From Near-Bankruptcy to Market Leadership: LEGO’s Success is All about Childs’ Play
By Denise Harrison, Senior Consultant
What would you do if you were faced with potential bankruptcy, with a product line that is over half a century old? Product line extension? Expansion into new lines of business? Sell the company? LEGO was facing this dilemma in 2001. While the first step was to return profitability to the core by streamlining the business; this was not enough to position LEGO to succeed in the future. Did the company need to better understand retail distribution? No, it was a better understanding of how children play that really turned the company around. How do children really play with the bricks? What do they like doing? What is missing? Learning the answers to these questions allowed LEGO to surpass Mattel in size, even though Mattel has a much wider range of products. The answers to the following questions helped LEGO reconnect with its user base and their parents:
- Is the way that children play different in North America, Europe and Asia? By understanding the cultural differences, LEGO was better able to position itself to meeting the requirements of these different end markets. Now Asia is one of its fastest growing markets.
- Do girls play differently and use LEGOS differently than boys? Tapping into the female market was another key to LEGO growth. LEGO Friends became a play theme that was more interesting to girls. But do girls like to build? Yes, building is one of the key attributes of this play theme’s success.
- What about adults? Do they use LEGO blocks? Apparently yes, who said LEGOs are just for kids? The popularity of LEGO Architecture is one of the success stories in the adult segment.
Historically, LEGO was primarily focused on boys 5-11; but by better understanding this segment and how play occurs, they were able to introduce a number of new products and product themes. And when the team truly understood what little girls were looking for and then expanded applications to adults the company really took off.
What is next for LEGO?
Over the last few decades, video games and the overall digital experience have grown to be powerful disrupters to the traditional toy and game market, and now, LEGO must truly understand how the LEGO brand fits with the digital experience. It is currently working with ways to build structures, take a picture of the structure and have it become part of a digital game. This tailors the video game experience to the individual user as the user adds unique structure to the video experience. How LEGO integrates the building experience with the digital experience will be the next challenge the company will face.
What does this mean for me?
As you develop your strategy, it is important that you truly understand your end users and how they use the products and services that you provide. Understanding the environment and what really works and what does not work will enable you to develop a broader and deeper understanding of the application and what you can do to make it easier, better, faster, more intuitive for the user. In addition, understanding how segments that are not currently targeted could use the product is another avenue for growth. Are there unmet needs in your market because no one has thought through how different users might use your product? How often do you go to trade shows in unrelated markets to come up with thoughts of new applications for your product? What about new trends? Do you face a disruptive trend similar to LEGO facing video games as an alternative for how your customers will spend their money? Do you hide your head in the sand, or look for ways to integrate the new product or service into the experience for which your customers are looking?
Understanding your users and future users and the user experience will be important to your long term success. Get out and spend time with customers while they are using your products and keep an open mind. This knowledge will add to the information that you will have to make good strategic decisions.
Interested in learning how to integrate information into your strategic planning process to come up with better results? Please call or email me, Denise Harrison at 910-763-5194 or firstname.lastname@example.org.
For more information about how to enhance your team’s strategic planning process please listen to our webinar: Why My Strategic Planning Is Not Working?
Denise Harrison is a senior consultant for the Center for Simplified Strategic Planning, Inc. She can be reached at email@example.com.
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