Review: Brick by Brick

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Brick by Brick, How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry is not, as you can probably tell from the title, like any other LEGO book in the bookstore. I've been sent a copy by the publishers to review.

It's written by David C. Robertson who's a professor at a Swiss business school, who was named the 'LEGO Professor' in 2008 and as such had access to LEGO management, partners and customers, and Bill Breen who's written several other books on business management.

The book's target audience is senior executives and entrepreneurs who, David believes, can learn a lot from the the company's past mistakes and successes, particularly how it turned itself around from its first loss in 1998 to become the largest toy company in the world today by thinking and innovating 'inside the box' rather than out of it.

The book is in two parts. In the first part, David explains how after the losses of 1998, Poul Ploughmann (formerly of B&O) was brought in to run the company and sought to innovate in new areas to stimulate growth using the 'seven truths of innovation'. Chapter 2 explains what was done, which on the face of it, all seemed reasonable. Then chapter three explains why it all went horribly wrong, leading the company into further decline and near bankruptcy in the early 2000s.

Part two documents the turnaround, which started when Yorgen Vig Knudstorp replaced Poul as CEO in 2004 and how, once the company was on a stable footing once more, it could again look to innovate, but in a different way.

Further chapters cover how Bionicle not only saved the company financially but also how the processes used to continually churn out new products every six months were adopted throughout the company; how LEGO Mindstorms opened the way for working with, and embracing, the LEGO community; why LEGO Universe failed; the birth of LEGO Games and how Ninjago came into being.

This book is very thorough, well researched and full of interesting insights about both the events themselves and how LEGO as a company operates. There are a lot of quotes from the people involved, except unsurprisingly, Ploughmann, who had left long before the author became involved with the company.

It is therefore a fascinating read, particularly if, like me, you experienced and saw for yourself much of what is written about at the time it happened.

As I'm not a senior executive or entrepreneur I can't really judge whether the book succeeds in its aim of providing lessons that can be taken away and applied within other organisations, but I do think that executives, or anyone else for that matter -- particularly those who have an interest in LEGO or the LEGO company -- will find it very interesting and thought-provoking.

The book is published by Random House and has a different cover (right) in the USA.

It can be purchased from Amazon:

21 comments on this article

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By in Denmark,

It's a good read, and very well researched. I'm about two thirds through it at the moment. But many of the insights seem obvious. Well certainly in hindsight. Does anyone really need a business book to learn such lessons as:
"Don't release a new product unless there's a reasonable chance it might make money"
"Don't kill a well-known respected brand name and replace it with something no-one's ever heard of" (Duplo, BTW, not Lego),
"Try not to release s**t products", and
"Do a bit of market research sometimes"

Part One could be subtitled "How to destroy your business by blindly following the advice of management consultants and business academics."
Part Two could be called "How to save your business by actually doing what you were good at in the first place and ignoring the above"

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By in United Kingdom,

Yes, that sums it up nicely...

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By in United States,

Sounds like an excellent read, I'll have to pick it up sometime.

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By in United States,

It's a great book. I knew the broad outlines of the stories he tells but his access makes for lots of detail that I'd never seen elsewhere. In particular, he makes clear how completely doomed LEGO Universe was right from the start. I knew it was doomed when it came out but I didn't know how "baked in" that was (and I say this in sorrow not from gloating -- my kids still miss the game).

It should also quiet the Bionicle haters -- no Bionicle, no independent revitalized LEGO.

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By in United Kingdom,

Yes, exactly what I thought. I've seen Mads Nipper give a presentation about the recovery so knew the basics about how they, er, went 'back to basics', but there is much more depth in this book than had been revealed before.

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By in United Kingdom,

So what's the upshot of the story? That endless licensing deals are what makes the most money? 'Cause that what I see when I look at the Lego website.

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By in United Kingdom,

Hmm... I'm not sure i'd take TLG as an example of how to make business decisions, as I think the above posts from people who have read the book kinda' proves. If all that can be gleaned from the book are the most obvious vanilla statements... then it shows up TLG as a company lacking empathy for their own product and customers who buy it.... almost like they're aliens to the human condition, and it's an ongoing experiment trying to figure out why anything happens the way it does.
I have always been left with the impression that TLG stumbles blindly into failures and successes and 'gropes in the dark' trying to figure out why each case was. I mean, they never seem to have the slightest clue what's going to happen... I was hoping this book might dispel that belief, but sounds like it reinforces it. They (TLG) can't see a disaster coming no matter how obvious it is to everyone else, and equally when success strikes they don't seem to know why.

On a side note: this would explain their phenomenal lack of empathy for licensed lines, how people can watch the films (pirates, lord of rings), and consistently fail to see the key hook-ups for the most exciting sets is staggering, or what makes those licenses unique - and hence, worth paying for. LotR Battlepacks, BALROG. Flying Dutchman.

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By in United Kingdom,

^^ The upshot is probably that innovation is good, but innovate in spaces that you're already good at, and which your customers expect you to focus on, and in a controlled manner. If that includes popular licenses, then so be it.

LEGO Games is a good example of this, of taking the core LEGO experience and applying it to a new product line, while remaining 'true to the brick'.

On the flip side, Jack Stone: dumbing down the LEGO experience to cater for a perceived new audience (kids who don't like building) alienated existing builders and failed to attract new ones because, well, they don't like building so they still didn't buy it.

It's easy to see why Mads Nipper says that this JS fire engine http://www.brickset.com/detail/?Set=4605-1 is the worse model LEGO has ever made: 28 pieces, awful figures and it looks nothing like a fire engine...

^ in the Ploughmann era, "TLG as a company lacking empathy for their own product and customers who buy it" was exactly the case but I believe they've turned the corner now. As for "fail[ing] to see the key hook-ups" in licensed properties, I suspect that's partly because they have to start work on the models way in advance of the movie actually being completed.

I've heard that The Lone Ranger movie doesn't even feature a stage coach, but presumably LEGO thought it might, or maybe it ended up on the cutting-room floor.

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By in Canada,

Sounds interesting.

Of course, we all know the real reason I'm posting a comment is to point out your not-so-glaring error in the first sentence. You said "not" twice, once on either side of your comma clause thingy.

:p

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By in United States,

^^

"It's easy to see why Mads Nipper says that this JS fire engine http://www.brickset.com/detail/?Set=4605-1 is the worse model LEGO has ever made: 28 pieces, awful figures and it looks nothing like a fire engine..."

Not quite the worst. If you use a little imagination, it passes. :-P That's what LEGO is about, right? Imagination? :-P

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By in Australia,

I read the book whilst stuck in transit, and to be honest the book is fundamentally flawed.

It fails to cover probably one of the biggest and key parts of the issues LEGO had, when it outsourced its production to Flextronics.
I'm guessing that it is an intentional omission given there is no way that you could possibly miss such a key part of the companies immediate history.

The flextronics deal was interesting on so many levels given it was a near fatal mistake bigger than Galidor and Jack stone combined, and it was such a very important part of learning from mistakes, especially so since the current management made the mistake of doing it , yet were allowed to opportunity to fix their mistake, learn from it and move forward, which was a very brave and courageous and ultimately brilliant decision.

5/10 from me.

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By in United States,

They probably omitted flextronics because it wasn't during the 1998-2004 era most of the book is about.

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By in New Zealand,

Available in New Zealand. I have just bought a copy from Whitcoulls for $NZ 37.99. Looking forward to reading it.

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By in United States,

Having just read all the "SDCC" comments, this is such a breath of fresh air. :o)

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By in Canada,

My dark age was between 1998-2004, partially because of the lack of good sets coming out in that time, and other interests ;). If I see it up here in Canada I'll have to check it out. Still working my way through A Million Little Bricks however.

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By in United States,

I have finished reading the book a few days ago. Got it from my local library. It's an interesting read. For all the book's enthousiasm for TLG and what a creative company it is now, one thing comes through loud and clear: LEGO is a business and it's there to make money. Sure, sometimes it loses money, but not intentionally. And its creativity is not that different from creativity of investment bankers: "let's dream up a new product that will make us lots of money," "let's dream up a new way of selling products" etc.

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By in United Kingdom,

Re: the omission of the Flextronics outsourcing, I asked David about this and this is his reply:

"We didn't talk about the Flextronics outsourcing and insourcing because I wanted to write a book about innovation, not the broader turnaround. (Similarly, we didn't cover the botched ERP implementation during the Plougmann years, which certainly hurt their performance.) My initial take on the Flextronics mess was the same as one of your readers – I thought it was one of the biggest post-2004 mistakes that LEGO made (the others: Ben 10, LEGO Universe, and letting Tom Stone and Jonathan Smith take the games business to TT Games).

"But here's why I don't believe the Flextronics decision was as bad as your reader believes. Say you're LEGO in 2004 and you have to modernize your factories and reduce your cost structure. You don't have the capital to open up a new factory in a low-labour cost country, so you have to outsource so that your partner can pay the upfront cost and amortize it over the following years. You convince Flextronics to put up the funds for a new Czech factory in return for a long-term production contract. Not what you'd prefer to do, but with the Danish Kronor getting ever stronger against the dollar (which it was in 2004), you've got to address the cost issue, and your customers have told you that you absolutely can't reduce quality. What other choices do you have? It's easy to criticize the decision in retrospect, but I'm not sure I'd do different if I was LEGO's management in 2004.

"What LEGO didn't anticipate was the coordination problems that happen with Flextronics. It's hard to decouple the production of pieces from the assembly of those pieces into sets when an external company is driving the piece production. It's only after LEGO brought production back in-house (around 2007) that their sales and profits started to skyrocket. That's because it's only when they control the entire production and assembly operation can they manage their piece inventory in a way that lets them take pieces produced for a poorly-selling set and put them into a high-selling set. That lets them keep more fast-selling stock on store shelves.

"By the way, I no longer think that outsourcing LEGO Star Wars, LEGO Batman, etc. to TT Games was a mistake either."

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By in United Kingdom,

@Huw This is probably too late to mention now, I forgot all about this review... (sorry). First thanks for responding to a couple of my points. Just one issue I have though, with regard to 'key moments of license properties' is just that point you mention about advance knowledge of movie content - many of the movies (lotr, Potc) were extremely popular long before the license deal was struck. They simply had no excuse for not understanding what the exciting elements are, or lacking detail.

It will be shameful if LotR never gets a Balrog (a unique lotr creation), Winged Nazgul, or Sauron (movie version), or continues to fail to release battlepacks to support the epic nature of the sweeping battles, especially given the entire trilogy IS a strung out war.

Similarly, how they could take on PotC and not see the desire in fans and potential for the Flying Dutchman, or Kraken attack, Skeleton crews, or again battlepacks of Soldiers vs Pirates, i sometimes get the feeling that the designers for license sets have no love or desire for the licenses, almost as though they resent the lack of creative input they will have, that they perhaps enjoy when working on pet projects.

But it seems so very odd, to chase licenses as part of the overall business plan, only to then pay such little attention to them, so they perform badly. Its like they just want another star wars, but expect it to just magically happen with no thought or plan of how to execute the license to full effect.

There's probably a job there somewhere - such as license project lead - that is missing from the equation.

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By in Switzerland,

Some very insightful comments, thanks a lot. I will probably buy it, but would really like to read more about the big picture now, too.

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By in United States,

Sounds like a very interesting read. Thanks for the review!

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