Podcast on Lego

Have followed Lego for years.  Both as a creative toy, and as a means to model more generally.

How Lego Can Rebuild Its Business

Wharton's David Robertson discusses what went wrong at Lego.

Danish toymaker Lego recently surprised its industry watchers when it announced plans to trim its 18,200-strong workforce by about 8% to shed about 1,400 jobs after seeing revenue drop for the first time in 13 years. Lego said revenue fell by 5% to Danish krone 14.9 billion (US$2.4 billion) in the first half of 2017 compared to the same period last year as sales weakened in mature markets such as the U.S. and parts of Europe. The drop is a shock for the toymaker, whose annual revenue nearly quintupled between 2007 and 2016 to DKK 37.9 billion (US$6 billion). But the warning signs were clear when revenue growth slowed from 25% in 2015 to 6% in 2016.

Lego said it would take steps to simplify operations that have become increasingly complex as a result of double-digit growth. “We have added complexity into the organization which now makes it harder for us to grow further,” said Lego chairman Jorgen Vig Knudstorp. “We have now pressed the reset-button for the entire group.” Lego will build a “smaller and less complex” organization to simplify its business model and reach more children. In some markets, Lego will clean up its inventories across its entire value chain. .... "