What's going on?
Lego, one of the world’s biggest toymakers, announced on Thursday that it had hired a new CEO to help it focus on bringing its toys into the digital world.
What does this mean?
Back in the early 2000s, Lego was struggling with poor sales and faced a significant risk of bankruptcy. Lego is a family-owned company, but under the leadership of the first non-family CEO, it turned things around. A decade of growing sales (more than 10% growth each year) ended last year, just as that transformative CEO relinquished his post.
Lego’s strategy to grow sales in the future is to put a greater emphasis on digitizing its toys (think: allowing kids to interact with Lego designs via platforms like Netflix and YouTube). Lego’s new CEO was formerly the CEO of a big Danish industrial firm, where he focused largely on utilizing digitization to increase sales.
Why should I care?
The bigger picture: Digitization is a priority for virtually every industry now.
While McDonald’s and Starbucks implement in-app ordering and JP Morgan partners with PayPal, Lego is promoting Lego Boost, a new way of teaching kids to code using its toys. Technology is now so pervasive that it’s not an exaggeration to say that every company needs to prioritize its tech team (and not just for support roles, but for key strategic initiatives).
For markets: Lego isn’t the only toymaker focused on digitization.
Lego’s sales growth over the past decade was driven, in part, by broadening its exposure – like the creation of Lego movies. It now wants to pioneer ways for kids to play with toys digitally. Interestingly, Mattel (which is a public company and vies with Lego for the title of world’s largest toymaker) hired its new CEO from Google and is focused on a similar strategy. The battle for the playroom has gone digital.