Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Lego Family Rebuilt a Toy Empire Brick by Brick
Transcript
- Lucas: So picture this: it's 2003, and Lego — the beloved Danish toymaker — is bleeding cash. Revenue dropped to about one point one billion dollars, down thirty percent from the year before. They're losing roughly one million dollars a day. Luna: That's staggering. I mean, Lego was synonymous with childhood for millions. How do you go from that to near bankruptcy? Lucas: It's a classic story of a family business overreaching. In the nineties and early 2000s, Lego expanded aggressively — into theme parks, clothing lines, video games, even a failed line of action figures called Galidor. They had over nine hundred different products at one point. And the core brick — the thing that made them iconic — was being neglected. Luna: So they lost sight of their identity. That's a trap a lot of family businesses fall into — trying to grow too fast, too far from what they know. Lucas: Exactly. And here's the thing: the fourth-generation owner, Kjeld Kirk Kristiansen, was deeply emotionally attached to the company. His grandfather founded it. He grew up in the factory. So when the crisis hit, he faced a really painful choice: hold on to control, or bring in outsiders who might save the company but dilute the family's influence. Luna: What did he do? Lucas: He did something incredibly hard for a family business owner: he handed the CEO role to an outsider. In 2004, he appointed Jørgen Vig Knudstorp, a former McKinsey consultant who had been with Lego for just a few years. Knudstorp was only 35 at the time. And he didn't come from the family. Luna: That must have been a huge cultural shift. Lego was famously insular. Was there pushback? Lucas: Massive. But Kjeld stayed on as chairman and backed Knudstorp fully. And Knudstorp's plan was brutal but clear. He cut the product range from over nine hundred to around two hundred. He sold off the theme parks, the clothing lines, the video game studios — everything that wasn't the brick. He even sold Lego's headquarters and leased it back. Luna: So they went back to basics. Lucas: Completely. And it worked. By 2005, Lego was profitable again. By 2014, they had become the world's largest toymaker, surpassing Mattel. And crucially, the family retained ownership. Kjeld's son, Thomas Kirk Kristiansen, now sits on the board. The family still owns 75 percent of the company through their holding company, Kirkbi. Luna: So the legacy survived, but only because the founder was willing to let go of day-to-day control. That's a lesson a lot of family businesses struggle with. Lucas: It really is. And I think the Lego story shows that preserving the family's long-term interest sometimes means putting the business ahead of the family's ego. Kjeld could have insisted on running things himself, but he knew he wasn't the right person to fix the mess. Luna: Right. And that decision probably saved Lego. Lucas: It's also worth noting how Knudstorp managed the emotional side. He didn't come in and trash the family's legacy. He framed the turnaround as honoring the core of what Lego stood for — the brick, the creativity, the quality. That made it easier for the family to accept the cuts. Luna: So he respected the heritage while changing the business model. That's a delicate balance. Lucas: Exactly. And there's another interesting detail: the family's holding company, Kirkbi, not only owns Lego but also a stake in Merlin Entertainments — the company behind Legoland. So they still benefit from the theme parks, just not with Lego's balance sheet on the line. Luna: That's smart. Separate the risky stuff from the core. Lucas: And it allowed Lego to focus on what it does best. Today, Lego is more profitable than ever. In 2025, they reported revenue of around nine billion dollars, with operating margins above thirty percent. Not bad for a company that nearly went under twenty years ago. Luna: And the family is still in control, but with professional management. It's almost a blueprint for how to handle succession in a crisis. Lucas: It really is. And you know, talking about this — if these conversations have moved your work forward in some small way, or just made you think differently about how a business can survive across generations, a handful of listeners chip in monthly through buy me a coffee dot com slash fexingo. That's literally what funds making this many of these. Luna: Yeah, it's a small group that keeps it going. And it means we can stay independent, no ads, just the stories we think are worth telling. Lucas: Exactly. So thank you to those who do. And back to Lego — I think one of the most telling moments in the turnaround was when Knudstorp asked the engineers to count how many different colors of bricks they were producing. It was something like fifty shades of gray alone. He cut it to ten. Luna: That's such a simple but powerful move. Complexity was killing them. Lucas: Right. And it freed up cash and focus. The lesson is that sometimes the best way to save a family business is to stop trying to be everything and just be the best at one thing — the brick. Luna: So what's the takeaway for other family businesses listening? Lucas: I'd say two things. First, be honest about whether you're the right person to lead through a crisis. Second, don't confuse the business with the family's identity. The Lego brick survived because the family was willing to change everything else around it. Luna: And they kept the soul of the company intact. That's the real legacy.