Following decades of growth, LEGO sales start to slow down in the early 1970s putting the company in unfamiliar waters. At the same time management start internal discussions whether the LEGO brick should be viewed as a toy or something more. This result in third generation owner Kjeld Kirk Kristiansen introducing his thoughts and ideas, on the company going forward, at a conference in 1978. To Kjeld Kirk the LEGO brick is not just a toy; it is a play and learning material with endless possibilities. This new mindset injects new energy into the company from the late 1970s onwards.
First signs of stagnation
The LEGO Group has been blessed with growth, progress and increased production since the 1950s. Sales, the company’s organization, and consequently the workforce and its premises, have grown and grown. However, the world is changing. The 1973 oil crisis temporarily slows the upward market. In the face of sluggish sales results, particularly in the American market, the LEGO Group experiences its first bout of stagnation – one effect of which is unsold retail inventories and an oversupply of molding capacity. It is decided to mothball 101 new molding machines. The workforce is also reduced drastically to trim the organization to the new reality. Between 1974 and 1977, the number of employees is reduced from 2097 to 1162.
In 1976 – referred to as the “zero year” for its lack of element news – the Group’s international organization slots into place. The strategic management level transfers to a separate company, INTERLEGO A/S. Strategic planning takes on a new and greater significance than ever. Kjeld Kirk Kristiansen, third generation of the LEGO family, returns from Switzerland to Denmark and joins the LEGO Group’s management team. His product development model from 1978 introduces the “System within the System”, speeds up product development, and sparks a new growth period – following several lean years.