The Moment of Clarity by unknow

Author:unknow
Language: eng
Format: epub
ISBN: 9781422191903
Publisher: Harvard Business School Publishing Corp (Perseus)
Published: 2014-11-02T04:00:00+00:00

FIVE

The Turnaround

Lego

IT’S A DREARY LATE FALL day in Billund, Denmark. In a town of around six thousand people and a handful of stoplights, one would expect a small airport with a coffee cart and a single runway. Instead, Billund is the second-largest airport in Denmark, bustling with hundreds of international flights coming in and out every day. The town wastes no time in communicating its chief benefactor and honorary citizen; in fact, the smiling, square head of the iconic yellow man greets you at every turn. Billund is home to the LEGO Group, one of the largest and most respected toy companies in the world.

At the company headquarters, giant red, yellow, and blue bricks are visible through the gloomy fog. The reception desk is, you guessed it, an enormous brick broken in half. And a life-size yellow LEGO man holds a computer welcome screen at the entrance. Considering the pride behind the LEGO brand on display across the campus, it is hard to imagine that only eight years ago, the iconic brick was lying on its deathbed. LEGO has undergone an astounding turnaround since 2004, driven, in part, by its commitment to a sensemaking practice.

In the 1930s, Danish carpenter Ole Kirk Christiansen started making tiny versions of his work projects—toy furniture and games. In 1947, he moved from wood to plastic, ultimately creating a full product line of toys. He named his company LEGO from the Danish leg godt, or “play well,” and, in 1958, his company patented its now-famous stud-and-tube coupling system, or the click-fit. An iconic children’s toy was born. The core patent remains unchanged even now, more than fifty years later.

But after decades of growth and innovation—in 2000, the company was the fifth-largest toy maker in the world—LEGO hit a major slump. In January 2004, it announced a huge deficit. It was, by its own accounts, bleeding cash to the tune of $1 million a day. Owner and CEO Kjeld Kirk Kristiansen, grandson of founder Ole Kirk Christiansen, was at the helm of a strategy to turn the company around. He stepped down and appointed Jørgen Vig Knudstorp, a former McKinsey consultant, as new CEO of the company.

Somehow, the company honored with the Best Toy of the Century award twice had completely lost touch with its core consumers. How did it happen? And how did LEGO come out of the fog and solve its own mystery?

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