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Paal Smith-Meyer is waving a BusinessWeek article in front of me about LEGO's resurgence. "The Brick is Back," reads the headline, and Smith-Meyer, who runs LEGO's New Business Group, is reveling in the positive press, particularly happy to share the story from the magazine for which I wrote for nearly a decade. LEGO, which struggled mightily in the early to mid-2000s, leaned heavily on design to turn its financial fortunes around. In the article, LEGO's executive vice-president for markets and products, Mads Nipper, says: "With our arrogance, we thought being LEGO allowed us to do anything." Great quote, I think. But here's the odd thing: In all my days working for BusinessWeek, I can't for the life of me recall an article in the magazine about the revival of the Danish toy company. I'm a pretty avid BusinessWeek reader, and I'm certain I'd remember a piece, particularly one with juicy, self-effacing quotes from senior executives like this one. As I look more closely, something seems off. The article is written by Patrick S. Mitchell. I know most of the writers at the magazine, and there has never been a journalist on the staff with that name. At least no one I can recall. A freelancer? The layout doesn't look quite right, either. The color of the border at the top of the page is pretty close. But there aren't any of the creative touches that my former colleagues in the graphics department used to make the articles more navigable. And then I catch it. The issue date of the magazine is March 22/29, 2010. At the time, that was more than a year into the future. I look up at Smith-Meyer, who just smiles. Turns out he wrote the piece himself in 2005 and used a graphics program to mimic BusinessWeek's layout. He distributed it to LEGO's senior managers back then to tell the story of LEGO's turnaroundbefore it happened. He wanted to give the company's leaders a road map, albeit one that describes the route from the rearview mirror. And that byline? Smith-Meyer came up with what he thought was a BusinessWeek-y name, instead of his Norwegian one, using his initials.
DESIGN TRANSFORMED
Just as design pushed LEGO to the precipice, it helped bring the company back. But here's the paradox: Instead of giving designers free rein to conjure up their most brilliant creations to save the company, LEGO tied their hands. Instead of rubber-stamping nearly every request for a new component, LEGO put each one to a vote among designers. Only the top vote gettersthe ones other designers imagined they could usewould be added to the palette. And it eliminated rarely used pieces, slashing the total number of components to about 7,000, the same number as in 1997. LEGO also forced designers to come out of their cocoons and work with noncreative staff. At the earliest stages of product development, marketing managers, who had detailed research on the types of products kids wanted, helped guide development. Manufacturing personnel weighed in on production costs before a prototype ever saw the light of day. Gone were the days when designers could go wherever their imaginations took them.
It was particularly challenging because design is LEGO's key competitive advantage. Over the years, various rivals have emerged, making bricks that snap together with LEGO blocks at a fraction of the cost. Montreal-based MEGA Brands is the current thorn in LEGO's side. Companies such as Tyco Toys came before it with a similar strategy. But kids and their parents keep buying LEGO, and not simply because of their belief that the quality is better. They buy LEGO because the company offers the most creative collection of models, not merely a collection of bricks. Confining designers ran the risk of diminishing that competitive advantage.