How Corporations Use History to Their AdvantageBreaking News
tags: economics, history crisis
In the early 2000s, the Lego Group had a problem.
Since 1993, the company had been diverting funds it raised from toy sales into ancillary businesses like theme parks, retail stores, and watches. And nearly every one of those prospects failed. Theses business moves were so bad that, according to an examination by Bain and Company, they were losing nearly $300,000 per day. In 2004, the company hired Jorgen Vig Knudstorp as its new chief executive officer, and his first major move was taking a hard look at the floundering company's early history.*
"They found a note from [Ole Kirk Christiansen] the founder of Lego that said, 'Only the best is good enough,'" says Diego Coraiola, assistant professor of management at the University of Alberta. "It made them remember that they were only a building block company."
Lego shifted its tactics. It sold off its theme parks and video games, sold or scaled back its foreign outposts, and even cut down on the number of Lego styles that were being made. This strategy paid off. In 2017, Lego reported the highest earnings in its 85-year history. Perhaps not coincidentally, you can now read all about Lego's long and storied past at its official website.
Coraiola is one of a number of experts who have studied how corporations dig up, then use, their histories.
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