BlogBlogLego admits it made too many bricks

Lego admits it made too many bricks

Lego admits it made too many bricks

BBC News: “Lego admits it made too many bricks”


So Lego has said it made too many bricks, and had stretched itself thin by diversifying into Lego Movies.


I love Lego. In fact I probably don’t know a man woman or a child that doesn’t love a bit of Lego, unless they step on it hidden in their carpet. But there a few of quick lessons to learn from their results.


Firstly, it’s nice to hear that the top man is actually keeping his finger on the pulse. They’ve admitted fault and also say they’re not happy with their results. (If you look at the figures in black and white, it’s true they’re not as good as last year, but I know a few businesses that will kill for them). The air of responsibility is refreshing. 


I had to think about the overstocking of bricks issues a little more. Over stocking can kill retail businesses. It often means selling products off at lower prices than intended, and then I thought that’s a daft headline. Lego bricks are all similar so therefore put them into other sets. That’s probably not possible on further reflection. As a dad who sat and watched his young son build set after set (he was far better than me ), of this stuff, it would be difficult to redistribute the bricks from these sets. 


One of the best things Lego did, and its well known, is get the rights to make superhero and film sets. But overproducing these can cause problems as kids want the ‘latest’ sets within their parents tight budgets.


What puzzles me from a marketing point of view is the comment about the movies.
As a rule diversification can cause potential problems for any business. They get sucked in concentrating on the ‘new shiny penny’ and don’t look after their core business. Core business should always be maintained, even if it means the diversification takes a fraction longer. 


It puzzles me, because I think the Lego Movies were absolutely the right thing to do for their market. They are now in control of their market. They set the pace with their own movies. Just look at the revenue that will be driven to Disney after purchasing Star Wars and Superheroes. It’s only a risky diversification if your heart is not in it and you are not invested in a longer goal. 


So, a few lessons. One in responsibility and facing up to a few mistakes that can be rectified easily. One in managing your stock and how it can effect your financials if not done properly and lastly one in diversification. Never let the biggest plate in your business become unstable and stop spinning. It’s key that it always spins!


http://www.bbc.co.uk/news/business-43298897

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