How LEGO almost went BANKRUPT

At some point, every kid in their lives has touched a Lego. However, not many people are aware that Lego was near bankruptcy in the close to the 20th century. How exactly did this happen?

At this point, Lego had been a hallmark of many childhoods since its founding. Then, several factors intertwined and led to its decline.

Misuse of diversification method: After success, they expanded their products too much and introduced hundreds of new products all at once. This did not reflect well on the consumer and it spread their resources too thin and diluted their brand’s identity.

Operational inefficiency: Because of these new products, the process of creating these Lego bricks took much longer as they were of different shapes and sizes. This limited the company in terms of gaining economies of scale.

Failure of new products: The ventures LEGO Jack Stone and Galidor resulted in unsold stock and financial losses.

This led to Lego being on the verge of bankruptcy.

Well, with all of this, how was Lego able to turn around and get to its position today?

Back to basics: After the failure of the diversification, Lego went back to basics and went to the original recipe for success they had in the earlier years with the original “brick”.

Communication with the community: Lego started to engage with the community and even involved fans in the design process.

Partnerships: This time lego partnered with various outlets such as Star Wars, Harry Potter, Marvel, and DC superheroes which improved their market position.

These changes allowed Lego to bounce back and go back to their old ways of success. LEGO’s journey from near-bankruptcy to global dominance serves as a testament to the power of innovation