Two years ago, in 2011, 90 percent of Lego's consumers were boys. A tough statistic to swallow for those of us who grew up playing with Lego's gender-neutral buckets of bricks. But the statistic came straight from Lego, which was then focused on boys with franchised sets based on properties like Star Wars and The Avengers after weathering a disastrous period in the 1990s that left the company on the brink of collapse. "Construction had never worked for girls, for whatever reason," says Garrick Johnson, a toy analyst for BMO Capitol Markets. "It took [Lego] four years of research to figure out how to address the girls' market, how to attack it the right way." Lego Friends turned out to be one of the biggest successes in Lego's history. They're five adorable little dolls with distinctive names and storylines and sets that encourage girls to build karate studios, beauty parlors and veterinary offices. The line doubled sales expectations in 2012, the year it launched. Sales to girls tripled in just that year.
Johnson says the company carefully studied differences between how girls and boys play. "When boys build a construction set, they'll build a castle, let's say, and they'll play with the finished product on the outside. When girls build construction sets, they tend to play on the inside." And research showed that girls loved little details, says Lego brand relations manager Amanda Santoro. "When we were testing this, we asked girls what would you like to see in a Lego school?" she said, as she showed off the line at Toy Fair, the massive industry event held each year in New York City. "Of course, they said an art studio. So we see a lot of detail here with the different paint canisters and the canvas here [a Friend] is creating." David Pickett blogs about Legos at Thinking Brickly, where he's criticized the Lego Friends' gender implications. "Their legs can't move independently, so they move as one big block," he points out. That's not the case with "minifigs" — the classic Lego minifigures with stocky little torsos, snap-off heads, and feet designed to click onto Lego blocks.
Additionally, Lego Friends cannot turn their wrists. "That sort of sends a message about what we expect women being able to do physically," Pickett notes. Lego Friends triggered the ire of Joy Pochatila, a scientist and mother of two small girls. Her first reaction to the line was dismissive. "Why can't they just play with regular Legos? Why does it have to be girl-driven?" she wondered. But Pochatila also was dismayed by how many of the regular sets revolve around male superheroes. "You don't see a Wonder Woman set," she points out. Her husband, Davis Evans, is a staunch Lego defender. When presented with the minifigs' skewed gender numbers, he argued that the androgynous figures could be read as female. Pochatila said she'd prefer a few more specifically female figures, ones that reflect a real-life ratio. And it's hard, she admitted, to argue with Lego Friends' appeal, the complexity of their sets and their overall message of empowerment. The success of the girl-centric Lego Friends has led to little girl dolls popping up in construction sets all over the place, including pink ones from Mega Blocks and Mattel's Barbie.
That's great, say fans, for developing STEM (science, technology, engineering and math) skills for girls. But critics wonder, would it be so hard for Lego to develop — even market — toys for girls and boys to enjoy together?In December 2011 the Danish masters of toy bricks and minifigures launched Lego Friends, a new line of building sets aimed at girls, to much skepticism, reflection, and even, in some quarters, #LiberateLEGO opposition. None could argue that the company hadn’t skewed “boy” in recent years, with seemingly endless iterations of Star Wars, police, and ninja-themed sets. Still, the new pastel color palate and taller, slimmer lady minifigures (introduced on our cover), and scenarios—suburban home, beauty parlor, and “New Born Foal” horse stable—suggested to some that the company was retrograde, pandering, or even sexist. In any case, it’s working: Lego Friends is a huge hit, exceeding Lego’s own wildest expectations. On Thursday the Lego Group reported that Lego Friends became the company’s fourth-bestselling line in only its first year (behind Star Wars, Ninjago, and Lego CITY, and surpassing superheroes), helping the company record the best financial results in its 81-year history, with a 25 percent increase in revenue globally (to $4.04 billion).
Moreover, Lego Friends’ performance has silenced any remaining naysayers within Lego who doubted the brand could appeal equally to both genders. (In 2013, Lego Friends will have another wave of products grouped around a “School’s Out” theme. Sets will include a detailed school and various after-school activities for the friends, such as martial arts, soccer, magic, and dance.) “Our data show that we tripled the number of girls who are building with Lego bricks in the U.S. market since the launch of Friends, and we’ve significantly shifted the gender split among Lego users,” says Michael McNally, Lego’s U.S. spokesman. Independent data appear to back up Lego’s claims. Retail researchers NPD Group tracks Lego Friends in its Building Sets category. If you compare Lego Friends dollar volume with similar volume in the Dolls Play Sets category (where it is sometimes merchandised in stores), Friends comes out on top: the No. 1 property of 2012. A closer look at the company’s annual report, meanwhile, suggests that Lego and its chief executive, Jørgen Vig Knudstorp, will be hard-pressed to top 2012.
(Because the company is private—it is 75 percent held by Kirkbi, a holding company controlled by the founding Kirk Kristiansen family, and 25 percent by the Lego Foundation in Billund, Denmark—it doesn’t publish quarterly earnings. But it has made its annual report public since 1997.) • The year’s operating profit increased to $1,373 million, against $1,057 million in 2011, an increase of 40 percent. • The operating margin increased to 34 percent, from 30 percent in 2011. • The year’s net profit increased to $969 million, up from $776 million in 2011. • The net cash generated from operating activities was $1,100 million, against $666 million in 2011. There are even numbers an economist and deficit hawk can love: In 2012 the Lego Group hired more than 1,000 people and paid $330 million in corporate income taxes. (The 1,000 employees represent nearly a 10 percent increase in its global workforce.) Aside from the surprising contribution of Lego Friends to Lego’s bottom line, what’s most remarkable about these figures is how successful Lego has been selling in shaky, even moribund European markets and just how far it has come under Knudstorp.
Though his typical Scandinavian reserve likely would prevent it, Knudstorp could reasonably claim he’s the best turnaround artist in global business. Just 36 when he was promoted to the top spot nine years ago, Knudstorp is only the fourth CEO at the company and the first who’s not a member of the Kristiansen family. Moreover, it’s difficult to imagine now, but at the time of his promotion the company was losing the equivalent of 1 million Danish kroner a day and getting mail from fans pleading, in the words of one letter Knudstorp will never forget, “to please not die.” A bona fide intellectual (he holds a PhD in economics from Aarhus University), Knudstorp is in many respects an anti-Steve Jobs. He doesn’t start with a vision of what Lego ought to create next and relentlessly refine it; he’s a systems guy, obsessed with devising a method for his engineers to do deliberately what Jobs did instinctively. This is how he came to approve Lego Friends. He didn’t have an epiphany one night.