In 2008, Danish toymaker LEGO was building on recent success. Under the leadership of Jorgen Knudstorp, its revenue growth for the past year was around 20 percent, and the following year would bring the growth phase of his long-term strategy, which involved investment in production capacity and marketing.
Knudstorp had brought the company back from the brink of bankruptcy several years ago. Executives attributed the crisis to overdiversification — LEGO had expanded to include lines of business like theme parks, clothing, digital games and DVDs. When Knudstorp became CEO in 2004, he refocused the organization on its core product: interlocking building blocks.
So when Warner Bros. studio approached LEGO about a film, the toy company was hesitant. They were doing well, and they had a plan for growth. If a movie based on the toy wasn’t well-received, the brand could be seriously damaged. And if the movie was a hit, would they even see any benefits? The year before, Transformers proved a box office success, but Hasbro reported disappointing holiday sales numbers for the figures the film was based on.
Not only that, the studio wanted the structures in the movie to be able to be replicated by fans. The partnership would mean work from LEGO in the efforts of its engineers, the production of new, movie-relevant toys, and assistance in marketing the film; it would be risky not just reputation-wise, but also resource-wise.
After toying with the idea, Knudstorp took the view that the movie could fit into his growth plan as a marketing opportunity. It paid off: Not only did the movie gross more than $250 million in domestic sales the year it came out, LEGO’s sales increased 15 percent and it became the world’s largest toymaker.
Read more about how reframing challenges as opportunities led to success in Professor Ming-Jer Chen and Senior Case Writer Jenny Craddock’s article “Lights, Camera, LEGO: How an ‘Active Play’ Giant Took a Chance on Hollywood,” in the Darden School of Business/Washington Post “Case in Point” series.
The article is based on the case LEGO Bricks: Fit for the Big Screen? (Darden Business Publishing), by Ming-Jer Chen and Jenny Craddock.