How Lego CEO Niels Christiansen is keeping kids hooked on bricks

In 2017, faced with its first profit loss in over a decade, the Lego Group brought in Niels B. Christiansen as CEO to tackle a problem the company couldn’t build its way out of: How to make a physical, imaginative toy succeed in a world where digital distractions were everywhere.?

Neils was an unlikely pick for a kid-focused company. An engineer by training, he built his name in manufacturing, most recently as CEO of Danfoss, which makes the the guts of industrial air-conditioning, automotive and maritime equipment.

At Lego, he realized his challenge was more about people-engineering than industrial: Growth had stalled and customers and employees were down on the company. Niels started stripping away bureaucracy, killing meetings that were slowing down decision-making and pushing responsibility out and down.?"I would actually like to show people trust," he told me, relating it to the freedom his parents gave him as a boy to explore far and wide.

In the latest This is Working, Niels talked to me from Lego's new Denmark headquarters about maintaining Lego’s speed and distributed autonomy, about why he’s committed to in-person experiences for consumers and employees, and about how the Lego brick will continue to click into a world that's only getting more digital.

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Here are some edited highlights of our conversation. We started by talking about how Niels wants Lego's new HQ to inspire creativity:

“We don't have a work condition where people can work from home every day. Therefore, I think we've just made sure the campus here is super exciting. This is a fun and playful campus to be in. There are a lot of activities that happen here. You can play mini golf. There are many places for teams to get together. You can have quiet places if you need to focus.

"There are Lego bricks for building everywhere. There are baristas out there on every floor actually to really make it a great experience to come in and be here and be with colleagues and have the fun and togetherness that comes with that. So we spend a lot on making sure that is there and that you can actually, as an individual, you don't sit in the same office or at the same table every day. It depends on what you do, who you work with, and what team you are in today. That allows a lot of flexibility that employees like. And I think those kind of things have just become more important during the last couple of years.”?

You've got a billion dollar manufacturing facility going up in the U.S. in Virginia. What's the thinking behind the investment?

“Our philosophy has been for a while that we want to be regional in the world, as we say. We want to kind of produce product in the Americas for the Americas, same in Europe for Europe and in Asia for Asia.

"The logic is, of course the proximity to consumers, so we can cater for mixed changes and whatever they would like to see right now. But also for sustainability reasons: We do not want to have a lot of Lego sets floating around on boats that needs to be transported here and there. So the proximity matters for us.

"As we are very successful in the U.S. market and the brand is growing, we need more capacity. And it was only logical, I think, to be closest to what is the biggest market we have now. Many Americans are really falling in love with the Lego brand and we want to sustain that.”

The pandemic caused supply chains to go awry everywhere. Did the play into this distributed manufacturing?

“We've always been committed to keeping [plants] close also because in the Lego box, there's just too much air shipping around the globe. We've been very conscious about the sustainability element of the CO2 emission coming from all the transportation. So that's been all on our agenda for a long time.”?

It's not just a new headquarters and new facilities: You've also been building out stores. Is that more for retail or marketing?

“The physical Lego-branded stores are a unique opportunity for us to really allow consumers and kids to get bricks in their hands and experience our universe, all the things we can do within the brand, in the physical world. I had the opportunity to be in the Fifth Ave., New York store — our flagship —?and seeing all these families and kids come in, and the joy they have, and the fun and the smiles, and the energy in store playing around. It's less important for me whether they actually transact with us or buy something; it builds their desire for our products. So it's really more a brand builder experience, physical experience for consumers, then it's kind of directly focused on transactions.”

It's less important for me whether they actually transact with us or buy something; it builds their desire for our products.

You’ve said that as a kid you were given very few boundaries around going out to play and coming home. How much does that experience influence you today?

“It sits in me, this fact that I would actually like to show people trust. I believe it's much better to operate within that. And in every person, actually having that person being responsible. So it's not like I'm just doing what somebody told me to do. I’m also doing what I think is the right thing to do within this frame and whatever this company is trying to do. So I do think it has influenced me. It's definitely influenced the way I've raised my own kids.”

When you set goals for the company, what are you looking for your managers to achieve?

“For us, we have a very clear target on customer satisfaction, on consumer satisfaction, on employee satisfaction, and that we all get measured on. We all get paid bonus on those. And it just means that we have to do business in a good way. And if you come out of the year with reasonable, good financials, but you have very happy employees that serve happy customers, I think that's a good chance that you will do another good year and the year after. And it's super dangerous if 90% of your steering comes from financing numbers.”

You are investing significantly in digital experiences. How will these investments change in five, ten years?

“We're trying to create this really, truly digitally enabled brand. And, there are several examples. Just take kids today. They spend a lot of their time online. That's where they are. That's where they expect brands like us to be with them. Now we provide a truly unique, also physical experience by building and playing with Lego bricks but we need to bridge this. We need to be present where they are. We need to bring Lego-type experiences in the digital world, but we also need to tie them to the physical world so we can bring that entire universe to kids. So this is the way for us to become nimble and agile and really relevant throughout. And it's quite a transformation.”

How do you transform without losing your DNA or what makes you uniquely special??

“Very simply, the brick is at the heart, so we are not going away from the brick. We're using digital to enhance the experience you get around the brick. But at the end of the day, I actually think we will be doing most of our business — also 10 and 20 years from —?by selling bricks. But the entire Lego universe will be [about] combining the physical brick build [with] experiences on the digital side that would allow you to jump forth and back. You create something here, then you have it out here. You build something — and then we allow you to have it in the digital world and play around.”

What advice do you give to people who are just starting their career?

“I think it's important early on in the career to work with things you really like, where you are just naturally curious about it because it's interesting. You tend to excel in doing what you really, really like and this extra hour or whatever you want to put in at some point, it comes so much easier to put that in if you really enjoy what it is.

I think it's important early on in the career to work with things you really like, where you are just naturally curious about it because it's interesting.

"If you can combine that with actually finding a good leader to work for and work closely with, I think that's where whatever leadership skills you can learn by being close to somebody early in career. I think that will actually make your career path steeper.”