 2003 it was right on the brink of bankruptcy. In 1999 the company faced a financial crisis and had to lay off a thousand people. They brought in a new manager, a turn-around expert, who started innovating. He was convinced that the brick was passé, that kids were leaving plastic toys for online games, play stations and nintendos. And so they tried lots of experiments, lots of different types of imnnovation. And some of them worked but most of them didn't. And it all came crashing down in 2003. What they learned from that brush with bankruptcy is that it's not enough to just boost innovation and creativity – you also have to focus and direct it. If you were a designer in LEGO in 2001 during their experimentation period, you were given a blank slate -' Create a great play experience, create a new toy – the sky's the limit'. And now if you're a designer at LEGO, you're told to create a great police station, a great fire truck. Some of the designers from 2001 left the compqany – they weren't happy with the new constraints. But other designers realized that if they're more focussed and directed, then the toys are more likely to be successful, get into the hands of kids and make money for the company. It's a different kind of satisfaction but it's been much more profitable for the company. Innovation is about balancing the space to create with the direction to deliver. Those two things are a little bit in conflict and getting that balance just right is hard to do and LEGO does it better than any company I've seen.

A picture of people playing with Lego

"Parents buy bricks, but kids buy stories."

DW: So what's it like at LEGO HQ where they brainstorm about new toys?

Well it's a lot of fun. You walk around the headquarters and there are LEGO toys everywhere. But one of the things that LEGO learned is that I think the management became a lot more humble. Back in the experimentation period they would do a lot of things in Denmark – they'd come up with toy ideas and say that's great and rush it out to market. Now there's much more careful testing. They'll go out to kids and show them different options for the toys and they'll see which ones really get the kids excited. They've a wonderful phrase – "there's only two groups of honest people in the world: kids and drunks". You know, kids will never lie to you about whether a toy is fun or not. And so management pulls itself out of decision making, largely. They don't make decisions as much as they used to.

A child looking at a Lego boat and talking about the stories she sees within it.

"Kids will never lie about whether a toy is fun or not"

There was controversy over their range called LEGO Friends because they included little female figurines in pink. And that led to an online petition from people annoyed about gender specific toys. Why did LEGO decide to go down that boy/girl route?

I think they'd been hammered by people who said, 'you're just making toys for boys. Why don't you make toys for girls as well?' So they went out and tested lots of different options and found that girls really respond to these pink and lavender toys with themes around socializing and getting together. And you're right, there was a big protest about it. And I have a daughter who was 11 when the set came out. She's to me the most beautiful girl in the world but I don't want her to be defined that way. So I bought a LEGO Friends set for her and watched her play with it. And what I saw, was that whether it was the way we raised her or whether it's wired in, she did respond to the pink bricks. But that got her playing with LEGO. And I'm a big believer that, that kind of creative construction experience, that 3D spatial reasoning that you get from playing with LEGO is a good thing for kids to have. And so, if pink toys are what's attractive and what makes girls want to play with LEGO, then I don't see myself as a parent saying "No, you can't have that". So I sympathize with LEGO on this one.

LEGO'S also started doing more themed toys and it's also endorsed products like Star Wars. Is that the future?

An example of Harry Potter endorsed LEGO products

LEGO has expanded into licensed products such as Harry Potter

I think what LEGO learned is that kids respond to stories. Whether it's a licensed product like Harry Potter or Star Wars or one they create themselves, like this toy called Ninjago that was very popular. But kids like that. If you look at a little box of LEGO there's always a little drama playing out on each one. Like if you look at the police station from a few years ago – in the prison cell there's a way for the burglar to open up the bed and slip out of a little chute and run away down the street. And so you can see the police have realized he's gone and they're hopping in the police car and chasing him. Well, kids respond to that. They see it and want to build the police station, they want to play out the little drama that's unfolding on the top of the box. And I think that LEGO learned that parents buy bricks, but kids buy stories.

David Robertson, has written Brick by Brick (Published by Random House June 2013) which looks at LEGO'S initial rise, then fall, and spectacular rise again.

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