Sales of movie-related toys dropped dramatically.
It was as if the tide had gone out and exposed a broad expanse of rocky beach. The 1999-2002 surge in sales from movie-related toys had hidden a harsh reality: LEGO had virtually nothing else to drive sales and profits; despite all the disruptive innovation it had tried. Most of its other toy lines were generating massive losses. So dire was the situation in 2003 that a LEGO executive, Jørgen Vig Knudstorp, told his colleagues, "We're on a burning platform. We're running out of cash [and] we likely won't survive" [ CITATION Rob13 l 1033 ]. After outside the box innovation had left a nasty scar on the company, they decided that instead of trying to gain new audiences as far as wider varieties they went back inside the box and instead thought about their existing Lego fans and worked on pleasing them. 'Over the past seven years Lego has been a success and this is all down to a 'third innovation strategy' it's a strategy of offering a family of complementary innovations around a core product. None of those complements are risky or difficult, but together the total package is irresistible to customers. LEGO is neither the first to use this strategy nor will they be the last. But there is no better example of a company that has used this approach superbly and profitably.'[ CITATION Rob13 l 1033 ].
The objective of this case study is to look at what made Lego successful as a brand and company and then what almost destroyed it. Firstly we will introduce the brand and discuss in further detail the innovation strategies they tried that failed, thirdly why did they fail and what could they have done to avoid it. Lastly we will discuss how they managed to bring the brand and company back stronger than ever, and what this involved as in going back to in the box thinking worked better for them, rather than reaching too far and missing the mark with the fans of their toys and other interested customers.