Building Back Brilliance: How LEGO Rebuilt Its Brand by Returning to Its Roots

In the late 1990s and early 2000s, LEGO was at a crossroads. The Danish toy company, beloved for its colorful interlocking bricks, had become one of the most iconic brands in the world. But by the turn of the century, it was facing significant challenges. The market had changed, competitors were emerging, and LEGO’s diversification strategy — expanding into video games, theme parks, and even clothing lines — had backfired. The company was no longer just about toys; it was a sprawling, complex business that had lost sight of its core values.

Sales were stagnating, and the company was hemorrhaging cash. LEGO's internal culture was in disarray, and by 2004, the company was on the brink of bankruptcy. Their operating model was stretched too thin, and the classic brick set was being overshadowed by the complexity of the brand's broad portfolio. Even though the LEGO brick itself was a timeless, beloved product, LEGO had strayed too far from its roots — and that was costing the company dearly.

The turning point came when Jørgen Vig Knudstorp, a former McKinsey consultant, took over as CEO. Knudstorp and his team realized that in order to survive, LEGO needed to go back to its origins and simplify. The first step was radical: LEGO stopped producing non-essential products, such as video games and clothing lines, and scaled back its presence in theme parks. Instead, they focused on the one thing that had made them great: the simple, versatile brick.

But simplifying the business wasn’t enough. LEGO needed to reconnect with its fans and rekindle the creative spirit that had defined it. This led to the introduction of LEGO Ideas, an initiative that allowed fans to submit their own designs for new sets. For the first time, LEGO invited its customers into the design process, giving them a voice in shaping the future of the brand. This fan-driven approach led to some of the most popular and successful sets in LEGO’s history, including LEGO Architecture and LEGO Star Wars.

This connection with its community helped LEGO regain its authentic identity and reignite passion among fans. But LEGO didn’t stop there. Recognizing the nostalgia that many adult fans felt for the brand, LEGO also tapped into the growing trend of adult collectors. The company began licensing beloved franchises like Star Wars, Harry Potter, and Marvel, creating sets that appealed not just to children, but to a whole new generation of adult fans. These collaborations boosted sales and brought LEGO back to the cultural forefront.

Perhaps most importantly, LEGO also made the bold decision to embrace innovation while staying true to its roots. LEGO introduced new, modernized bricks and themes that maintained the integrity of the original design but allowed for more intricate and creative builds. They also embraced the digital age, launching apps and even creating a movie, The LEGO Movie, which became an instant hit and further cemented the brand’s place in popular culture.

By 2014, LEGO had transformed from a company on the brink of bankruptcy into the largest toy manufacturer in the world, surpassing even Mattel in revenue. The brand’s resurgence wasn’t just about making money — it was about reconnecting with its essence, fostering creativity, and aligning with its customers’ values. LEGO became a symbol of how a brand can embrace its past, adapt to the present, and build a sustainable future.

Takeaway Branding Insight:

LEGO’s story is a powerful reminder that even the most iconic brands can lose their way, but they can also find redemption by returning to their roots. In the face of adversity, LEGO didn’t simply trim the fat; it redefined its purpose, reconnecting with its fan base and focusing on what made it unique. For brands, this means that in times of struggle, it’s often better to refocus on the core strengths and values that customers love, while innovating in a way that stays true to the brand's essence. Rather than chasing trends, true success comes from creating a brand experience that resonates deeply with your audience and stands the test of time.

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