Why can Lego toy manufacturers be popular around the world?

Why can Lego toy manufacturers be popular around the world?

Why can Lego toy manufacturers be popular around the world?

The face of the graceful Danish Lego Group CEO Knud Stoop, embarked on a flight from New York to Amsterdam.

That was the end of 2003, which was the lowest point of LEGO's development: Lego's product sales fell by 30% compared with the previous year. Lego lost its leading position in all core markets, with a negative cash flow of US$160 million. The debt is about $800 million. According to market forecasts, the year 2004 will be even worse, and the net loss is expected to double to $300 million. In early 2004, an internal survey of the company's entire product catalog showed that 94% of LEGO suits were not profitable, and only Star Wars and the Biochemical Warrior series were making money. Lego not only bears the biggest losses of all toy manufacturers, but also becomes the least profitable brand in the industry.

Knu’s neighbor on the plane happened to be the author of the best-selling book, “Return to the Core,” and Chris Zucker, a partner at the famous Bain Consulting Company. Chris said in the book that the conditions for continued profit growth must come from the company's clear customer base and focus on relatively few products. He warned companies to implement careful and cautious plans when expanding into a similarly relevant area, such as when expanding new channels, value chains, technologies or product lines. If you are engaged in too many projects in a short period of time, the results may not be satisfactory.

This is God's will, and Knu, who is sitting next to Chris, gets a lot of inspiration from the former. As they talked, Knu felt that he had found a problem that had bothered him for a long time.

LEGO has been involved in a wide range of innovative businesses over the past 10 years: computer games and film studios, LEGO Education Center, LEGO Kids, LEGO dolls, media – including books, magazines and TV, and 3 theme parks. 300 brand stores to be opened.

Despite the efforts, most of these adventures ended in failure. In fact, the speed at which the LEGO Group advances into the new market is generally in line with its speed of loss.

Looking back at the company's diverse actions, Knu realizes that the root cause of Lego's dilemma is that it is too eager to create new products that are different. He agrees with Chris that if a company has a strong core business, it can develop a peripheral industry every five years. Lego is doing the opposite: to develop five surrounding industries in a year, and suddenly face many businesses that they don’t understand at all. LEGO does not have this ability and cannot keep up with the pace of development.

Knu concluded that experimentation and diversification are good things, but behind this, there needs to be a management system to maintain its integrity. Moreover, the company should also give overall guidance to the innovation process. He vaguely made a decision to be more "concentrated" and "focused."

Management's centralization: "Lego's Jobs", the king returns

To overturn in a short time, you must rebuild a sustainable, profitable business mechanism. To this end, a three-person leadership team led by Kyle was quickly established. These three are: Kyle, Knu and Afson. LeGer’s third-generation leader, Kyle, is known as “Lego’s Steve Jobs” and has served as president of the company since 1979. He is a low-key person and never publicizes. It was he who established an effective management structure around Lego Games that allowed the company to experience a period of high growth for 15 years.

Kyle redefines and extends the entire concept of "building a system", which leads to a series of best-selling products from the company. He also innovatively launched a game theme set.

Under his leadership, during the 10 years from 1978 to 1988, Lego's sales soared like a rocket, a five-fold increase; while Knu, a McKinsey management consultant, was the first to warn that Lego would be comprehensive in 2004. Leaders of the crisis, the Lego leaders were blindly optimistic and have been expanding without limit. Knu has a correct and long-term insight into LEGO and a high level of interpersonal skills; Ovsson has enough intelligence and leadership to rebuild LEGO's financial system. He is the best CFO candidate. These three leaders, each with their own advantages and complement each other, form a very strong and effective leadership group.

The personnel arrangement of the leadership means that the original principals of Prague and Scholela are leaving the company. The company’s press release said that “because the company is about to face a financial deficit of about $225 million, Kyle will be responsible for the day-to-day management of the company with the help of Knu and Ovsen. Anyway, this is better than the past Prague Man The management chaos in the era is much better, at least the uniformity of the management team.

After hearing the changes in management, a designer was happy to synthesize Kyle's picture into the poster of the movie "The Lord of the Rings: Return of the King". Within a few hours of the announcement, the poster was posted in various places in the lobby of the LEGO Group headquarters. On the same day, at the company's staff meeting, the staff warmly welcomed Kyle's return.

Although the company is in a buzzing atmosphere, it is difficult to conceal the huge concerns about the situation at the time. This kind of mood leads to three core issues facing the transition period of the enterprise:

1. Can the dilemma be reversed? Because the situation of LEGO was described by the Danish media as “poorly unexpected, almost destroyed”, the company is collapsing.

2. Who is the real helm? In this regard, the answer of the new leadership team is: we do not need to be entangled in various vocabulary, we need an action plan to let the company survive, this is a matter of urgency. This is trying to open a window for everyone to do. The survival plan is accompanied by a series of priorities to reshape the company's financial health and competitiveness.

3. What is the strategy? Kyle said that the decline of the LEGO Group was due to the pursuit of too many trends and neglected the foundation of survival. The reason for our failure is not paying enough attention to core products, but relying too much on authorized products to stimulate growth. The word "core" has been repeatedly raised in the company's economic recovery plan and the right to alternate.

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