How Lego Reinvented Themselves Using Strategies of Digital Transformation

By Amin Naserpour

In 2003, Lego was teetering on the brink of bankruptcy. They knew that if they wanted to stay in business, they were going to have to make big changes.

1) They committed to drastic changes

Lego had never been a company afraid of taking risks, and this is likely why they were able to reinvent themselves so successfully. They gave themselves an honest appraisal, and made sweeping changes throughout the organization, shaking up everything from internal processes to their product lines.

2) They analyzed the data

Data is one of the most important aspects of digital transformation. Decisions based on objective data are nearly always better than decisions based purely on subjective views or impulses. There was a period when leaders at Lego were blaming the popularity of video games for their lost revenue, but this was a misdiagnosis.

When they looked at the data, they could see that the vast majority of their sales came from their non-electronic line of products. The blocks weren’t the problem. This same analytical approach was applied to their supply chains. A great product doesn’t mean anything if producing it is losing money for the company.

3) They worked with their competition

Working with competitors is vital to digital transformation. The digital age has changed the ways that consumers interact with brands. Many brands have harnessed the spirit of collaboration that the ubiquity of social media has brought about, and pooled their resources to launch creative ventures together. 

Lego partnered with other franchisees in the toy industry. Brands like Harry Potter, Star Wars, and Batman were competition for toy sales, but Lego made their competition their collaborators, and licensed characters from these franchises to create exciting new Lego toy sets.

Lego is a toy company. Their target market is children. Children also like to watch movies. This is where the iconic Lego movie franchise came from. This is also an area where they looked at the data, seeing that movie franchises pull in consistently high revenues, but they also stuck to their brand’s visions. This brings me to the last step in Lego’s successful turnaround.

5) They had a solid vision for what their brand was about

When Lego ran into financial trouble, and they started bringing in outside consultants to help them identify where they’d gone wrong, they found that a big part of the problem was that they’d strayed too far from their own philosophy. From the very beginning, Lego’s vision had been all about helping kids play. When they remembered to be true to this philosophy, everything else fell into place.

Lego is a disruptor and an innovator.