Rebuilding a brand: Learnings from LEGO

Imagine a company that sells 600,000 items a day, is used for five billion hours a year, and was named toy of the century. Twice. Now imagine this same company crumbling five times -- three times literally (all due to fires), twice figuratively -- and having to be rebuilt with a different strategy each time.

Many of today's companies also require reinvention as they grapple with market effects and consumer trends caused by Covid-19.

For proof that it's possible, they should look no further than LEGO, who has thrown out the instruction booklet and successfully reconstructed itself again and again.

But while its iconic block-sets are simple enough to get building (easy-to-follow instructions; inspiring picture on the box) and stoke just the right amount of creativity, LEGO was constructed under much more frustrating, even inflammatory circumstances: 1916: LEGO's founder, Ole Kirk Christiansen, purchased a woodworking shop in a small town in Denmark to construct furniture. 1924 : Just as he was looking to expand, the shop caught fire and burned down.

Determined to keep going, he rebuilt a larger shop. 1929 : The Great Depression forced Christiansen to switch gears to more inexpensive goods like wooden toys. They didn't sell well at first and he slid into bankruptcy.

Eventually they gained a national following, thanks to his focus on quality and craftsmanship. 1942 : Germany's WWII occupation of Denmark turned violent; Christiansen's shop was caught in conflict and burned down once again. When he rebuilt, he also had to consider new materials, thanks to war-related manufacturing equipment shortages, and he turned to plastic.

1942-1960: Christiansen and his son, Godtfred, evolved the product to become what we know today as 'LEGO': brick systems that can interlock with one another, creating endless combinations that form a system of play. 1960 : LEGO's workshop sustained its third fire (tip: test your smoke alarms), burning all its remaining wood toy inventory. LEGO rebuilt again and committed entirely to plastic toys.

For the next forty years, LEGO continued to grow, improving their core product line, adding figures and theme sets, even building an airport and theme park in its small-town HQ in Billund, Denmark.

The company grew eight-fold in just 15 years. The toy world was their oyster. Until...

2003 : The company found itself £600m in debt. They were facing pressure for multiple reasons, including: share-stealing from new disrupters, copycat entrants hindering differentiation and LEGO diluting its own brand.
With the popularization of computers and electronic games, LEGO was simply losing its share of the toy market.

As their EVP of marketing, Mads Nipper said, "Play trends changed, and we failed to change." Big retailers were critical to LEGO sales, but they often placed the toymaker's kits alongside cheaper copycat brands, causing LEGOs to get lost in the shuffle. In attempts to self-resuscitate, LEGO chased after numerous new product lines that didn't pan out.

Massive toy franchises like Hasbro and Mattel operate with the strategy of producing as many cheap product lines as possible, with the goal of driving sales widely. LEGO attempted to copy that strategy, cranking out numerous product lines. However, they were too far afield from LEGO's core offering and consumers recognized that, so the non-LEGOs simply didn't sell.

Facing insolvency, LEGO had to start behaving and rebuilding, once again, to stay intact. And rebuild they did. In 2020, LEGO was the top-ranked toy brand in the world, with a brand value of approximately £6.5 billion.

Rebuilding a brand: Learnings from LEGO

What lit the good kind of fire under LEGO's turnaround?

Recentring around their brand foundation

LEGO's emphasis on play unites both their offerings (interchangeable, interlocking pieces) and their promise (joy of building, pride of creation).

In the past, they lost sight of this positioning in their attempt to keep up with other toy brands and trends; once they reoriented themselves around it they began to regain traction:

  • LEGOLAND theme parks -- literal hubs of play -- opened in California, Florida, Malaysia, Dubai, the UK, Japan, and Germany.
  • The company partnered with Disney, Marvel, and DC Comics to create its popular Star Wars and superhero-themed playsets, giving customers an opportunity to play within these worlds through LEGO.
  • The LEGO Movie franchise and The LEGO Batman Movie raised the profiles of its licensed properties while celebrating the brand's core message around their products inspiring play.
Rebuilding a brand: Learnings from LEGO

Diversified their audience

While sticking to their positioning was good for the brand, they also needed to evolve their thinking elsewhere: their target audience.

Since its inception, LEGO intentionally focused on creating toys for children. Yet there was a growing faction of adults who loved LEGO, even forming meetup groups around them. The company's execs initially chose to ignore them.

But after marketing and product design budgets were slashed during the downturn, they decided to reopen their minds and arms to this adult audience, dubbed AFOLs (adult fans of LEGOs). It was a gamechanger for their brand.

  • AFOLs can now submit and vote on suggestions via LEGO Ideas -- a crowdsourced platform that collects proposals for new LEGO theme sets like The Golden Girls or Ghostbusters. Numerous LEGO sets have been produced from these suggestions.
  • In 2007, LEGO paired up with Chicago-based architect Adam Reed Tucker, who had been constructing iconic buildings out of LEGO bricks.

    This endeavor later became a new product line, LEGO Architecture. These were cleverly targeted at a more adult-dominated demographic, and consequently sold at a premium price.

  • As of late, LEGO has evolved their marketing strategy towards stressed out adults who have used LEGO sets as a form of meditative entertainment during the pandemic.
Rebuilding a brand: Learnings from LEGO

Products based on deep research and prototypes

You don't repeat as toy of the century by just tossing out concepts and hoping they work. LEGO studied, ideated, prototyped, tested, tested again and then still worked to make it even better.

  • LEGO developed Future Lab, which brought together their best designers from around the world into a top-secret R&D team.

    Their core task: to discover what was "obviously LEGO" but hadn't been created yet.

  • Whereas they once went all-in on new products, the Lab creates working prototypes to test and then release to the market in small quantities. This encourages innovation and bigger thinking within the organization but removes the fear of jeopardizing the core business.
  • They also place a big focus on ethnographic research -- studying kids' play styles in great detail and using that data to base product innovation. The product line LEGO Friends is designed specifically for how girls tend to play with the bricks: focusing on freeform role-playing vs. strong narratives of their male counterparts.
Rebuilding a brand: Learnings from LEGO

LEGO has made a business out of building and rebuilding.

Considering that the pandemic has blazed through many business strategies, many industries are now feeling the heat to rethink, and even rebuild, the way they operate.

If you're finding yourself amongst the ashes, then get inspired from LEGO's mindset and ask yourself and your team these questions:

  • What is the positioning or North Star of our brand (reminder: LEGO's is 'philosophy of play'), and is that what we're truly selling?
  • Do we know what the functional and emotional benefits of our brand are?
  • Are there other audiences we haven't considered that would benefit from both the functional and emotional benefits of our brand?
  • Are our tactics also bringing to life the essence of our product?
  • In what ways can we iterate quickly and efficiently to test new tactics?

Now go pick up the pieces (because stepping on them really hurts) and start rebuilding.

Sadia Ali is a Senior Strategy Manager at Heartbeat, the marketing agency for Healthcare Challenger Brands and a proud member of the Publicis Health network.