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Lego blocks5/7/2023 ![]() ![]() Much has been written about LEGO and many explanations have been given for its fall and upturn. From 2007 to 2013, LEGO displayed a 24% growth in sales. A famous example was to introduce the “intelligent brick”, as part of updating the Mindstorms’ robotics set, which allows users to program their robots.Įven in the face of global financial crisis, the rebound strategy followed resulted in incredible growth. LEGO pursued new markets by building on its core and capitalizing on the diversity and skillfulness of its staff and fans. Following the crowdsourcing trend, the company turned to its fans for ideas by introducing the Digital Designer, where users could design and upload their own sets of LEGO.įinally, the third phase involved drawing the growth path. They emphasized building a core set of products that would allow unlimited expansion and innovation. This was basically a “return-to-the-brick” initiative with the main goal to regain profitability. In 2006, LEGO initiated the second and most important phase of its rebound strategy. Practices included closing offices as well as eliminating workforce, unprofitable factories and products. The first phase, in 2003, included rigorous restructuring for survival via imposing constraints. Unfortunately, the innovation attempts did not bring about expected outcomes, and in 2003, the company almost collapsed in the face of a 30% drop in sales and a $800 million debt.Īfter a period of serious loss, it became time for radical action and LEGO initiated a three-phase rebound strategy. Approaching the educational toy market and introducing products such as Darwin, a digital version of LEGO bricks, constitute representative examples of the prominent brick devaluation that occurred during that period and a move away from the modular system. However, in the process of trying to attract new audiences and to break into new markets, development projects of that era markedly downplayed the brick. The losses did not stop LEGO from stepping up the innovation attempts. In 1998, the company reported a loss of $48 million. Sales grew only 5%, while production costs rapidly rose. Nevertheless, the desirable growth was not achieved. From 1994 to 1998, its offerings tripled and new markets were approached. To compete with digital and electronic toys, LEGO set off on a journey of incessant, untamed innovation. Children at that time began embracing electronic and digital entertainment – video games, computers, VCRs – and LEGO’s longstanding portfolio of plastic construction bricks lost its oomph. In the 1970s, the company introduces mini figurines of small plastic people.Īt the end of the 20 th century, after eight decades of accelerating growth, the company faces the challenge of incremental competition. It also expands its town-themed offerings as well as its outer space, pirate and castle kits. ![]() ![]() ![]() By constantly introducing new sets that consist of the same bricks, LEGO leverages huge economies of scale in product development, in brick production and in retail.Ī single brick can bring about endless expansion! LEGO enters the preschool market with the DUPLO line of bigger bricks that can be easily handled by toddlers. Moreover, leveraging modularity here means that the bricks in any toy set can be combined with the bricks of any other toy set, increasing the possibilities of creativity. This modular system is a set of basic building blocks that can be combined in different ways to build numerous varying creations. Their brick patent leads to the creation of a modular system, which allows LEGO to take a step away from the traditional production of standalone toys. Then, in 1958, they introduce the “stub-and-tube coupling system” that defines the legendary LEGO brick. During the 1950s, Christiansen and his son, Gotfred Kirk, put a new idea for a plastic construction brick into the test. The company is initially focused on manufacturing wooden toys for children, but soon switches to plastic fabrication. It is 1932 when Danish master carpenter Ole Kirk Christiansen founds LEGO in Billund, Denmark. ![]()
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