How Lego Became the Most Valuable Toy Company in the World

A bucketload of license deals

Even though it would appear Lego is well-positioned to become a fairly large entertainment company, McNally refuses to budge. Of Ninjago’s success, he says, “That is awesome, and it engages kids. But it does not mean we want to be an entertainment company.”

There’s a reason Lego does not see itself as an entertainment company—it tried and failed to do something similar about a decade ago. Under then-CEO Kjeld Kirk Kristiansen, it built theme parks, started a division to design video games (Lego’s popular, current line of licensed games is developed by Tt Games) and launched several varieties of toys to tap into existing trends.

The company nearly went under—one reason McNally’s job requires a delicate touch. “Licensing was one thing that…I don’t want to say was responsible for it, but there were properties that were translated into the Lego world that needed to have very specialized pieces to go along with them,” he says. “And one day, we turned around, and we had 7,500 different pieces in 70 different colors.” For a company that takes so much pride in refusing to skimp on the manufacturing end, that presented a serious problem in the supply chain. Kristiansen stepped down, and current CEO Jørgen Vig Knudstorp sold off the parks to Britain’s Merlin Entertainments Group before giving something on the order of the St. Crispin’s Day speech to his staff.

“He said, ‘I don’t believe that I’m tying your hands behind your back. You’ll still be able to make beautiful models—you’ll just have to find new ways to make them,’” McNally recalls. “At first it was, ‘Ugh, I can’t believe we can’t make those pieces,’ and then it became more, ‘Wait, how do we make it with the pieces we have?’”

That exhortation to build more creatively embodies the almost religious ethos permeating the toy company that doesn’t want to be an entertainment company. Lego has another show on Cartoon Network, Legends of Chima, featuring creatures from its new line of toys, which resemble other “play patterns” currently popular in the toy world—lines like Bakugan or Beyblade that have a gaming, point-scoring component as well as an action figure.

Playing with the similar Ninjago action figures, McNally says, was “a low-intensity building experience” designed for kids who are intimidated by a huge castle or a Star Destroyer. “It was about recruitment, and it worked, and that’s why we’re doing Chima.”


“It’s really about getting as many kids as possible to build,” he says. “Every time a child engages in that, she’s learning really important life skills—she just doesn’t know it. It’s about patience and persistence, and trial and error, and at the end, she’s really proud of what she built.”

That is the central creed at Lego: Get kids to build things. And because many at the company truly believe that Lego products exist in the service of children, rather than the reverse, employee loyalty and quality control are more or less a given.

That is also what attracts Lego’s branding partners—who, in turn, attract the kids to building.

And that is how you build a successful toy business: block by block.

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