“We are on a burning platform,” Lego’s CEO Jørgen Vig Knudstorp told colleagues. “We’re
running out of cash… [and] likely won’t survive”
But Lego’s CEO Jørgen Vig Knudstorp was able to create a ‘comeback story’ and achieved profits
of £660M, making it the number one toy company in Europe and Asia, and number three in
North America, where sales topped $1BN for the first time. From 2008 to 2010 its profits
quadrupled, outstripping Apple’s. Indeed, it has been called the Apple of toys: a profitgenerating, design-driven miracle built around premium, intuitive, covetable hardware that fans
cannot get enough.
2. Challenge
From its founding in 1932 until 1998, Lego had never posted a loss. By 2003 it was in big trouble.
Sales were down 30% year-on-year, and it was $800M in debt. An internal report revealed it had
not added anything of value to its portfolio for a decade.
“We are on a burning platform,” Lego’s CEO Jørgen Vig Knudstorp told colleagues. “We’re
running out of cash… [and] likely won’t survive”
But Lego’s CEO Jørgen Vig Knudstorp was able to create a ‘comeback story’ and achieved profits
of £660M, making it the number one toy company in Europe and Asia, and number three in
North America, where sales topped $1BN for the first time. From 2008 to 2010 its profits
quadrupled, outstripping Apple’s. Indeed, it has been called the Apple of toys: a profit-
generating, design-driven miracle built around premium, intuitive, covetable hardware that fans
cannot get enough of.
How did Knudstorp revive Lego?
3. In 2003
In 2003 Lego reported an operating loss of USD 228 Million due to:
• Supply Chain Challenges
• Too many SKUs
• Too may failed new launches
• Competition from less expensive blocks & bricks brands
• Competition from Xbox and other video games
• Dwindling hold on the main customer 8-12 years old boys
https://ctl.mit.edu/sites/ctl.mit.edu/files/attachments/MIT_CIS
Rwp407_TheLEGOGroup_AndersenRoss_0.pdf
4. In 2004
JVK becomes the new CEO:
• The first ever CEO from outside of family
• In 2016 he retired as CEO and became Chairman of Lego
• Now serves on Lego Board and Starbucks board
• Before becoming CEO of Lego he was Head of Strategy of
Lego for 3 years and was a McKinsey & Co consultant
before that
• Under his leadership Lego went from 600% increase in
turnover from 6.3 billion to 37.9 billion in 2016.
6. JVK’s Turnaround Strategy
Phase I - Fortify
• Product - Back to Basics (band-aid) – cutback the
number of SKUs and focus on the bricks & blocks
• Process - Supply-chain augmentation, fortification
and digitalization
• People - A core team of highly empowered -1s
who were in touch with him and each other every
day
7. JVK’s Turnaround Strategy
Phase II A. Innovate Brand
He involved the Lego Fans in new product development and new ideas:
• Reward opportunity
• Employment Opportunity
Phase II B. Innovate IT
• “we are a brand driven company but as much an IT driven company” -
JVK
• He involved external stakeholders in understanding what the digital
trends and next practices are - R&D, CRM, SCM, Manufacturing 4.0,
Insights..
8. JVK’s Turnaround Strategy
Phase III Transform
• Focus on toys for the girl child
• Focus on digital & online games
• Focus on digital content (YouTube Channel powered by
fans)
• Focus on hybrid toys (offline and online application)
• Focus on collaborations – Super Mario®, Disney & StarWars
• Focus on building content franchise (Lego Movie)
• Focus on new markets
• Focus on Digitalization & IIOT (Lego Platform)
9. Some facts about JVK that inspire
accountability
1. He had a proven track record as a consultant before Lego
2. He repeatedly followed-up with the board till he got the opportunity to make his recommendations
3. He had a habit of asking (too) many questions, he always says how else do you gain clarity and arrive at the
real concern. He is equally concerned about answering questions and not giving-up till he is sure he has
clarified.
4. Even when fighting the toughest fights for Lego, JVK did a second MBA (Harvard) and a course in Digital
Transformation from MIT.
5. He says we must work 16 hours a day but hopefully not on the same things repeatedly
6. His team often recalls proudly that even on the worst days JVK would say come to me with questions and
problems but not with a ‘No’ or don’t not come at all.
7. You do your work, let me do mine but lets make time to give each other help and suggestions all the time
![Challenge
From its founding in 1932 until 1998, Lego had never posted a loss. By 2003 it was in big trouble.
Sales were down 30% year-on-year, and it was $800M in debt. An internal report revealed it had
not added anything of value to its portfolio for a decade.
“We are on a burning platform,” Lego’s CEO Jørgen Vig Knudstorp told colleagues. “We’re
running out of cash… [and] likely won’t survive”
But Lego’s CEO Jørgen Vig Knudstorp was able to create a ‘comeback story’ and achieved profits
of £660M, making it the number one toy company in Europe and Asia, and number three in
North America, where sales topped $1BN for the first time. From 2008 to 2010 its profits
quadrupled, outstripping Apple’s. Indeed, it has been called the Apple of toys: a profit-
generating, design-driven miracle built around premium, intuitive, covetable hardware that fans
cannot get enough of.
How did Knudstorp revive Lego?](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)