In the early 1930s, with the world in the grip of economic depression, a Danish widowed father of four had a vision. Despite the grim fi scal outlook, Ole Kirk Christiansen purchased a small toy shop in the town of Billund and launched a modest business with the name Leg Godt (Danish for ‘play well’).
Christiansen was a pioneer from the outset – his was the fi rst toy business to embrace a new technology called plastic. Within a few short years, Lego, as the company was now a ectionately known, had become the toy of choice for children worldwide.
In the years that followed, Lego evolved and grew. From simple plastic blocks to the release of playsets and the invention of the little yellow man, the company innovated its way to the position of undisputed leader in children’s play.
Until the late 1980s, that is.
As new generations of children began opting for video games rather than plastic playsets, Lego was faced with a dilemma. The company began an 11-year loss stretch – losing $500 million in just two years at their worst point.
By the late 1990s, the casual observer may have been justifi ed in predicting that Lego had run its course and was a dead brand walking. And yet, the story was far from finished.
Recognising the need to embrace the digital age, Lego’s strategy was informed by the old adage: If you can’t beat ‘em, join ‘em. Lego entered a series of licensing arrangements with well-known movie franchises such as Star Wars, Batman and Indiana Jones to create their own co-branded video games. Buoyed by the success of this new direction, Lego expanded their digital o ering with the 2010 release of a massively multiplayer online game Lego Universe. More recently, they have developed smartphone apps that allow users to build Lego shapes while sitting on the bus.
There is little doubt that Lego today is more powerful, profi table and relevant than ever – the recent release of their blockbuster movie is testament to this. In contrast, Lego’s one-time rival Meccano has faded into obscurity.
What can we learn from Lego?
So, what can other brands and businesses learn from this story of adaptation and reinvention? I would suggest that in order to win the battle to stay relevant over time, organisations and leaders must consistently be willing to do the following:
While an appetite for change is critical to staying ahead of the curve, it is important to discern which fundamentals in an organisation should never change. Just as it is necessary to determine which walls are loadbearing when renovating a house, leaders must identify non-negotiable values, principles and purpose. Tamper with these ‘load-bearing’ fundamentals, and everything may come crashing down.
Before embarking on any change agenda, it is vital to recalibrate an organisation with its core DNA and allow this to be a guidepost for strategy and a touchstone for decisionmaking. In the case of Lego, the company’s leadership never lost sight of Lego’s core purpose of inspiring play, creativity and imagination amidst their digital reinvention.
Any gardener knows that regular pruning is necessary to maintain the health and vitality of a garden. In the same way, organisations require regular pruning of initiatives, traditions and even people who are inhibiting growth. While pruning can be painful and even disruptive in the short-term, it is critically important.
Consider how Sony CEO Kazuo Hirai has recently embarked on a series of necessary pruning initiatives. In the face of $6.4 billion loss for 2012 and a dramatic downgrade of Sony’s credit rating, Hirai recognised that he would need to act quickly to turn around the ailing tech giant’s fortunes.
His first step was to end Sony’s decade-long marriage with Swedish mobile phone company Ericsson. Next, Hirai spun o any Sony-owned non-core companies, dramatically streamlined manufacturing processes and cut Sony’s global workforce by roughly 10,000 employees.
We were all raised to believe the lie that great minds think alike. Nothing could be further from the truth! The greatest and most creative minds have always thought very differently from their peers and the prevailing wisdom of their era. Being able to view the world from a di erent frame of reference is, in fact, the key to innovation and invention.
Leaders must pay particularly close attention to the views and perspectives of those who have fresh eyes in an organisation – often owing to their lack of experience. Such fresh eyes have no
trouble thinking outside the box because they have no idea what the ‘box’ even looks like yet.
Keeping pace with change will require leaders and organisations to continually re-engineer their internal systems and processes. Too often, being ‘in a groove’ can easily turn into a rut, and simply repeating the habits that have worked in the past can set you on a collision course with ine ciency and irrelevance.
As times and needs evolve, so must the positioning of businesses and brands. This could mean developing new products and services, tapping into new markets, or completely overhauling a brand’s messaging.
To see a brilliant example of a repositioned brand, look no further than 160-year-old glass manufacturer Corning.
In 1908, half of Corning’s revenue came from making glass bulbs. Over time, the Corning brand extended beyond these roots and became known for its high-quality cook- and kitchenware.
Today, however, many of Corning’s most lucrative products are ones that didn’t exist 10 years ago. The company now specialises in cathode-ray tubes, fi bre optics for HD TVs, and laser technology that enables mobile phones to be fi tted with micro projectors.
Corning is a great example of a company rich in tradition and history that has stayed relevant by not being afraid to embrace new products and services as times have changed. Setting a brand or organisation up for enduring relevance involves a principle that every experienced surfer understands well. In order to catch the perfect wave, a good surfer knows the importance of keeping their eyes firmly on the horizon. While a wave is still forming a long way o in the distance, surfers know that this is the time to move – to paddle out and get in position. Move too late or not at all, and you’ll simply get washed up as the wave crashes over you.
In much the same way, winning the battle for relevance is about anticipating, preparing for and embracing change – no matter how uncomfortable or confronting it may be. As Charles Darwin once observed, “It is not the strongest that survive, nor the most intelligent. Rather,” he said, “it is those who are most responsive to change.”
Michael McQueen is a leading business commentator and four-time bestselling author. His most recent book “Winning the Battle for Relevance” explores the importance of reinventing an organisation or brand before you are forced to.