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Not every rebuild succeeds, but LEGO's did.

In 2003, the iconic Danish toymaker was losing $1 million daily. Sales had dropped 30% YOY. Debt had reached $800 million. The company that defined childhood for generations was months from bankruptcy.

By 2014, LEGO had overtaken Mattel to become the world's largest toy company by revenue. The turnaround didn't just save the business. It created a blueprint for how brands can refocus, rebuild, and scale.

LEGO is a clear example of what happens when companies strip complexity, return to core strengths, and build systems that support sustainable growth. That’s a critical lesson for B2B as B2C alike. 

Disconnected pieces

From its founding in 1932 until 1998, LEGO had never posted a loss. Then came the crisis.

Consultants rushed to LEGO's Danish headquarters with a diagnosis: The brick was obsolete. They pointed to Mattel's success with Fisher-Price, Barbie, Hot Wheels, and Matchbox. The message was clear. Diversify or die.

LEGO took their advice. It spent hundreds of millions to open theme parks. It built its own video games division from scratch, including the largest installation of Silicon Graphics supercomputers in northern Europe, despite having no experience in the field. Jewelry for girls. LEGO-branded clothing. The expansion continued.

Star Wars and Harry Potter sets sold well, but only when new movies were released. Otherwise, they sat on shelves. By 2003, sales had dropped 30% year-over-year. Debt reached $800 million. Operating margins collapsed. An internal report revealed the company hadn't added real value to its portfolio in a decade.

LEGO was producing more and innovating less.

Back to the brick

In 2004, Jørgen Vig Knudstorp became CEO. A former McKinsey consultant and the first CEO from outside the founding family, Knudstorp delivered a blunt assessment: The company was on a burning platform, running out of cash, and unlikely to survive.

His turnaround strategy started with focus. LEGO would return to what it did better than anyone else: the interlocking brick system and the creative play it enabled.

Knudstorp cut product lines, reduced brick varieties, sold the Legoland theme parks, and laid off 1,000 employees. The moves were painful but necessary.

More importantly, Knudstorp implemented financial discipline the company had lacked. Finance Director Jesper Ovesen introduced a Consumer Product Profitability system to track which products and markets were actually generating returns. For the first time, LEGO could see where it made and lost money.

The data revealed hard truths. Many new products weren't profitable. Classic themes like City, Castle, and Space still resonated with core customers. The company had abandoned its strengths to chase trends it didn't understand.

It was time to go back to the brick.

Building the digital bridge

Refocusing on core products didn't mean ignoring digital transformation. It meant integrating technology in ways that enhanced rather than replaced the physical experience.

LEGO expanded its IT team from 600 to more than 1,800 professionals. The company developed retail automation tools, integrated cloud technology for high-traffic digital experiences, and launched video games that connected to physical sets.

The LEGO Movie in 2014 grossed more than $460 million globally and earned a 96% approval rating on Rotten Tomatoes, matching Oscar nominees 12 Years a Slave and Gravity. But the film succeeded because it reinforced what made LEGO special: imagination, creativity, and the joy of building.

Digital became a complement, not a substitute.

LEGO also launched the IDEAS platform in 2008, allowing fans to submit designs and vote on which should become official sets. The initiative crowdsourced product development, deepened customer engagement, and generated bestsellers like the NASA Apollo Saturn V.

The platform proved that LEGO's community wasn't just buying products. They were co-creating the brand.

Results that stack 

By 2006, operating margins had recovered to 15.6%. Revenue grew 85% over the next five years while the overall toy market grew just 11%.

In 2014, LEGO overtook Mattel to become the world's largest toy maker by revenue. In 2015, it surpassed Ferrari to become the world's most powerful brand according to Brand Finance. By 2023, annual revenue reached nearly $10 billion. The company now holds an 11.3% global toy market share.

From 2008 to 2010, profits quadrupled, outpacing even Apple's growth during the same period. The company has been called the Apple of toys: design-driven, premium, and built around hardware that fans can't get enough of.

This was the result of disciplined execution: cutting complexity, investing in core capabilities, and building systems that scaled.

What holds it all together

LEGO's recovery wasn't built on isolated fixes. The company created an integrated system where each decision reinforced the others.

Cutting brick varieties simplified manufacturing, which freed capital for digital platforms. Those platforms deepened customer relationships, which fed the IDEAS community. Community engagement generated product designs that became bestsellers, which strengthened brand loyalty. Stronger brand loyalty justified premium pricing, which funded better retail experiences. Better retail experiences attracted new customers into the community.

The system worked because brand, operations, product development, and customer-focused functions stopped operating separately. They became components of a single engine where improvements in one area created momentum in others. When LEGO launched a movie, it drove brick sales. When brick sales grew, it justified more media investment. When media succeeded, it brought new customers to physical stores and digital platforms.

This is how Growth Engines function. Every touchpoint connects to and amplifies the others, creating compounding returns that isolated tactics never achieve.

Built to go the distance

The Jordan brand still drives billions in annual revenue through retro releases and new models. That’s what happens when the brand becomes part of your infrastructure instead of an isolated campaign.

In energy and industrial markets, the same principle holds. When brand, marketing, sales, service, and execution operate together, the outcome compounds over time. Fragmented activity creates noise. Integrated systems create lift.

Reebok and Nike both built great shoes. Only one built a framework that could keep running when conditions changed. Growth is not an accident. It’s engineered.

Lessons from LEGO

For B2B firms navigating market pressure, LEGO's turnaround reveals a pattern that matters. When consultants recommend diversification to hedge against disruption, the advice sounds rational. Spread risk. Enter adjacencies. Build optionality.

That approach can work sometimes. But in other cases—Lego included—that path can stymie growth. The company survived by doing the opposite: identifying what it did better than anyone else and engineering every function to support that core.

The challenge isn't choosing between focus and growth. The challenge is building systems where focus creates growth. LEGO didn't just return to making bricks. The company built a framework where community, digital, retail, and manufacturing worked together to make the brick experience more valuable, more engaging, and more defensible.

The turnaround has been called the greatest in corporate history. David Robertson's book Brick by Brick has become required reading for business schools, with companies like Sony, Adidas, and Boeing studying the approach.

At HexaGroup, we help B2B firms build these integrated systems, where brand, marketing, sales, and service work in lockstep to create a sustainable competitive advantage. Because the companies that thrive through disruption don't diversify their way out. They engineer their way through.

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