Lego builds a solid business, even in the age of multimedia; Lego CEO doesn’t give out business cards when he goes to a meeting. Instead, he fishes out a tiny plastic Lego figurine bearing his likeness

PUBLISHED OCTOBER 19, 2013

Lego builds a solid business, even in the age of multimedia

World’s No 2 toymaker sets up regional headquarters in Singapore, remains confident of Lego’s lasting appeal

LEE U-WEN LEEUWEN@SPH.COM.SG

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JORGEN Vig Knudstorp, president and CEO of Lego, doesn’t give out business cards when he goes to a meeting. Instead, the 44-year-old reaches into his pocket and fishes out a tiny plastic Lego figurine bearing his likeness – dark-rimmed spectacles and all – with his full name, telephone number and e-mail address printed on the toy’s clothes. It’s a small but telling sign of the level of creativity that goes on behind the scenes at the Danish company famous for making those colourful interlocking plastic bricks.“One of my designers came up to me one day and said, ‘I hope you don’t mind, but I made you out of Lego bricks’,” he says, adding that his “business card” has even been displayed as part of a Lego exhibition in a department store once before.

Like many children, Lego was very much a big part of Mr Knudstorp’s childhood. His engineer father and kindergarten teacher mother never let him pick out electronic toys when they went shopping at the mall.

“There were all these video games and remote-controlled cars, and I really wanted them. But they said to me, ‘Anything with batteries is not allowed. You have to use your own hands’, so I ended up with a lot of Lego toys,” he recalls during an exclusive interview with The Business Times.

His love for Lego was, perhaps expectedly, picked up by his four schoolgoing children too, whom he says enjoy playing with Lego today as much as he used to when he was their age.

The bricks are not only just for the kids, either. Mr Knudstorp reveals that even his friends – some of whom are parents themselves – want to get their hands on the toys whenever they visit.

“They come over to my place and say, ‘Oh, can we build this or build that?’ So all of us will just get out the Lego sets and do just that,” he says with a chuckle.

Even in an age where kids are growing up surrounded by smartphones and tablet computers, Mr Knudstorp isn’t the least bit worried that the simple Lego brick might one day become irrelevant.

“Take playing a football match on the computer, for instance. It’s great to play the video game, but it can’t replace the physical activity. I would say, however, that maybe the video game encourages the physical play even more because you are fascinated by the sport itself,” he says.

On the business front, Lego’s financial numbers would make any shareholder purr. The privately owned company is controlled by Denmark’s richest man, Kjeld Kirk Kristiansen, the grandson of the company’s founder, Ole Kirk Kristiansen.

Lego recorded total sales of 10.4 billion Danish kroner (S$2.36 billion) in the first six months of 2013, which makes the company the world’s No 2 toy manufacturer – between leader Mattel and third-ranked Hasbro.

Lego is busy sinking its roots in Asia, in particular in Singapore where it recently set up its regional headquarters at Tower 3 of the Marina Bay Financial Centre.

Singapore holds a special place in Mr Knudstorp’s heart as he has visited the city-state many times over the past three decades both for work and leisure.

His latest trip to the Republic was planned to coincide with a high-level meeting of Lego’s group management team involving the 25 most senior leaders of the company. The board of directors also converged in Singapore for a meeting.

When time permits, Mr Knudstorp likes to pop by the Singapore Science Centre to check out what’s new there, as well as to visit some of the local schools and universities to learn more about the education system.

Every year, he welcomes a group of students from the Singapore Management University to tour Lego’s main headquarters in Denmark’s Billund municipality and interact with the management and staff there.

“I have this strong relationship to Singapore, if you like,” says Mr Knudstorp, when asked why he picked this tiny island to house the company’s Asian operations.

“I felt that Singapore would be a wonderful place to attract a strong workforce. I’m proud of the people we have hired here at our regional headquarters. They are all talented and I think they will help propel our business to an even stronger level here in Asia,” he adds.

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Bamboo Innovator Institute is set up to establish the thought leadership of resilient value creators around the world. KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia. The Moat Report is developed together with our European partners The Manual of Ideas (www.manualofideas.com), the idea-oriented acclaimed monthly research publication for institutional and private investors. The MRA’s paid-subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities and savvy private individual investors. KB has presented his thought leadership as a keynote speaker in global investing conferences with speakers including famed serious investors Donald Yacktman, Howard Marks, Jean-Marie Eveillard etc. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, macroeconomic and industry trends in Singapore, HK and China. KB has been rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm since 2002. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Mirae Asset Global Investments, Korea’s largest mutual fund company. He holds a Masters in Finance and degrees in Accountancy and Business Management, summa cum laude, from the Singapore Management University (SMU). He had also taught accounting at the SMU. He had published cutting-edge empirical research in the Special Issue of Istanbul Stock Exchange 25th Year Anniversary of the Boğaziçi Journal, Review of Social and Economic Studies, as well as wrote articles about value investing and corporate governance in the media.

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