Brick by Brick

Robertson, an academic who held a professorship funded by LEGO, wrote with Bill Breen about the company's near-failure and recovery, with access to executives and internal material.

The crisis narrative is the useful part. LEGO faced falling sales in the late 1990s as management concluded that children were abandoning physical construction toys, and responded by diversifying: theme parks, clothing, video games, television, an action figure line, jewellery for girls, and a redesigned product architecture. The company also brought in designers with instructions to innovate freely, expanded the number of unique elements from around six thousand to over twelve thousand, and pursued growth in every direction simultaneously. By 2003 it was close to insolvency.

The recovery under Jorgen Vig Knudstorp reversed most of it. The company sold the theme parks, cut the element count sharply, imposed a rule that new sets should use existing elements wherever possible, restored profitability discipline at the individual set level, reduced the product range, and returned to the core building system. Robertson argues that the decisive change was not less innovation but bounded innovation: designers were given constraints on cost, on element reuse and on the target customer, and were required to work within the existing system rather than around it.

The LEGO Mindstorms case is covered in detail, including the decision to embrace rather than fight the adult enthusiasts who reverse-engineered the software.

The book was written with company cooperation during a period of extraordinary success, and it does not seriously examine the licensed-property dependence that a large share of the recovery rested on, or what happens when those licences change hands. The general argument, that innovation without constraints destroys value in a system-based product business, is the transferable content.