How LEGO Stopped Thinking Outside the Box and Innovated Inside the Brick

BrickbyBrickFew toys have caught the imagination of children everywhere more than LEGOs — the multi-colored plastic blocks that can snap together to construct houses, castles, space ships or fantastical imaginary figures.

The Danish company (whose name roughly translates to “play well”) traces its roots to a failed carpenter named Ole Kirk Christiansen, who in 1932 decided to put his skills to work creating toys made of wood. In the late 1940s, Christiansen invested in the then-risky injection molding technology needed to make the plastic blocks. In the late 1950s, Ole Kirk’s son, Godtfred, came up with the interlocking stud-and-tube design that made the company a household name.

But there is a side to the company’s story that is rarely told, one that Wharton practice professor David Robertson says can serve as a guide to both the importance and the perils of innovation in today’s global marketplace. In his new book, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry, Robertson, who wrote the book with journalist Bill Breen, recounts how a binge of innovation almost bankrupted LEGO — and how the company brought itself back from the brink by returning to its roots.

An edited transcript of the conversation follows.

Knowledge@Wharton: We’re here today with Wharton practice professor David Robertson, author of the new book, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry. David, thanks for being with us today.

David Robertson: Thanks for having me.

Knowledge@Wharton: I had a chance to read the book. The story of LEGO’s transition from a small company that made wooden toys to a worldwide giant is pretty interesting. Could you briefly discuss its origins?

Robertson: Sure. It [started with] a failed carpenter in 1932. Denmark was in the midst of a recession like much of the world, and a carpenter named Ole Kirk Christiansen was having trouble getting the wood he needed to make furniture. So he took scraps of wood and made toys for kids, which actually did pretty well. He turned that into a business and started LEGO in 1932.

Knowledge@Wharton: Where did the iconic brick come from? How did he go from wooden toys to the plastic blocks that we all identify with LEGO?

Robertson: [Christiansen] made wooden toys for the first 15 years of the business. He has four young sons. His wife dies a year or two after he starts the business. He continues to grow and do well. And then in 1947, against the wishes of his now grown sons, he invests in this really risky technology called plastic injection molding and starts making plastic toys, which initially do pretty badly.

Originally Published July 1st, 2013 in Knowledge@Wharton

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