Brick by Brick (2013) by Bill Breen is a business case study book that looks at how LEGO went from nearly going insolvent in 2003 to being a very profitable business half a decade later. It’s not a bad business book. If you like LEGO and tolerate or enjoy this kind of book it’s worth looking at.
As with most business books about successful companies that have invented some kind of money press the key lesson to learn would be to come up with something that is either a market like Ebay or Steam, dominate a market like Microsoft or Google and then you can let the engineers and artists off their leash to go and invent things as they please. This works well for a while until ultimately the rest of the world starts to change. In LEGO’s case computer and screen entertainment started to eat into their profits. LEGO finally started to licence things with Star Wars and this proved to be an incredible success. But while they were doing that they diversified wildly and started producing too many sets that were losing money.
In the late 1980s LEGO introduced a system so that designers could work out the Full Cost of Manufacturing or FCM and thus work out how much each kit would cost but during the late 1990s designers were allowed to untether themselves from this metric and by 2003 this problem became so serious that it threatened the autonomy of the company.
Breen then describes how LEGO was saved by first halving the number of components the company produced, selling the LEGOLAND theme parks and cutting costs and getting back to the core. Then in a second stage the famous LEGO brand DUPLO was resurrected, targets of 13% for each group were introduced and more loss making lines were removed. Once the company was saved better design process was introduced with more reviews. Finally once LEGO was back and working well newer risky design was allowed but in a more controlled way than in the 1990s. Also the internet was used to get feedback and help from the plethora of now more easily accessible LEGO fans.
There is an interesting chapter on the future of LEGO where the author ponders how 3D printing, Minecraft and new internet tools might affect the long term future of LEGO as well.
The book is well written and will appeal to people who are into looking at how companies can transform and who like LEGO.