In the early 2000s they faced the possibility of going bankrupt. They were going up against firm competition from Mattel and Hasbro and in 2004 had debts nearing $1 billion and saw sales slump 40% in just two years.
So what happened to Lego, that might be also happening to your business? What was the thing that almost destroyed this giant and may continually destroy any other businesses?
It was Over-Diversification!!! Their problem was obvious, they were doing too much. They had theme parks, video games division and clothing lines. They’ve lost their focus.
When the new CEO — Jorgen Vig Knudstorp came over to help Lego get back on their feet he asked himself and his team one of the most important questions in the history of this brand. What should we leave out?
This is the question you should ask yourself: what should you stop doing in your business?
In 2005 Lego sold Legoland theme parks, their game division and many more. They went back to profitability in a matter of months. In 2011 they have become the most profitable and fastest growing company in the toy industry.
What is it that you should leave out?
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