Project management post-mortems: LEGO
Discover how LEGO stepped up their project management strategy to drive continuous improvement and team collaboration.
We all know LEGO, we’ve all used it and we all hate stepping on it. It’s a globally popular brand, but in the early 2000s, LEGO was facing a crisis. Despite its nostalgic charm and worldwide recognition, the company was bleeding money. According to this article by Leaders, by 2003, LEGO was losing approximately $300 million a year. Fast-forward a few years, and not only had LEGO recovered, but it had also become the most profitable toy company in the world. How? Through a remarkable journey of business project recovery, agile innovation and strategic execution.
This case offers rich lessons in project management and product development. Let’s explore what went wrong, what changed and what project management professionals can learn from LEGO’s transformation.
Written by
Polly is a Marketing Executive at Learning People, bringing extensive expertise in professional training and career development, including in-demand fields like data, tech, cyber security, cloud computing, project management, and business skills.
The problem
LEGO's troubles ultimately came from an explosion of creativity with minimal strategic direction. To stay competitive in the market, the company had introduced hundreds of new products, licensed themes and accessories. However, this expansion came at a high cost.
By the early 2000s:
- The company was producing over 13,000 different pieces, which was excessive relative to demand.
- Development teams operated in silos, often launching new projects without considering feasibility or customer demand. What have we said about good communication skills!
- Operating costs soared while sales plateaued.
- Customer loyalty was eroding as core fans struggled to connect with the overly complex new sets.
In project terms, LEGO was experiencing scope creep on a huge scale, poor stakeholder comms and misaligned strategic goals.
The turnaround
Enter Jørgen Vig Knudstorp, a former McKinsey consultant who became LEGO’s CEO in 2004. Knudstorp, with a background in strategic thinking, brought a project-centric mindset to the company’s recovery.
His approach was systematic and deeply grounded in project portfolio management principles. Here’s how LEGO shifted gears:
1. Cutting complexity
One of the first changes was dramatically reducing the number of unique bricks being produced from over 13,000 to around 6,000. This streamlined production and enabled the company to focus on delivering engaging sets that stayed true to the LEGO brand.
This step mirrored best practices in agile product management, prioritising the backlog and eliminating low-value features.
2. Listening to customers
Knudstorp locked in on the importance customer feedback and market research, backing product development decisions with data. This was a significant change from the previous “create it and hope they come” model.
LEGO began involving their passionate fanbase, known as AFOLs (Adult Fans of LEGO), in the design and testing of new sets. This change introduced a more customer-centric approach to project planning, a classic mark of agile development.
3. Aligning strategy with projects
One of the most critical changes was ensuring every project aligned with business goals. Teams were restructured around clear objectives, with project leaders held accountable for budgets, timelines and performance metrics.
This alignment of strategy and execution was integral. Projects had to deliver measurable value. LEGO even introduced a new stage-gate process for product development, ensuring that every idea was rigorously vetted before going to market.
4. Empowering teams
Rather than diluting creativity, Knudstorp empowered teams with a clearer sense of direction. By removing bureaucratic barriers and actively encouraging cross-functional collaboration, LEGO teams could innovate within constraints; an essential principle in agile frameworks.
The results
By 2008, LEGO had returned to profitability. But more importantly, the company had created a sustainable operating model that balanced creativity with commercial viability.
Some key wins:
- Operating profit margin climbed steadily; LEGO even performed well during the 2008 credit crash.
- The LEGO brand was reinvigorated through hits like LEGO Star Wars and eventually, The LEGO Movie.
- The company embraced digital transformation with platforms like LEGO Ideas, allowing fans to submit and vote on set designs, blending agile innovation with community engagement.
Lessons for project management professionals
If you’re working as a Project Manager, LEGO’s turnaround is packed with actionable insights:
- Keep your portfolio lean: Too many parallel initiatives can dilute focus and drain resources.
- Listen to the end-user: Build feedback loops into every project. Real-world is almost guaranteed to dramatically improve product-market fit.
- Align every project to strategy: Clear business goals should be the north star for any initiative.
- Empower your teams: Creativity thrives within well-defined boundaries. Agile isn’t about chaos. It’s about focused iteration.
The power of reinvention
LEGO’s story is a case study in patient and resilient project leadership. By recognising when strategy had drifted, having a big rethink and applying disciplined project principles, LEGO turned a near-collapse into one of the greatest comebacks of all time.
For aspiring project managers and those navigating the complexities of modern business, the LEGO turnaround offers an inspiring reminder: with the right mindset, the right tools and a commitment to aligning execution with purpose, any project can be rebuilt brick by brick.
Header image credit: igra.design / Shutterstock.com
