How LEGO got hot ... again

  @FortuneMagazine February 27, 2014: 7:21 AM ET
RED17 legos 2

A LEGO rescue-helicopter set, unboxed. ReD's hands-on market research helped the toymaker get "back to the brick."


It might be difficult to recall, what with a hit movie out and LEGO sales near an all-time high, but just a decade ago the company was on the brink, bleeding $1 million in cash a day and posting record deficits.

The problem was, no one knew quite what the problem was. LEGO had tried different fixes, expanding into new product lines like Click-its (snap jewelry for girls) that didn't look anything like its traditional bricks. Focus groups were no help, recalls Paal Smith-Meyer, who heads new strategy at LEGO, because in the drab test spaces, kids were drawn to bigger blocks, made by competitors, mostly because they thought they were supposed to react to bigger being better. The environment was "false," Smith-Meyer says. And so LEGO set out on a radical new course: to understand the roots of play by observing its customers (kids -- and parents) actually playing in the comfort of their homes.

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