What LEGO’s Near-Collapse Taught Me About Saying ‘No’

By the early 2000s, LEGO had expanded well beyond the plastic brick that built its name. The company was operating its own Legoland theme parks, running an in-house video game development studio and producing its own clothing line and television content. This looked like smart diversification: A toy company was evolving into a full entertainment brand.

But in practice, LEGO was trying to be an amusement park operator, a game studio and a clothing brand all at once, none of which it had ever actually been good at, while the core product — the brick sets that built its identity in the first place — lost focus and market share as attention scattered across everything else. By 2003, the company had lost close to a third of its revenue in a single year. It was reportedly within about 18 months of running out of cash entirely.

When Jørgen Vig Knudstorp became CEO in 2004, he did something a little unexpected: He didn’t abandon the games, parks or films. Instead, LEGO sold majority ownership of its theme parks to Merlin Entertainments, while keeping the licensing rights, so the brand stayed in the parks without LEGO having to run them. The in-house game studio was shut down, and LEGO began licensing its brand to specialist developers instead, which is how Lego Star Wars and Lego Batman came to exist (parents: ask your kids).

A decade later, The Lego Movie came to be the same way, as a licensed partnership with a film studio, not an internal production arm. LEGO kept every one of those businesses. It stopped being the one operating them.

This paved the way for one of the most legendary comebacks in business history.

The difference between owning something and running it yourself

Nobody at LEGO decided theme parks or video games were bad ideas. They were good ideas. The mistake was assuming that having a good idea for a business meant LEGO had to be the one personally running it.

Operating a theme park requires an entirely different set of skills than designing a toy. Building a video game engine requires an entirely different discipline than manufacturing plastic bricks. LEGO’s leadership had correctly identified where the opportunities were and incorrectly assumed that capturing the opportunity meant doing the operational work themselves.

The fix meant recognizing which parts of the opportunity they should own and license out, and which single thing, the brick system, they needed to run themselves better than anyone else could.

I’ve seen this pattern in the business owners I work with, and I also relate.

The year I had to decide

A few years ago, when my father passed away, I found myself responsible for running the family businesses on my own — work we had previously split between us. On top of that, I had my own growing venture: the coaching that has become an integral part of what I do today.

The logical move was obvious: The coaching business was the smallest revenue generator by far, and it was also demanding on my time because it was my newest venture. Every efficiency argument pointed toward shutting it down and focusing entirely on the established, profitable businesses.

I couldn’t do it.

That work was something that fulfilled me, and giving it up to save time felt like solving the wrong problem. So instead of cutting the newest business, I went back into one of the established ones and looked at every part of it individually: what each piece actually generated and how much of my direct, personal attention it needed to keep running.

Here’s what I found: It was, in fact, possible that someone else could run them well without my direct hand in it every day. So I handed them off, because keeping myself personally attached to them meant I never had the space to do the coaching work that mattered to me, or to lead the rest of the business properly.

The audit that actually makes a difference

The audits that business owners see regularly say nothing about which parts of your business are consuming your personal attention in a way the revenue number never shows. LEGO’s theme parks and game studio weren’t obvious disasters … for a while. They were slow leaks on leadership’s focus, long before the financial damage became impossible to ignore.

But that’s not to say any of those were bad decisions, because every business owner adds things for good reasons. There are opportunities too promising to pass up, natural extensions of what customers already love, which give you a chance to be involved in something exciting.

The mistake is assuming that chasing a good opportunity means you personally have to operate every part of it.

An exercise to run this month

Take the different parts of your business, whether that’s product lines, services, client segments or side ventures, and lay them out individually. For each one, ask two separate questions: “What does this actually generate?” and “Does it need my direct, personal involvement to keep running, or could someone else — a hire, a partner, a licensing arrangement — run it perfectly well without me in the middle of it?”

You’re looking for the mismatch: the thing that deserves to exist in your business, but doesn’t actually need you personally running it day to day.

When you find it, you have the same decision LEGO made when it sold the theme parks and shut down the game studio while keeping both in the business through licensing. Own the thing that made you valuable in the first place. Let people who are more suited to operating the rest actually operate it.

The real goal was always creating something built to last. Sometimes, the fastest way back to that starts with being honest about which parts you actually need to be doing yourself.

Here’s to building a business, and a life, with zero regrets.

By the early 2000s, LEGO had expanded well beyond the plastic brick that built its name. The company was operating its own Legoland theme parks, running an in-house video game development studio and producing its own clothing line and television content. This looked like smart diversification: A toy company was evolving into a full entertainment brand.

But in practice, LEGO was trying to be an amusement park operator, a game studio and a clothing brand all at once, none of which it had ever actually been good at, while the core product — the brick sets that built its identity in the first place — lost focus and market share as attention scattered across everything else. By 2003, the company had lost close to a third of its revenue in a single year. It was reportedly within about 18 months of running out of cash entirely.

When Jørgen Vig Knudstorp became CEO in 2004, he did something a little unexpected: He didn’t abandon the games, parks or films. Instead, LEGO sold majority ownership of its theme parks to Merlin Entertainments, while keeping the licensing rights, so the brand stayed in the parks without LEGO having to run them. The in-house game studio was shut down, and LEGO began licensing its brand to specialist developers instead, which is how Lego Star Wars and Lego Batman came to exist (parents: ask your kids).