System at Play

Germany invaded Denmark on April 9th 1940. Danish forces, while clearly outmatched, offered notable resistance, particularly in Copenhagen. It didn’t take long however for King Christian X to realize that his forces stood little chance, and he surrendered the same day the invasion began in exchange for domestic political independence.

Since Denmark offered little by way of military importance, it was largely left alone by the Germans and enjoyed a great deal of autonomy as opposed to the rest of occupied Europe.

As the allies gained the upper hand in the war, Hitler became increasingly concerned that Denmark could be used as a staging area for an allied invasion of mainland Europe. The guard against the threat, on August 29, 1943 martial law was declared in Denmark, and German forces moved to occupy the country. Hospitals, government buildings, and factories were requisitioned for military use across the country.

In the small town of Billund a German officer was sent to take command of a small toy factory in order to repurpose it as a munitions depot. The officer spoke no Danish. The factory owner spoke no German. Siezing the opportunity, Ole Christiansen, the factory owner, played the part of a country simpleton. He sold his acct so well, that the officer eventually gave up, and decided taking command of the town hall would be easier than dealing with the idiotic factory owner. This was the third time Ole Christiansen’s quick thinking had saved his company.

The first was when his factory burned to the ground in 1924. The second was when he retooled his factory to make toys during the great depression. His battle word business had survived these two crises before it even had an official name. It wasn’t until 1934 that Christiansen used a self-made contraction of the Danish Phrase leg godt (play well), to name his toy company Lego.

For 30 years Lego manufactured quality wooden and metal toys. They were good at it. People recognized and loved their products. But post war Europe was a challenging environment. Supply chains were shredded, and materials were limited. Lego struggled to acquire the lumber necessary to produce their cars, trucks, and best-selling peace pistols.

Ole Christiansen needed another moment of inspiration or his company would be chocked by a lack of materials to produce their toys. He found his answer in plastic. The relatively new technology had been brought about through wartime research, but in the wake of the conflict it had been further developed to be used in a variety of household products. Ole saw a material that was cheap, readily available, and a perfect solution for the constraints. His son Godtfred saw a cheap low quality knock off material.

Ole and Godtfred fought bitterly over plastic. To Ole, it was the solution that would get them through the post war supply problems. To Godtfred it was a cheap band aid that consumers would never want. Eventually a compromise was struck. Lego would continue making their existing toys out of wood. But their newest product, Automatic Binding Bricks would be made of plastic.

For ten years Godtfred ignored the plastic division of Lego, and sales of the bricks were paltry. The bricks were nothing more than an annoying side project to Godtfred. With his father no longer in the business he focused more and more of Legos resources on developing the wooden toys it had always made.

In the late 1950’s cheaper imported German toys began flooding the market in Denmark. Godtfred faced a crisis. He simply could not compete with the cheaper versions of the same toys. Unable to stay afloat producing wooden trucks and guns, Godtfred made a decision he never wanted to make. Lego would focus exclusively on the automatic binding bricks.

Lego invested money marketing the bricks. Renamed as the Lego System in Play, the bricks took off like wildfire. Sales of the bricks doubled. Then tripled. Lego expanded overseas. Lego never looked back.

 The tale of Lego's ascension from a humble wooden toy workshop in Billund to the world's largest toy company is a masterclass in adaptation and resilience. At the heart of this story lies an essential truth about business and life: change is inevitable.

Ole Christiansen’s initial vision was wooden toys, and that vision served the company well. But the post-war era brought new challenges, chief among them was a scarcity of wood. The solution, as Ole saw it, was plastic. His son, Godtfred, resistant to change and loyal to tradition, saw plastic as nothing more than a cheap substitute. It's a sentiment that many of us can relate to. Change, especially significant change, often meets with resistance. We become accustomed to what we know and fear what we don’t.

The Lego saga serves as a poignant reminder: change is inevitable in both life and finance. Whether it’s adopting new savings methods, reconsidering investments, or simply shopping around for better service rates, staying active and adaptable in our financial decisions is paramount. It’s not just about weathering the storms; it’s about harnessing the winds of change to propel us forward. In the end, the ability to adapt, to embrace new possibilities, will shape our financial futures just as it shaped Lego's destiny.