The Crumbling Years#
In 2003, LEGO posted a loss of $300 million. The company was virtually out of cash and was predicting a loss of $400 million the following year. A new millennium had begun, and LEGO was about to end.
But How Did We Get Here?#
LEGO was flourishing in the 1980s, with profits doubling every five years. This growth was largely driven by the baby boom that gave birth to Generation X. Every kid wanted LEGOs.
But when the 1990s began, Chinese manufacturers had figured out how to make similar toy bricks for much less. Meanwhile, the demand for video games and sophisticated electronic toys was rising. The generation that had grown up loving LEGO didn’t pass on that love to their children.
LEGO, however, played it by the book. During its boom years, it diversified into electronics, video games, theme parks, and even jewelry and watches. It aggressively expanded its product line, hiring innovators and designers. Yet it still failed.
Wartime CEO#
LEGO’s leadership brought in a new CEO: Jørgen Vig Knudstorp—the first CEO from outside the founding family. Knudstorp began with textbook turnaround strategies: he reduced staff, cut the product line in half, and sold off peripheral businesses to refocus the company on its core—the bricks.
But the underlying problem remained. Kids didn’t want LEGOs; they wanted digital toys. And even when they did want bricks, cheaper alternatives were available. With the company still struggling, Knudstorp and LEGO’s chairman Kjeld Kirk Kristiansen visited a LEGO fan event: BrickFest 2005. That’s where everything changed.
Finding the AFOLs#
In its darkest days, LEGO had listened to business experts and consultants. But it had overlooked its most passionate audience—Generation X.
By 2005, Gen X was 25–40 years old—not your typical children’s toy demographic. LEGO had always known about its adult customer base, but it had long dismissed this group as too small to matter. At BrickFest, however, Knudstorp realized that this group, which made up just 5% of LEGO’s customers, was spending 20 times more than the average household with kids.
More importantly, these fans weren’t just buying; they were building. They were organizing conventions, moderating forums, and creating massive custom LEGO sets just for fun.
They were called AFOLs—Adult Fans of LEGO—and they were the company’s secret weapon.
Empowering the Superfans#
LEGO embraced its superfans by opening up the product development process. It started actively listening to community ideas, involving fans in product design, and—perhaps most importantly—connecting these fans with each other to form vibrant communities.
Many AFOLs had previously felt like isolated weirdos. LEGO changed that by legitimizing and celebrating their passion. The result was a product ecosystem built by superfans and loved by everyone. Over time, more than 60% of LEGO’s new product sales came from ideas sourced from its community.
Fostering Connection#
Since then, LEGO has continued to foster strong connections with its fan base through community programs and outreach events. It has invested heavily in creating channels for participation and collaboration.
In 2015—just 11 years after its lowest point—LEGO surpassed Mattel to become the world’s largest toy brand.