As a child, all Jorgen Vig Knudstorp wanted was to get his hands on a racing car or train. But in the 1970s in the Danish province of Jutland his parents refused. Instead — perhaps uniting their backgrounds as a teacher and engineer — his mother and father rather prophetically plumped for a different toy: Lego.
Mr Knudstorp, now 46 and sporting round glasses and spiky hair that suggest nothing if not a grown up Harry Potter, has reason to thank his parents for their choice. Chief executive of the Danish group for the past 11 years, Mr Knudstorp has led Lego back from the brink of financial collapse to becoming this week the world’s biggest toymaker by sales.
As the rest of the $84bn global toy industry struggles from the digital threat of smartphones and iPads, Lego has tapped into the middle-classes in China, India and South Africa for growth, as well as its strongholds of Europe and the US. Using variations on essentially one product — humble plastic bricks and yellow minifigures — the Danish toymaker has become bigger than the US companies Mattel and Hasbro with their multiple brands from Barbie and My Little Pony to Monster High and Transformers.
Some argue that in the process Mr Knudstorp has become one of the leading business figures of his generation, albeit one less well-known than many due to his running an entirely private and family-controlled company. “In some ways, I think he’s a better model for innovation than Steve Jobs,” says David Robertson, a professor at the Wharton School and an author of Brick by Brick about Lego.
Things certainly looked less promising when Mr Knudstorp arrived at Lego in 2001 at the age of 32, fresh from a three-year stint at consultants McKinsey in Paris and an MBA degree. The toymaker had lost money the year before and by the time Mr Knudstorp took over in 2004 as chief executive it was deep in crisis.
Some of what he then did was straight out of the consultant’s textbook: jobs were cut and assets were sold, including its theme park and computer games businesses. The first non-family member to run the company in its 83-year history, Mr Knudstorp had an unusual mantra for the conservative business: making money was good. The red ink was soon staunched.
But Mr Knudstorp did not aim to do a resurrection single handed. He sought to harness the skills of many at Lego who had felt neglected as the toymaker had lost faith in the brick, turning its back on classic designs such as police stations and instead going for edgier but easier-to-build toys such as a character called Jack Stone, much maligned by Lego fans and designers. He also dealt with what Prof Robertson calls “a very dysfunctional family business”, keeping the descendants of founder Ole Kirk Kristiansen on side.
For all this, he turned to an unusual source of inspiration: an 18-month stint as a trainee kindergarten teacher straight after high school as he considered following his mother into education. “My dad says that’s where I learnt everything I needed to know about leadership. If you can be a leader with kindergarten children, you can be a leader anywhere,” he once said.
Prof Robertson says Mr Knudstorp’s main skill is getting the best from his team by giving them the proper support and resources. An example from 2004 was championing a marketing executive who pushed for a back-to-basics design for a new fire engine and the return of its Duplo line for toddlers, which had been dumped by a previous boss. “I think that is a much more powerful leader, somebody who can create a lot of Steve Jobses, rather than just one,” says Prof Robertson.
Having rescued Lego, Mr Knudstorp positioned it for growth. Products based on Star Wars and Harry Potter were all well and good but the Danish company had to pay licensing fees. Instead, Lego looked for homegrown success, from its Japanese-inspired Ninjago line to the Friends range that is aimed specifically at girls.
The results have been spectacular: in 2007-14 Lego’s revenues more than tripled and its net profits rose sevenfold. Mr Knudstorp, who lives in the same Jutland town where he was born with his wife, a doctor, and their four children, has cautioned that this growth cannot continue, but in the first half of this year sales and profits rose by about a quarter.
Challenges remain. Lego’s advance into the digital world of play has been fitful. In 2010, it expensively launched the Lego Universe online game, which flopped only for the similarMinecraft — developed by one Swede, working part-time — to become wildly successful. Mr Knudstorp, who keeps a low profile and lists his hobbies as reading and hiking, also warns that complacency could creep in as most of Lego’s 15,000 workers, many hired after its recovery, have only known good times.
But he shows little sign of stopping, once saying he hoped the Lego job would be for life. A sequel to the highly successful The Lego Movie is set for 2017, as is a new visitor centre designed by star architect Bjarke Ingels in the toymaker’s sleepy home town of Billund.
Mr Knudstorp even had a chance to show off a lighter side when, at last year’s results presentation, he danced awkwardly while singing the movie’s theme song: “Everything is awesome, everything is cool when you’re part of the team.”
The writer is the FT’s Nordic correspondent
Get alerts on European manufacturing when a new story is published