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Lego: How it became the world’s most powerful brand

Jul 11, 2017

At a recent McQueenie Mulholland away day, we were asked to think about one brand that we’d love to work with – a fantasy client. Answers from our team were really varied, from Ecover to Land Rover and a good mix in-between, but one answer that stood out was from Sue McQueenie who would love to work with…Lego.

Why would somebody want to work with a business that is so well known and established?

Well, as we’ve been finding out, this hasn’t always been the case.

We often work with companies who are going through, or are thinking about going through a re-brand, or are diversifying their product range in some way. We’d probably ask them a number of questions to ascertain how much they know about the market that they have, and the new market that they’re hoping to move in to.

And from now on, we’ll also be likely to refer them to The Guardian article, How Lego clicked: the super brand that reinvented itself as seen in the paper on 4 June.

The article discusses that as recently as 2003, Lego, the internationally renowned Danish toy manufacturer was reporting a 30% loss year on year and was £800m in debt. Fast forward to 2015, and the company overtook Ferrari to become the world’s most powerful brand. So what happened between those years to change the fortune of Lego?

Consultant Vig Knudstorp was bought in to turn things around. According to the Guardian article:

“He slashed the inventory, halving the number of individual pieces Lego produces from 13,000 to 6,500 … He also encouraged interaction with Lego’s fans, something previously considered verboten”

So, rather than adding to its product portfolio, Lego started by taking things away, by simplifying it. And they also talked to their customers. They used the time to find out what worked and what didn’t.

This resulted in a clearer focus – on making the things that they knew they were good at, and that set them apart from other toy manufacturers. But they expanded this existing product range, to include ranges for girls, and for adults, instead of just those primarily aimed at boys. Another key success was partnering up with those who are also very good at what they do – an example being the films and TV programmes that grace screens worldwide on a daily basis.

The result? Lego has just announced the highest revenues in its 85-year-history. We’ll certainly be using them as one of the best examples of a company turnaround that we’ve come across and we hope they continue to do well for many years to come.