The podcast discusses the history of LEGO, their pivot from wood to plastic, and their use of franchising and IP to turn things around. They also compare LEGO's revenue to companies like Nintendo and Fortnite, explore the ownership structure of a LEGO investment office, and highlight LEGO's impressive growth and smart retail strategy. The discussion includes topics such as licensing and manufacturing costs, as well as LEGO's strategic initiatives like focusing on sustainability and merging digital and physical experiences.
Lego's strategic shift towards creating themed sets and implementing licensing deals with popular brands helped them overcome market challenges and become the largest toy maker in the world.
Lego's recognition of adult fans, known as AFOLs, and their emphasis on IP partnerships and storytelling tapped into a new market and sparked enthusiasm among collectors, solidifying their success.
Lego's success can be attributed to their ability to create products that appeal to both children and adults, as well as their strategic collaborations with popular franchises and brands.
Deep dives
The Birth of Lego: From Wooden Toys to Plastic Bricks
Lego started as a wooden toy company in 1932, but eventually pivoted to plastic bricks in the 1940s. The introduction of the Lego brick, with its innovative locking mechanism, became a game-changer for the company. They focused on creating a system of play, with themes and sets that could work together. Over time, they expanded their product line and implemented licensing deals with popular brands like Star Wars and Harry Potter, which further expanded their reach and fan base. They also embraced storytelling and collectibles, creating characters and stories that resonated with fans. This strategic shift helped Lego overcome challenges in the market and propelled them to become the largest toy maker in the world.
The Challenges and Innovations During the 90s
In the 1990s, Lego faced various challenges, including increased competition from digital entertainment and declining birth rates. They attempted product and brand diversification, but these strategies did not result in the desired growth. Lego experienced their first financial loss in 1998, leading to a reassessment of their approach. They realized the importance of their core product, the Lego brick, and began partnering with popular IPs to create themed sets. This move capitalized on the brand's strength and the emotional connection fans had with these IPs. They also started producing their own stories and characters, expanding beyond just building blocks. The success of these efforts was evident in the release of the Lego Movie, which became a blockbuster and reinforced the value of storytelling and brand partnerships.
The Rise of Adult Fans and New Value Propositions
One significant shift for Lego was recognizing the presence of adult fans, known as AFOLs (Adult Fans of Lego). This opened up new markets and opportunities for the company. Lego's focus on IP partnerships and storytelling attracted adult fans and allowed them to tap into their nostalgic connection with the brand. Additionally, Lego became a popular product for collectors, with some sets gaining significant value over time. This combination of adult fans and collectors brought a new level of fandom and enthusiasm to the brand. Lego's strategic evolution enabled them to overcome challenges, expand their reach, and solidify their position as a beloved and successful toy company.
Lego's Success Factors: Product Innovation and Licensing
Lego's success can be attributed to two key factors. First, their ability to create products that appeal to both children and adults. By recognizing that adults are also users and targeting them with products tailored to their interests, such as Beatles-themed sets, Lego has expanded its customer base. Second, licensing partnerships have played a significant role in Lego's success. By collaborating with popular franchises and brands, Lego has been able to create highly sought-after sets that generate increased demand and enhance their product offerings.
Engaging and Building a Community of Die-Hard Lego Fans
Lego's success is not just about sales, but also about building a passionate community. Through initiatives like the reality TV show Lego Masters and support for adult fans of Lego with YouTube channels and co-creation opportunities, Lego has fostered a strong bond with its fan base. By actively interacting with their fans, Lego has strengthened its brand loyalty and created a community that goes beyond just buying their products. This focus on community building has not only helped revive the company after a period of near bankruptcy, but also positioned Lego as a pioneer in open innovation and crowdsourcing.
Prepare to embark on an exciting journey about the magic of building – both in terms of creative design and prosperous business strategy.
We're about to unravel the colorful story of LEGO, where imagination and innovation interlock seamlessly to create an empire that's been stacking up success, one brick at a time! It's a brand where business philosophy and product design are as interconnected as the bricks it's so famous for.
So join Alen, Franz, and Tom as they explore how this iconic brand has masterfully constructed its path to global acclaim, including...
How a pivot from wood to plastic (and from traditional toys to bricks) transformed the direction of a small Danish toy brand
Why a chance encounter on a business boat trip would lead to a critical strategic decision in Lego's history
Lego's 1990s slump and how it turned things around through franchising, IP, and the mature play market
The surprising margins Lego maintains in the declining toy market
Whether you're a lifelong LEGO enthusiast or intrigued by the story of turning creativity into commerce, this episode shows how every great idea starts with a solid foundation and a few strategic building blocks!
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