Lego Makes a Hundred Billion Bricks a Year. CEO Niels Christiansen on Why They’re Now More Important Than Ever

(Miss this week’s The Leadership Brief? This interview below was delivered to the inbox of Leadership Brief subscribers on Sunday morning, Sept. 20; to receive weekly emails of conversations with the world’s top CEOs and business decisionmakers, click here.)

“Washington Man Designs Lego Basilica Replica.” This is not an Onion headline. The global lockdown has driven many to distraction. For parents with young children, the restrictions and closures have made this a particularly bonkers time. In March, after Lego employees realized that nearly 90% of the world’s school-age kids were outside of their normal learning environments, they posted a number of play ideas and building suggestions online. The company says the digital content has reached more than 80 million users around the world, helping provide inspiration that has made the world’s living rooms awash with castles, ships, trucks, treehouses and fantastical figures. “It was not about trying to sell more,” says Lego CEO Niels Christiansen. “At the center of it is really creative ideas of what to build.” Still, consumer sales at Lego rose 14% in the first half of 2020, according to the family-owned company, which was founded in 1932 in Denmark. Total revenues at Lego increased by 7% in the first half of the year, to approximately $2.5 billion.

Christiansen, 54 and an engineer by training, recently joined TIME for a video conversation from his home office in Copenhagen. He talked about the surprising complexity of making plastic bricks, Lego’s ambitious plan to wean itself off of petroleum-based plastic by 2030—the company has already tested over 300 sustainable materials for making plastics—and the one product Lego will never make.

Subscribe to The Leadership Brief by clicking here.

(This interview with LEGO CEO Niels Christiansen has been condensed and edited for clarity.)

Lego crowdsources new product ideas from devotees, including its new player piano. I’d like to start with questions crowdsourced from my nieces and nephews and family friends who are passionate about Legos. First, why don’t Lego characters have noses? (Max, 8)

It’s because we can do most of the impressions that we want with the mouth and eyes, whether they smile, whether they wear glasses or not. It’s also to keep things as simple as possible while still providing diversity and creativity. I guess there’s been no reasons for noses.

Have you designed a set of Legos? (Emmett, 7)

In my life, I’ve built many, many, many Lego creations, but I did not yet have the opportunity of turning one of them into a set, unfortunately.

Do you have a pet project now that you’re advocating for, any breaking news?

Yes, I have the privilege of once a year I get into a huge room and see all the different proposals for what could be sets to launch in one- or two-year horizon. And I do have my favorites. The problem is that when I come out of that room I have my mind erased so I cannot tell anybody about anything.

So here’s a socially minded question from Henry, 9. Some kids can’t afford Legos. What are you doing to help disadvantaged children acquire Legos?

Even though it’s a question from a kid, that’s something that is very, very important to us. We are donating a lot of sets to kids around the globe who are not so fortunate they can have sets. We have done a lot of that also during COVID. It’s the fact that 25% of all our dividends, our profits, go to the Lego Foundation. And the Lego Foundation makes grants on learning through play with a particular focus on kids who are in less fortunate situations.

Back to Emmett. He asks, What’s your favorite Lego set?

It changes over time, but now it is a Bugatti. It can actually drive and go into gear. I find it so amazing. It was very, very difficult. That’s my favorite right now.

And Henry asks, If I want my parents to buy me more Legos, can you recommend a study that shows Legos benefit learning? P.S., I’ll tell my friends about it.

There are a lot of skills around resilience and problem solving and creativity that you learn through play.In 2018, we talked to 13,000 families about play and the benefits of play. The Lego Foundation does a lot of studies for this to be research based. There are a lot of skills around resilience and problem solving and creativity that you learn through play. And children should play enough at an early age that they acquire those skills. Kids today are tested more, they are under more pressure, they’re in school more, they’re in after school, they’re at sports. And for them to deal with this rapidly changing environment, they need those basic fundamental skills that come through play. So I think that would be wise if Henry were to refer to the Lego Foundation’s reports on the importance of learning through play.

Subscribe to The Leadership Brief by clicking here.

Will there be Lego people with masks, wearing masks for the virus? (Nadia, 10)

We don’t have it at the moment. I would not say that it could not happen.

Now for the boring, adult questions. What was your most intense supply-chain disruption that Lego experienced as a result of COVID?

We have a supply chain based on five big factories around the globe with a lot of flexibility in our operating model shifting between those. But we did have two months of forced closure of our Mexican factory, and the Mexican factory is the prime factory supporting the Americas. So that was a very significant disruption for us.

For all the fun associated with Lego, you also pride yourself on your manufacturing prowess.

We’re not playing around. We are world leaders in molding in plastic. It’s unbelievably high tech. The product is very creative, but manufacturing it is a very, very structured and very well-controlled process. That complexity is really, really high.

In engineering speak, what level of precision is required to make Legos?

Our tolerances are extremely tight.

All to make plastic bricks?

We manufacture around a hundred billion bricks a year.A lot of people think, “O.K., how difficult can it be to put some bricks into a package?” We manufacture around a hundred billion bricks a year. So a hundred billion bricks in many, many different shapes and sizes and colors. And these bricks need to be available in the exact right moment that you put these 200 or 5,000 bricks into one box. If there is one brick in one color that’s not there, then we cannot produce the set. We have a huge complexity in the logistics behind making sure that we have all the right elements and all those ready at the right point in time.

Aside from those logistics, what makes Legos so challenging to make?

Just imagine, you take these bricks and they fit together beautifully. You can take them apart and they fit together again and you can do that thousands of times. These bricks, some of them they would be sitting around in your attic or your basement for 40 years and they still work. And whatever brick you bought 40 years ago still connects beautifully with a brick you bought yesterday. That takes an amazing precision. But also longevity and robustness in the plastic material. So we are really, really world-leading in doing that. And though the brick itself may look trivial, to bring the safety and the functionality so they can be sitting—sometimes it lies around in the window in the sun for two weeks and then they put it in the refrigerator and then they do all kinds of stuff, they leave it outside and they bring it in. And it cannot be brittle, it cannot break, it cannot be sharp or have sharp edges if it breaks. The safety level and quality level is unbelievably high, much higher than you would normally find in a toy or anything else.

You have a goal of making Lego bricks from sustainably sourced material by 2030, instead of petroleum-based material. Are you on target?

Making bricks out of sustainably sourced materials is not trivial. That’s why we’ve given ourselves another 10 years to get there. But I’m also honest to say there’s some uncertainty in that because those materials do not exist today. It’s not like I just could go out and say O.K. and say, Listen, if I paid 20% more, then I get this material and then I can just do it tomorrow. Because it’s not there.

Are you out to replace plastic?

We are not looking to get out of plastic. We are looking to sustainably source plastic. We already have some sugarcane-based plastic materials that still have all the same good characteristics that I talked about before.

How important are your licensed products?

It’s not half of our business, but it’s a significant part of the business where we are linked to external IP.

I understand that 60% of your product line every year is new.

Yes. I don’t know any company that would do that!

The Lego Millennium Falcon Collector’s Edition is today the most complex Lego set ever sold, with over 7,500 bricks and an $800 price tag. Is there anything planned that is at that level of complexity and expense?

We have 250 designers, 40 different nationalities, so I’m sure they’ll come up with something that’s even stronger in the future than the Millennium Falcon.

How do you get to be a Lego designer? What are their backgrounds?

You cannot take the Lego designer [degree program] at any university. I cannot give you a formula. It’s anything from an engineer to an artist and anything in that spectrum.

What essential human instinct does Lego tap into?

Endless creativity. You can express yourself, you can try things out and play, and you can build. You can be proud of the creation you have actually done. You can improve it all the time, you can get new ideas. I think that’s what we all like, and often as we have also done here we talk about the Millennium Falcon or the big sets like the Bugatti. You build those, but let’s also remember that most of the Lego buildings, and actually the Lego building that I have really liked most as a child, was really this free building. I think that’s the big, big strength compared to any other toy where you buy something that is more or less finished and then you play with that. Here you get to create what you then will role-play, and you can improve it. And it’s kind of a continuous process where you’re in the driver’s seat.

There’s a lot of concern about distracted attention spans and too much screen time.

A couple of years ago, I often got the question, Is the brick still relevant? And everything shows the brick is probably more relevant than ever. Kids really like this physical play. We also know that parents are very aware of that. I get letters from moms who say, Listen, I’m so happy with this new set. Now my son or daughter has not been playing on the screen for three days, and they have been so immersed into this creation they have done.

Who is your biggest competitor?

Everybody else fighting for children’s time.

What toy company do you admire the most that’s not Lego?

Disney.

What is one thing Lego will never do?

We will never produce military toys.

---

CHRISTIANSEN’S FAVORITES

BUSINESS BOOK: You may find me boring, but that’s actually Michael Porter’s old book Competitive Strategy. It’s a very fundamental book on how to do strategy.

AUTHOR: On my vacations I like to read Ken Follett.

APP: Spotify.

DAILY EXERCISE ROUTINE: Swim in the morning, in the ocean, and then I do Pilates.

BREAKFAST: I eat a special type of yogurt that originates from Iceland. It’s called Skyr.

Subscribe to The Leadership Brief by clicking here.

 

 

✍ Credit given to the original owner of this post : ☕ Business – TIME

🌐 Hit This Link To Find Out More On Their Articles...🏄🏻‍♀️ Enjoy Surfing!