Rebuilding LEGO | Brick to the Future | 2

Audible subscribers can listen to all episodes of Business Wars ad-free right now. Join Audible today by downloading the Audible app. November 2003, Lego headquarters, Bill and Denmark. Christmas is closing in and as board members gather, the sense of crisis inside the company is growing. Six months have passed since Jurgen Vignodstorp warned Lego's leadership that the company is headed for bankruptcy. He thought that he'd be fired. Instead, he got promoted to strategic development sheet and told to find out what's gone wrong at the toy maker. Helping him is Jesper Ovisin, Lego's new chief financial officer. Ovisin's spent weeks digging into Lego's finances to diagnose the issues. Now, he's about to present his assessment of the company's finances to the board members, including Kiel Kirk-Kristiansen, the head of the family that owns Lego. Ovisin delivers a bleak assessment. Not only is Lego losing around a million dollars a day, its procedures and recordkeeping are so haphazard, that the company doesn't even know which products make or lose money. For six years, under the guidance of CEO Paul Pogman, the company has spent huge sums developing innovative new products and opening new Lego land theme parks every two years. But with so little financial oversight, it doesn't know which, if any, of these projects are working. Ovisin tells the board that he can't understand how Lego ended up in this mess. He used to work for Danska Bank, Denmark's largest bank. When he worked there, everyone came to work stressed and miserable, but the business made huge profits. At Lego, the company is dying, but everyone seems happy. Now, this is a perennial lesson we encounter on business wars, good vibes, bad books. It's easy to mistake smiles for success, but culture without accountability is like a party on a sinking ship. Good leaders know there's much more to gauging the health of a company than internal culture alone. After absorbing Ovisin's dire report, Kristiansen meets privately with Ovisin and Newt Store. He tells them that he recognizes that Lego is now in a life or death struggle. The company cannot afford any kind of defensiveness, complacency, or wishful thinking. Then, he makes a shocking decision. Flagman is out. Kristiansen will return to his former position as CEO. But, this will be a temporary arrangement to project stability. In reality, the business will now be run by the three of them. They will act as a shadow sea-squeed to circumvent opposition to change from within Lego. Newt Store will lead day by day efforts to save the company, supported by Ovisin. Six months ago, Newt Store was convinced he was going to be fired. Now, he's been chosen to lead the company in its darkest hour. The future of Lego depends on them succeeding. But all three men know success is far from guaranteed. Many within Lego will try to oppose them. Company veterans will cling to the old ways. The new generation of freewheeling innovators recruited by Flagman will resist having their freedom curtailed. And if Newt Store can't overcome these competing internal factions, Lego will never escape its tailspin. What's going on? Now, we're going to have a great time. We're going to have a party. We're going to have a party in the Urakala. Brown and this is Business Board. In the last episode, Lego tried to innovate its way out of trouble. But instead of saving the brand, the move pushed the company over the edge. Now, it's down to former management consultant, Yorgen Vignutstorke to rebuild the business. This is episode two, brick to the future. It's February 2004, two months after Yorgen Vignutstorke's meeting with Kelle Kirk-Christianson and Jesper Overson. Lego is reeling from a devastating Christmas. Across the U.S., there are warehouses full of unsold jackstone and gollidor toy sets. The news that Paul Ploughman is out and Christy Hanson is back in charge is going down well. Employees are putting up posters around Lego headquarters mimicking the Lord of the Rings movie Return of the King, but doctored to include Christy Hanson's face. But behind the scenes, it's not Christy Hanson, but Newtstorke, who's really the executive now on a mission to find a way to save the company. Newtstorke meets night after night with Overson and the restaurant of the Lego Land Hotel in Billand. They spitball what feels like a thousand different strategies for pulling the business back from the brink. Newtstorke knows that what Lego executives expect is an upbeat strategic program, packed with promises to restore growth and other warm words about Lego's prospects. But whenever he and Overson run the numbers, it's just not possible. This is not the moment for grand plans and big promises. Growth has to wait. Now is the time to cut back and concentrate on survival. In 2003, the company posted the worst results in its entire history, a loss of around $240 million. And the projections for 2004 are even worse. In fact, things are so grim, Lego might not even be around in a year's time. If they don't act now, there will be no company to grow. The market also senses Lego's weakness. Private equity firms are circling. Lego might be privately owned and therefore protected from a hostile takeover. But if it runs out of money, its banks and creditors may push it into a sale. In order to save Lego from the corporate bulters, Newtstorke does the unthinkable. He begins exploratory talks with US rival Mattel about selling the company. No one at Lego wants that. But the situation is so dire that if Newtstorke can't turn the business around, selling to Mattel might be the next best option. But in the meantime, he's going to make one final attempt to pull the company from its death spiral. In late February 2004, Newtstorke heads to the New York toy fair, the annual showcase of the global toy industry. He hopes to reassure Lego's major retail partners that the company is getting a grip on its problems. But the reception is chilly. Retailers are still trying to offload unsold Lego toys that shoppers shunned last Christmas. In a tense meeting, representatives from Toys R Us, America's second largest toy retailer, tell him that the company's new lines don't appeal to kids or parents. The only new product Lego's launch that's popular is Bionicle. Bionicle is a science fiction themed line of construction toys where kids construct their own action figures. It launched in 2001 and has become a huge hit. In its debut year, Bionicle delivered sales of more than $140 million. That's about 10% of Lego's total sales. But Lego's failing to supply enough Bionicle toys to stores. That failure means Lego and toy retailers are missing out on millions of dollars. The problem is that instead of doubling down on Bionicle, Lego diverted resources towards other new lines like Jack Stone and Galador. As a result, Lego's distribution systems can't meet the high demand for Bionicle. There's a lesson here. You can't just chase the shiny stuff. Bionicle was printing money, but Lego still got distracted. Founders do this all the time. They abandon what's working to chase the next big thing. Sometimes you got to focus on what clicks. You can't build a skyscraper on the foundation of a mere high rise. The meeting ends on a sour note. The Toys R Us crew tells Newt Storp that these days it feels like they understand Lego better than Lego does. It's later that night, and Newt Storps on the red eye flight back to Europe. He finishes reviewing the latest sales data, closes his laptop, then slumps back in his business class seat and size. Rough day, huh? Newt Storps turns to the man in the next seat over who flashes him a smile. Don't worry, we've all had him. Chris Zuck, good to meet you. The man holds out a business card bearing his name, and the logo of the management consultancy "Bain." Newt Storps reaches into his own pocket and pulls out a Lego mini-fig that looks like himself. Every senior Lego executive carries these little toys instead of a conventional business card. Zuck takes one look at the smiling yellow plastic face and bursts into laughter. Yeah, that might be the best business card I've ever seen. I love that kind of stuff about Lego. You take one look at this and you see the heart of the company you're dealing with. I might use this in my next book. Oh, you write about business? I mainly look at innovation. You know how different companies respond to changing markets. Newt Storps feels a rush of excitement. Oh, that's on's fascinating. I'd love to hear more. Zuck grins, relishing the chance to talk about his favorite subject. Well, my book is called "Profit from the Core." A premise is about 75% of companies that achieve sustainable growth that do it by strengthening their core business before they try to branch out. You know, too many companies think they need to be at the cutting edge of every new trend, but actually what you really need to ask is who are our core customers and how can we serve them more deeply? What Zuck is saying makes intuitive sense to Newt Storps. He's just never heard it articulated so clearly. Okay, but how does that work in practice? Well, my rule of thumb is that a company should only ever expand into holy new territory once every five years or so. There's no way you can learn the ins and outs of any new market in less. Newt Storps' blood runs cold. He realizes that Lego has Zuck's formula completely in reverse. They've been trying to move into five new markets a year instead of one every five years. Zuck holds up the smiling mini-fig Newt Storp just gave him instead of a business card. I mean, just look at Lego. Everything you guys do comes down to one thing, the Lego brick. And it'll snap and click as the pieces fit together. People should build companies like they would a Lego set, you know, one brick clicking into another and then another. Not just scattering them across the room. Zuck's mind flashes back to the colossal failures of Jack Stone and Galador. Those sets didn't even use Lego bricks. In fact, they had been specifically designed not to. It hits Newt Storp like a bolt of lightning. Throughout the last few years, Lego has been trying so hard to change and keep ahead of the curve that it's forgotten what made it great in the first place. Lego needs to find its core again and get back to the bricks. Yep, Newt Storp just had an aha moment. But let's zoom out and think about what we're learning here. Lego was trying to conquer five markets a year. That's like speed dating with your budget. But growth doesn't usually stick unless it's paced, even under the best circumstances. Everything too fast stretches your team, your brand and your sanity. You also run the risk of losing your company's soul if not the company itself. In June 2004, Kristiansen's Steps aside as CEO and names Newt Storp as his replacement. The store starts with the lessons Zuck taught him on the red eye flight fresh in his mind. His plan is to take Lego back to its core business and ruthlessly cut excess costs. He cancels the Lego Explore Preschool Toiline and Resurrects Duplo. He moves some manufacturing away from Denmark to countries where labor costs are lower, like Mexico and the Czech Republic. Lego's expensive design labs in London, New York and Milan are shut down. Newt Storp then reviews what Lego pieces are being used in each set and is horrified. Under Plagmins drive for innovation, Lego's toy designers were free to create unique pieces for new Lego sets, new swords for many fig pirates, unique gadgets for Jack Stone and trans-dimensional spaceships for Galador. The list goes on and on. But each new plastic piece means investing upwards of $50,000 on creating a new mold. The genius of the original Lego system was that one machine could turn out the same pieces for multiple sets. The Lego bricks are interchangeable whether you're building a fire truck or a Star Wars tie fighter. But with Lego designers running wild, there's been an explosion of the number of bespoke pieces used in Lego sets, leading to an explosion in manufacturing costs. Newt Storp institutes a ruthless call of all pieces that can't be used in multiple sets. He also clamps down on duplicate pieces after discovering that Lego makes six different chef figures. He cuts five of the chefs, leaving only one. Next, he declares that all new products must deliver at least a 13.5% return on sale. Return on sales is a measure of efficiency, basically how much profit a business generates for every dollar it earns in sales. But higher the return on sales, the better. From now on, it's not enough for Lego's teams to have cool ideas. Those ideas have to be capable of being produced efficiently enough to deliver the returns the company expects. Many of the designers hired underplugment hate the new restrictions, but Newt Storp is internalizing another of Suck's lessons. That innovation has to be guided and disciplined so that it drives profits, not just buzzy headlines. Newt Storp also convinces Kristiansen to spin off the Lego land theme parks. The rush to open those theme parks had become a massive financial strain. Lego was a toy maker, not a theme park company. And Lego is out to stick to what it does best. But it's not just the freewheeling innovators of the ploughman years Newt Storp needs to deal with to make progress. He's also going to have to deal with Lego's traditional wing. But to convince them to get on board, he's going to get back to basics and discover what makes Lego so beloved in the first place. And to do that, he needs to talk to the brand's biggest fans. I'm Leon Nefak, best known as the host and co-creator of podcast Slow Burn, Fiasco, and Think Twice, Michael Jackson. I'm here to tell you what 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. Named one of the best podcasts of the year by the New Yorker and Rolling Stone, Final Thoughts Jerry Springer is a story about choices, how we make them, how we justify them to ourselves, and how we transcend them or don't. 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. It's 2004, and in LEGO's headquarters, Mod's Nipper stands before the company's top executives and management. He's LEGO's head of marketing. He wears a sharp suit and stylish glasses with a mischievous glimmer in his eyes. As the saying goes, the only people who ever really tell you the truth are drunks and children, and we've been out getting the truth from the children who play with LEGO. For the past few months, Nipper and his team have been traveling across LEGO's key markets, meeting its core customers, the kids. But this time we tried something new. Instead of bringing children into our offices as part of focus groups, we went to them. We spent time in their homes, seeing how they actually play. If you want to learn how to lie and haunts, you don't go to the zoo, you go to the jungle. I want to tell you about one kid I met. I asked him what his most treasured possession was, and he showed me these old scuffed-up sneakers. Now, why did this kid value these old shoes so much? Because he had scuffed them up by practicing skateboard tricks over and over again, and knowing those tricks increased his status amongst his friends. Nipper sees confusion on the faces of a LEGO team. They're unsure why he's telling them about some random kid's sneakers. He gives them a smile. We are told repeatedly that kids today are different, right? That children who play with video games just aren't interested in construction toys. But we've been wrong the whole time. time. What that kid with the shoes shows us is that children value mastery. If something catches their interest, they'll work on it hour after hour, especially if they think he can impress others. Nipper lets that sink in. Then offers his take away from his search for children's truth. For the past five years we've been desperate to simplify Lego. Thinking kids don't have the patience for those kinds of toys. But we've been guilty of a huge mistake. We've underestimated children. One of the executives leans forward to interject. But surely video games have fundamentally changed the toy industry. Nipper smiles. He used to think the same. Sure, video games have changed things. Just not in the way we thought. Kids like video games and construction toys. They'll play PlayStation for an hour then pick up their Lego bricks. And when they do they want real Legos. They want to be a little challenged. Nipper holds up a Lego fire truck toy. It's red plastic glinting in the conference room lights. This is the fire truck we made for the Jackstone sets. We deliberately made those sets simpler. Thinking kids no longer had the attention span to build their own toys. Well we were wrong. Kids didn't like Jackstone because it didn't challenge them at all. It didn't feel like Lego. We need to stop dumbing Lego down. We need to get back to what we always did best. Creating toys that are fun and challenging. We need to get back to the bricks. It's August 2005 and Lego CEO Jorgen Vic Newtstore who's making his first visit to Brick Fest. An annual gathering of hardcore Lego fans from across the world. He winds his way through displays of giant Lego brick castles and an entire room dedicated to Bionicle. These incredibly complex creations must have taken hundreds of hours to build. Not to mention thousands of Lego bricks. But the fans and builders at this event aren't kids. They're a-falls, adult fans of Lego. Until now Lego was a company avoided engaging with a-falls. The designers and executives in Bill and assumed that they knew best and that any insight from outside would at best be irrelevant or at worst a distraction. But Newtstore is now following one of the key tenants from the profit from the core strategy. Your most valued customers will tell you what can be done with your brand. While a-falls only make up around 5% of Lego's customers, they spend up to 20 times more than parents buying Lego for their kids. And Newtstore thinks the company needs to start listening to their feedback. The response he gets at brick-fest is emphatic. Adult fans hate the juniorization of Lego that they've seen in recent years. They want Lego to be Lego, not an imitation of G.I. Joe. Newtstore also realizes that the adult fan community is a huge potential resource. They know things that even Lego doesn't about the products. If Lego could tap into their passion, it could benefit. Here's a trueism in modern business wars and I'm gonna overstate it for effect but that's because it's important to get the spirit here. Forget consultants. Your super fans probably have better ideas. They live and breathe your product. If you're not listening to them, you're leaving insights and cash on the table. Okay, I said I'd overstate it for effect. So are consultants bad? No, useless, far from it. They could be very wise and helpful but here's the point. The best R&D often comes from your most obsessed customers. And that's what Newtstore leans into. He institutes a program whereby a-falls can submit ideas to the company and if those ideas are put into production, the person who suggested it receives 1% of the proceeds. Engagement with the A-fall community results in huge improvements to Lego mindstorms, the company's robotic sets. It also leads to the creation of Lego architecture sets that allows enthusiasts to recreate historic monuments like Chicago's Sears Tower or the Big Bend Clock Tower in London. These prestige sets use standard Lego bricks but sell it a huge premium at gift shops and museums creating hefty profits. By 2006, Newt Storps pushed for financial discipline, has brought Lego back from the edge of bankruptcy. And that gives him breathing space to think about developing new products. But there can be no return to the failed innovation without rules approach of the past. He has to figure out exactly what works and what doesn't. And one thing that has been proven consistently successful is Lego's movie tie-ins. Newt Store has defined another Star Wars. It's early 2007 and Newt Storeps stands in Lego headquarters staring at a smiling mini-fig wearing a leather jacket and cowboy hat. The character is unmistakable. Its Indiana Jones reborn as Lego. Newt Storeps has built on Lego's success with Star Wars and Harry Potter by inking deals with the studios behind Batman and Indiana Jones. But now that's a problem because in the right hand of this Indiana Jones mini-fig is a tiny plastic pistol. For the traditionalist set Lego, this is a step too far. They could just about handle the light sabers and laser blasters of the Star Wars franchise. But this is based on a real gun. So they're putting up resistance to the Indiana Jones tie-in, arguing that this is too serious a break with Lego's commitment to never teach children about violence. But for Newt Storeps, Lego is in no position to walk away from a huge opportunity like this because of a plastic revolver. He pushes through the deal and Lego Indiana Jones becomes a big hit for the company. New from Lego. Indiana Jones, the greatest venture hero. But while Newt Storeps costs saving and financial discipline have steered Lego away from the brink of immediate disaster, its dependence on new licensing deals is a problem. Harry Potter and Indiana Jones Lego sets sell well, but a lot of the profit flows back to the movie studios that own the rights to those characters. To really put Lego back into profit, the company is going to have to start making its own hits again. But the wild form of innovation that Lego tried before led to catastrophe. So to figure out what it should do next, Newt Storeps going to have to die deep and rediscover what made Lego great in the first place. Newt Storeps begins combing through Lego's recent efforts and he discovers that amongst the crushing failures of lines like Jack Stone and Galador, there was one Lego theme that had generated huge sales and huge profits. Bionicle. Bionicle's space cyborg toys were built with a ball and socket system that allowed extremely free movement of their limbs, but still had the Lego feel of kids having to build their own action figures. The release of the Bionicle toy sets were backed by a cascade of comics, books, and animated movies to get kids into their world. But not just that. Because Bionicle had a storyline told through regular releases of comics, movies, and books, the production of the toy line had to conform to a strict schedule. That forced everyone working on the product from marketing to creatives to manufacturing to sales to work with absolute efficiency and discipline. There was no time to waste on the directionless experimentation that marked expensive failures like the kid pad. In other words, Bionicle had focus. Newt Storeps uses the lessons of Bionicle to create a new template for how innovation will work at Lego. The expensive freeform philosophy of the Pogman years is gone. From now on, designers will be encouraged to innovate creatively, but within strict guidelines. These rules include a demand that at least 70% of every new set must contain standard pieces. This keeps expensive custom molding to a minimum. At first, some designers object to these new guardrails, but many others discover that when done right, they can often be more creative when working within those strict guidelines. Now this is an idea much bigger than some block of Lego. Sure, cool ideas are fun, but unless they can be made, shipped, and sold at a profit, they're like prototypes with a PR team. Guardrails don't kill creativity. They keep those creative impulses from flying off a cliff. Even as the financial crisis of 2008 batters its rivals Hasbro and Mattel, Newt Storps' regime of discipline and focus means Lego maintains its steady growth. But, like most businesses, Lego wants more than just steady growth. So as the world emerges from the chaos, Newt Storps decides that, following Chris Zuck's guidelines, it's time to make a once-in-five years move and launch a major new product line, one that has a specific and daunting goal to deliver a 10% boost to the company's revenue. A team is put together at Lego's head office in Denmark, following the streamlined development approach that birthed Bionicle, and gradually a new Lego theme emerges. But this one is entirely original, rather than a movie tie-in. It'll be an immersive world with its own characters and stories, and owned by Lego itself. It's mid-2010, and Lego CEO Jörgen Vignodstorps is in New Jersey with marketing chief Mads Nipper. They're observing a focus group testing out the company's latest creation. The toy they hope will soon become Lego's flagship line, Ninjago. Things are going better than they hoped. In the room where the focus test is underway, a dozen eight to ten-year-olds maintain wrapped attention as they build temples and dojos out of Lego bricks, and listen to the stories of fierce ninjas battling evil skeletons that make up Ninjago's fictional world. Then, focus group facilitator reveals the secret weapon that Lego hopes will set Ninjago apart. Okay, I'd like to show you something else. James and Danny, why don't you come over here and the rest of you can come around and watch. The facilitator opens a box and takes out a set of small plastic discs. Each one is about a couple of inches wide. She hands one to James and another to Danny. Okay, these are your ninja spinners. Here, you can fit your ninjas onto them like this. The facilitator shows James and Danny how to click their ninja minifigs onto the top of their spinners. James is playing as the ninja character Kai, who holds a plastic katana sword. Danny is playing as the ninja Jay, who uses nunchucks. Okay, now we're ready to practice the ancient art of spin jitsu. Just put your spinners down here and here we go. She demonstrates how with the snap of the wrist, one can set the ninja spinners in motion. Both Danny and James immediately pick up the idea and stare each other down playfully. Then, whew, Danny and James flick their wrists and the two ninja warriors spin into action. Their weapons whirling around them. After a moment of circling, the two minifigs clash together with Danny's nunchuck wielding ninja sending James's character crashing down. The assembled kids go wild with excitement, each clamoring and shouting for their own spinner to go into battle. Newt's dork and nippers smile at each other in satisfaction. Eventually, the facilitator comes out to talk to them, leaving the kids to play out their own ninja battles. I don't know what to say, I honestly don't think I have ever seen a group of kids so enthusiastic. I think this toy is a hit. The excitement about Ninjago is a promising sign. Ninjago was developed using all the lessons Newt's storepin' his team Gleaned from studying Bionicle and the mistakes of the Pogban years. The goal here was to grow from the core, to make something new that still felt like Lego. The ninja characters are the minifigs that kids know and love, and the play experiences rooted in building and learning through creativity. Ninjago didn't reinvent the wheel, it just spun it better. The magic wasn't in making something wild and new. It was in blending fresh ideas with what already worked. Minifigs, creativity, characters with stories and bricks. You know, innovation hits harder when it's anchored in identity. Ninjago is also accompanied by a TV show to immerse kids in its world. But unlike with Galador, this time, Lego doesn't dilute itself into thinking it's a TV studio. Instead, it collaborates with a cartoon network to produce an animated show to help stoke interest in the toys. There's a lesson here for everyone who wants to grow their business. Want to come up with your next big thing? Then build it with your old strengths. And in 2011, Ninjago arrives on screens and in stores. Ninjago is an immediate hit. Lego sees a 20% spike in its first quarter sales. That's more than double what Lego hoped. Ninjago goes on to become the company's third most successful line after Star Wars and its enduring classic Lego City. And this time, there's no movie studio to split all those profits with. A year later, Lego follows Ninjago with a release of another new line. For decades, Lego has been pigeonholed as a company that makes toys that appeal more to boys. It's tried and failed several times to overcome that with play sets aimed at girls. So with a company's new focus to approach to innovation in place, Newt Store wants to try again, fed up with leaving out a market consisting of half the world's children. The result is Lego Friends, a range of Lego sets aimed specifically at girls. The launch of Lego Friends provokes a wave of controversy. Some online critics accuse Lego of trying to be politically correct. Others accuse Lego of playing two gender stereotypes because the Lego Friends playset has a pastel color scheme, suburban home, and beauty parlor. But the demographic that matters are girls and their parents. And turns out, they don't care about the arguments from either side of this debate. Lego Friends is an enormous commercial success. In 2012, the company sees a 25% increase in its annual sales and a huge rise in the number of girls and women buying sets and engaging with the brand. Like Ninjago, Lego Friends isn't just a best seller. It's massively profitable too. Thanks to Newt Storps' tight financial discipline and profit from the core strategy, the new Lego is not just releasing new products. It's releasing new products that excite while maintaining what people have always loved about Lego. In 2014, powered by the popularity of Lego Friends and Ninjago, Lego sales passed Hasbro in Mattel to become the world's number one toy maker. Think of this. 10 years earlier, Lego was nearly dead on the verge of selling itself to Mattel for peanuts. Now, it is the toy champion. And it's about to score another stunning victory at the box office. I don't think he's ever had an original thought. That's not true. Introducing the Double Decker couch. So everyone could watch TV together and be buddies. That was literally the dumbest thing I've ever heard. The Lego movie is an animated smash hit that brings in more than $450 million. But its story also mirrors Lego's own comeback. Movie tells the story of Emmett, a construction worker Lego figure who stands up to the evil Lord Business who wants to stamp out creativity. And in a way, it echoes how Newt Storep himself reconnected Lego with its creative roots and gave it the discipline and courage not just to escape business oblivion, but to build a new world in which for this company everything seems to be truly awesome. Jorgon Vig Newt Store, retired in 2016, but Lego remains the world's top toy company to this day. A turnaround he led is now the stuff of Business Legend, one of the all-time textbook examples of how to fix a failing business. And these The answer wasn't to move fast and break things. Innovation for its own sake can be just as dangerous as failing to adapt at all. Innovation needs to be guided by strategic goals and taken one step at a time. Moonshots only work once you know how to build a rocket. But LEGO's near-death experience is also a reminder that success brings its own risks. Complacency can be fatal. When things aren't going well, it sometimes hides the red flags you might have missed along the road to success. LEGO couldn't see it was heading toward the rocks because things had been going so well. Oh, one last thing. It really does help to keep an eye on the finances. Everything is awesome until you're in trouble. Now, it's your turn to be a master builder. 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 two of Rebuilding LEGO for Business War. We've used many 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 these seem your dramatizations, but they are based on historical research. I'm your host David Brown, JS Raffaele 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 Alissa Jung Perry. Voice acting by Chloe Elmore, our managing producer is Desi Blalock, our senior managing producer is Kalim Pluz, produced by Tristan Donovan of Yellow Ant and Kate Young. Our senior producers are Emily Frost and Dave Shelling, Karen Lo is our producer emeritus. Our executive producers are Jenny Lauer Beckman and Marshall Looley, for wondering. Wonderful. (upbeat music)