Written by Onri Jay Benally. A thematic paper called Adaptation, Lego: From Traditional Toy Company to Digital Company.

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Onri Jay Benally
12/07/2021
Business of Digital Media
Adaptation, Lego: From Traditional Toy Company to Digital Company
Major companies all over the world have changed their business model with the rise of
e-commerce (Kelly, 2020). The LEGO Group is no exception to this movement. This progress has
been contributed to not only by the growth of internet infrastructure worldwide, however,
mobile device usage (Coleman, 2020) and (Briedis, 2020). Adaptation used in this context refers
to the focus on learning from surveyed data by consumers that gives insight into what should
be promoted or produced in the business. This is important because The LEGO Group has
traditionally manufactured play items in the form of acrylonitrile butadiene styrene (ABS)
plastic interlocking bricks. The change from a traditional toy manufacturer to a successful digital
company was something that required a massive reform in supply chain, product launches, and
hiring practices.
Key words: e-commerce, transformation, engagement platform.

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Figure 1 Granted patent for LEGO Automatic Binding Bricks (Kirk, 1961)
Figure 2 A LEGO brick highlighting the chemistry of the newer plastic brick. The first ones were made of cellulose acetate.
It is important to note that just because e-commerce has risen, doesn’t mean that
companies have altogether stopped operating their brick-and-mortar business locations.
According to (Holbrook, 2018), around 90% of all retail purchases still take place in physical
stores. This means that businesses have simply chosen to utilize the internet as a way to not
only showcase their in-store products, but to help keep track of inventory. This helps
companies adapt to consumer buying patterns quickly. In other words, e-commerce has

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become a data tool to strengthen the outlook of what the business plan may look like in the
future. This movement has also helped The LEGO Group to create closer relations with the
largest retailers to promote product customization and joint forecasting (Andersen & Ross,
2016). The significance of this is that tracking what people liked to buy was not as easy to
organize without the efficiency of digital and automatic data collection.
At The LEGO Group, it was said that there was no shortage of innovation to go around.
However, that innovation was not very responsible in terms of financing. One example that was
highlighted in (Andersen & Ross, 2016) showed that some LEGO brick products were introduced
with new colors, but when compared with older bricks, the variation of those colors hardly
differed. Another complication was that too many variants of new brick designs were being
developed by the design team, which also led to negative profits. It would seem that creating
new styles of bricks would make people interested in buying more LEGOs, but this was not the
case.
In 2016, The LEGO Group decided that it would initiate large-scale investments and pay
closer attention to representing itself as a digital company in order to support long-term growth
(Starling, 2021). Revenue that rose by 13% since 2020 are credited to The LEGO Group’s focus
on digital games and online sales (Christiansen et al., 2020). With the increase in families
learning and playing together at home during the pandemic lockdown, there was a demand to
be met for LEGO® products, which it successfully met (Starling, 2020). Some of these products
include movie theme sets, LEGO® Technic, LEGO® MINDSTORMS®, LEGO® Life, LEGO® Building
Instructions App, LEGO® Brand Store (online), LEGO® Super Mario, LEGO® Minecraft, Life of
George, and LEGO® Fusion App. Each of these product launches in recent years are either a way

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of combining the physical with digital play or pure digital play through interaction that nurtures
creativity (Andersen & Ross, 2016). Games, programmable LEGO robotics, mobile apps, 3D
scanning software, all give the consumer new ways to play and experiment with anything that
they want to create. Not to mention, The LEGO Group markets to all ages. “[A consumer]
suggested LEGO® Minecraft and within 48 hours we had 10,000 people saying, ‘if this product
was out there, I would buy it’. And by the way, they crashed our server 2 or 3 times that
weekend” -Erik Hansen (Andersen & Ross, 2016). This is one of many examples where
consumers suggested content that could be used to create new products for LEGO’s digital
marketplace.
With the growing popularity of digital products from The LEGO Group in conjunction
with its tangible plastic bricks, there comes a need for employees who can make them. Toward
the end of 2020, The LEGO Group made plans to recruit hundreds of computer experts to
support its digital expansion. In a news article by Forbes (Hotten, 2021), it was said that, “every
2.77 seconds ‘someone uploads a Lego creation to our digital platforms that they have created
and want to share.’” This statistic that helps us to visualize the amount of IT infrastructure that
must be maintained at LEGO and the specialists who would need to design and maintain those
systems. The engagement platforms that are needed can be met by LEGO software engineers in
conjunction with the number of suggestions from the community (Andersen & Ross, 2016).

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References
Andersen, P., & Ross, J. W. (2016). Transforming the LEGO Group for the Digital Economy. 17.
https://ctl.mit.edu/sites/ctl.mit.edu/files/attachments/MIT_CISRwp407_TheLEGOGroup_A
ndersenRoss_0.pdf
Briedis, H., Kronschnabl, A., Rodriguez, A., & Ungerman, K. (2020). Adapting to the next normal
in retail: The customer experience imperative. McKinsey & Company, 9.
Coleman, A., Jen, Fionn, Ciara, David, & Roisín. (2020). E-Commerce KPI Report 2020—Must-
Know Metrics. Wolfgang Digital. https://www.wolfgangdigital.com/kpi-2020/
Christiansen, N. B., Andersen, J., Bhardwaj, A., Burke, C., Goldin, J., Rasmussen, C., & Shuster, L.
I. (2020). Annual Report 2020 (p. 69). The LEGO Group.
https://www.lego.com/cdn/cs/aboutus/assets/bltdee53df07dda2287/Annual_Report_202
0_ENG.pdf
Holbrook, T. (2018, May 24). Council Post: Five Ways Brands Can Adapt For The Era Of E-
Commerce. Forbes.
https://www.forbes.com/sites/forbescommunicationscouncil/2018/05/24/five-ways-
brands-can-adapt-for-the-era-of-e-commerce/
Hotten, R. (2021, March 10). Lego plans hiring spree for digital growth drive. BBC News.
https://www.bbc.com/news/business-56344283
Kelly, G., Kohli, S., Wachinger, T., & Zipser, D. (2020, August). Perspectives on Retail and
Consumer Goods. McKinsey & Company, 8, 210.
Kirk, C. G. (1961). Toy building brick (United States Patent No. US3005282A).
https://patents.google.com/patent/US3005282A/en

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Starling, M. (2020, September 3). ‘Rise of the kidult’: Lego builds profit as all ages play. The
Week UK. https://www.theweek.co.uk/retail/107980/lego-builds-profit-and-sales-as-all-
ages-enjoy-play
Starling, M. (2021, March 11). Lego builds digital strategy after record sales. The Week UK.
https://www.theweek.co.uk/952214/business-briefing-lego-builds-digital-strategy-after-
record-sales