The Sledgehammer

Rebuilding a Brand, Brick by Brick

August 17, 2021

Building a Challenger Brand is not for the faint of heart. There are no step-by-step guides, few examples to model after, and bold bravery is required.

LEGO knows this all too well.

Whereas its iconic block sets make it simple to get started (easy-to-follow instructions and inspiring picture on the box) and they stoke just the right amount of creativity, the company was constructed under much more frustrating, even inflammatory circumstances:

1916: LEGO’s founder, Ole Kirk Christiansen, purchased a woodworking shop in a small town in Denmark to construct furniture.

1924 🔥: Just as he was looking to expand, the shop and his attached house both caught fire and burned down. Determined to keep going, he rebuilt a larger shop.

1929 🔥: The Great Depression forced him to switch gears to more inexpensive goods like wooden toys. They didn’t sell well at first and he slid into bankruptcy. Eventually they gained a national following, thanks to his focus on quality and craftsmanship.

1942 🔥: Germany’s WWII occupation of Denmark turned violent; Christiansen’s shop was caught in conflict and burned down once again. When he rebuilt, he also had to consider new materials, thanks to war-related manufacturing equipment shortages, and he turned to… plastic.

1942-1960: Christiansen and his son, Godtfred, evolved the product that we know today as LEGOs: brick systems that can interlock with one another, creating endless combinations that form a “system of play.”

1960 🔥: LEGO’s workshop sustained its third fire (PSA: test your smoke alarms), burning all its remaining wood toy inventory. LEGO rebuilds again and commits entirely to plastic toys.

For the next forty years, LEGO continued to grow — improving their core product line, adding figures and theme sets, even building an airport and theme park in its small-town HQ. The company grew 8x in just 15 years! The toy world was their oyster. Until…

2003 🔥: The company found itself $600 million in debt. They were facing pressure for multiple reasons, including:

  1. New disrupters were stealing share: With the popularization of computers and electronic games, LEGO was simply losing its share of the toy market. As their EVP of Marketing, Mads Nipper, later said, “Play trends changed, and we failed to change.”
  2. Copycat entrants were hindering differentiation: Big retailers were critical to LEGO sales, but they often placed the toymaker’s kits alongside cheaper “copycat” brands, causing LEGOs to get lost in the shuffle.
  3. LEGO diluted its own brand: In attempts to self-resuscitate, LEGO chased after numerous new product lines that didn’t pan out. Massive toy franchises like Hasbro and Mattel operate with the strategy of producing as many cheap product lines as possible, with the goal of driving sales widely. LEGO attempted to copy that strategy, cranking out numerous lines of notsolegoy products. However, they were too far afield from LEGO’s core offering and consumers recognized that, so the non-LEGOs simply didn’t sell.

Facing insolvency, LEGO had to start behaving and rebuilding like a Challenger, once again, to stay intact. And rebuild they did — in 2020, LEGO was the top-ranked toy brand in the world, with a brand value of approximately $6.5 billion.

What lit the good  kind of 🔥fire🔥 under LEGO’s Challenger turnaround?

They re-centered around their brand foundation

LEGO’s positioning on “play” unites both their offerings (interchangeable, interlocking pieces) and their promise (joy of building, pride of creation). But they had lost sight of this positioning in their attempt to keep up with other toy brands and trends. It was only once they reoriented themselves around this North Star that they began to regain traction:

  • LEGOLAND theme parks — literal hubs of play — opened in California, Florida, Malaysia, Dubai, the UK, Japan, and Germany.
  • The company has also partnered with Disney, Marvel, and DC Comics to create its popular Star Wars and superhero-themed playsets, giving customers an opportunity to “play within” these worlds through LEGO.
  • The LEGO Movie  franchise and The LEGO Batman Movie  raised the profiles of its licensed properties while celebrating the brand’s core message around their products inspiring play.

They stopped putting all their audience bricks in one basket

Whereas sticking to their positioning was good for the brand, they needed to evolve their thinking elsewhere: their target audience.

Since its inception, LEGO intentionally focused on creating toys for children. Yet there was a growing faction of adults who loved LEGOs — even forming meetup groups around them. The company’s execs initially chose to ignore them. But after marketing and product design budgets were slashed during the downturn, they decided to reopen their minds and arms to this adult audience, dubbed AFOLs (Adult Fans of LEGOs). It was a gamechanger for their brand:

  • AFOLs can submit and vote on suggestions via LEGO Ideas — a crowdsourced platform that collects proposals for new LEGO theme sets like “The Golden Girls” or “Ghostbusters.” Numerous LEGO sets have been produced from these suggestions.
  • In 2007, LEGO paired up with Chicago-based architect Adam Reed Tucker, who had been constructing iconic buildings out of LEGO bricks. This endeavor later became a new product line, LEGO Architecture. These were cleverly targeted at a more adult-dominated demographic, and consequently sold at a premium price.
  • As of late, LEGO has evolved their marketing strategy towards stressed out adults who have used LEGO sets as a form of meditative entertainment during COVID.

They based future products on deep research & prototypes

  • LEGO developed Future Lab, which brought together their best designers from around the world into a top-secret R&D team. Their core task: to discover what is “obviously LEGO” but hasn’t been created yet.
  • Whereas they once went all-in on new products, the Lab creates working prototypes to test and then release to the market in small quantities. This encourages innovation and bigger thinking within the organization but removes the fear of jeopardizing the core business.
  • They also place a big focus on ethnographic research — studying kids’ play styles in great detail and using that data to base product innovation. The product line LEGO Friends is designed specifically for how girls tend to play with the bricks: focusing more on freeform role-playing vs. the strong narratives favored by their male counterparts.

LEGO has made a business out of building and rebuilding. Considering that the pandemic has blazed through many business strategies, many industries — especially pharma & healthcare — are now feeling the heat to rethink, and even rebuild, the way they operate. If you’re finding yourself amongst the ashes, then get inspired from LEGO’s mindset and ask yourself and your team these questions:

  • What is the positioning or North Star of our brand (reminder: LEGO’s is philosophy of play), and is that what we’re truly selling?
  • Do we know what the functional and  emotional benefits of our brand are?
  • Are there other audiences we haven’t considered that would benefit from both the functional and emotional benefits of our brand?
  • Are our tactics also bringing to life the essence of our product?
  • In what ways can we iterate quickly and efficiently to test new tactics?

It’s time to pick up the pieces (because stepping on them really  hurts) and start rebuilding.

At any given time, there are hundreds of actual sledgehammers present in the Heartbeat office. To celebrate their first year on the team, each HB’er receives their very own sledge—a nod to our daily pursuit of tearing down tiresome healthcare marketing. To determine what is built in its place, we often turn to outside industries, cultural forces, and personal experiences. We eagerly share them with one another, and now we’re sharing them with you. Clear the way—here comes The Sledgehammer.