Brick by Brick: Inside Lego

Short but packed with valuable data and wisdom, I watched Bloomberg’s Brick by Brick: Inside Lego (available on Netflix) three times this week. Why three times? For one, I absolutely love lego. After the second time, I thought I should record some of the finer points for later reference.

Below you’ll find my notes from the video.

Lego stats

The Lego Movie

  • 55 billion Lego elements were made in 2013
  • 105K pieces made every minute
  • More than 600B since 1932
  • 80 pieces per every human being
  • At 500 million tires/year, the largest tire maker in the world
  • Each second, 10 sets are sold
  • Christmas season, 34 sets per second are sold
  • 60% of sales in the 9 weeks leading up of Christmas
  • 5 billion total hours/year of children playing with Lego
  • over 50 video games and counting
  • 1 motion picture

Limitless creativity meets intense logic

What is lego?

“Lego is a material that’s endlessly creative and at the same time, extremely logical. Everything fits in a digital way of 0s and 1s. It is the only material in the world that acts as if it was glued, yet you can easily take it apart.”
– Jørgen Vig Knudstorp, CEO

Combinations of the same colour bricks:

2x4 Lego brick

  • Two 2×4 bricks can be combined in 24 different ways
  • Three 2×4 bricks can be combined in 1,060 different combinations
  • Six 2×4 bricks can be combined in 915,103,765 combinations

Lego history


Origins in Denmark, founder Ole Kirk Christiansen a carpenter

Name origin: “Leg godt” meaning “Play well”

“Lego is meant to doing good for the children of the world. That’s the aspiration of the owner.”
-Neils Lunde” Author of “The Lego Miracle

In 1960, an intense fire in the wood-working factory provided an opportunity to rethink and reimagine Lego. It was at this time that they made the decision to stop the production of wooden toys and any plastics that were not part of a brick system. From the 60s forward, Lego focused all their efforts in the concentration of building brick components.

Lego troubles: Everything is [not] awesome


By early 2000s Lego was in trouble. In 2004, the Danish toy maker was hemorrhaging a million dollars a day. It had lost touch with its customers and was on the brink of collapse. (MarketWatch)

“It had lost its way in terms of understanding its own self identity. What is Lego uniquely about?”
– Jørgen Vig Knudstorp, CEO

Lego had expanded in areas they had no idea about. They were approaching going bust. In 2004, Morgan Stanley sent three executives that met with owner, suggesting that Lego should be sold to Morgan Stanlely

Lego did not understand its core business. Because Lego did not understand its core business, Lego underestimated its own strengths.”
-Neils Lunde” Author of “The Lego Miracle

What went wrong, according to Jørgen

  • Didn’t understand how and where it was making money
  • Not disciplined in operational process
  • Poor match between forecast and manufacturing
  • Limited sharing of data within organization
  • Didn’t understand where to invest first
  • Didn’t understand which product lines and which customers were profitable
  • It had lost its way in terms of understanding its own self identity. What is Lego uniquely about?

Lego rebuilds


Jorgen Vig Knudstorp, CEO of Lego

Game changing CEO: Jørgen Vig Knudstorp

  • 36 years old when appointed CEO (2001)
  • 4th CEO of company, first one out of the family
  • 2 masters degrees (Economics & Business Administration)
  • Previously worked for McKinsey (global consulting)

Sales fell 20% in 2004, only to grow 5% the following year. At the time, the company did not seek growth.

“Growth is like sugar coating on your problems. You don’t see them so well when you’re not growing. When you’re not growing, you really need to drive productivity. That allowed us a lot of time to re-base, and re-focus the business. We tried to focus on only doing the things where we had a unique advantage, and thankfully, Lego as a brand and the core product, the brick and the building system is very unique. So we had that base of consumers that were very loyal. And then we said, ‘how can we make products for them?’ We don’t know how big that business is going to be, but we’re going to go back to that core.
So what we did was, we started with that fundamental question: Why do you exist?
– Jorgen Vig Knudtstorp, CEO


  • By 2013, Lego became the world’s most profitable toy company
  • Net income at a percentage of sales: Lego at 24%, Mattel at 14%, Hasbro at 7%
  • Created the ‘construction toys’ category
  • Lego is currently the fastest growing toy maker on the planet
  • In the past few years, it has had a string of hit products thanks to its intense market research. It’s been filling in the gaps in its offer
“The last seven or eight years we have had double digit growth every year. You know, that’s mind boggling.”
– Kristian Reimer Hauge, Lego

Jørgen’s favourite quote

“We shall not cease from exploration and the end of all our exploring will be to arrive where we began and to know the place for the first time”
– Poem by TS Elliot

Final thoughts


Many organizations suffer from lack of identity. Understanding who you are, developing your brand vision, discovering your core values, and having a mission that is in sync with the soul of your organization, are sometimes disregarded as being important to busines.

While Lego has built a large empire since its humble beginnings in 1932, the last twenty twenty-five years or so have been a time of soul-searching and re-identification. Knudstorp lists out a series of business flaws from operations to lack of market research. What I found most interesting is that he, along with many analysts and authors, state that Lego’s greatest downfall was it’s loss of identity. The company operated as if it didn’t know itself anymore.