LEGO Turnaround: How Focus Rebuilt the Brick Business
The LEGO turnaround began in 2004, when the company was on the brink of bankruptcy because it was doing too many things at once, according to a Boston Consulting Group interview with Jørgen Vig Knudstorp, LEGO Group president and CEO from 2004 to 2016. LEGO refocused on the brick and its fans, and it reported record 2025 revenue of DKK 83.5 billion, up 12%.
What caused the LEGO crisis in 2004?
The LEGO crisis came from overexpansion and a diluted brand, according to Boston Consulting Group's 2017 account of its interview with Knudstorp. BCG describes Knudstorp as a 35-year-old former academic and consultant when he became CEO, and as the first LEGO CEO from outside the founding Kirk Kristiansen family.
In that interview Knudstorp said the company "lost its focus and its core" because it did many things at the same time. He added that LEGO had not nurtured the community around its brick and had taken customer loyalty for granted by stretching the brand too thin.
What is the LEGO turnaround timeline?
The LEGO turnaround timeline runs from the 1958 brick standard to record results in 2025, and each date below comes from the BCG interview or LEGO's results release.
Date
Event
Source
1958
The modern brick standard begins, and every brick since fits every other LEGO brick
Knudstorp, BCG interview
2004
Knudstorp becomes CEO while LEGO is on the brink of bankruptcy
BCG
2016
Knudstorp ends his term as president and CEO
BCG
March 10, 2026
LEGO reports 2025 revenue of DKK 83.5 billion, up 12%
LEGO Group
What did LEGO change to recover?
LEGO changed by returning to the few things it did better than anyone else and fixing how it managed them. Knudstorp named those strengths as a unique material that holds together like glue yet comes apart easily, the loyalty of families across generations, and a large fan community. In 2017 Knudstorp said LEGO made more than 70 billion bricks a year.
The table below maps each problem Knudstorp described to the response he gave in the interview.
Problem in the 2000s
LEGO response
Detail from the interview
Too many activities at once
Return to the brick and the capabilities behind it
Knudstorp asked what the company did better than anybody else
Community under-served
Treat fans as a core audience
Knudstorp said the company had not nurtured that community well
Video games drawing attention from toys
Treat games as another way to engage children
Knudstorp said LEGO made games with partners and ranked as the second largest title for families with children in 2017
Growing complexity
Flat management structure
Knudstorp met monthly with a group of 20 senior vice presidents
How does LEGO measure success?
LEGO measures success with three scores before it looks at profit, according to Knudstorp. The first is a Net Promoter score, a survey rating of how likely people are to recommend a brand, taken from children. The second is the value LEGO creates for its customers and suppliers. The third is employee engagement, which Knudstorp called the foundation of LEGO's reward system.
Knudstorp described financial results as the outcome of those three measures. His reasoning was that a company with highly recommended products, partners who gain from working with it and engaged employees will make a profit. A brand team can copy the structure without copying the company: pick the audience that must recommend you, and measure it first.
What do LEGO's 2025 results show?
LEGO's 2025 results show that the refocus has held for two decades. The company's results release of March 10, 2026 reported revenue up 12% to DKK 83.5 billion, operating profit up 18% to DKK 22.0 billion and net profit up 21% to DKK 16.7 billion. LEGO also reported investments of DKK 9.2 billion, mainly in new factories and expanded facilities, and free cash flow of DKK 10.8 billion.
According to Spielwarenmesse's summary of the release, LEGO CEO Niels B Christiansen credited the portfolio, the strength of the brand and an effective operating model for the demand. The same summary says LEGO City, LEGO Technic, LEGO Star Wars, LEGO Icons and LEGO Botanicals were among the most popular themes and brought new, younger fans into LEGO play. It adds that LEGO Fortnite Odyssey passed 1 billion player hours, that LEGO announced a partnership with the F1 Academy, and that LEGO used less virgin fossil-based material in 2025 than in 2022 while revenue grew 29%.
Knudstorp named risks in 2017 that still apply: volatile emerging markets, rising protectionism and a product made from oil. Those were the costs LEGO had to manage while it grew.
What can other brands take from the LEGO turnaround?
Other brands can take three checks from the LEGO turnaround, each tied to something Knudstorp said or LEGO reported.
Check
Question to ask
LEGO example
Core
What does the brand do better than anyone else?
The brick and its compatibility since 1958
Community
Who recommends the brand without being paid?
Fans the company says it had not nurtured well
Measure
Which score comes before profit?
Children's Net Promoter score, partner value and employee engagement
The LEGO turnaround shows that a brand recovers by shrinking to what only it can do and then measuring the people it serves. LEGO's 2025 revenue of DKK 83.5 billion followed from a 2004 decision to stop doing everything else.
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