The LEGO Miracle
If you went up to any child in America and asked them if they liked LEGOs, chances are they’d say yes. LEGOs are a toy that allows a child to express their creativity, both by building whatever they think of or role-playing with designed sets. The reusability aspect of the pieces allows people to always have a use for them, even after the set has been built.
The fact is, this world renowned company started as just a normal Danish toy company, but over time became one of the biggest toy companies in the world.
Ole Kirk Kristiansen, the creator of the company, was a master carpenter who created products such as ironing boards, step ladders, stools, and most importantly wooden toys. He created the company in 1932 with the help of his 12 year old son and future owner of the company, Godtfred. For the first few years, it continued to be a small company, eventually having 7 employees and 42 different toys in 1936. They continued to expand their product line, adding items such as “The LEGO Duck” and “Numskull Jack.” The company was using a vertical integration strategy, producing all of their parts in one small LEGO factory. The place didn’t last too long, as it burned down in 1942. It was then that Kristiansen realized that the company needed to focus primarily on toy making, which is what they have done since then.
The company continued producing toys, finally moving on to plastic. They purchased a top-of-the-line plastic injection molding machine, which allowed the mass production of plastic toys such as balls or board games. The machine cost DKK 30,000, which would be about $68,000 in today’s money. It was a lot of money, but it gave LEGO the opportunity to create their most famous product: the LEGO Automatic Binding Brick. Though it was never patented, it was added to the 200 other plastic and wooden toys and sold exclusively in Denmark. With only 50 employees at the time, Ole Kirk Kristiansen had his eyes set on expansion.
Ole Kirk Kristiansen eventually did expand, building a new plant in 1952. With a much larger budget, the company built the DKK 350,000 plant that would allow increased production of both plastic and wooden toys. In 1954, LEGO starts its dominance of the toy market by patenting the newly-named LEGO brick. The groundbreaking part is the development of the LEGO system, which allowed LEGO parts from completely different sets to be used together.
This gave LEGO one of the greatest competitive advantages in the history of toys, which is what allows companies to become so big. The lineup at the time came to include 28 different sets, 8 different vehicles, and many extra parts. They started exporting these toys, which allowed more people to buy them and join the consumer base. The exporting eventually got to the point to where the first foreign sales company was established in Germany. People from around the world were starting to get to know LEGO, and business was booming.
1958 was the start of a new era for LEGO, as Ole Kirk Kristiansen passed away and left his son, Godtfred, the company. Though this seems like a bad year for LEGO, it was actually a great year due to the patenting of the new stud-and-tube-coupling principle. This concept made the models much more stable, as well as giving them the design they’ve kept up until now. Communication started becoming easier as well, when LEGO bought their first photocopier and telex machine.
As the plastic bricks became more and more popular, the wooden toys started becoming obsolete. Rather than discontinuing the products like most modern-day companies world do, LEGO instead started marketing all “non-brick” toys under the brand BILOfix. As efficiency of production increased, a single operator had the ability to operate two machines at once. LEGO also continued expanding by creating new foreign sales companies around Europe in places such as Britain, Belgium, France, and Sweden.
LEGO’s production of wooden toys would soon come to an end, as the factory would soon burn down (how ironic) in 1960 due to a lightning strike. The company decided to focus solely on their expanding collection of LEGO sets, which was now over 50. As they continued growing, they wanted to keep following the vertical integration method and keep the manufacturing process all to themselves. To help out with this, LEGO created their own airline company in the same town they were created in. This allowed LEGO to start exporting to America, one of the biggest markets in the world.
Now that LEGO had a solid consumer base, they started making small and efficient changes. One of these was the switch to ABS plastic, which was more durable, non toxic, and overall higher quality compared to the previously used plastic. A second change to the company was the addition of instruction manuals, which were brief booklets of images that showed how to assemble a set. This made the construction process much easier to follow and more efficient. Another change, and perhaps the most important change, was better communication with consumers. LEGO started reaching out to their customers to see what they liked and didn’t like, which led to better products such as LEGO train sets. Not many companies did this, and it gave LEGO an advantage when it came to consumer happiness.
As an attempt to keep providing customers with things they like, they attempted to get in another market kids love: amusement parks. LEGOLAND Billund was created, and was a huge success. The colorful aesthetic of LEGO bricks gave a neat concept or an amusement park, where many of the decorations consist of large scale LEGO projects or giant LEGO bricks. As a massive success, the park welcomed 3,000 visitors on the first day and 625,000 in the first season.
LEGOLAND is still a massive hit today, with 8 current facilities and at least 3 more planned for the next 5 years. Along with the success of LEGOLAND came a growth in the whole company, which brought up the need for a new logo. Every good company has a great logo, as people think of the logo whenever you say the name. LEGO’s iconic logo is a red block with white text surrounded black and yellow borders. The unique font is LEGO exclusive, and everybody remembers it.
When any company tries to expand, their main aim is to expand their audience. LEGO has done this in many ways, on of which being the creation of LEGO DUPLO. DUPLO is a larger version of typical LEGO blocks, and allows kids to play with them. The new type of bricks made it to where parents did not have to worry about kids swallowing the toy, and it was much easier for the kids to build and construct. Now kids of all ages, and even adults, could enjoy the toy.
LEGOs were so popular that a 1980 study showed that 70% of Western European families with at least one kid under the age of 14 had some sort of LEGOs in their household. LEGO was slowly taking over the toy industry, making their way into the homes of most families worldwide. For most of the 80s and 90s, LEGO continued it’s dramatic growth and kept expanding the line of products.
LEGO’s period of massive growth didn’t last forever, as they faced their first deficit in 1998. The advancement in technology was mostly to blame, as kids started playing with video games instead of with toys. This led to a period of recession, which would soon be recovered. As most companies would do, LEGO got their head in the game by creating their own video and computer games. Some of these included LEGO Racers and LEGO Bionicles, two popular games among kids.
This situation ended up leading LEGO to a whole new market, which is still big today with the popularity of electronics. LEGO eventually got into the board game business too, making many games based around building with friends. Another market LEGO entered was the movie market, which has really been successful in the past few years. One of LEGO’s biggest hits was The LEGO Movie, earning over $470,000,000 at the box office. LEGO has continued to make more movies, such as the LEGO Batman Movie and the LEGO Ninjago Movie. These movies are another way LEGO has managed to take kid’s interest, and will continue to for years to come.
LEGO has slowly taken over practically every market of children’s interests, from board games to book bags. Practically every kid (or adult) has loved LEGO’s products, despite their age, gender, or race. They have a great business model, doing most everything by themselves and transporting or producing products worldwide. The different themes allow many types of ways to play, as well as a surplus of parts that can be used to construct whatever the mind can think of. LEGO is mainly such a great toy because it allows kids to think and play freely, which is something that each generation loses more and more over time.