Rebuilding LEGO | A Burning Platform | 1

Audible subscribers can listen to all episodes of Business Wars ad-free right now. Join Audible today by downloading the Audible app. It's early 1997 and at the Lego headquarters in Bill and Denmark, Peter Eo has a big idea. He stands in a darkened conference room in front of the Lego executive team, the controls of a slight projector in his hand. Eo is the head of Lego's operations in the Americas, his large frame, affable manner and well-school British accent, Belaya sharp business savvy mind. And today, he's presenting the project he has spent over a year pouring all his energy into. Eo clicks the projector, and his final slide moves into focus. It's a mock-up drawing of a Lego character or mini-fig. The yellow plastic and broad smile of these tiny Lego figures are famous around the world. They charm generations of children and their parents. But this smiling mini-fig is unlike any that the Lego executive seen before. Because this one is dressed in the black robes of Darth Vader, the iconic villain of the Star Wars films, and carries a tiny lightsaber. Eo brings his presentation to a close as the lights fade up in the room. So, in conclusion, I see this Star Wars licensing deal not just as a way for Lego to make a great series of toys, but as a way to connect with a whole new generation of children. Eo scans the faces of the executive team. But instead of the enthusiastic smiles he's expecting, there's a stony wall of grim scowls. Finally, one of the executive speaks up. Peter, in more than 65 years of making toys, Lego has never had to license someone else's idea. We've always encouraged children to create their own worlds, not just to play with and existing stories. A partnership like this is just not the Lego way. Well, time to do change. Perhaps being over in the States, I'm more in touch with this trend. But the kids of today really like toys that are drawn from creative worlds they know. They connect with stories. Eo's spent countless hours negotiating a licensing deal with Lucasfilm. His plan is for Lego to create a line of Star Wars Lego sets to coincide with the release of the Phantom Menace, the first new Star Wars movie in 16 years. But now, he can see his visions of Lego X-Wings and Star Cruisers vanishing before his eyes. Another executive pipes up in horror. Just look at the names of these products. Death Star, laser blasters, stormtrooper. These are toys, these are weapons. The outraged executive turns to the company's CEO, KL Kirk-Kristianson. KL, your grandfather's swore we would never make modern weapons a subject for children's play. Is this what he founded Lego for? KL, Kristianson, looks thoughtful but unreadable as he stares up at the Lego Darth Vader still on the screen. Meanwhile, Eo struggles to contain himself at this line of attack on his grand plan. Well, come on now. This is hardly realistic violence. Star Wars is not the Terminator or GI Joe. Star Wars is all about teaching kids the difference between good and evil. Eo hopes this appeal might have registered with the inner children of the executive team members. But instead, the same exec who objected to the weapons brings his hand crashing down on the table. It's literally got the word war in the title. This is not the Lego way. We do this deal over my dead body. Eo feels his body swamp. The largely Danish executive team are usually polite and measured. This outburst means resistance to his vision runs deep. Eo believes that this could be not just a missed opportunity for Lego, but a danger to the company. Half of the toys sold in the US during the past year were based on already existing intellectual property. And Lego's bigger American rivals, Mattel and Hasbro are already forging ahead in this field, bringing shiny plastic versions of Disney princesses and DC comic superheroes to kids playrooms across America. But Eo has encountered this attitude at Lego before. Decades of strong sales have bred a form of complacency at the company. A Lego knows best attitude that makes it resistant to change or ideas from the outside. And that Lego knows best attitude. We'll soon bring the company to the brink of oblivion, a crisis that threatens to send the Danish toy giant straight into the reject bin of bankruptcy. But how will it get out of this jam and rebuild itself into the world's biggest toy company? It's a big deal. It's a big deal. Respect. Here's a sobering statistic for you. As few as one in ten companies that go into free fall ever managed to fight their way out of it. When things go seriously wrong for a company, it's extremely hard to fix. Companies have a momentum that's hard to turn around. Corporate culture gets stuck in its ways. Eurocracies formed out of necessity become roadblocks to change. This is why the business graveyard is full of companies that seem to see the cliff edge coming but fail to avoid it anyway. But some do survive. And one of those that did, managed to turn things around before it was too late. The Lego Group. In fact, it didn't just get itself back on the right track. It went from facing oblivion to becoming the world's number one toy manufacturer in just ten years. The problems started in the 1990s after decades of constant growth and profit made the company complacent. And by the time it realized just about everything was going wrong, it was almost too late. It had to adapt and then innovate its way out of the situation. But look, that's easy to say. Everyone claims their business is innovative, right? But making innovation work, I mean truly work. Well, that's hard. And that was a lesson Lego had to learn the hard way. This is the story of how Lego achieved something many thought impossible and how close it came to going bust along the way. This is Episode 1, a burning platform. It's early 1997 and Lego's top executives have just rejected the plan to release Star Wars products. But the man behind the plan, Peter Eo, the head of Lego in the Americas, isn't ready to give up. He spent a year negotiating with Lucasfilm to get the license. And he knows US toy retailers are excited at the idea of filling their stores with Star Wars themed Lego. But he needs to overcome the stiff resistance of Lego's top executives. Here's a thing about legacy brands. They can get stuck worshipping their own myth. Eo wasn't just pitching Star Wars. He was holding up a mirror to accompany drifting out of step with the market. When you know the customer better than the conference room does, you're already holding the high ground. But Eo still needs to back up his argument with evidence that those executives can't argue with. The parents who buy their kid's Lego set. He runs focus groups across the US to find out if parents share the concerns of Lego's top executives. He then does the same in Germany, Lego's biggest market. He eventually returns to Denmark with clear evidence. Parents do not associate Star Wars with violence. The lightsabers, Jedi nights, and Cuddly Ewoks are far enough away from real-world combat that parents are more than happy to let their kids build Lego stormtroopers. The findings from the focus groups win over some executives, but not all. Eventually the clash between Eo and traditionalists in Denmark reaches a deadlock. And it comes down to Kiel Kirk-Kristianson, Lego's owner and CEO, and the grandson of the company. founder. Christianson weighs the choice carefully. He's a Star Wars fan, but he's also torn. This is a departure from the philosophy of play established by the company's founder, his own grandfather. But with parents, kids, and retailers clamoring for this tie-in, the commercial opportunities hard to ignore. So Christianson breaks with decades of company tradition and strikes Legos first ever a licensing deal. Legos Star Wars is born. Legos and Star Wars join forces so you can build authentic Lego Episode 1 hot racers, Command Gungan Subs. Sometimes the boldest business move is letting go of your founders' ghosts. Christianson didn't just sign a licensing deal. He broke one of the company's commandments. That's a tightrope. Honor your roots. But don't let them strangle your growth. But even as Lego prepares to get jet eyes and land speeders rolling off the production line and onto the shelves, the company begins to feel its own disturbances in the force. For decades, Lego has been incredibly successful. It turned huge profits. Forbes declared its signature plastic bricks the toy of the century. And over the past 15 years under Christianson's leadership, the company is quadrupled in size. But since 1993, that growth has stalled. And in 1998, the company posts its first-ever annual loss, going $48 million into the red. The setback shocks the company to its core. And the leadership snaps into drastic action. A thousand workers are laid off and cost-cutting initiatives are implemented across the entire company. Then, in a shocking move, Christianson announces he's stepping back. He'll take on the title of company president, but will hand the running of day-to-day operations over to Paul Pogman. Pogman is a tall, wiry troubleshooter with graying hair. He's just achieved a celebrated turnaround at Bang and Olivesum, a Danish maker of high-end Hi-Fi equipment. Now Christianson expects him to do the same at Lego. Pogman immediately brings in an old Bang and Olivesum colleague, Italian marketing executive Francesco Ciolella. And together, the two undertake an exhaustive top-to-bottom review of the company's situation, bringing in teams of consultants to diagnose the cause of Lego's ongoing decline and to figure out a solution. This mid-1999, an in Bill and Denmark, Pogman and Cicolella have gathered Lego's leadership team. They're ready to share the results of their investigations and reset the company's future. Thank you. Ladies and gentlemen, we know it's been a challenging year, but we have a plan to fix this. But first, we have to recognize that the world is changing. It's not 1979 anymore. Children today are different. They have computer games, remote control cars, tamagotchi digital pets. They don't want to have to build their toys, they want to open the box and play. One of Lego's top managers leans forward in his chair and interrupts. But our mission is for children to learn through play. Are you saying that we throw away all of that because kids now like computer games? Pogman expected resistance from Lego's traditionalist leadership, and he knows just how to counter it. When Old Kirk Christianson founded Lego in 1932, all the toys were made of wood, right? Well, then in 1946 he saw whether world was going and risked everything to invest into a plastic injection molding machine. A lot of people back then said he was crazy, that children would never choose plastic toys of a wood. But he knew that innovation was the only way for the company to grow, and that is what we need to do now. Innovate. Pogman feels the atmosphere in the room change. It was one thing when he was promising a plan for the future, but now he's demanding change in innovation. He suspects the leadership team are beginning to fear for their own status within the company, and maybe even their jobs. Francesco Cicolela, Pogman sold buddy from Bang and Olivesson, now leans forward. If I may, Lego's original genius came down to one thing, the Lego brick. Almost every brick could fit in almost every toy set, so children always stayed within the Lego universe. But today, the strength of Lego isn't so much in the brick, it's in the name Lego itself. People love Lego as a brand, and that brand can be so much more. We don't need to be just a toy maker. We can make clothes, create video games, expand our theme parks. Lego is as well known as Disney. There's no reason we can't be a 360 degrees lifestyle brand in the same way. But to do that, we have to let go of the past. The Lego brick was our greatest strength, but now it's holding us back. We need to think beyond the brick. Pogman smiles, as Cicolela's infectious energy brings some excitement back to the room. That's exactly it. We aim to make Lego the number one brand in the world for families with children. Pogman looks over at Christianson. The man who brought him in to rescue the company. He can see Christianson's eyes shining, both at the invocation of his grandfather's legacy, and at the scale of ambition that Pogman has just brought into the company. You know what they're chasing here? It's the holy grail of branding, stretching a name to something bigger than the product. But here's the rub. Just because people love your brand doesn't mean they wanted on your sneakers in theme parts juice boxes, stretch too far, and even a strong brand will snap. Can Lego go beyond the toy box and transform itself into a lifestyle brand? We're about to find out. I'm Leon Nefak. Best known is the host and co-creator of podcasts Slow Burn, Fiasco, and Think Twice, Michael Jackson. I'm here to tell you about my show Final Thoughts, Jerry Springer, whose name is synonymous without rages guests, taboo confessions, and vicious onstage fights. But before the Jerry Springer show became a symbol of cultural decline, its namesake was a popular Midwestern politician and a serious-minded idealist with lofty ambitions. Through dozens of intimate and revealing interviews with those who knew Springer best, I examined Springer's lifelong struggle to reconcile his TV persona with his political dreams and aspirations. And one of the best podcasts of the year by the New Yorker and Rolling Stone, Final Thoughts Jerry Springer's story about choices, how we make them, how we justify them to ourselves, and how we transcend or do. Listen wherever you get your podcasts, or binge the whole series at free right now on audible. Start your audible subscription in the audible app. In mid 1999, Legos' new leader, Paul Ploughman, hits the ground running, unleashing a wave of new ideas and initiatives across the company. He opens a new Lego Land theme park in California, building it cost around $130 million, but Ploughman's convinced it's worth it. In fact, his plan is for Lego to open a new theme park every two years and start a global chain of Lego retail stores. The theme parks and stores tie in with Ploughman's vision of mimicking Disney and making Lego a lifestyle brand synonymous with childhood across the world. Some amusement parks are built on children's dreams, but now there's one built out of children's toys. That's right, Gail Anderson is at Lego Land and Carl's Band with a first look at this unique new park. The theme parks, however, won't solve Lego's immediate crisis. The company losing money, it needs a boost right now. But as 1999 continues, Lego's decision to break with tradition and sell Star Wars play sets pays off. The Star Wars tie-in is a massive hit. It exceeds the company's own forecasts by 500%, bringing in more than $200 million. It's enough to bring Lego narrowly back into annual profit. It's far from a bumper year, but it's a huge relief after the shock of 1998's loss. Encouraged, Ploughman builds on that success by inking a major licensing deal with another magical universe beloved by kids around the world. Harry Potter. Then, Ploughman shows what he means by making innovation the center of his strategy, with the development of another brand tie-in that reinvents what a Lego toy can be. The Steven Spielberg Lego Movie Maker set. The Spielberg set is like nothing else the company has ever released before. He comes with a digital camera that connects to a family's home computer so that kids can make stop-motion short films using their Lego cities and many figs. The set even comes with a green T-Rex so that kids can build Lego Jurassic Parks. But changing the toys isn't enough. To truly recreate Lego is an innovative global brand. Plagman must also change the way its products are designed. But doing that means overcoming internal resistance. Lego is a global company with a small town mindset. Traditionalism rules at Lego's offices in factories in Billand. A small town on Denmark's remote Jutland Peninsula. Locals joke that it's three hours from anywhere. Plagman believes that the world's most talented designers will never move to a place like this so he will have to bring Billand to them. He opens research and design labs in London, New York, Milan, Barcelona, Tokyo and Los Angeles. He also keeps their operations isolated from the Danish head office so as not to impede their free wheeling creativity. Plagman and Chico Leila urge these design teams to go beyond the Lego brick play system that's defined the company for decades. Plagman's aim is for Lego to seek out so-called blue oceans, which is management speak for markets that are so new and unexplored that the waters haven't been stained red with the blood of business rivalries. This was becoming a fashionable buzzword among business thought leaders as the world changed with the growth of the internet and innovation was seen as the be all and end all of all business strategy. Then in the clearest signal yet that Lego is letting go of its past, Plagman kills Duplo. The oversized brick sets that Lego aims at preschoolers. Though its sales had somewhat plateaued in recent years, Duplo is hugely popular and the first step that millions of children take into the Lego universe. In Germany and the Netherlands, Duplo was nearly as big a brand as Lego itself. But Plagman is terrified that electronic gadgets are taking over from traditional toys and he wants to show the world that when Lego says it's changing, it means business. He reworks Duplo as Lego Explore. Duplo's familiar rabbit logo is ditched to the horror of Lego's veteran design team. The Lego Explore line also radically moves away from brick building. The line adds toys like the Explore Music Roller, a plastic stick with wheels that plays music when a child pulls it along the ground. These new toys aren't designed for kids to build themselves. They exist to compete directly with similar battery powered play things from Mattel's Fisher Price brand. In their relentless pursuit of innovation, Plagman and Chico Leila adopt a forward thinking "There's no such thing as failure" approach. Lego buys a tech startup to help it create a product called Kidpad. It's a high tech toy crossed with a video game where playing with the physical bricks changes what happens on screen. But after three years and millions of dollars of investment, that an issue to be shut down without a single Kidpad having made it to the shelves. In the fall of 2000, Chico Leila flies in to review the failed project. The executive in charge of Kidpad is terrified he's about to lose his job. But instead, Chico Leila's relaxed about the losses. The way he sees it, innovation can't happen without making mistakes. He spends just 30 minutes reviewing what went wrong before declaring they're never going to talk about Kidpad again. Fail fast, learn faster. In startup plan, that's the gospel. Of course, Lego's no mere startup. Kidpad crashed burned and cost of fortune. But Chico Leila didn't flinch. No post mortem, no blame game, just what's next? That's the real takeaway here because that's how innovation works, right? Not every rocket makes orbit, but each one can be an important step when you're teaching yourself to fly. The emphasis is on moving forward to create the next great Lego revolution. By 2001, the innovation push is in full swing. As new and venive Lego products roll out, sales rise by 17%. These gains create a sense of forward momentum in the company and a feeling that the brand innovation is paying off. But at the same time, the company is spending so much money innovating that its profits fall. Even with the success of its Star Wars and Harry Potter play sets, Lego lost hundreds of millions of dollars in 2000. But Ploughman isn't deterred. He takes the increase in sales as a vindication of his "innovated all costs" strategy, and he's about to make his biggest move yet. Looking at the sales figures, he recognizes that where Lego is doing best is in its tie-ins with movie franchises like Star Wars and Harry Potter. For Ploughman, this makes sense. All the management consultants he's employed say that modern kids love to engage with a story of an existing imaginary universe. They love to weave characters like Luke Skywalker, Darth Vader, Dumbledore, and Hagrid into their own creative worlds. The consultants also report that kids raised on MTV and PlayStation's prefer edgier, darker stories than Lego customers of previous generations. But the problem with these film tie-ins is that Lego now has to split a huge chunk of the profits with the Hollywood studios that make the movies. So why doesn't Lego create its own imaginative universes? Ploughman decides it's time for Lego to tell its own stories and create its own original cast of characters. That way it won't have to share the profits with anyone. He orders the research and design teams to get to work on new story-driven Lego toys. The first result of this push is an action figure called Jack Stone. Lego sees him as its answer to Hasbro's sensational popular soldier toy GI Joe. But Lego is still Lego. It's a privately owned company controlled by the family of the founder. The company doesn't just exist to hit the numbers stock market investors expect. It must also align with the philosophy of the family that owns it. Ploughman knows he can't totally break Lego's tradition to never make a toy that glorifies war, or that makes killing seem like child's play, but he wants an action figure. So Jack Stone is positioned as an all-purpose civilian action hero. Sometimes he's a police officer. At other times, a firefighter. Or even a helicopter pilot. He rescues people no matter what danger they might be in. Guided by his motto, "Can do will do done." The Jack Stone figure itself is about a third larger than a traditional Lego minifig, and the Lego set it comes with are also larger and simpler than a traditional set. This is in line with another of Ploughman and Chicolela's beliefs. That kids who are into video games don't have the patience or attention span for toys that require long, complex building processes. They want to open a box and start playing. So Ploughman tells his teams to simplify their designs and drastically reduce the time it will take a kid to put together his Jack Stone helicopter and start flying. "There's a new kind of hero in town, so fearless, so ready to save the day. He's larger than life." But Jack Stone is only the first step, because Ploughman's got an even more ambitious product line in development, an entire fantasy universe of space warriors, alien worlds, and sci-fi robots called "Golador." With the Golador toy series, Lego entirely dispenses with the traditional Lego brick. In its place, it's a pins and holds system of interlocking limbs and torsos, so kids can snap together their figures in a process Lego called "clinching." It's a system that lets kids mix and match the body parts of different action figures. It also spares them the time and mental work of having to build their toys like a traditional Lego set. Golador's figures also look nothing like the smiling yellow minifigs that children around the world know and love. Instead, they feel more like transformers or mighty morphine power Rangers. This is all part of Pogman and Chicolella's grand vision that Lego must think beyond the brick. But the biggest innovation of Golador lies in how it's marketed. Lego's plan is to create a Golador TV show to get kids connected to the imaginative universe, and use that excitement to drive toy sales. Hasbro and Mattel pioneered this strategy back in the 80s with animated shows to promote transformers and "he-man" toys. And since the rights to Golador would be owned by Lego, all sales are free from those pesky licensing fees. Pogman brings in Hollywood producer, and the show, "Golador Defenders of the Outer Dimension" is born. The live action series follows the adventures of Nick Bluetooth. Here, that's the hero's actual name. As he transported to the outer dimension to battle the evil alien overlord, "Gorm." But while Ploughbun is excited, some folks at Lego headquarters in Billand are worried. They think Galador feels, well, very unleggo. But the US arm of the company is predicting huge sales numbers, and for Ploughbun being unleggo is a feature not a bug. The old Lego was sinking. The name of the game is now innovation at all costs. And with millions of dollars invested in bringing Galador to TV screens and toy stores and Jack Stone ready to storm the action figure market, Lego seems ready to move beyond the brick. Everything's in place. All there's left to do now is get ready for the all-important holiday sales season. We're going to be able to get ready for the holiday sales season. If you're going to be able to get ready for the holiday, you can get ready for the holiday. We're going to be able to get ready for the holiday. We're going to be ready for the holiday. It's fall of 2002. And the mood at Lego headquarters is revving up. Trucks are delivering Jack Stone and Galador play sets to Walmart, Target, Toys or Us, and other big toy retailers across America. After several years of being propped up by Star Wars and Harry Potter themed Lego sets, companies hopeful it can prove that it too can create story worlds that captivate children. But as Christmas draws near, problems in the plan emerge. Retailers don't seem to know where to place Jack Stone play sets in their stores. Should it go next to Lego and other construction toys? Or does it need to be alongside the action figures? But retailers don't need to worry because children aren't looking for Jack Stone anyhow. These two basic to bill to appeal to those who love construction toys but too low action to outshine rival action figures. Boys just don't seem to connect to Jack Stone as a hero. The trend is towards brooding and edgy heroes like Neo from the Matrix movies, Jason Born and Marvel's Wolverine. Still, Lego does have Galador in its promotional TV show ready to save the day except it didn't. Not even close. Erred on Fox Kids and the Fox Family Cable channel. Galador's live action TV show was meant to captivate a new generation like Harry Potter or Transformers. Lego spends big on special effects, but it's never made a TV show before. And the story ends up a little more than a half hour ad. Then, just before the show airs, Disney buys the Fox Family channel and cuts back on its marketing support. The result is a lackluster show with below average audience ratings that leaves most viewers baffled. Galador's problems don't stop with the TV show either. Lego's leadership are so convinced it's going to be a smash hit that they scamp on focus tests and order their sales force to flood toy stores with stock. But with the TV show failing to generate the expected buzz, Galador toys do little but hog space on the shelves. With Jack Stone and Galador failing to connect, Christmas 2002 proves disastrous. Walmart and Toys A Russ are left with warehouses full of unsold Jack Stone and Galador's sets costing the money by the day. Retailers end up slashing the prices to try and get rid of the unsold stock. It also dense retailers trust in Lego's ability to launch new products. And that's a real problem. The US toy retail scene is dominated by a handful of big box chain stores and if they doubt your ability to convince shoppers to buy, they're not going to place big orders. Christmas 2002 goes down as a catastrophe. Sales falls short of expectations and profits, flatline. Replacing Duplo with Lego Explorer is hit sales too. The Lego Land theme parks are draining cash. There is no way to hide this situation and no way that Paul Ploughman can spin it as a momentary setback that simply requires more creative thinking and frantic innovation to turn things around. The family that owns Lego moves to replace Ploughman as COO. But CEO Kiel Kurt Christianson wants an orderly transition. So instead of removing Ploughman immediately, he brings in an ally to help stem the bleeding. The man he turns to is Jurgen Vigneudstorp. He's a lean, studious looking 35-year-old with glasses. He joined Lego two years ago after working as a consultant at McKinsey. In a company with such a strong family culture, NuteStorp seems like the ultimate outsider. But Christianson's desperate. He believes that only someone from outside the company's insular corporate tradition will ever be able to see the crisis with clear eyes. NuteStorp spends the next six months digging deep into the state of Lego. He visits its operations across the world, coms through its financial statements, and analyzes its production systems to uncover how serious this disaster truly is and what caused it. And then he returns to head office to give his assessment. It's June 2003, and in Bill and Denmark, NuteStorp stands in front of the entire Lego executive team. And NuteStorp already knows they won't like what he has to say. And that's because what he's discovered is far worse than he or any of them ever imagined. He looks out at the assembled team and tries to find an image that will force them to recognize the position they're in. The situation is this. We are standing on a burning platform. On our current trajectory, the Lego group may not survive the next two years. Mr. NuteStorp, much of the current losses are simply due to the weak dollar making our products expensive in the US. I mean, until a few months ago, sales were growing. NuteStorp almost rolls his eyes as he searches for the voice that is piped up from the back of the room. The weak dollar hasn't helped, but these issues go so much deeper. The sales that were growing were largely our licensed product lines like Star Wars and Harry Potter. But we expected those sets would keep selling even in years when no new movies were released. That has proven to be naively optimistic. Another executive speaks up. OK, so this is a cyclical downturn. Another film will come out and sales will bounce back. NuteStorp feels shock at how Lego seems willing to tie its fortunes to the decisions and business cycles of companies thousands of miles away in Hollywood. No, another Star Wars film is not going to save us. Like I said, this goes deeper. Even in years when sales have gone up on paper, we have still lost money. The problem is in the structure of our entire operation. NuteStorp brings up a line graph. I analyzed Lego in terms of economic value added. This is a technique we used at McKenzie. It's a way to measure the value a company creates for shareholders. What I found was that from 1993 to 2002, the Christianson family would have been better off if they put the company's money into no risk low return government bonds instead. By not doing that, the Christianson family is burned through half a million dollars of value each day, every day for 10 years. All eyes in the room turn to look at CEO Kiel Kirk Christianson, who has just been told that he has, in effect, lost $1.6 billion dollars. Ouch. An executive in the front row stands up visibly angry at the onslaught of bad news. Well, if you hate this company and how we do things so much, why don't you just go work at Mattel or Hasbro? Or go back to McKenzie. Foodstorp smiles to himself. Listen, I am the father of four children. I grew up playing with Lego only a few miles from this factory. And before I started at McKenzie, I trained as a kindergarten teacher. Believe me. I know how magical Lego is for children. I don't hate this company. I love it. But our only hope is that we can get a new job. The hope right now is to face the facts about the situation we're in. He looks out at the sea of angry, cross-armed Lego employees in front of him. I know you came here today expecting me to present some flashy new strategy with new lines of toys or magic software that will reinvent Lego for the 21st century. But the truth is we don't need a growth strategy. Right now we need a survival plan. We change or we die. Those are our only two options. You might not want to hear it, but it is how things are and it is my responsibility to tell you the truth. Christiane now approaches the podium and places his hands on new dstorps shoulder. Thank you, Jorrigan. We appreciate your honesty. I promise we won't shoot the messenger, but perhaps we could have the room for a few moments. Newdstorp walks out of the conference room. As soon as the door clicks shut behind him, his shoulders sag with tension. He pulls out his phone. Hi sweetheart. Well, I tell them the truth. What else could I do? I don't know. Maybe today will be my last day at Lego. Let this sink in. This 71 year old family business would have done better parking its money in savings bonds. Newdstorp used a quiet killer, economic value added to cut through the feel good fog. Sales growth is great, sure, but if it's not generating profits or real value, you're just running on fumes. As Newdstorp ends the call to his wife, he glances back toward the closed doors of the conference room. Inside, he knows both his own and Lego's fate are being decided. For years, the company has had its head in the sand about its situation. Now, it's running out of time to change. And if the company refuses to listen now, it could all be over. On the next episode, Lego finds itself on the very brink of disaster. The company reimagines what innovation means and Christianity is faced with a heartbreaking decision. Follow Business Wars on the Audible app or wherever you get your podcasts. You can listen to all episodes of Business Wars ad-free by joining Audible. From wondering, this is Episode 1 of Rebuilding Lego for Business Wars. We've used multiple sources for this season, including brick by brick, how Lego rewrote the rules of innovation and conquered the global toy industry by David Robertson. A quick note about the recreations you've been hearing. In most cases, we can't know exactly what was said at the time. These scenes are dramatization, but they are based on historical research. I'm your host David Brown, JS Raffaelia of Yellow Ant wrote this story. Research by David Wolinski, Sound Designed by Ryan Potesta. Kyle Randall is our lead sound designer, fact checking by Alyssa Jung Perry. Our managing producer is Desi Blaylock. Our senior managing producer is Kalim Pluse, produced by Tristan Donovan of Yellow Ant and Kate Young. Our senior producers are Emily Frost and Dave Schilling. Karen Lo is our producer emeritus. Our executive producers are Jenny Lauer Beckman and Marshal Lui for wondering. What are you wondering? Yeah, what do you want to get out of? I just got a bunch of things to do. I'm going to get a bunch of stuff to do. I'm going to get a lot of things to do. I'll see you next time.