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Lego’s ‘awesomeness’ was always bound to revert to ordinariness Premium

Analysts love to study success but their eulogies can be dangerous, writes Andrew Hill
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SEPTEMBER 5, 2017 by: Andrew Hill
There is always some part of the world of management studies where, to quote from The Lego Movie, everything is awesome. Lego itself was that place — until this week.

The maker of the ubiquitous coloured building bricks announced it had unexpectedly lost a chunk of its revenues down the back of the sofa — about 5 per cent in the first half — and would have to cut 1,400 of its 18,200-strong workforce.

“A big minus,” was the verdict of Jorgen Vig Knudstorp, executive chairman, who last month unexpectedly pushed Lego’s new-ish chief executive towards the exit, in favour of the man the board had wanted to hire all along.

As chief executive himself until the end of last year, Mr Knudstorp admits he bears some of the blame for Lego’s recent setback, just as he took much of the credit for the toymaker’s spectacular recovery from near bankruptcy in 2003.

Not for the first time, analysts flocked to turn Lego’s revival into eulogies to its awesomeness. Like playful six-year-olds, professors have delved into the big bag of bricks and constructed papers about how Lego exploited synergies between manufacturers and users, how it spanned organisational boundaries, how it engaged customers, or built “enterprise capabilities for digital leadership”.

Lego is the new favourite index entry in how-to management titles . . . much of that analysis may now need to be dismantled and put back in the box

I see a lot of business books. Lego is the new favourite index entry in how-to management titles, only just behind the likes of Apple and Facebook. Much of that analysis may now need to be dismantled and put back in the box.

In the late 1990s and early 2000s, the same thing happened to another Nordic champion, Nokia. Its turnaround filled the shelves of academe with glowing appreciations, before the Finnish company’s phone-making business ultimately succumbed to complacency.

This bias towards studying success is inevitable. It sells better than failure, for one thing. Business author Jim Collins told me earlier this year that How The Mighty Fall, his study of failed companies, was his favourite book, but it is far from his biggest hit. That would probably be Built to Last or Good to Great, both studies of successful companies. Another reason for the success bias is that thriving companies are naturally happier than struggling ones to let nosy professors in to study their management skills.


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Such a skew is bad for business as a whole. It implies, wrongly, that champions will continue to see off challengers indefinitely. It may even promote bad habits as though they are best practice. And it shores up chief executives who inevitably grow to feel that their leadership prowess is the main reason why studies of their companies top the business bestseller lists.

Mr Knudstorp does not seem to be in this last category. He comes across as a level-headed leader, who by doing the right things — staunching losses, focusing on cash, simplifying Lego’s structure and reinvigorating its purpose — managed, with his colleagues, to pull the toymaker out of a nosedive 14 years ago. In an interview with the FT when he stepped down as chief executive last year, he even anticipated the problems he outlined on Tuesday, notably the bureaucracy and complexity that entangle companies as they expand.

Success studies are often attacked for not having spotted the inevitable decline of their subjects. One legitimate defence is that it still pays to examine the training techniques of elite athletes, even if they later lose their world records. For now, Lego is still the world’s most profitable toymaker — no mean feat and one worth analysing. But if the toymaker ever falls into the trap of thinking it has attained the state of perfect happiness lampooned in The Lego Movie, its managers should brace themselves: an inevitable shift from awesomeness back to ordinariness is probably overdue.