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BrickFest 2005 Keynotes
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lugnet.events
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Sat, 13 Aug 2005 20:23:45 GMT
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Posted for Larry P. Please forgive spelling mistakes... I'll be posting an .MP3
file of the notes sometime later....
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Keynote presentation notes
13 August 2005
Joergen Vig Knudstrup
focus of talk is where LEGO is going.
LEGO is going through a survival plan, which is very serious. Talk about how
LEGO plan to revitalize the company
headlines:
- What is the essence of LEGO, the core, what is it all about
- How do we view the future, and what is the role for LEGO in it
- The journey underway, what should you expect to see, what's going to happen
and what will it be like
The essense of LEGO
there is a destiny to a company that has been in existance for more than 70
years, and you cannot run away from that destiny, it is not completely the
companie's decision, if it does not ring true iwth the global audience, you
cannot go there.
- The word LEGO means things. Plastic interlocking bricks, not just our product,
despite our efforts
- the brick sets the company a part. the brick sits in a system, everything fits
together. It is like software or a language or a system. everything ties
together and you can build endlessly. Honestly, at heart, no one (else?) has
provided that to the world. So the system of brick is fundamental to what is
this company
Over the last 15 years, the LEGO brand has been strechted, put on a lot of other
things, bikes, stereos etc. But that is not the focus. We will not continue to
stretch, we weill go deeper into bricks and system, not in to stretching... If
you are theoretical you have already thought about systems and networks, once
you are in a system, if you are in the system, there is an interconnect (N@)
like cell phoines. If you are on the same system you can connect, you can form
networks. the more there are the more valuable it is.
THinking about LEGO we beleive it is the platform for the type of play we are
all about. So the system of users is the third element of what LEGO is about.
Brick, System, system of users. WE are the system of users. the company is
amazed by what the core is and what it has achieved. We beleive that the core is
not those at BF, those that use LUGNET, or FLL, or the LEGO club. But the real
community is those unregistered users further out, in outer circles (BF
attendees at the core, etc)... there are at least 2M we know of, but proibably
2x, 5x, even 10x that many people who feel the are in that community. they would
rather do more lego than switch systems.
So to us the community is veyr important. If the community starts falling apart,
the tempurature at the core is going down, that to us is a signal that what we
are is falling apart too. So we are pleased an honored to be here, thanks for
asking us to be here
Finally we have learend that this brand means a lot to us, we get letters world
wide. We ask why? We hope it has little or nothing to do with TV advertising.
(well, we've never spent much on it!). we think the appeal is emotional, the
appeal of building with bricks. It does things for you when you build, for the
builder, for the family, for the community. So we have a heritage, we build on
that emotional appeal, that enablement of buidligg creating, realising fantasy.
So we want to guard and nurture that.
The brand, teh trust, the quality, the responsibility we have to our
users/community
brick, system, commuinity, and our heritage, our brand name
So... what is the journeyt we are going to take? to survie, to thrive,
TO build on that core
More community, more bricks in the systme, more trust in the brand and the
quality. We are not goin got walk away from that level of quailty, we want to
build oin it, not stray. It is important to us to be clear about identity
because we have went throiugh a deep financial crisis. that fcauses you to ask,
are you doing the right thing, is gthere a future in that? We look at trends.
We hear over an over that kids want more violent play that they are measured
aginst video games against TV. When you listen to those trends, that kids have
less time, focuse on 3R ,n ot creative. So it is easy to go down that route, to
go quick build. But the direction to take in the future is to go across that
trends. We are not a toy for eveyrone, we are a toy that is a bou tthe lego way
of playing, of being creative. We will try to navigage against those trends and
maybe play a bit in that space but we must remain true to what we are not
becaome what others want us to be.
It is important ot be clear about that. We went through a restrucuter, cost
cutting, paying off loans, selling off non strategic assets. The partk sale is
strategic, we are partners with fam ent. comp
we cut 25% of our cost, 20% in 9 months... not pleasant for any manager, we
written off assets, still struggling with restoring profitabilty, crucial to
survival
We are not done, there are further major changes. ALl toy company are
struggling. Even mattel, if it were not for declinaing usd, they would be in
decline. Hasbro says the same thing. they say they cannot grow/ survive. So we
are not goin g to do what they are trying, to find trends and rid them. We are
going to go a different way
The toy places are all closing, KB, Zany, TRU, FAO.... all are going down. We
need to reorg how we go to market. We are trying toi grow ways to sell directly
to consumers. Impofrtant adjustment
That' sjust sales/mktg /.... How do you produce? what is the setup. What about
globalization? Most elections are about that, US, Europe, all concerned about
china. we used to do box edsigns in Billund. Now we do it it in china,
indonesia, etc. It's enabled, with ohone, email, net. 10x to 20x cheaper to do
box designs in thired world. So we will have to work across the globe, cheapest
tech possible,. that means hcanges within the group.... loss of jobs in Europe.
We have told our emplpoyees bluntly that there is change coming and the future
is that they will not all have jobs and what the decisions are. Somtimes they
change productivity to stave off this change but we cannot change how
globalization works
The final change area is less tractable , to chanvge what we do. No moving to
comsumer electr4onicis, travel, bikes, MP3 players, etc. you wil be doing
bricks. but you still need to be innovative!!!
So far what we have done is the easy stuff... closing plants moving jobs is
tractable. Solving the new demand and what we are going to invent is deep and
big and very hard. Biggest challenge for the company! Eveyrone thinks you are
done, there are no themes left to exxplore. Then you realise you have only just
started.
So I challenge you, where is it coming from. I want you to ask, to challeng us,
to be inspired back., We think inovation will come from a dialog with the
community. who buys, who uses, who loves it, how do they use it?
We want peole to say this is brand new yet completey wihtin the system
Questions from the audience
Scott Lyttle:
what are you doing as far as trains age 4-7 and girls 4-7 ???
A: we find it hard to have a strong presence in NA in the preschool segment. IN
EU we are reviatlising Duplo. We are testing with Tthe Tank in preschool. The
lego explore train line was too overengineered, too complex. maybe we did too
much. it is so complex that the kids would get more benefit from a simpler, less
expensive polatform. So the strategy is to make it less and simpler, and tye it
in to LegoVille and duplo figs.
Scott again" but that is good for preschool. not for 4-7... what is the gap
fill?
A: Duplo can go beyond 4+... fisher price geo trax goes beyond jusgt 5. We have
seen Duplo go to 5 or 6 maybe not 7. I don't htin kwe are going to produce a
train to close the duplo system gap... we will not build on the 4+ Junior
platform. WE are pushing system younger instead. We want to extend up and system
down
As for girls; difficult question. In scandanavia we thrive with Belville.
Perhaps that's due to penetration of LEGO. Parents buy belville beacuse the
parents loive it. In DK BElville is the single biggest sellin gline (since there
are so many different boy's lines). We are going to continue to appeal that way.
40-50% of duplo is also bought for girls. So continue on the classic line
Kevin Clague:
How much do you look back at legends, space legends, classic castle, etc.
A: we are looking to the past. Our srategy is a mix of tradition and renewal.
KKK tried to facilitate this 10 years ago and it may not have executed
correctly. There is a need for new users to have a fresh look (without studs,
fancy sets, etc) but there is a big demand that we look more realistic. We want
to maintain the classic iconicly lego in primary colors but balance that need.
Technic has been relauhced. Look atht ecrane flap. We have went back to flap
box. As a company we had lost faith in Technic but in germany it is in triple
digit growth... so going back is good
Rich (on behalf of gary Istok, his LUGNET question)
(9 different window types let you make many window styles, todays windows don't
match, not enough pieces in different colors... "can anything be done?")
A: JVK - good question. Prehistory on system and elements. 2-3 years ago, we
counted the number of elements that were active. There were 15K different ones
(including color). My training was economist, so was concerned with investment
in al those colors and shapes, very expensive to manufacture, and logistically
you can't make a set if you are missing one. 15K elements is logistically a
nightmare. Later it dawned on me how it destroyed the experience. Our strategy
is to bring it down to 7K... we are at 8K now. We think that iwll improve the
platform. For eaxmple, tires, we are the worlds biggest producer of tires. That
scares me actually. We are going to go to new tyre designs where they are all
compatible, fewer hub sizes???...
Can't promise veyrhtin will fit (we like studless!) but I prmose you more
systeml, more focus on interchange.
Michael Tygh?:
New bug in MS software, and is unspoorted. still sold as new. Is there going to
be updates, what is the future
A (from another person): Sorry about hte bug. that's a mistake. But 1 or 2 years
ago there was a misunderstanding, some bad pr by us. It has been on the market
since 1998, and we have seen a lot happen there. We are looking at what it takes
to continue to suport this brand. we canpt give details but we are loking in to
what to do
Q: any possibility of getting involved in beta testing new Mindstorms?
A: can't comment.
Q: Nathan Bell
WHen we discuss designs on LUGNET for example, do you take it as an insult or
constructive criticism?
JVK-A: I had a conversation with my wife the other sunday, she said don't be
defensive, but I have a comments on houw you interact with our oldest... and
Ifelt attacked! Our attitude is tell us what you really think. If you don't ask
for it a lot, hyou won't get fedback. I am running a project to get internal
feedback already. I am working to get feedback from customers too. we know that
customers love lego and are telling us stuff because they care. Sometimes I send
everyo9ne else out of the room so they can tell me what they really think. We
learn a lot from that. We think we have improved our relationships by listening.
So please tell it like it is
Q: Brian (Indylug guy I think)
Outsorcing concerns me, how are you going to protect quality
A: we are going to sruvive not thorough quality or service only, we are going to
maintain and hold onto it consistently. Finding mold suppliers is not easy. We
have someone that worked on supply chain issues for 38 years and he thinks it's
challenging! we will not outsource unless we get quality and can control an
dmanagage it
Phillip Lafelur
Q: thanks for coming, it validates that a 50 year onld cna play with childs toys
and that execs would come and share what they think. Suggestion: get the colors
straight (holds up 8 gold bricks,) 4 are gold, 4 are not.... it drives us nuts
(color wise)
A JVK points at Mike.... glad you're here to answer that.. yes we noted it, yes
we are deeply regretful about that
Not sureqho
Q; what are the plans for town. city an dany idea boook coming for that?
A: Take the feedback. no current plan for an idea book. City line is one of 8-10
key lines that will carry us for at least the next 5 years. It will expand and
grow in new directions...
FBTB moderator and SW fan
Q; what happens after the SW license runs out
A: (Space! says the crowd...) we had a great session with the space team. Lego
SW is an identity in itself. We believe that Lucas likes it, and is the license
they feel the strongest about. no idea how Georrge kid's got all those bags back
on the plane after they visited billund! we will find ways to continue the
collaboration
(hardlug guy)
Q; any change on train radius??? it's too small
A: hands to Torumd.... (JVK LOL good luck with that one) Tormud.. yes we know
about the radius wishes and the whole track system wishes. We can't do it short
term. We ARE looking into it. We cannot promise anything. There are some
initiatives coming though Mayve there is a beginning of development of a hobby
train...
Ted Michon
Q: also thanks... we rent trucks to go to shows. Thanks for life changing!... we
live close to carlsbad. wasn't it hard to part with LEGOLAND Billun??? wasn't it
hard to draw a line between that park and the rest of the operation
A: it was hard, yes. emotionally. But operationally the line won't be that
sharp. We are partners, not just sellers. you are right htough it is our
heartland. we will make it work somehow.
Lester Witter
Q: Marketing point: My daughter likes Belville but she also likes the designer
building set (withe with red roof) because it's complete, not just a front
A: girls like dollhouses, like realisms, like to build towns and lives
?... texlug guy?
Q: As a town fan and world city, I like that the service packs (as a child I saw
them) have returned, and the catalogs are ore like they were when I was younger.
How do we help you? We could have helped you sell. now can we do that?
A: we need to look at that. there is leverage there. Talked to Unilver CEO, they
had 80B USD turnover... he said that you are the same size as us... you need to
look at the 50 years of lego bricks, the product does not perish. the platform
is all of the poroict, more than just this years stuff. so we want to
Cindy the castle stained glass lady
Q: product cycle is short. too short. 2 cycles a year is different. in the past
2 or 3 years were around. Maybe you could do better if you lasted longer
A: it hurts us badly. it forces designs to be faster. look, feel, campaignsn
etc. we face a demand for novelty. we are trying to tell them that it hurts THEM
too. We are telling them about canging and inventory obsolecence. We want
solidity, we want peace, calm, some product being last years product. we think
it will benefit consumers and retailers too ... novelty will continue to drive
Bionicle, but weare looking for lines that can be logner termed, slow down the
pace of churn., we can't sustain it.
Jean Capp from Capp toys and trains
Q: wants to talk to marketing and distrubiton... are you going to go public
A: No. (KKK takes the stage) definitely NOT!!!! wanted to say... I am so happy
to be here and hae heard about BF for years but it is wonderful. I love your
creativity and the warm feeling.. thak you very very much for all you have done
for up
well, while I am up here.. JVK siad we have to be more flexible and get closer
to the consumer... we hvae talked about it for years but haven't done it
effectively. The focus on brick, system, conmmunity is what is going to take us
forward. we need to be more flexible. the question is can we not make more of
the old sets, we need to be albe to make more of the bricks that you need when
you need them. It is a challenge that JVK will work oin, how can we be more
better ath suppling custom made productrs and things that the specific sets,
items, bricks demanded. We MUST be able to satisfy that demand. We want to be
the company that is close to the customers
JVK: as they say in SW, when there is an apprentice (points at self) there is
always the master.... points at KKK
Eric Olsen:
Q:Why did LEGO wait till 2005 to make vikings?
A: scandinamvian humbleness... we did not think people would want it.. we were
wrong! the demand is overwhelming... especially medium sized sets. ... a little
girl I previeweed this told me.. there are no horns and no dragons, you know...
so we say "vikings or whate3ver it is..." even the retailers loved it when we
showed it in Feb. In the US it is exclusive with TRU, in the UK exclusive with
Woolworth...
Christopher Masi
Q: what is your favorite theme
A: Mike, star wars... it does a good job with the spirti of SW and the spirit of
LEGO... that said they are all my favorites
A: Sam, Mindstorms
A: mark: Lego Factory
A: Jake:trains
Tormud: technic
Jen: Technic
KKK: I have many children... I lvoe them all.. but... am a car person, so Racers
JVK: I like designer, and starwars but my kids are 4, 3, ans 1.5 so... duplo!!!
Mark Millere
Q: What can we do about getting more trains into walmart, target, what have
you, the public does not know you have them. no track, no other sets
A: The internet is teh way. these retailers won't want to carry that. If we can
document what we can do, what you can do (NTS)... a YEAR ago they were pissed
off at us, the delivery, margins, service were not good. Now we can go back to
walmart who insists on low prices and margins, and we tell them they are losing
money by not carryinhg higher price point sets. If we can tell htem demand is
oging to be somewhere because of shows, or enthusiasts or clubs, maybe some
sotres will take product.
Charlie Parker
Q: claimes to be youngest adult fan, bionicle... have you heard of Blocko? They
have a Bionicle knockoff
A: we find companies liek that all the time. Copying bionicle is toughter but we
knoew they would get to copy. we also see MB trying to pick up some o four
features.. we take action where they are copying. But we beat them in the
market... convince retailers not to carry that stuff
Jean Mark
Q: most people do not know trains exist. we get asked where to find product,
especially trains. WOuld you allow specialty stores to carry LEGO if they want
to... some people are afraid of the internet. Is there a way to set up a
specialty shop or create an account to sell ?
A; I noticed at LLCA there awere few trains, the company has made the mistake
that trains are not interesting to NA kids.
?
Q: Has technic been successfu and will you continue
A: yes, and yes
Steve Barile
Q: Ive heard you use analogies to tech companies, there was a company that came
up with "intel inside" program, the cpu was too generic. the other commapny was
confusing. you have clones. any thoughts to use a "genuine LEGO" program to help
brand identity?
A: we are thinking along those lines. in the US we via survey learned that 42%
of users thought MegaBloks are a subbrand of LEGO. We don't want to directly
compare ourselves to them but we will make a stronger effort to say "this is
genuine LEGO quality". we have been matching them too much to compete instead of
having confidence to play a different game.
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Message has 5 Replies:
 | | Re: BrickFest 2005 Keynotes
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| (...) ALL the incoherence in there is because I was trying to take notes too fast and do other stuff too. JVK is actually a really awesome speaker! I just wasn't able to keep up as well as I usually do... sorry. (19 years ago, 13-Aug-05, to lugnet.events)
| | | Re: BrickFest 2005 Keynotes
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| Thanks Larry for the big work :) (to bad I couldn't be there) Sounded like an interesting Q&A this time. Many parts of the session sound like music to my ears... going deeper into the system rather than stretching it... perfect! Casper (19 years ago, 14-Aug-05, to lugnet.events)
| | | Re: BrickFest 2005 Keynotes
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| SNIP Thanks, Larry, for the play-by-play. as a hunt-and-peck typer, my fingers would melt trying to keep up like that (then i couldn't play Lego :( ). Jeff (19 years ago, 16-Aug-05, to lugnet.events)
| | | Re: BrickFest 2005 Keynotes
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| (...) snip..> (...) It has been exciting to hear about the plans for the LEGO train system. I like the idea of the Play Train being "interesting to kids & useable by adults". I hope it has been well thought out, as it is worrying that the (...) (19 years ago, 21-Aug-05, to lugnet.events)
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