Written By: David Carneal – Digital Efficiency Consulting Group – DECG
Read Time: 4 min
Let’s say the quiet part out loud: when most companies get into trouble, they don’t simplify. They panic.
They add more products. More features. More exceptions. More “innovation.” More meetings to “align” on the innovation. (Because nothing screams “we’re fine” like a calendar that looks like a game of Tetris.)
LEGO tried that path. And in the early 2000s, it nearly buried them.
This isn’t a cute story about imagination and colorful bricks. It’s a business survival story about doing the one thing most leaders refuse to do: cut the chaos.
The “Innovation” Trap (a.k.a. The Corporate Comfort Blanket)
In the late 90s, LEGO looked at video games, saw the future, and did what a lot of companies do when they get scared: they tried to become everything.
Clothing lines. Video games. Theme parks. Action figures like Galidor that didn’t even play nicely with LEGO’s core system.
Hard question: when you say you’re “diversifying,” are you expanding… or just running from your core business because it got difficult?
LEGO didn’t diversify. They distracted.
And then the operational nightmare showed up, because operations always shows up to collect the bill.
Complexity Is a Tax. LEGO Was Paying It Like a Billionaire.
Designers were basically allowed to create whatever they wanted. Want a unique pirate sword? A specific hood? A one-off siren? Sure. Just order a new steel mold (which costs real money, every time).
By 2004, LEGO’s unique elements had exploded from around 6,000 to nearly 13,000.
Translate that into adult business language:
13,000 unique bins to stock
13,000 supply chain decisions
13,000 chances to screw up
The Turnaround: “What Can We Stop Doing?”
Enter Jørgen Vig Knudstorp. He didn’t lead with, “What new things can we make?” He led with: “What can we stop doing?”
He looked at the data and saw something brutal: about 90% of components were used in just one design.
So LEGO forced simplification and cut unique parts roughly in half, from about 13,000 down to about 6,500.
This wasn’t “cost cutting.” This was system design.
Manufacturing got smoother (fewer mold changes)
Supply chain got predictable
Creativity improved because constraints forced smarter design
Selling the Distractions (Because Focus Is a Strategy)
Simplification didn’t stop at bricks. LEGO sold a controlling interest in the LEGOLAND parks and shed side businesses that were expensive and distracting.
They stopped trying to be a lifestyle brand and went back to being a toy company.
Hard question: if I asked your team what business you’re actually in, would I get one answer… or twelve?
The Result: Profitability Through Constraint (Not Magical Unicorn Dust)
Once LEGO stopped feeding complexity and started feeding the system, the turnaround followed.
By stabilizing the supply chain and removing the administrative sludge of 13,000 parts, LEGO returned to profitability within about a year.
Later, they were strong enough that by 2015 they were being described as the “world’s most powerful brand,” overtaking Ferrari.
Their profits also quadrupled during the 2008–2010 recession period.
The Lesson for You
You might not be manufacturing plastic bricks, but I guarantee you’ve built your own version of the “13,000 parts” mess.
Here’s the uncomfortable inventory check:
How many different forms do you have that ask for the same data?
How many “special processes” did you create for one client that you never use again… but still support forever?
How many software tools are you paying for that do the exact same thing, just with different logos and different sales reps emailing you “quick question”?
What can we stop doing today?
If you want help finding your “13,000 parts”
If you’re ready to simplify without turning your operation into a science experiment, that’s the lane I live in at DECG.
We map what’s actually happening, identify the hidden complexity, and build a practical plan you can implement step by step.
Small improvements create real change.
Supporting Series Available here
Footnotes
Platform01 Consulting (2023) – LEGO: One of the Greatest Turnaround Stories In Corporate History
The CEO Magazine / AIU (2025) – From the Brink of Bankruptcy: How LEGO Rebuilt Its Future Brick by Brick
LEGO Company (2003) – Annual Report 2003
The Strategy Institute (2025) – From Bankruptcy to Billions: Lego’s Blueprint for Business Transformation
The Guardian (2017) – How Lego clicked: the super brand that reinvented itself
Roland Berger (2019) – Restacking the rules of innovation
Harvard Business School / TOM (2015) – The LEGO Success Story: Getting Everything to Awesome!
Forward Partners (2023) – Amazing Turnaround: How LEGO Avoided Bankruptcy
NorthCo (2025) – The Lego Turnaround: How an Iconic Brand Rebuilt Itself