Latest / Building Brands with Fexingo: Identity, Reputation, and Long-Term Business Equity / How Lego Rebuilt Its Brand Brick by Brick
Transcript
- Lucas: In 2003, Lego was on the verge of bankruptcy. The company was losing about a million dollars a day. They had overexpanded into theme parks, video games, clothing lines — basically anything with the Lego name on it. Luna: I remember reading that they had something like 14,000 different elements in production. Way too much complexity. Lucas: Exactly. So the core question becomes: how do you take a brand that’s synonymous with creativity and play, that’s been around since 1932, and restore its identity when it’s literally running out of cash? The answer starts with a former McKinsey consultant named Jørgen Vig Knudstorp. Luna: He became CEO in 2004, right? At 35 years old? Lucas: Yeah, he was the first non-family member to run the company. And his first move was brutal but necessary. He sold off the theme parks, licensed out the video games, and cut the number of parts by more than half. He basically said: we’re going back to the brick. Luna: That sounds like a gut-level decision. But how do you sell that to a board that’s used to growth through diversification? Lucas: He framed it as a brand problem, not a financial one. Knudstorp argued that Lego had lost its identity. The brand promise was ‘creative play for every child’, but they were making action figures and pre-built sets that told a child what to build instead of letting them imagine. So he zeroed in on the brick set as the core expression of the brand. Luna: Right, so the product itself became the brand anchor. That’s a really clean line. Lucas: And it worked. By 2005, Lego was profitable again. But the real brand transformation came a few years later when they started leaning into storytelling. They already had licensed properties like Star Wars and Harry Potter, but those were just sets. The shift happened when they decided to tell their own stories. Luna: You’re talking about The Lego Movie in 2014, right? Lucas: Partly. But even before that, they launched Lego City and Lego Ninjago as original IP through short films and web series. The brand started to exist beyond the plastic brick. It became a narrative universe. And that’s when the brand really exploded. Luna: So they went from a toy company to a media company without calling themselves one. Lucas: Exactly. And the key insight is that every piece of content reinforced the same brand value: creativity through construction. The Lego Movie’s tagline was literally ‘Everything is awesome’, but underneath that was a message about the power of imagination. The film made adults nostalgic and kids curious. It turned a plastic brick into a cultural touchstone. Luna: What’s interesting to me is that they didn’t abandon the core set. They added layers on top. The brick remained the foundation, but the brand grew through stories and licensing. Lucas: That’s the discipline. They resisted the temptation to make action figures or dolls. Everything goes back to the brick. Even their digital games, like Lego Dimensions, required physical bricks to play. The product and the media experience are inseparable. Luna: And that coherence is rare. Most brands try to be everything to everyone and end up meaning nothing. Lucas: Right. So by 2015, Lego had become the world’s largest toy company by revenue. And they did it without selling a single piece of plastic that didn’t snap into another piece of plastic. That’s brand discipline at scale. Luna: It’s a great example of a brand that almost died from success. They had to shrink to grow again. Lucas: It really is. And I think the lesson for any business is: know what your brand’s irreducible core is. The one thing you do that no one else can replicate. For Lego, it’s the brick. The clutch power. Once they protected that, everything else — the movies, the games, the theme parks they eventually reopened under license — became additive. Luna: That makes me think about companies I work with. They’re always chasing adjacent markets, but few stop to ask what the brick is. Lucas: And if these conversations have moved your work forward in some small way, you know what would be cool? If today was worth a coffee to you, that’s the link — buy me a coffee dot com slash fexingo. Luna: Yeah, it’s a low-bar way to say ‘this matters’. And it keeps the show ad-free, which we love. Lucas: Exactly. So back to Lego — the turnaround wasn’t just about finance. It was about redefining what the brand stood for. And that required saying no to a lot of easy money. Luna: It’s like that line from The Lego Movie: ‘The only thing cooler than following the instructions is building something new.’ Lucas: Exactly. And that’s the brand truth. Lego today is worth roughly fifteen billion dollars. That’s not from following anyone else’s instructions. It’s from knowing exactly what you are and what you’re not. Luna: Let’s talk about one more element: their adult fan base. They deliberately courted AFOLs — Adult Fans of Lego — with complex sets like the Creator Expert series. That opened up a whole new revenue stream while reinforcing the brand’s emphasis on creativity. Lucas: Yeah, they didn’t treat adults as an afterthought. They built sets that were essentially art projects. The Lego Architecture series, the Star Wars UCS sets — these are for grownups who want to build as a form of mindfulness. That’s brilliant brand extension because it stays true to the core activity. Luna: So the brand is essentially a platform for creativity at any age. Lucas: Exactly. And that’s why, even today, Lego remains resilient. They’ve weathered competition from digital games and remote toys because the brick experience is tangible, social, and endlessly reconfigurable. The brand is elastic because it’s anchored in a physical object that’s itself a tool for imagination. Luna: It’s a cliche, but they really did build their brand brick by brick. Lucas: And they almost destroyed it the same way. The lesson is that brand equity isn’t about how many products you make. It’s about how deeply one product resonates.