危 wēi  danger

Lego, still a privately held Danish company, has been producing the plastic bricks that made it famous since 1949. The company name Lego was coined by the founder, Ole Kirk Christiansen from the Danish phrase leg godt, which means ‘play well’.  And the company is certainly helping many play well, with its colourful bricks sold in over 130 countries.  Everyone on earth has, on average, 52 Lego bricks.  However, at the end of the 1990’s the company was in sharp decline – computer games were eroding traditional toy sales, its range targeting girls had bombed and its theme parks were unprofitable.  On the face of it, Lego was likely to fade away.

机 jī opportunity

Lego’s leaders had different ideas.  They began their firm’s reinvention by talking to toy retailers who told them clearly not to mess with Lego’s brand or its core products.  Accordingly, the company’s staff were tasked with introducing new products targeted at its core customer, boys of 5 to 9 years and were given a performance-based pay scheme to align incentives.  This approach yielded a stream of highly successful new ranges, including movie sets, e.g. Star Wars and Harry Potter, Lego Factory and Mindstorms products.  Mindstorms Lego sets are robotic, fully programmable and can even be controlled with mobile phones, clearly positioning Lego as a complement to computer games.  Lego Factory enables users to design, share and purchase their own kits – the downloadable software makes it simple to create virtual 3-D models which are then automatically priced.  With more than 30,000 kits uploaded so far there is a burgeoning community of Lego fanatics sharing their creations.  Through these new ranges, Lego capitalized on emerging trends and ensured that it remains relevant to another generation of kids.  This has been reflected in its financial performance, even as the overall toy market declines Lego’s revenues and profits are climbing, up 19% and 30% respectively in 2008.

how about…

• Beginning any process of change by clearly understanding your customers’ perceptions of your challenge?
• Harnessing potential disruptions to make your offer more relevant, partnering where necessary?
• Empowering your fanatical customers to develop your offer with, or even for you?

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