The story of Lego has been used as an example for many a MBA course. The story is incredible. Lego – a privately owned company did almost everything right – they listened to the customer, they developed products in different categories, enabled innovation in their company and came up with unique ideas. When the technology changed, Lego adapted the best they could by inventing Lego Mindstorms. However, the company was barely profitable.
A consultant Jorgen Vig Knudstorp came into Lego as CEO and transformed the company. One big area, was to manage the inventory that reduced the products, managed the innovation and streamlined the company through some job losses but mostly focusing the company on important products that did sell. He stopped trying to meet every customers demand but rather focused in high demand customers.
This has been developed into a book “Brick by Brick” by David Robertson. This makes a good example for all companies in how to balance innovation, management, marketing and business rigor.