Lego’s next big challenge: exporting its unshowy culture

Not your typical Danish businessmen.
Not your typical Danish businessmen.
Image: Reuters/Valentin Flauraud
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It’s already the second-biggest toy maker in the world, after Mattel. Now Lego wants more. In 2014, it will go from having one global headquarters, in Denmark, to five. The company is expanding its offices in London, Singapore, Shanghai and Enfield, Connecticut to form a network of global hubs.

The reason is simple. Lego cannot hope to be a global company from its offices in Billund, says one Lego employee. With a population of just 6,155 and a journey of more than three hours on the train to Copenhagen, Billund is an unlikely base for a world-beating firm. Its claim to fame, apart from Denmark’s second-busiest airport (which really isn’t saying very much), is Legoland.

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Lego has been growing by double digits for at least the past decade. In FY 2012, the last full year for which numbers are available, the company’s global sales hit 23.4 billion Danish kroner ($4.2 billion), up 25% from the year before. Its net profit margin stood at a healthy 24%, twice that of Mattel’s in 2012. But it needs to expand if it is to continue this sort of growth. China, for one, is high up on Lego’s list of priorities. It’s building a new manufacturing and distribution facility there that it hopes will supply China’s growing middle-class, CEO Joergen Vig Knudstorp told Bloomberg earlier this month. Besides, the company wants to avoid a re-run of the late 1990s and early 2000s, when its business nearly collapsed due to a series of bad management decision.

Yet expanding across the world poses a challenge for what remains at heart an essentially Danish operation—something the company hopes to export to its new offices. Within the company, according to the employee, there is a policy of not being too showy or brash. This is characteristic of Scandinavian culture. Called “Jante’s Law,” it boils down to remaining humble and not calling too much attention to yourself. It’s unlikely to be an easy sell to Lego’s new employees schooled in American exuberance or Chinese confidence. Making sure the pieces fit together will the biggest challenge as Lego continues its march to global dominance.