THE HISTORY OF THE LEGO COMPANY


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Lego has been delighting its fans with toys and rainbow stories for 80+ years. And their start was not so fun. But they persevered and withstood the biggest financial crises. Read more about Lego’s success story below. We reveal the secrets of how she has been winning the hearts and minds of children since 1958!

Creation of the Lego Company

the beginning of Lego history and the Christiansen family

Lego founder Ole Kirk Christiansen saw the world in a poor Danish family, so he did not like to talk about the “bright time” at all. After receiving a basic education, he decided to become a carpenter, and worked tirelessly in a factory. But in the 1930s, the Great Depression hit the world. Ole lost his job.

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The trouble does not go alone. Soon his wife dies. The young man was left alone with four children. I had to survive, get by with odd jobs and save terribly. During this period, Kirk Christiansen discovered his entrepreneurial spirit.

He realized that the best work must be done by yourself. And he created a small-scale production for the manufacture and sale of ironing boards (such as Tefal IB9100EO, but made of wood), ladders, wooden toys like tractors and ducks. Ole was assisted by his eldest 12-year-old son Gottfried.

Their first toys for sale were cars and wooden furniture, which were of good quality. There was little competition, so the business took off quickly. The staff increased to as many as 7 people, and Ole Kirk thought about specializing only in the manufacture of toys. Already in 1934, the nameless workshop had the name LEGO. In Danish, “Leg Godt” means “fun game” or “play well”.

Gotfield Christiansen and his father at the LEGO factory

Goth became a support for his father, they continued to develop the family business. Although initially Ole wanted to give him a higher education, so that a graduate would start working in a prestigious company. But the war interrupted all plans. In 1940, Germany occupied Denmark, and Goth had to choose among a few universities. He did not want to learn from the Germans, so he returned to the factory.

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In 1942, the Lego factory burned down. Despite the difficulties and hardships, the Christiansen family decided to start everything from scratch.

From wooden toys to robotics

It was in the 42nd that they decide to concentrate on selling toys, abandoning the rest of the range that they had to work with before. This decision was so successful that in just a few years the company grew. Already 40 people worked at the new production.

  1. In 1946, Lego began to sell sets of bricks with pictures.
  2. And in 1947 Ole decided to start assembling plastic toys.

The molding machine suppliers sent them the machine along with several samples of plastic products. Among them are hollow Kiddicraft bricks by Hillary Page. Ole appreciated the idea of ​​the constructor and decided to improve it. This is how the world got the famous Lego bricks!

children's Lego constructors

According to another version, the Christiansens family bought an injection molding machine in 1946 and officially bought out the patent for “plastic bricks”. The original version of the “bricks” was not liked, it was remade and began to be promoted. Therefore, in the future, Page’s authorship was no longer mentioned in their developments.

Lego began to focus on its main feature: parts from different designers could connect with each other.

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By the beginning of the 1950s, there were 50 workers in the workshop. Production grew, Lego made more than 200 types of toys from different materials. The annual revenue of the company reached 500 thousand kroons. It would seem, live and rejoice.

But fate has dealt a blow to Ole Kirk Christiansen again. In 1951, he suffered a stroke, after which he was never able to fully get on his feet. Despite the difficulties, the family business continued to develop.

  1. In the early 50s, the company created the first promotional film about its products.
  2. In 1954, they managed to patent their name: since that time, the combination of LEGO appears on all their toys.

In the same year, Gottfried went on a business trip to England, which became crucial for the further development of the brand. At a business meeting, Goth struck up a conversation with a purchasing agent. He complained that all manufacturers have the same approach to toys.

During the conversation, the young entrepreneur thought about creating a game system that would develop the imagination and allow you to build different worlds from one set. It was after this meeting that he wrote down the four LEGO principles:

  1. Variety of use cases.
  2. Structural strength.
  3. Availability for everyone.
  4. Ease of distribution.

Important: Lego is based on the belief that toys should be interesting for all ages – whether it’s a 5-year-old boy or his 70-year-old grandmother.

Realizing the potential of his idea, Gottfried began to tailor the production of products to these criteria. Just a few years later, the world saw the famous LEGO sets, with which you could create a house and a mini-car that looked like real ones. The company constantly developed the designers, supplementing the range with thematic sets. This made it possible to create a city with a unique character.

modern lego sets

Lineups have appeared:

  • intergalactic metropolis;
  • small cowboy town;
  • minecraft field;
  • the universe of the Friends series, etc.

However, initially the market did not accept such ideas. In 1955, Gottfried went to the Nuremberg Toy Fair with his LEGO System creation, where he failed miserably.

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All the media and representatives of large retailers spoke extremely negatively about the prospects for the future genius of the toy world. However, he did not despair, and in 1958 he developed the classic LEGO mount. Yes, the very thing that is separated only by teeth or pliers.

Around this time, Goth was able to convince his father to reduce the range of wooden toys, since everyone loved plastic. And he did not fail. Despite the fact that at first LEGO did not “enter” in their homeland, these designers fell in love abroad, and they do not let go until today!

Ole Christiansen, founder of the company, died in 1958. Lego was headed by the already familiar Gottfried, who decided to focus on the “brick” gaming system. Family friends believed that his thorough approach to construction was wrong, and constantly discouraged. They argued that focusing on a new direction would make the company unprofitable. But Gottfried did not listen to anyone and continued to innovate in the world of games.

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In 1960, LEGO suffered another fire. Most of all went to the shop of wooden toys. As a result, it was decided not to restore it. So now old Lego toys sell for hundreds or even thousands of dollars. In rare photographs from that time, children can be seen building toy garden furniture out of them in their backyards.

In 1969, the legendary DUPLO line appeared. Its details were larger than usual, so they were suitable for the development of babies. This series caused a sensation among parents of young children. The set was easily connected with “adult” parts, so it was suitable for games with different designers.

  children play with lego

In the mid-60s, the Legoland amusement park opened in Billund. According to conservative estimates, it attracted up to 2 million guests a year. At the time, these were unrealistic numbers! It was a source of profit and advertising. Around that time, the company began to turn into a real empire. Well, where there are empires, there are expansions.

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In the early 70s, LEGO began to conquer the North American market. Gottfried decided to take a chance: he sold the license for the production of designers to Samsonite. Previously, “daughters” were usually used for this. Samsonite opened 3 factories and developed a sales system. However, despite good results (about 5 million sets per year), they could not reach the same turnover as in Europe. So we decided to get out of the toy business.

Around the same time, the company began a serious crisis. The first wave of popularity faded away, and Gottfried no longer had bold ideas. Then something happened that no one expected. His second child, Kjell Christiansen, brought new ideas. Toys have become similar to those we know.

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Lego has slightly changed their concept, adding electric trains and various gas stations to the lines. The characters were also changed: there were just workers, but there were whole families and large groups of friends.

Kjell reduced the models, which allowed them to be placed in toy vehicles. And in 1977, Lego received a wave of sales. The number of thematic series has increased. Fans of “space”, “medieval” and themes should thank Kjell!

Lego Castle and Lego Space line

In the 70s, the company began to work in another direction – it ventured to make kits for teenagers. In LEGO Technic, it was possible to assemble entire models of cars and other equipment. Then the developments of this line began to be used for Lego-based robotics. Such toys have wireless data transmission up to several tens or even hundreds of meters – everything, as in full-fledged smart technology like fitness trackers.

In 1979, Kjell became CEO of LEGO. He reorganized the production line: some sets were transformed into his own brands. DUPLO received a separate series. The figurines also have facial expressions and movable arms. Thanks to this, Lego broke all sales records again.

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However, in the 80s, new troubles appeared – competitors copied products. LEGO’s brick technology patent was expiring (then copyright was valid for up to 50 years). The market was flooded with thousands of replicas. Some unfortunate producers did not hesitate to call their masterpieces like “Le Squares Go Play”. They openly used the promoted name.

In 1984, Tyco Toys and Mega Blocks began to use the technology developed by LEGO. But instead of thoughtlessly copying, they carefully integrated them into their toys. The subsequent lawsuit between Lego and Tyco was additional advertising for the latter – after the “dispute” Tyco took over 10% of the toy market in the United States.

LEGO is not cheap. It is not surprising, during the development of the company had no competitors. The high price was justified by the quality and the right to be out of competition. It was possible to buy first-class toys from only one manufacturer. But in the 80s, they had to lower the prices of goods in order to survive.

: Lego Space and Lego Castle lines

Therefore, Lego decided to take not only quality, but also quantity. It was in the 80s that many ideas were improved: the Space, Castle and Technic series were expanded. At the same time, the first toys appeared that could be controlled from a PC – this was the first step towards the introduction of robots.

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In 1988, LEGO held the first building championship. Children under 17 from any country can take part in them. Subsequently, championships will become a tradition in the company. So Lego can show their social responsibility and at the same time advertise products.

In 1989, the LEGO Pirates set appeared, where the characters did not smile. In the future, it is this meticulous approach to the idea that will become part of the LEGO philosophy. And it was a new success. So enchanting that it noticeably relaxed the company’s management. Because Lego had a hard time going through the crisis in the 90s.

In addition, in the same 1988, the term of the patent for the uniqueness of the attachment form ended. And there were more than enough “virtues” copying the concept of the brand. The company suffered losses. Even the creation of designers using new technologies did not save. Debt sucked into LEGO.

History of the crisis and bankruptcy of Lego

Incomes began to decline. People bought fewer building blocks because of the ubiquity of home computers and games for them. For the sake of objectivity, we note that not only computer technology is to blame. The policy of the company bosses was wrong. They thought that they would always be at the top of popularity.

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Movie Addiction

Contracts with Star Wars and Harry Potter brought in a lot of money, but hurt the brand’s philosophy. Lego in 1998 fell into a major crisis, for which they paid with the work of thousands of employees. Managers began to think about new ways to earn money, contracts with movie universes seemed like a lifesaver.

kids playing lego

And, indeed, financially, Lego won. The next 3-4 years were the most profitable for toy magnates. Therefore, the management of LEGO decided to take the bull by the horns and scribble themed sets.

Such a policy went against the preferences of the main target audience. Lego fans are accustomed to realistic cities that whole families play with. Instead of regular Lego customers, they bought several themed sets and went home. If the Lego bosses hadn’t caught on in time, it would have been the beginning of the end.

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Such a huge volume of single (which is very bad for business) transactions created an illusion of false stability for management. Already at the beginning of the 2000s, they forgot about the crisis that they had barely survived two years earlier.

The bosses of the LEGO GROUP began investing in dubious side projects that were driving a new crisis. The business miraculously survived – thanks to regular customers.

Projects on the side – in search of individuality

There were mega-successful Lego Movies series and Lego Worlds games with figurines, houses, planes, airports and other merchandise elements. And before there was no such freedom, the consumer audience did not accept innovations.

Lego experiments

Lego began to experiment in the late 80s: they sold clothes, watches and other accessories. Such exhibits go under the hammer at auctions for hundreds of dollars, and then it was difficult to even recoup the costs. In the 90s, the company tried to design a Lego Chess computer game. But the company’s fans didn’t like it.

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The most problematic project was the line of Belville designers for girls. Lego has invested a lot of money and effort in popularizing these minifigures, but they have only suffered losses. It happened because the target audience were junior high school boys.

The company decided to switch to girls. And the girls are not such lovers of design. The fact that Lego Disney Princess is now breaking sales records is the merit of marketers and PR people. Learned to interest, offer and sell. Thank them for this.

When Lego realized their failed mistake, they decided to study and implement the business structure of their biggest competitors, Mattel and Hasbro. But even that didn’t help. The only sustainable solution seemed to them to be to reduce the production of original kits, which were popular.

Zero stagnation

In the 2000s, the entire toy market stagnated. But it was expressed most clearly in Lego products. Literally in 2003 alone, they lost $211 million. And their debts amounted to a record $732 million. An unimaginable amount at that time!

kids playing lego

Despite the hopelessness, the company developed the MindStorms kit to create full-fledged mini-robots. Innovations were not pulled out of the debt hole, although they cost a lot of money. But Lego robots sunk into the soul of tech geeks.

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An interesting fact: a student from the USA hacked the dialing software and made it publicly available. Thanks to this, fans of the new LEGO have been able to create custom control platforms. Instead of suing, the company decided to meet the geeks halfway and began posting part of the new developments on its website.

The media wrote that Lego has a plan to sell the business. However, the situation was saved by the appointment of a new CEO. For the first time in history, a person NOT from the founder’s family headed the company. They became Jorgen Vig Knudstorp, who literally saved the company.

The rescue was painful.

  • He reduced the bloated staff by reducing the number of employees from 8,000 to 3,500.
  • Reduced the range from 13 thousand to 6.5 thousand sets, leaving only the most popular.
  • Jorgen noticeably “rejuvenated” the company: he fired elderly employees and hired young people. Thanks to this rotation, LEGOs are once again the daredevils who were famous for their audacity.
  • The CEO cut production in the US and Switzerland, moving factories to cheaper Mexico and Eastern Europe.
  • He sold the unprofitable Legoland and offices in the US, Korea and Australia. In return, the company began to rent modest areas.

And the most important decision – Jorgen Vig Knudstorp decided to return the original prototype to the company. Resumed sales of universal designers of the Lego Classic type. And to strengthen the connection with buyers, he created crowdsourcing competitions, where the authors of the best toys will receive 1% of the proceeds from the sale of their idea.

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  Jørgen Vig Knudstorp and Lego production

In 2007, Lego was able to return to revenues of $280 million. Yes, they were no longer “monsters of the industry” with incredible export volumes, as in the 80s. But their development again became stable. The mortgage crisis of 2008-2009 was not acutely felt by the company.

It was in 2007 that the world saw the iconic Lego Architecture line. Everyone was able to build famous sights at home. At the same time, a line for boys of primary school age, Ninjago, was being developed. And in order to attract generation Z to new toys, the company created an entire animated series and even several video games based on the “Ninja story”. Unlike the 90s, this time the series and games went instantly! Until now, millions of little boys are asking: “Buy NinjaGo!”.

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Tenth – retail care

Until the mid-tenths, Lego was again “on horseback.” In 2016, the company’s turnover, compared to 2008, increased by almost 600%. Their annual profit was $ 520 million, which exceeded the income of Hasbro and Mattel combined. But Lego wanted to sell to them, remember?

  Offline Lego stores

In 2014 they started promoting their sets through movie theater cartoons. This idea proved so popular that hundreds of parody shows and cartoons began to be made on it.

However, in 2017 there was a new crisis: for the year, Lego’s revenue decreased by 5% (to $ 2.4 billion). Consequently, costs had to be reduced again. The company laid off 8% of its workers during the year. This is 1400 people.

In 2018, we survived, although there was no talk of overcoming the crisis. Profit grew by 4% and sales by 3%. The ingenious idea – to move into retail – brought a new trend in development. This is exactly what Lego started doing in 2019.

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Prior to this, the company was not engaged in retail sales and “delivery to the door.” Goods were sold only in the largest toy stores. After looking at the mono-brand stores of companies such as Xiaomi, Apple, Miniso, etc., the management realized that there was not enough personal store – where only their products would be sold.

Directly in stores, they will be able to invent their own game universes, collect them from different blocks, and show the “pluses” of goods.
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The history of the creation and development of Lego teaches that the main thing in life is the ability to understand your mistakes and focus on your strengths. This is the only way to give odds to competitors and show “how steel is tempered”. No one knows what the continuation of the Lego universe will be like. One thing is clear – this company will be studied as an example of resilience, because it develops under the motto: “Never give up!”.

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