Were you among the millions who hit the theater last weekend to see the new Lego Batman movie? Experts predict the flick will likely go on to top the $469 million box office hauled in by the first Lego movie. Pretty staggering numbers.
Even more amazing? It wasn’t that long ago that Lego nearly went out of business. In 2001, the company was nearly bankrupt after years of over-expanding. It was bleeding nearly $1 million a day. But instead of dying off like so many other major brands, Lego survived and thrived.
How? The turnaround started when Lego executives hired a 33-year-old consultant named Jorgen Vig Knudstorp to investigate what was going wrong at the company. His report, which didn’t mince words, shocked the executives. Vig Knudstorp said Lego hadn’t created value since 1993, and predicted the company would continue to decline. He was right. The next year, the company’s sales were down another 40% and it owed about $800 million.
In a surprising turn of events, the executives named Vig Knudstorp CEO. Just 35 at the time, he had no experience leading a brand as large as Lego and was the company’s first non-family CEO.
As expected, Vig Knudstorp shook things up. He put the company’s earnings reports up on the walls for every employee to see. He scaled back on office space, cut the number of Lego designs by nearly two-thirds, and sold off the company’s stake in Legoland theme parks. He also had his designers live with Lego customers for a week to see firsthand out children played with the product.
“We decided to hardly grow for 5 years while we were fixing the business,” he has said.
Vig Knudstorp’s prescription for the problem? First stop the bleeding, then rehabilitate, and only then focus on re-growing the company. By 2013, Lego had record profits of $869 million. In 2016, revenues grew 25%.
After going from the brink of bankruptcy to one of the largest toy countries in the world, Lego’s turnaround provides a valuable lesson for any executive or entrepreneur facing tough times. The solution may feel antithetical to all we are taught as leaders. Rather than pushing down on the gas, try tapping the brakes. In extreme cases like Lego, you may even need to slam the brakes.
Slow down, reevaluate, fix what’s broken, then slowly rebuild — one Lego at a time.
Originally published at medium.com