Lego the Interview; we speak with Soren Torp Laursen

Lego recently became the second largest toy company in the world in terms of revenue (see “Lego Challenges for the World's Biggest Toy Company”) and number one based upon net income.  They accomplished this feat by posting an astounding eight consecutive years of double digit increases in sales. 

Soren Torp Laursen, President of Lego Brands, has overseen Lego’s growth over these explosive eight years.  We asked Soren to help us better understand how they accomplished this feat and, more importantly, what happens next.   He kindly complied and here is the result:

Richard

Eight years in a row of double digit increases is an incredible feat and the people at Lego, from management on down, should be extremely proud.    Can you tell us some of the key factors in how you got the ball rolling (which is one thing) and kept it rolling (which is entirely another thing)?

Soren

If you go back to 2003, we had our worst year ever as a company. Recovering from that moment, we squarely focused on being the best at delivering great construction toy play experiences, and we set aside all of the distractions that prevented us from being able to do so (running our own software publishing division, publishing our own books, developing our own branded non-toy merchandise, managing theme parks). We learned the hard way that we are best suited to stay focused on being a great construction brand, and all of the rest of what it takes to engage children is best left to the experts in those areas. We did not plan for growth while we undertook a right-setting of the business, in fact we hoped for break-even results, but ironically, getting back to a construction focus drove immediate growth. By focusing on being the best construction experience we can be, we were able to reignite our fans, recruit new users to building, generate real value for our retail partners and drive growth in the category and overall industry that makes building sets a true beacon.  What it takes to sustain growth is a tremendous amount of organizational and personal discipline. Every year children have increasing options, their expectations grow and the temptations multiply to try things to grab their attention. The toughest thing to do is to stick to your knitting, but we have been relentless in our commitment to our core idea, and to driving innovation that reinforces building and doesn’t distract us from our wheelhouse.  

Richard

What impact did reaching out to girls with Lego Friends have on last year’s numbers?

Soren

We set out to dramatically increase the number of girls who build with LEGO bricks, and the launch of LEGO Friends helped us to triple the number of girls in the U.S. alone who build the LEGO way. We sold twice as much Friends product as we had anticipated at launch, and the line ranked in our top 5 themes globally in its launch year, contributing to roughly 50% of the growth we experienced in 2012. In fact, the #1 overall best-selling LEGO set of 2012 was LEGO Friends Olivia’s House. Not only have we provided a means for more children to engage in the positive development benefits of construction play, we have also significantly increased our active consumer base. It is our hope and strong belief that many of those girls will also explore other themes in the LEGO system, and we are therefore very excited about the growth opportunity that this has opened up for us.

Richard

Congratulations for successfully reopening the construction door to girls.  Ironically, your reward for doing so is competition like Mega Bloks Barbie Build & Style?  What do you see as the future for girls and construction and how will Lego move forward?  Are there some licenses on the horizon?

Soren

We are thrilled to have a formula in LEGO Friends that has invited a new audience to build and to truly engage in collecting and playing deeply with the LEGO system. Given that we focus only on building, we don’t see girls and construction as a trend or something that we will try for a few months to see what short-term gain we can grab. Construction is perhaps one of the most complex and complicated businesses to establish and maintain, yet it is our only focus, so we know what it takes to create and supply for sustainable engagement. We very much see girls as part of our core business moving forward. We are adding to the Friends collection this year and we have plans to further expand the opportunities through a variety of new themes and properties in the years to come.

Richard

Construction, whether it is virtual or three dimensional, has become a major growth industry.  Is that because of Lego’s leadership or do people just crave to build?

Soren

It’s a great question and one we ask ourselves all the time. Our research indicates that no matter how tech savvy, virtually geared or plugged in children are, they will always have an inherent need to tinker, to create, and to build. Because we focus only on the construction play pattern and have successfully expanded our business, much of the growth in Building Sets is attributable to the LEGO brand. The more children are exposed to the possibilities, the fun and the personal reward of building, be it physically or virtually, the

more they will seek those brands that provide the best opportunities to explore those needs.  Where we may take more of the credit for the surge in building sets interest revolves around the ways in which we have made the LEGO brand more than just a toy or play experience through seamless integration with content, gaming, events, etc.  

Richard

Now that you have accomplished an “Eight-Peat” is a “Nine-Peat” possible?

Soren

It’s commonly noted that most companies cannot grow as we have for more than 3 years consecutively without experiencing a decline. Every year we say that it will be increasingly more difficult to deliver the growth trajectory we have seen in the last 8 years, especially considering that we’ve quadrupled our share of the U.S. toy market in just 5 years. Every year we are sincere in acknowledging the challenges ahead of us, and yet we continue to drive growth. We know that our brand has scope for a lot more here in the U.S. and as long as our offer stays compelling and irresistible to children and their families, we will continue to grow. Our goal is to be the best, not the biggest, so our measure of success is not necessarily the same of our competitors. If we can be the best and most loved toy company while driving even more modest yet sustainable growth, we will be very satisfied. 

Richard

Thank you, Soren, for a great interview.

 

Comments

[Chris]

Fantastic interview Richard!

[Richard]

Thank you Chris.

[Lisa Orman, KidStuff PR]

Soren is a fascinating and generous executive to share his thoughts with you. Great questions. Thanks Richard!

[Paul Edwick]

Great insights, and puts in context the criticism that Lego endured a year ago for bringing in "girls" building blocks.

[Mary Couzin]

Richard,

I very much enjoyed reading this interview. Terrific questions and answers.

Soren is one of the most approachable and thoughtful leaders in our industry. I admire him greatly.

~Mary