One of the great things about having kids is that it enables you to revisit your own childhood. One of the big surprises for me was to see how different the Lego of today is from that of my own youth.
A lot’s changed – not just the toy, but also kids, and the market in general. It makes a useful case study of continually evolving product-market fit.
Lego originally started producing wooden toys in the 1930s and in the 50s borrowed the design and concept of plastic self locking bricks from Kiddicraft.
Takeaway: It’s not about being first. It’s about being best. See Facebook/MySpace for details. It’s not the idea, it’s the execution.
Early Lego was made out of cellulose acetate, a material which warped, and could not support high locking friction. Lego persevered with several plastics, before settling on ABS. It proved to be crucial in creating the quality of the brand, as well as the effectiveness of the brick. The moulds used by Lego are engineered to very high tolerances – less than 2 micrometres (2 thousands of a millimetre)!
Takeaway: The product has to work. The most important piece of content in content marketing is…your product.
Initially when Lego launched, the range was composed of:
- Major sets of bricks, suitable for birthday/christmas presents.
- What were called “plan packs” – kits to produce specific models, typically of houses, and later, vehicles. Again quite expensive, so only for special occasions.
- Small supplementary sets, suitable for pocket money.
- Small plastic vehicles in HO/OO scale designed to work with existing train sets such as Hornby.
There was a restricted range of bricks – some charts show almost every type of piece available on a single sheet of paper – and the color range was limited to just white, red, blue, yellow, black, transparent, and some more limited plates in grey and green.
Takeaway. Try to cover the market opportunity with packages for every pocket. Make your product compatible with existing solutions to ease adoption. This is a classic market entry approach.
During the 60s, Lego introduced train sets, which removed the emphasis on working with existing HO/OO scale railway sets. One aspect driving this was that whilst Lego was relatively expensive and a premium toy, so were existing train sets, and so in this comparison, Lego did not look quite so unaffordable.
Takeaway. The expansion into a former “partner” market is the classic “bowling pin” approach of Geoffrey Moore’s “Crossing the Chasm”. It talks to the strategy of initial co-opting partners to complete the solution, and then, one-by-one, slowing taking them over directly.
This move to train sets led to the discontinuation of their range of small plastic vehicles, and in the 70s a new innovation – the mini-wheel – allowed the introduction of similarly scaled vehicles to houses. This enabled the system to expand and rely less upon external solutions to “complete” the system of play. This new combined system of vehicles and cars was called Legoland.
Throughout this period, the complexity and richness of Lego sets increased, but was still based upon a narrow range of product lines:
- Building sets.
- Legoland houses and cars
- Supplementary sets
A significant development was the move from general purpose building sets, to more specific model kits.
One thing notably absent from Lego were any people. Boys of that age would play with toy soldiers and girls with dolls, but Lego had nothing similar. To address this, in the mid-70s, Lego introduced two ranges – the Lego family. Large, jointed people models designed to be used in conjunction with room sets as a Lego dolls house. Shortly thereafter the original mini figures, or ‘minifigs’ as they are affectionately called – were scaled to “fit” Legoland houses and vehicles, and were initially a jointless faceless* statue. And it didn’t even really fit the scale either.
*(see our blog on the Psychology of Marketing)
It’s not known what Lego originally thought about these two lines, but the Lego family line was quickly retired, whilst the minifig evolved to include jointed legs and arms, as well as a recognizable face. An icon was born.
Takeaway. You should never stop innovating. But innovating means experimenting and evolving. Test the waters with a minimum viable product. Failure is actually progress.
The next major expansion of Lego that occurred was in the late 70s and early 80s with the introduction of themes. The first themes being Space, Castle, and Pirates. These were phenomenally successful. If you look at a Lego catalog of today (almost 100 pages now), less than 10% are building sets designed for kids to build their own constructions, and the overwhelming majority are thematic sets of specific models. Supplementary sets – a staple of the 60s and 70s have all but disappeared.
Over time Lego has experimented with several themes and sub-themes. Some fail, some succeed, but there is a constant refreshment of ideas. Perhaps the biggest advance came with licensed themes – Star Wars being the best known, and was introduced in 1999. This might be one area where perhaps Lego were behind the curve. Die-cast toys like Dinky and Corgi had been successfully producing TV tie-ins such as Thunderbirds and Batman since the 60s, so this avenue was well known in the industry.
Takeaway. Look after the market, and the profit will look after itself. Whilst licensed themes are more expensive and require royalty payments, they dramatically increase the size of the market.
During the mid-00s Lego stumbled and faced losses for the first time. It took a sustained period of soul searching and a “back-to-basics” approach to bring things back on track. Simply put, Lego had expanded to far away from their core market and needed to focus more on how children actually played with their toys. As part of the process they reduced by half the number of unique pieces they produced, but this helped power them back to success with a few years.
Takeaway. Understand your limits and keep to your core values. Lego took more than 50 years to get to its current position. There are no short cuts.
As Lego has grown, a number of sub-lines have been introduced. These include Duplo, for toddlers, and Technic for older children and a more direct competitor to Meccano. In addition, Lego has expanded “beyond the brick” into games, movies and theme parks. As children today spend more and more time online, Lego has followed them.
Takeaway. Don’t leave anything on the table. Even if sub-markets seem small, if you ignore them, you allow space for competitors to plant roots and flourish – potentially then able to attack you in your core market.
Lego has been phenomenally successful. But its story has not been one of obvious destiny, but rather one of continual refinement, reinvention, and evolution. No company can stand still. We think of Lego as being almost timeless, but that isn’t quite true. The search for product market fit never stops.
Catalog Images Copyright Lego
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