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Humble beginnings - The inspiring story of The LEGO Company

Written by Graham Mitchell | Jun 25, 2017 10:46:03 AM

The LEGO Company is a modern-day business success story. They are the largest toy manufacturer in the world and have manufactured a total of 500 billion LEGO blocks and over 4 billion mini-figures. They’ve stood the test of time, and even in 2017, the company is listed on Forbes as one of the world’s most valuable brands. LEGO’s road to success did not come without its challenges, however, and business owners can learn many invaluable lessons from their journey. These are some of the business lessons we’ve taken away from their story.

1. Be prepared for set-backs

Ole Kirk Christiansen founded a toy manufacturing company in 1934 that was to eventually become LEGO. But before this, the company started as a carpentry business.

Ole faced his first challenge when he had to retrench all of his carpentry workers due to difficult times. He decided to turn his attention to making wooden toys in order to support his wife and four children. During the early years of the toy business, a customer cancelled a massive order just before Christmas, leaving Ole in a difficult financial situation. To add to his woes, two fires destroyed the toy factory and Ole’s wife passed away leaving him to raise their four sons alone.

The Second World War compounded the toy-maker’s challenges. Despite all these setbacks though, Ole never gave up and shouldered his way through the difficult times.

The reality of running a business is that you will experience setbacks. Some of these setbacks may be severe and test your resolve to continue but LEGO’s subsequent success should encourage you to prevail despite the difficulties.

2. The owner must be prepared to sell

Twice in LEGO’s early history, the company faced cancellations of orders and a drop in sales. During these difficult times, Ole took to the pavements, meeting with clients and selling products to stay in business.

As a business-owner you are the number-one sales person. Too often, business owners are glued to their desks and either do not make the time or are just not prepared to do the selling. As the owner of a business you need to roll up your sleeves to make things happen when sales are down.

3. Talk to your customers

The idea of a system of play that evolved into the LEGO brick came about when Ole was chatting to a toy retailer whilst his son was on a ferry ride. The retailer’s insights into the toy market gave birth to the idea that became the LEGO system of play.

Business owners need to ask their customers for insight into what is happening in the market and how they can get better at serving their customers.

4. Never stop innovating

LEGO started out making wooden toys but they never stopped looking for new ideas to enhance their toys. The company evolved from making wooden toys to using plastic. LEGO created a play system using building blocks that eventually led to creating the LEGO brick. Mini-figures were added 20 years later. Soon themed products such as LEGO Star Wars were added to the collection that ensured the product remained popular.

Innovation is important to the survival and ultimate success of a company, so keep innovating. It took LEGO more than twenty years of continual innovation before they created the world-renowned Lego brick.

5. Instill a culture through storytelling

LEGO has a strong culture and this culture is kept alive through storytelling. The story that is still told at LEGO today is about Ole’s son who tried to save money by not giving the wooden toys a third coat of paint. Ole was angry when he heard this and made his son unpack all the finished toys and paint them with a third coat of paint. LEGO has always prided itself about the quality of its products.

Culture is best instilled in a business when the points of culture are shared through storytelling.

6. Manage risk

LEGO nearly went out of business twice when fires destroyed their factory. Two of our clients at GROW have experienced similar setbacks when their warehouses were burgled and all their stock stolen. To make matters worse, they discovered that they weren’t adequately insured. Other clients have had computers stolen, losing critical business information because they had not backed-up their data properly. In all of these situations the impact on our clients’ businesses was severe.
To avoid these type of challenges, ensure that you manage risk through adequate insurance and reliable off-site back-up for your company information.

LEGO’s challenges show that determination and focus are integral to business. Do you resonate with any of the business lessons behind LEGO’s journey to success? What else do you think contributes to long-term business growth and sustainability?

LEGO have published a fascinating, animated video, documenting their history – have a look at it below and consider what you can learn from their story as you build your own business:

 

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