How LEGO Revived Its Brand

This article from Businessweek popped up in Instapaper this week, and it reminded me just how similar this site’s two topics really are. LEGO and Apple might not seem too related, but both companies experienced nearly identical failures followed by stellar renaissances.

Apple’s story is common knowledge – Steve Jobs returned in 1997 to lead a struggling and directionless Apple into the modern world. He cut unnecessary products, focused on just a few specific, attainable markets, and used his legendary personality and insight to drive his employees to greatness.

LEGO in the early 2000s was facing many of the same difficulties. No longer content with simple bricks, the company branched out into action figures, shoes and clothing, and even a TV show. Profits faded while designers churned out simplistic, stylized sets and the number of distinct component molds ballooned (7,000 in 1997 to 12,400 in 2004). New CEO Jørgen Vig Knudstorp and Paal Smith-Meyer, director of LEGO’s New Business Group, halted the decline by cutting back. Instead of overextending the company, they focused on their strongest market (construction sets for boys) and imposed strict limits on set design. New part molds now needed a majority vote, and manufacturing costs became paramount. Instead of foundering, sets regained their creativity, and sales picked up. Now LEGO owns an impressive 7% of the global toy market and has continued to grow steadily even through the worst economic downturn in decades.

To me, this shared philosophy of conscious restraint is what makes each company so successful – exceptional design and top quality are direct byproducts of a limited but purposeful portfolio.

Either that, or just hire a CEO with round glasses, thinning hair, and a stubbly beard.

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