Stellar Games: LEGO by Hui Min

LEGO

LEGO Group is a privately held company based in Billund, Denmark and also best known for the manufacture of LEGO-brand toys. This company has subsidiaries and branches throughout the world, and LEGO products are sold in more than 130 countries. LEGO^@ toys are universally recognized for their inventiveness, timelessness and durability. The highly successful company, founded by a carpenter name Ole Kirk Christiansen in 1932, remains a family-owned business today.

Founder: Ole Kirk Christiansen

Danish toymaker Ole Kirk Christiansen was born on 7^th April 1891 in the village of Filskov where located between the towns of Sonder Omme and Give in Central Jutland Denmark. As one of 10 children in a poor family, when he age of six, he was tending the family’s livestock. At age 14, he was apprenticed to his older brother, Kristian Bonde Christiansen, who was a carpenter. Ole returned to Billund in year 1916 and with his savings from working abroad in Norway, he bought the local woodworking shop where he began his carpentry work and later his toy business. Around 1916 he married Kirstine Sörensen and they had 4 children: Johannes (b.1917), Karl Georg (1919), Godtfred (8 Jul 1920) and Gerhardt (1926). Kirstine died in 1932and two years later he married Sofie Jörgensen and they had a daughter, Ulla (1935). He died on 11st March, 1958 and his son inherited the company and turned it into a global powerhouse.

How the business started?

In year 1916, Ole Kirk Christiansen bought the local woodworking shop where he began his carpentry work and later his toy business. When he began making wooden toys, he had seven or eight employees and sold his wooden goods and toys to local farmers.

In 1932, hard times hit his little workshop. It was the depression. His wife had just died, leaving him a single father to his four sons. Business was slow and he was on the verge of bankruptcy. Ole decided to make a few wooden toys to help make ends meet. Soon his toys were his bestsellers. He decided to focus on making wooden toys full time. He called his toy company Lego.

Product / Company name

LEGO from the Danish words "leg godt", which means "play well". Coincidentally, it also means "I put together” or “I assemble” in Latin.

Business Philosophy

It is LEGO philosophy that “good play” enriches a child’s life – and its subsequent adulthood. With this in mind, the LEGO Group has developed and marketed a wide range of products, all founded on the same basic philosophy of learning and developing – through play.

Business Strategies

Product innovation drives growth in last two years

LEGO's product designers were the main reason behind its growth in 2009 and 2010. As a company, LEGO has traditionally focused on its home category – construction toys – where it has enjoyed dominant status for many years. While its share of the category remained steady, equally its growth prospects were limited by the growth of the category as a whole.

So LEGO got more aggressive, and in the last couple of years expanded its established building blocks concept into different categories. In 2009, LEGO Games were introduced, featuring buildable board games, which gained high enough consumer appreciation to make LEGO the third largest player in the category globally, garnering a share of 6% in Games and Puzzles. The new line was well received in most of the key geographies, taking a significant portion of the market.

Similarly in 2010, LEGO released Minifigures which quickly became a hit, and took the company into the pocket money segment. A coincidence or result of careful planning, the line appealed to cash-strapped consumers in the post-recession environment.

Combating age compression

Another key aspect of LEGO's strategy has been its successful partnership with a number of developers to release LEGO branded video games. While cooperation between traditional-and video game companies is not new in the industry (Hasbro partners with Electronic Arts to release electronic versions of its games), LEGO is the most prolific and arguably the most successful in this area. Over 40 LEGO branded titles have come out since 1997.

Video games provide an effective defence against the trend of age compression trend in toys. Children, especially boys, are likely to move into video games at an earlier age nowadays, and the first game they choose is more likely to be something they are already familiar with from the traditional arena. LEGO's games are primarily aimed at this younger demographic. Video games also extend the lifecycle of licenses – and help LEGO find game studios to develop its games, as these studios may not have existing relationships with either Star Wars or Pirates of the Caribbean licensors. The most recent addition has been LEGO Universe – a massively online multiplayer game role playing game (MMORPG).

Key to Success

Open Innovation
- Accepting external input and also allow other company to use its ideas and technologies.
- Lego built its success on open and collaborative relationship with its consumers.
- Business model: Turning Users Into Product Developers
- Example: Lego MIndstorm

Lego bricks that can be programmed with sensor to allow consumers to create moveable Lego robots as well as design.
Once Lego launched its Mindstorms, within three weeks, more than one thousand advanced web users, found a way to hack the software that accompanied the construction toy and made many unauthorized changes thus introducing new functions.
With the new ideas, the hacker were able to improve the original product which resulted in the sale of more units.
Lego originally did not target customers over the age of 18 however with the new and improved product; they sold a lot of units to customer over the age of 18.

- Lego was able to turn around its bankruptcy by using the creativity, imagination and intelligence of others.

-Re-inventing operations while maintaining "Only the best is good enough" culture by:

Seeking out and responding to insight
Failing Faster
Getting back to their roots as a culture of innovation

The ups & downs of the entrepreneur business

During the bleak years of the 1930s, Christiansen sold his simple wooden toys door to door in the tiny farming community of Billund, Denmark, where he lived. After facing near bankruptcy in 1932, Ole Kirk managed to survive by combining the production of his wooden toys with more mundane household implements such as ladders and milking stools.

After the turmoil of World War II and a disastrous fire that destroyed the toy factory in 1942, Ole Kirk Christiansen decided to rebuild his enterprise. A larger and more modern factory was constructed near the site of the old warehouse in Billund and the company was converted from a sole proprietorship to a private limited toy manufacturing company named Legetojsfabrikken LEGO Billund A/S (The LEGO Billund Toy Factory Ltd.).

However, the company has survived global depressions, a World War, the TV age and the digital age. It has survived the onslaught of American toy conglomerates, and later, cheap Pacific Rim imitators. It is still among the most popular toys for boys’ ages 7―14, and accounts for 3.6% of all toy purchases.

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Wednesday, 16 November 2011

LEGO by Hui Min