lego case study 2014

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How Lego clicked: the super brand that reinvented itself

The revival of Lego has been hailed as the greatest turnaround in corporate history, ousting Ferrari as the world’s most powerful brand. Johnny Davis reports

F rom its founding in 1932 until 1998, Lego had never posted a loss. By 2003 it was in big trouble. Sales were down 30% year-on-year and it was $800m in debt. An internal report revealed it hadn’t added anything of value to its portfolio for a decade.

Consultants hurried to Lego’s Danish HQ. They advised diversification. The brick had been around since the 1950s, they said, it was obsolete. Lego should look to Mattel, home to Fisher-Price, Barbie, Hot Wheels and Matchbox toys, a company whose portfolio was broad and varied. Lego took their advice: in doing so it almost went bust. It introduced jewellery for girls. There were Lego clothes. It opened theme parks that cost £125m to build and lost £25m in their first year. It built its own video games company from scratch, the largest installation of Silicon Graphics supercomputers in northern Europe , despite having no experience in the field. Lego’s toys still sold, particularly tie-ins, like their Star Wars and Harry Potter -themed kits. But only if there was a movie out that year. Otherwise they sat on shelves.

“We are on a burning platform,” Lego’s CEO Jørgen Vig Knudstorp told colleagues. “We’re running out of cash… [and] likely won’t survive”

In 2015, the still privately owned, family controlled Lego Group overtook Ferrari to become the world’s most powerful brand. It announced profits of £660m, making it the number one toy company in Europe and Asia, and number three in North America, where sales topped $1bn for the first time. From 2008 to 2010 its profits quadrupled, outstripping Apple’s. Indeed, it has been called the Apple of toys: a profit-generating, design-driven miracle built around premium, intuitive, covetable hardware that fans can’t get enough of. Last year Lego sold 75bn bricks. Lego people – “Minifigures” – the 4cm-tall yellow characters with dotty eyes, permanent grins, hooks for hands and pegs for legs – outnumber humans. The British Toy Retailers Association voted Lego the toy of the century.

When The Lego Movie came out in 2014 the film snob website Rotten Tomatoes awarded it a 96% approval rating: only Oscar nominees 12 Years a Slave and Gravity matched it. This year’s follow-up, The Lego Batman Movie , outperformed the last “proper” Batman movie, Batman v Superman: Dawn of Justice , to such a degree that DC Comics now faces a genuine problem: audiences overwhelmingly prefer the Dark Knight in his pompous and plastic version voiced by Will Arnett , rather than Ben Affleck ’s portrayal.

Lego’s revival has been called the greatest turnaround in corporate history. A book devoted to the subject, David Robertson’s Brick by Brick: How Lego Rewrote the Rules of Innovation , has become a set business text. Sony, Adidas and Boeing are said to refer to it. Google now uses Lego bricks to help its employees innovate.

Lego’s saviour is the aforementioned Vig Knudstorp – a father of four, perhaps not uncoincidentally – who arrived from management consultants McKinsey & Company in 2001 and was promoted to boss within three years, aged 36. “In some ways, I think he’s a better model for innovation than Steve Jobs,” Robertson has said.

Last month I flew to Billund, a small town in the Jutland peninsula where Lego was founded. The landscape was flat and grey, but as I drove from the airport a large primary coloured arm or head would occasionally appear though the pine trees: the Lego Group owns several buildings here and has decorated the landscape accordingly. I was immediately in a good mood.

“Billund was built to function, not to please,” explained Roar Trangbaek, Lego’s cheerful, bearded publicist. “There’s not a lot of fun here.” He meant there wasn’t a lot to do there – it’s hard to imagine the nightlife is up to much – but given that 120m Lego bricks are manufactured here every day, fun was very much the point of the place. As if to prove it, Trangbaek handed me his business card. It was a Minifigure of himself.

The following morning the Lego Group was due to announce its latest annual results. Today was an opportunity to meet some of its key employees, tour the factory and be among the first to step inside Lego House – a 130,000sq ft marvel that will open in September, and is expected to draw 250,000 visitors a year. It has been designed by Bjarke Ingels , the hottest name in architecture right now, whose commissions include Google’s HQ, the new World Trade Center and last year’s Serpentine Pavilion. Ingels certainly seems to have enjoyed himself: Lego House resembles 21 giant Lego bricks stacked into a 30m tower. Visitors can climb up to the rooftop garden and down the other side, pausing to take in attractions, restaurants, play zones and a gallery dedicated to fan-made Lego extravaganzas. Life-sized Lego sculptures had been placed around the interior – a cop, a firefighter – while real-life construction workers in hi-vis tabards beavered away around them, a surreal sight.

Lego had compensated for the disruption to the town’s shops by allowing them to exclusively sell Lego kits of the Lego House, the only place in the world they’ll be available. (For Lego’s numerous cult fans, this is a massive deal.)

Vig Knudstorp rescued Lego by methodically rebuilding it, brick by brick. He dumped things it had no expertise in – the Legoland parks are now owned by the British company Merlin Entertainments, for example. He slashed the inventory, halving the number of individual pieces Lego produces from 13,000 to 6,500. (Brick colours had somehow expanded from the original bright yellow, red and blue, sourced from Piet Mondrian , to more than 50.) He also encouraged interaction with Lego’s fans, something previously considered verboten. Far from killing off Lego, the internet has played a vital role in allowing fans to share their creations and promote events like Brickworld , adult Lego fan conventions. A year before James Surowiecki’s landmark book The Wisdom of Crowds was published, Lego launched its own crowdsourcing competition: originators of winning ideas get 1% of their product’s net sales, designs that so far include the Back to the Future DeLorean time machine, the Beatles’ Yellow Submarine and a set of female Nasa scientists.

“Lego has this incredible ability to engage with people and that has single-handedly enabled it to weather very, very difficult seas,” says Simon Cotterrell, from brand analytics firm Interbrand. “What’s made them successful over the past 10 years is their ability to create new entities, movies, TV shows, by partnering with brilliant people. They’ve said: ‘We might not make as much money if we outsource it, but the product will be better.’ That mentality is very Danish. It comes from saying: ‘We’re engineers. We know what we’re good at. Let’s stick to our knitting.’ That’s a very brave thing to do and it’s where a lot of companies go wrong. They don’t understand that sometimes it’s better to let go than to hang on.”

It also started making hit toys again. As well as putting a focus back on classic Lego lines like City and Space, it has launched the ninja-themed Ninjago line, Mindstorms, kits that allow you to build programmable Lego robots, aimed at teens. And for grown-up kids, Lego Architecture, replicas of the Guggenheim, Burj Khalifa and Robie House , that last one not for the feint-hearted or time-poor – it contains 2,276 bricks. Most impressively for a company with a customer base that in 2011 was 90% boys, it finally cracked the girls’ market. Lego Friends features a reconfigured “Mini-doll” and centres on five characters in the fictional Heartlake City. None of this has happened by chance. Lego is said to conduct the largest ethnographic study of children in the world.

“We call it ‘camping with consumers’,” says Anne Flemmert Jensen, senior director of its Global Insights group. “My team spends all our time travelling around the world, talking to kids and their families and participating in their daily lives.” This includes watching how kids play on their own and with friends, how siblings interact and why some toys remain perennial favourites while others are relegated to the toy box. Children are fickle – as the makers of forgotten “must-have” Christmas toys, like Pogs and Furby, will concede.

Ninjago was crowdsourced: its first iteration featured skeletons as enemies because tests proved they were the most popular baddies among six-year-old boys, globally. “Ninjas crystallised themselves because we were, like: ‘What’s the greatest hero entry point?’” says Cerim Manovi, senior design manager and creative lead on the line. “We showed them superheroes, everything – but ninjas just grabbed kids right there.”

Lego Friends took four years of research (plus a $40m global marketing push) to get right.

“One of the main things was they couldn’t really relate to the Minifigure,” says Mauricio Affonso, Friends’ model designer. “It’s too blocky. Boys tend to be a lot more about good versus evil, whereas girls really see themselves through the Mini-doll. They wanted a greater level of detail, proportions and realism.”

Lego Friends sets (bakery, amusement park, riding camp, etc) tend to feature something else missing from boys’ sets: a loo. The boys don’t care, the girls’ pragmatism demanded it.

Roar Trangbaek shows me the original Lego house, where the company’s founder Ole Kirk Christiansen lived. It’s now a private museum that tells the Lego chronology through artefacts, packaging and toys. More than one adult visitor has been known to burst into tears when confronted by a key line from their childhood: in my case the Space Lego of the mid-1970s. (Lego gets inundated with requests for re-releases, but they won’t do it. Their focus is the kids of now and tomorrow, not yesterday.) Christiansen was an expert carpenter when the Great Depression hit. He figured the one thing people would always find money for was toys for their children. His company motto is carved into a plaque here – “det bedste er ikke for godt” (Only the best is good enough) – something borne out when Christiansen’s son Godtfred returned home one day to proudly inform dad he’d saved them some cash by only applying two of the usual three coats of varnish to a wooden duck. He got a tongue- lashing for his trouble.

“It is a good story, but it’s also a true story,” says Trangbaek.

In 1946, against everyone’s advice, the family invested in a newfangled plastic-injection moulding machine. Later they adapted Croydon-based inventor Hilary Fisher Page’s self-locking bricks (billed his “sensible toy”) – plastic cubes with two rows of four studs to enable stacking. The final part of Lego’s success clicked into place in 1958 when it created its “system”. Where previously they’d made toys of all shapes and sizes now every brick fitted with every other: everything was backwards compatible. “We’ve got the bricks, you’ve got the ideas,” advised a 1992 Lego catalogue. A mathematician recently deduced that just six eight-stud bricks of the same colour could be combined 915,103,765 ways.

During the factory tour we saw some of those bricks being created. Here, 768 moulding machines work 24/7, 361 days of the year. There was a constant hiss: the sound of raw granulate being fed into the vast machines. Then something akin to Wonka magic, brightly coloured pieces of joy materialising at the other end. Lego’s quality control and precision is rigorous. As any parent who’s trodden on a piece knows, Lego is hard. The bricks have to be strong enough to hold together, but not so strong they can’t easily be pulled apart by a child. They call it “clutch power”. It is a huge industrial process, with similar plants in Hungary, China and Mexico. “Our idea is to have factories located close to key markets,” Trangbaek explained. Most companies make product where it’s cheapest then ship it. Not Lego. “It’s much more costly for us to lose a sale,” he said. “If you go to a toy store and you don’t find the product there on the shelf, you will be disappointed. But you will also not leave the shop without another toy.”

Lego is increasingly concentrating on bridging the physical and the virtual. This year it rolled out Lego Life, a social network for kids too young for Instagram to share their creations, gaining “likes” from peers and Lego characters alike. “Lego Batman can comment in character. ‘That’s awesome – would have been better in black and yellow,’” says Dieter Carstensen , head of digital child safety and the Lego Life team.“That kind of stuff.” There’s also Nexo Knights, a video game where powers are unlocked by scanning Lego pieces. They’re researching VR and AR. “Some of the things we’re looking at are very near to being feasible now,” says William Thorogood, an irrepressibly bouncy Brit, and the senior innovation director with Lego’s creative play lab. “Other things are very exciting, but probably not feasible for 10 years, depending on how mature the tech becomes.” Later this year we can look forward to The Lego Ninjago Movie , whose tone looks every bit as irreverently daft as its predecessors.

The next morning in Billund, Lego announced the highest revenues in its 85-year-history. Since December the company has been run by another Brit, Bali Padda, the first non-Dane in charge, after Vig Knudstorp moved into a new role to expand the brand globally. Asia, with its booming middle class, is a focus.

“The reality is that the last few years the growth has been supernatural,” Julia Goldin, Lego’s chief marketing officer, tells me. “When you look at the proportion of revenue that’s coming out of the mature markets it becomes more and more challenging with the level of penetration. But we look at every year starting at zero because you have to recruit every child again and make the brand exciting for them. That becomes a good challenge, of course.”

Earlier I had met Bo Stjerne Thomsen, the director of research and learning with the Lego Foundation, an independent body that owns 25% of the Lego Group and studies early childhood development through play. (It has partnered with Unicef in South Africa, and funded the world’s first professor of play , at Cambridge University)

Thomsen produced two plastic bags containing a few red and yellow bricks, part of a basic kit they use to engage learning.

“Quickly build a duck,” he instructed me. “Everybody can usually do it in 40 seconds.”

We set to work. Thomsen’s duck had two outstretched wings. Mine had a red bill, a red slab for feet and a yellow block for a tail.

“Oh, that’s fun!” he said. “I like that.”

There was no wrong or right duck, of course. That was the point. “It’s about the process of making and investigating and learning,” Thomsen said.

“How fast do you think anyone can do a duck?” Thomsen asked.

I’m not sure, I said. Ten seconds?

“Ten seconds? OK, let me count.”

Then he slammed another set of pieces straight down on to the table.

“That’s my duck!” he beamed. “I just sliced it up so it’s ready for the oven. Ha ha!”

Lego is a serious business. It just happens to be in the business of fun.

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The LEGO Case Study 2014

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About The Authors

Jan W. Rivkin

Stefan H. Thomke

Related work.

• July 2013 (Revised February 2014)
• Faculty Research

Jørgen Vig Knudstorp: Reflections on LEGO's Transformation

• LEGO  By: Stefan Thomke and Jan W. Rivkin
• Jørgen Vig Knudstorp: Reflections on LEGO's Transformation  By: Stefan H. Thomke

HBS Cases: LEGO

Although it isn't part of the admissions criteria, experience playing with LEGOs can come in handy at Harvard Business School.

When Stefan H. Thomke teaches his new case about the iconic toy company, he gives students eight-studded LEGO building bricks to figure out how many different ways they can be combined. Thomke's experience goes back a long way—as a kid growing up in Germany he participated in a LEGO competition. As an adult, though, his interests lie more in the business behind the bricks. "When you've written many cases you have a gut feeling that one like this could be really great," he says.

Thomke, the William Barclay Harding Professor of Business Administration, wrote the case with Harvard Business School's Jan W. Rivkin, the Bruce V. Rauner Professor of Business Administration, and Daniela Beyersdorfer, associate director of the HBS Europe Research Center.

LEGO explores how the company-one of the most profitable toymakers in the world-grew to global dominance from humble beginnings; the mistakes that led it near bankruptcy; and why one turnaround attempt failed while a second succeeded. LEGO executives were unusually supportive about the case-writing process, Thomke says. "We had access to everybody; they wanted the story to be told truthfully, with all the good and the bad."

Building At The Start

Part of that access included a visit to a wood craftsman's workshop in the small town of Billund, Denmark, where LEGO began, in 1916. Carpenter Ole Kirk Kristiansen eventually shifted the business from making houses and furniture to crafting wooden toys. He based the name of his new venture on the Danish words for "play well" (and, as it turned out, the Latin words for "to assemble"). His motto "Only the best is good enough" would later be carved into a wooden plaque and hung in the workshop. These themes of good play and quality products were both bedrocks and touchstones for future generations of LEGO toy makers.

Godtfred Kirk Kristiansen represented the second generation, working alongside his father at age 12. The LEGO brick played with by kids and adults around the globe came into being during Godtfred's tenure. He considered it a unique, sturdy, simple product—a system—that offered endless opportunities for creative fun, and drew up a list of product characteristics including "long hours of play" and "quality in every detail" that was distributed to everyone in the company.

Like his father, Godtfred paid careful attention to every aspect of the business, applying, for example, his knowledge of material science and production technology to the brick-manufacturing process. It's because of these precise specifications that bricks made under his watch are interchangeable with those available today. Godtfred's cautious nature extended all the way to the profit margins: he championed slow, steady growth. Because of this, it could take years for a new product to go to market. Green bricks, for instance, appeared in play sets only after a decadelong decision-making process-and the idea to include them came from Godtfred's son (and third-generation toymaker), Kjeld.

The snail's pace served the company well, as did the grandson of its founder. Under Kjeld's management, product demand was so high at times that executives actually found themselves discussing ways to slow sales.

A Shock To The System

That all changed in the early 1990s as seismic shifts pounded the toy market. Big Box toy discounters trampled mom-and-pops and lowered prices dramatically. Meanwhile, birth rates declined, children had less time to play and not much interest in toys that didn't offer instant gratification. "These changes did not play well to our strengths," observed current CEO Jørgen Vig Knudstorp in the case.

Serious jolts were also taking place in the LEGO Group. Out of work for a year following a serious illness in 1993, Kjeld appointed a five-person management team to help him run the company when he returned. The group focused mainly on driving growth. When a benchmarking study revealed LEGO's global name recognition was on par with industry giants like Disney, the team started churning out new products and ideas to leverage the brand's untapped value. A line of LEGO-branded children's wear was created and a division of the LEGO Group was charged with pitching book, movie, and TV ideas. LEGO building sets became increasingly complex with more unique components.

While the number of LEGO-branded items grew, sales did not, and in 1998 the company suffered its first financial loss. "Their top-line growth was slowing down but their cost was accelerating, so they were starting to lose some significant money," says Thomke.

Danish turnaround expert Poul Plougmann was hired to reassemble LEGO and staunch the red ink. "He comes in and … does things by the book," says Thomke. "He lays people off, he streamlines some things, he globalizes." And yet the financial picture grew worse. "He's basically going by the turnaround book, but it doesn't work."

One continuing problem: the company's growing complexity was choking it. Adding more bricks made products harder to assemble, forecasts harder to determine, and inventory harder to manage. Depending on the kit, there was either too much inventory, or no inventory at all, and restocking could take months.

"You had this multiplier effect of added complexity that went through the entire supply chain," Thomke says.

The LEGO Group had also gotten too far away from the core values it had been building on for the better part of a century. The toymaker found itself needing to turn around its turnaround.

Outside The Family

Enter Jørgen Knudstorp. He was just 35 years old when Kjeld promoted him from director of strategic development to CEO in 2004. (Kjeld retired that same year.)

Like Plougmann, he had no family ties to the company. Unlike Plougmann, his turnaround attempt succeeded. Knudstorp's slow-it-down approach of careful cash management, focusing on core products, and reducing product complexity certainly contributed to that success. It would also take re-engaging with customers, many of whom passed a love of LEGOs to their children while still connecting with the toys themselves. "One of the insights Jørgen had when he became CEO was that he needed to reconnect with the community [of loyal LEGO fans], one of the most powerful assets the company had," says Thomke. "It was a huge part of the comeback."

Knudstorp worked hard to define the core business of the company. "How you work with, and experiment outside of, the core of your business is part of that balance," explains Thomke.

Knudstorp recognized that innovation was part of that core, but he'd also seen the result of unconstrained creativity, so new product design began to be informed by market research, user feedback, and how well the toys matched the vision of quality creative play laid out by its founding fathers. Putting parameters on how people innovate had the paradoxical effect of making them better at it.

Reining in the creative process was part of a larger push by Knudstorp to reduce overall complexity within the organization. On the supply chain side, he did away with many of the unique brick components added during Plougmann's tenure, and eventually decided to bring brick manufacturing back in-house to ensure quality control.

Finally, Knudstorp made big changes to the management team, firing five of seven manufacturing executives and appointing a new leader for the team. A psychoanalyst was brought in to teach the management team how to identify decision-making made by logic versus emotion.

Sustainable And Balanced

It turns out that LEGOs promote lifelong learning. While the bricks themselves teach children the fundamentals of construction and creativity, the company's almost century-old history of management change has important lessons for businesspeople. "Managing sustainable growth is also about managing a balanced business system," says Thomke. "Complexity is something you need to watch very closely."

Controlling complexity, clarifying the core of its business, and engaging the larger community helped save the LEGO Group. Although he was not a Kristiansen by birth, Knudstorp's management style and business ideals closely mirrored those of its founding fathers. Only the best was, and is, good enough.

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CASE STUDY: LEGO Digital Solutions

LEGO ® applies its own approach of “systematic creativity” to adopting SAFe

UPDATE January, 2017 : A year after Henrik Kniberg and Eik Thyrsted shared the first phase of LEGO’s SAFe journey, they are back with the next chapter of their story. Their efforts to nip and tuck SAFe for optimal results run the gamut from large edits to small tweaks, and their learnings and outcomes are captured in a 36-page in-depth summary that is full of candid commentary and describes the thought process behind each decision. You can download it below.

Download LEGO Case Study Update

“ … this has ​improved the motivation​ of the team members. Going to work is more fun when there’s less confusion and less waste. And motivated people do better work, so it’s a positive cycle! Another impact we’ve seen is that other parts of LEGO visit the meeting, get super inspired, and start exploring how to implement some of these principles and practices in their own department. In fact, agile is spreading like a virus within the company, and the highly visible nature of the PI planning event is like a a catalyst. ” —Henrik Kniberg and Eik Thyrsted

One of the world’s leading manufacturers of play materials, The LEGO Group is still owned by the Kirk Kristiansen family who founded it in 1932. With headquarters in Billund, Denmark, and main offices in Enfield, USA, London, UK, Shanghai, China, and Singapore, the company employs more than 15,000 people worldwide.

In 2014, LEGO Digital Solutions turned to SAFe to improve their collaboration model and seek out what they like to refer to as the “Land of Awesome.” Their story of transformation was presented at LKCE (Lean Kanban Central Europe) by LEGO’s Head of Project Management, Eik Thyrsted Brandsgård and Lean/Kanban Coach, Mattias Skarin from Crisp.

Much like creating something from LEGO ® bricks, they built their transformation one piece at a time, starting with inviting 20 managers to a 2-day Leading SAFe class. From there, they began training the teams; first one, then another until they had 20 teams trained in SAFe. They approached every step as a learning journey, allowing for creativity along the way. When something didn’t seem like a good fit, they weren’t afraid to experiment. Taking results from Inspect and Adapt, they tweaked SAFe to their needs with a simple guiding principle, “Keep the stuff that generates energy.”

“The combination of a structured system, logic and unlimited creativity encourages the child to learn through play in a wholly unique LEGO fashion.” —The LEGO Group

Their first PI Planning event—which they now refer to as their “center of gravity”—went better than expected, with the teams eager to take what they learned and apply it.

“You just can’t replace face-to-face communication, and PI planning is just a fantastic way to do that.”

Their presentation includes insights and lessons learned, such as:

• You need critical mass
• They can now better manage expectations
• Don’t be afraid to experiment
• To become good at something you need to practice it
• Experimenting your way forward matters more than your selection of path

SAFe’s creator, Dean Leffingwell, calls their presentation, “One of the most insightful applications and presentations that I’ve yet seen on SAFe.” You can view their 45-minute video below.

Many thanks to Mattias and Eik for sharing their inspiring story!

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The LEGO Case Study 2014

The A CONTENTS 1 Introduction 2 Difficult start to the decade - 2001. 3 Signs of Recovery 2002. 4 Hopes dashed - 2003. 5 LEGOLAND parks. 6 LEGO Brand Stores. 7 The Knudstorp Review. 8 Financial Focus - the Oveson addition. 9 Back to basics and the limit to adjacencies. 10 Developing the strategy - why do we exist? 11 First the action plan - first things first. 12 Summary and Conclusions 13 Appendices 13.1 Knudstorp on communication 13.2 References and slides

The A 1 Introduction In 2014, LEGO® announced record results. In the financial year 2013, revenues had increased by 10% to 25.4 billion danish krona. Profits before tax were 8.2 billion DKK. The company had once again delivered an impressive operating margin of 33% before tax. In US dollars, the company had achieved $4.5 billion of revenues and profits of $1.5 billion. Revenues had increased from just over $1 billion some seven years earlier. LEGO® had replaced Hasbro to become the largest toy company in the world second only to Mattel. In just eight years, revenues at the Danish toy manufacturer had tripled. The company had turned around a loss of 2.5 billion krona in the financial years 2003 and 2004 to an operating margin the envy of high tech stocks around the world. The transition had boosted prices and gross margins from 56% to over 70%, slashed operating costs from 70% to 37% of turnover and doubled sales per employee. Return on equity had increased from zero to almost 70% and equity values had increased from 400 million to over 11 billion DKK. Valued on par with NASDAQ’s Facebook, the company would be worth over $150 billion. Not bad for a toy company based in Denmark. The future had not always looked so promising. In presenting his report to management in June 2003, Jørgen Vig Knudstorp, then head of strategic development had pulled no punches, “We are on a burning platform, losing money with negative cash flow and a real risk of debt default which could lead to a break up of the company”. Quite a turn around! How had the remarkable transition been achieved? In this case study we analyse the performance of the company using our corporate strategy framework of analysis. We apply the same techniques to Apple [2012] and Amazon [2014]. The results are fascinating, offering comparison and contrast in the approaches used within each company. Check out also the Excel and Keynote Slides available as a FREE download from the site.

The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 3 2 Difficult start to the decade - 2001 For LEGO® it hadn’t been such a great start to the decade. In 2000 the company had a loss of DKK 831m, which the Chairman described as “unsatisfactory”. There had been little or no growth in the year. Global net turnover was DKK 9.5 billion, compared to DKK 9.8 billion in 1999. In US dollars the company has lost $100 million on revenues of around $1.2 billion. 2000 had been a very difficult year for the entire toy industry. But despite many strengths and high points, the LEGO Company was impacted because it was believed by many, including key customers and management, to have lost focus. The LEGO Company planned to reduce or abandon certain initiatives outside of the core business, including wristwatches, publishing and other lifestyle products. At the same time, LEGO intended to reduce losses in software and the LEGOLAND parks. The strategy was to refocus on the LEGO brand – stimulating imagination, creativity and learning – “it is what children and parents expect from us. We will continue to expand within this area, applying a growth strategy with a huge potential and lower risk”. More emphasis was to be placed on using leading-edge technologies in ways that support LEGO brand values – such as extending the “intelligent brick” concept of LEGO MINDSTORMS to open up whole new ways of playing and learning, as well as initiatives such as LEGO Studios , putting the power of moviemaking in the hands of children. New products included the “power product” programme, as well development of the TECHNIC and BASIC brands. It was believed that Bionicle , a new product with great potential, first launched in Europe in February 2001, would combine physical and online play with LEGO story building. Products such as Harry Potter, Bob the Builder and Life on Mars – many of which would be launched or expanded in the next year and beyond – were new concepts to provide children with imaginative “story starters”. The product strategy - to create open-ended play scenarios with popular or fantasy characters with LEGO elements. Check out also the Excel and Keynote Slides available as a FREE download from the site. The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 4 Part of the growth strategy for 2001 and subsequently would include tapping the market potential in the United States, Japan, the United Kingdom and other European countries where market saturation was far from achieved. The Chairman was anxious to assure all LEGO enthusiasts around the world the LEGO Company was not in danger, despite a difficult financial year. Safe in their hands “The LEGO brand is as strong as ever. The LEGO Company was built upon a vision that we should nurture the child within every one of us. This is a timeless vision, and we will remain true to it and build our future success upon it.” It all sounded very promising and so it seemed initially.

The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 5 3 Signs of Recovery 2002 In 2001 the LEGO Company returned to profit. A pre-tax profit of DKK 530m, compared well to a loss of DKK 1.07 billion the year before. Profit from primary operations was DKK 822m. This result was described as “satisfactory”. The 2001 result appeared to be an obvious improvement o n t h e p r e v i o u s y e a r ’s negative performance. The successful result was attributed to a marked increase in sales and extensive internal changes in areas such as production, control and the product range. “The changes have largely been implemented – and have indeed borne fruit during the financial year.” Sales rose from 9.5 billion DK in 2000 to 10.7 billion DK. Higher sales to the American market were the biggest single factor behind the increase. Asia/Pacific and virtually all European markets contributed to the higher level of turnover. As for multi channel retailing, there was also an increase in mail-order and Internet sales via LEGO Direct. “The LEGO Company has almost completed the process of radical change in which it has been engaged over the past few years. The many adjustments have helped produce a more efficient and market-oriented organisation” claimed the Chairman in the Annual Report for the year. “Our Company’s financial success is due primarily to the resolute effort made in many areas. This has included a more market-responsive and focused product range, product mix, more efficient production procedures, and more targeted marketing. We have succeeded in coming up with a product programme which has proved more attractive to the consumer, and we have become better at reacting faster to consumer wishes.” “The sharp rise in sales was due especially to such product series as Harry Potter, Bob the Builder and LEGO BIONICLE"

The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 6 The sharp rise in sales was due especially to such product series as Harry Potter, Bob the Builder, LEGO BIONICLE and the more classic LEGO products – all of which contributed handsomely to the year’s result. “The LEGO “Light’ Project, which brought about very far-reaching changes in our control systems, planning procedures and organisation, has also enabled us to respond quicker to the wishes and needs of the market.” The Chairman warned that despite these many improvements, ”the massive boost in sales left us at times unable fully to satisfy demand in all areas.

“Not all was well in LEGOLAND as would prove to be the case in the following year. In 2004 the LEGO Group would have to take radical new steps to tackle its most serious financial crisis to date”.

The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 7 The LEGO Group through three generations

The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 8 4 Hopes dashed - 2003 In something of an understatement, 2003 was described as a very disappointing year for LEGO Company. Net sales fell by 26 percent from DKK 11.4 billion in 2002 to DKK 8.4 billion. Play material sales declined by 29 percent to DKK 7.2 billion. The result was a pre-tax loss on earnings of DKK 1.4 billion, i.e. a drop of DKK 2 billion compared with 2002. “The year’s result can only be described as unsatisfactory. The negative development reflects an unsuccessful growth strategy with a consequent loss of market shares.” announced the Chairman in the Annual report. At the beginning of 2003, substantial inventories of LEGO products, particularly in the USA, had built up within retail channels as the 2002 Christmas sales had failed to meet expectations. “By February 2003, behemoth retailers such as Target and Walmart were choking on a backlog of unsold LEGO sets. LEGO inventory had ballooned by 40% at some outlets to more than twice the amount of stock considered to be acceptable.” [p 63 Robertson & Breen] As a result, LEGO sales were extremely slow at the beginning of 2003. The downward trends continued and impacted on the year as a whole. The traditional toy market stagnated in 2003, whereas the trendier part of the market saw progress. The intensified competition in the traditional toy market resulted in a loss of market share in most markets. Competitors chose to pursue a strategy of aligning themselves with LEGO Company’s products and marketing, new trendy products emerged and retailers developed own private labels products. The decline was particularly marked in the US where sales dropped by approximately 35 percent compared to 2002. Asian markets experienced a fall of 28 percent. A significant part of the decline in these markets was attributed to shortfalls in the sale of movie tie-in products. There had been no follow through on the initial Star Wars success. The traditional Central European markets initially performed rather well and showed stability for most of the year. The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 9 Late in the year, however, sales also declined in these markets. Germany finished the year approximately 20 percent below prior year’s level, and the UK, Holland and the Nordic markets fell by 13 percent. Only the new markets in Eastern Europe and distributor markets maintained sales on a par with prior year. Sales of movie tie-in products developed unsatisfactorily. Interest in the Star Wars range and, to an even greater extent, the Harry Potter series - the 2002 top seller - fell below expectations in a year without new movie releases. The drop in sales of these products accounted for more than 50 percent of the overall sales decrease. LEGO Company’s own BIONICLE® range performed better, although sales fell by up to 20 percent. Nevertheless, one of the products in the range reached the Top 10 list of the most wanted Christmas presents in the USA. At the same time, the first BIONICLE DVD, produced in collaboration with the MIRAMAX film company, had an enthusiastic reception in global markets. The sales slowdown affected LEGO Company’s product range across the board. Nevertheless, it was encouraging to note (or so it was claimed) that sales of the classic LEGO products, Make & Create, doubled and the new products for girls, CLIKITS™, also got off to a good start. The range was discontinued in 2006. CLIKITS™, off to a good start - it was not to last.

The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 10 5 LEGOLAND parks The strategy of the LEGOLAND parks was to come under heavy scrutiny. The project was increasing “visibility” of the brand but was capital intensive providing limited return. Only the Billund site was making a significant profit. The overall result for the LEGOLAND parks in the year was on a par with 2002, although there were widely differing developments within the individual parks. LEGOLAND Billund Denmark, ended the year with a new visitor record and increased profits by around 10 percent. Despite a slightly weak peak season when the park receives nearly 40 percent of its visitors, the year finished impressively, achieving its highest ever visitor numbers for one day in the park’s 35 year history in September 2003. LEGOLAND Windsor UK, experienced a minor decrease in net sales due to a declining number of visitors. However, turnover per visitor increased and the result was on a par with 2002. LEGOLAND California USA, saw a weak start to the year, but ended the season better than ever before. This meant that, in terms of visitors as well as turnover, the park achieved a result comparable to 2002 which indicates that previous years’ decline in visitor numbers appeared to have been halted. LEGOLAND Deutschland did not manage to avoid the “second year” effect which had been noted in connection with the opening of new parks. While the year got off to a good start, the very hot weather in the peak season kept many visitors away. Although the hot summer also adversely affected LEGOLAND Billund and Windsor to some extent, the consequences for the German park were more noticeable. On some days, the number of visitors totalled only 60 percent compared with the same days in 2002. Demanding a separate skill set to the toy tradition, the parks were becoming and expensive distraction to management and to the overall direction of the company.

The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 11 6 LEGO Brand Stores Within the own retail unit, twelve new test shops were opened during the year in accordance with the strategy aimed at strengthening the consumers’ experience of LEGO products through own brand stores. The total number of shops under the new concept increased to 15. Besides the 15 test shops and the shops in the parks, LEGO Company had a further five branded shops and four outlet shops. The final expansion plans for brand stores were under preparation and were expected to be in place during 2004. Over three hundred stores were within the ambitious longer term objectives of the retail division. In many ways the own brand stores were something of a distraction to management and to the core business. Capital intensive, demanding a completely different skill set, the strategy was at odds with the ambitions and objectives of the major customer groups. Key retailers including Walmart, Kmart, Target and Toys R US, were unlikely to take kindly to the own retail concept. They were already frustrated with the loss of focus on the basics of the LEGO business and the lack of stock turn and margin performance of the product offer in store.

Demanding a separate skill set to the Toy tradition, the retail stores, like the theme parks, were becoming and expensive distraction to management and to the overall direction of the company.

The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 12 7 The Knudstorp Review In 2003, given the deterioration in the financial performance of the company, Jørgen Vig Knudstorp then head of strategic development was asked to undertake a review of the problems and produce a report. Knudstorp had joined the company from McKinsey & Company. Knudstorp was born within one hour of the main LEGO site, had been a childhood fan of LEGO and was keenly aware of the company’s heritage. Knudstorp had a strong sense of the LEGO traditions. The McKinsey training and tradition had taught Knudstrop that “Fact finding is the first step to problem solving”. That would require a back to basics review and assessment. Quoting Jack Welch CEO of General Electric, “a good CEO must, see things as they are, not as you wish them to be”. A back to basics review lay at the heart of the review strategy. J F Kennedy would say “the great enemy of the truth is very often not the lie, deliberate, contrived and dishonest, but the myth, persistent, persuasive and unrealistic”. This tenet of world affairs was no less true of business and management misperception of the underlying business. What Knudstorp discovered was particularly disturbing. In presenting his report to management in June 2003, he pulled no punches : “We are on a burning platform, losing money with negative cash flow and a real risk of debt default which could lead to a break up of the company’.

The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 13 Jorgen Knudstorp later explained to Diana Milne from Business Management Magazine : “In 2003 we pretty much lost 30 per cent of our turnover in one year. The decline continued in 2004 with another fall of 10 per cent. So one year into the job, [Knudstorp was to become CEO in 2004], the company had lost forty percent of its sales. We were producing record losses and cash flows were negative. My job was how to stop the bleeding. We had to stabilise sales and cut costs dramatically to deal with the new reality of selling 40 percent less than we had done two years earlier. We had too much capacity, too much stock. It was sitting in the wrong countries. The retailers were very unhappy”. Lego was off track and management didn’t really understand how far it was off track. Most employees and customers were very clear about the problems but there were no lines of communication to enable the key messages to get through to the top. The company was organised in a form of matrix management. Twelve senior VPs were overseeing six regions, operating in silos with little accountability. Worst of all there appeared to be no assessment of product profitability. The company had no idea which products were making money and which were failing to produce an adequate return on the sometimes, heavy tooling investment. Management was out of touch with major customers. New products for 2003 were competing for retail space on shelves already overstocked with unsold merchandise. The concept of STAMP collections i.e. Stock Turn And Margin Performance within retail distribution had been of little focus to the product development teams. Retailers were overstocked with products which offered diminishing margins as clearance offers ensued. Focus on the end user (the child) had ignored the means of access and distribution (the retailer). There had been a lack of follow through on Star Wars and Harry Potter at crucial times in the product life cycle. This hinted at a lack of continuity planning amongst the marketing and product development groups. Lack of profitable innovation was also apparent. Sales had increased but the bottom line had deteriorated. There were lots of new products but no profitability. The number of SKUs within the product range had escalated from 6,000 in 1997 to over 14,200 by 2004. The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 14 8 Financial Focus Knudstorp was assisted in his mission by the arrival of Jesper Ovesen as the new Financial Director. Ovesen had been Chief Financial Officer of Danske Bank, one of the largest banks in Scandinavia. He was also alarmed by what he discovered. The financial analysis was inadequate. There was a profit and loss account by country but no product analysis. There was no line profitability. The company did not know where they made money or lost money. The LEGOLAND parks were a cash drain but no one really knew why. Ovesen quickly completed the financial analysis and began to develop financial targets, particularly for line profitability. Targets of full manufacturing cost ratios (FMCs) and ROS return on sales targets were set. The company introduced a 13.5% return on sales target for all products within the LEGO portfolio. Analysis of capital allocation and measurement of return on capital performance would place the LEGOLAND parks under scrutiny leading to disposal in 2004. Kuudstorp and Ovesen believed the company needed not so much a strategy, more an action plan. Managing the business for cash rather than sales growth. Sell off the theme parks, slow retail expansion, slash the product offer and cut 1000 from the work force. Develop an action plan in the short term rather than a comprehensive strategy.

The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 15 9 Back to basics and the limit to adjacencies. A chance encounter with Chris Zook of Bain & Company assisted Knudstorp in his thinking. Zook was the author of “Profit from the Core” in which ZOOK argued that profits arise when companies focus on core products for clearly defined customer groups. Businesses could not afford too much diversification or as Zook described “the development of adjacent markets”. Zook sugested, growing companies could afford perhaps one adjacent market move every five years. Knudstorp realised LEGO had been trying to develop not one adjacency every five years but something like five adjacencies every year. The owners of the company had been spooked by the patent expiry of the basic LEGO brick in 1988. New players like Tyco Toys and Mega Bloks had developed me too products. New products including software, games, PlayStation, Xbox and the like had convinced senior management the move would be digital. “The LEGO brick was going to die!”. Hence the rush into adjacent markets in the perceived need to diversify away from the original business. LEGO had tried to developed a diversification strategy (ZOOK’s adjacent market moves) which included software (LEGO Moviemaker), learning concepts (LEGO education), lifestyle products (LEGO Kid’s wear), girls toys (LEGO dolls), books, magazines, television, theme parks and own retail with a goal of over three hundred retail stores. Each move had demanded a special set of skills away from the basic skill set within the LEGO business. Knudstrop was to herald a return to basics, reminiscent of the “Stick to the Knitting” mantra of Peters and Waterman [1982]. The company had been guilty of chasing too many fads and ignoring the focus on key LEGO kit construction products. There had to be a return to the LEGO brick. Back to the brick as a building system. A coherent expandable universe of toys. There had also to be a focus on profitability, especially the basic potential of the core products. At the end of 2003, it was decided to change the business strategy and set out a series of specific initiatives in order to ensure a stable platform for the Company’s development. The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 16 Knudstorp would later say “One of the rules I stick to is you can really only build an adjacency to your core business every 3-5 years because it’s such a major undertaking in terms of culture and capabilities. Rather than doing one adjacency every 3-5 years, we did three to five adjacencies every year. So I think that’s what nearly killed us”. ! I think we found there were basically two fundamental challenges that grew out of this period - over stretching and over expansion. Focus had been lost on basic execution, simple things. We didn’t know really what we produced on a weekly basis. There was a lack of transparency. We didn’t know where we made money and where we lost money. It was obvious that the strategy was wrong but we didn’t know what the right strategy would be, largely because the old one had looked like it was the right strategy. ! So we actually for the first two years of this new transformation of the company said, “Look, we don’t have a strategy. We just have an action plan”, which is a plan of detailed plan of back to basics, serving the retailers really well, making the products children really cared about, getting back to the core of what Lego had always been about, sort of a process of rediscovery.! ! ”We’ll spend a couple of years to stabilise the business and restore execution. We’re gonna s p e n d t h r e e y e a r s restoring profitability and then eventually we’re gonna get back to organic growth”. The action plan to survive, cut costs, sell businesses, restore competitiveness, generate cash and ignore the dash for growth in the immediate future.

The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 17 The business had to focus on retail first, then the end user. The challenge to restore competitiveness by focusing on retail customers, working to improve margins and stock turn for the major customer group. Delivering, to stores the right kits in the right volumes at the right time, creating a balanced portfolio on the shelf. Improving STAMP, the stock turn and margin performance in store. Focus on Kids would follow. End user customer orientation would be developed using focus groups and paying more attention to the AFOLs, the Adult Fans of Lego. The process would Lead to project MINDSTORM with the engagement of customers in product development. Knudstorp was to involve LEGO in the wisdom of crowds, crowd storming in the product development process. What would Steve Jobs have made of it all? Henry Ford would have had none of it, “Ask my customers what they want and they would probably have asked for a faster horse.” As it was they got the Model Ford T, in just one colour - black. The back to basics action plan was to focus on classics like DUPLO, LEGO, LEGO Technic and Lego Mindstorms. In addition. to utilise story based products like Star Ways, Harry Potter, Bob the Builder and Bionicle. DUPLO was first launched in the 1970s for the junior 2 - 5 market. One of the most popular launches was Bob the Builder in 2001. The characters and theme a perfect fit for the LEGO construction, build and play system. In a shock move, despite years of strong brand development and recognition, all of the infant toys in the LEGO range were r e b r a n d e d a s L E G O EXPLORE with different colour packaging. The strategic marketing mistake w a s r e v e r s e d i n t h e Knudstorp review. “The successful implementation of these initiatives was crucial for LEGO Company to ensure profitable growth and at the same time, uphold its strong, global brand position among families with children.”

The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 18 10 Developing the Strategy - why do we exist? In search of the basics, Knudstorp asked - Why do we exist? What do we do better than anyone else? What makes us unique? In conventional strategy analysis we ask, what is the USP the unique selling proposition. What are the KSFs, the Key Success Factors. What are the factors which develop competitive advantage. How can we develop the Kaizen process - consistently and persistently enhancing the KPIs, the Key Performance Indicators developed from the KSFs the Key Success Factors. 10.1 The Brick and the System The answer for Knudstorp lay in the brick, back to the simple thing, the LEGO brick, a unique rediscovering of the core business. Not just the brick but a unique building system, in which all parts fit together. Fit together so tightly but not so The search for strategy tightly that a two year old cannot take them apart. 10.2 Quality - Masters of the Mould Then would follow quality. “Only the best is good enough” the founders legacy. Quality not occasionally right but consistently right. To achieve that LEGO had become masters of the mould, a core competency, an important component in the basic skill set. By 2014 Knudstorp would talk of the manufacturing of 30,000 individual components every minute, a staggering 25 billion pieces every year. Each component manufactured with precision by world masters in moulding. But it is not enough to be “world masters in moulding” LEGO would need to develop operational expertise on a world scale. 10.3 Logistics - the right product in the right place at the right time To ensure the right kits arrived at the right Walmart store at just the right time, logistics would demand the co-ordination of operations involving warehouses in Mexico and USA with manufacturing operations in Denmark, Hungary, Czech republic, China and USA. Optimally producing the right inventory, at the right costs would demand the expertise of enterprise architects, engineers all with immense strategic capability. The task for the LEGO revival was intense. “Not just a brand but a business system maintaining competitive advantage”

The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 19 11 First the action plan - ten steps 1 Rationalise the product offer - cut 30% of the product offer 2 Attack the cost base 3 Slow the LEGO stores programme 4 Shed the theme parks 5 Jettison the computer sales business. 6 Relaunch DUPLO 7 Introduce financial targets - Line profitability , Consumer Product Profitability 13.5%, the ROS benchmark. FMC - targets for full manufacturing cost. 8 Close to the customer - putting the retailers first 9 Understand the end user - focus groups, mind storming, listen to the AFOLS 10 Better segmentation, DUPLO, LEGO and FRIENDS for the young females. 11.1 Rationalise the Product Offer - return to basics For several years, LEGO Company had invested substantial funds in expanding its product portfolio. This commitment and the consequent cost increases had not produced the desired results. In some cases, new products have even cannibalised on the sales of LEGO Company’s core products and thus eroded earnings. The development of new products had led to an escalation of the product offer, without any significant improvement in sales performance. Higher number of SKUs within the production process had led to a diminishing return on set up costs. The increased product offer led to complications in the sales process and also at point of sale within the major retailers. Towards the end of the year, it was decided to focus on the classic LEGO products with their strong ties to the universal and timeless LEGO bricks and the values that consumers associate with the concept. This involved a non-recurring cost of DKK 450 million, primarily allocated to writing down operating assets and buildings as well as redundancy payments resulting from the reduction in activities. 11.2 Attack the cost base As early indications were that weak sales would continue throughout the year (2003), LEGO Company increased its focus on cutting costs, especially by adjusting production capacity to the reduced activity level. This resulted in a global reduction in the number of staff of 600 later to rise to over 1000. It was decided to move forward the closure of the Lättich factory in Switzerland to February 2004. The planned closure resulted in further job cuts of approximately one hundred. The ongoing endeavours to adapt production to lower sales contributed towards a satisfactory inventory situation at the end of the year. The reductions in costs, including the redundancies, only moderately affected the 2003 result but were to impact more fully on the 2004 outturn. The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 20 11.3 Bring Back DUPLO “The future creating a platform for stable earnings and balanced growth within the play material area is crucial for LEGO Company’s future.” was the statement in the Annual report for 2003. “For this reason, the Company changed its business strategy at the end of 2003 and set out a number of specific initiatives for 2004. The revised business strategy would focus on developing and marketing the Company’s more timeless core products that are in general demand because of their power to stimulate children’s creativity and learning.” One of the consequences was the re-launch of LEGO® DUPLO®. In 2002, the DUPLO brand was replaced by the new development system for pre-school children, LEGO EXPLORE, aimed at creating a simple and accessible system of stimulating play methods for young children. The company failed, however, to persuade consumers of these benefits, and sales of pre-school products dropped by 37 percent during the year, accounting for approximately 10 percent of LEGO Company’s sales. Such sales levels are obviously far from satisfactory for these former top sellers. The decision to drop LEGO® DUPLO® had been a mistake which was quickly recognised and reversed. The DUPLO brand had an important role to play in the market segmentation process. In 2004, the pre-school products were to be relaunched under the LEGO® DUPLO® and LEGO BABY brands. Movie tie-in products would continue to be an important, although relatively minor, part of LEGO Company’s range. The substantial fluctuations in the sales of these products were considered to be incompatible with the desired stability in earnings.

The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 21 12 Summary and Conclusions In 2003, LEGO was according to the Knudstorp review “on a burning platform, losing money with negative cash flow and a real risk of debt default which could lead to a break up of the company”. The company had reported losses of $228 million on sales of just over $1 billion in 2003 and a loss of $207 million on sales of $1.1 billion in 2004. In 2013, the company achieved $4.5 billion of revenues and profits of $1.5 billion. LEGO® had replaced Hasbro to become the largest toy company in the world second only to Mattel. Return on sales had increased to 33% and sales per employee had doubled. Lego achieved this sensational turnaround under the leadership of Jurgen Knudstorp. A focus on core products and values. Clear leadership with a command structure focused on profitability. A premium pricing strategy and a high return on sales target. A return to core values on product quality, the lego legacy and a value for money proposition for end users and the retail customers. Understanding the KSFs, the key success factors were instrumental in this process. Close to the customer became a Knudstorp mantra. Using focus groups for kids and AFOLs, the adult fans of Lego in the process, new product ideas were tested during the product development process. The sometimes short product life cycles demanded a steady new product development programme in which products were brought to market within a much shorter time frame and within a given cost base. A process of market segmentation and customer segmentation, led to the refocus on DUPLO for the younger market, LEGO as the core brand and Lego FRIENDS , opening the brand to the young female market. The company analysed the offer into Fantasy and Reality matrix. Excitement in the offer was maintained by products such as Star Wars, Harry Potter and Pirates. The more technical were inspired by Technic and Architecture. The younger age group enthralled with Bob the Builder.

The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 22 The Knudstorp process had : Created a clear vision for the future direction of the company. Set a clear direction for LEGO and fundamentally changed the way the company did business with major retailers. Created a clear command structure within the organisation with an emphasis on performance and profitability. Defined gross and net margin targets defined as the major challenge within product development including a premium price strategy and a 13.5% return on sales target. Restored competitive advantage by focusing on retail customers, in particular their profitability. Understanding the importance of “STAMP” the impact of Stock Turn and (Margin Performance), gross margins achieved in store. Reduced the level of risk by right sizing the activities, cost base and assets to a lower overhead base, reducing the break even level for a given level of turnover. Introduced back to basics, focussing on the Lego brick legacy. A focus on the brick and the system, developing core products for a clearly defined group of customers. Avoiding the lure of too many adjacencies. Encapsulated the belief in the brand and the company, In Knudstorp’s own words “Passionate about what you are doing, living your dream”. The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 23 The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 24 13 Appendices 13.1 Knudstorp on Communication How are we doing boards “So for instance in the factories, rather than introducing an IT system and elaborate reporting, we put the reporting up on a white board. We created something we still use to this day. We call it a visual factory. Every Friday morning at 7:00 a.m. we’d get together and the managers would write down how the factory was performing in front of all of us. Green numbers for good outcomes, red numbers for bad outcomes. People look at that and say, “When are you gonna put it in an IT system?” and I say, “It’s never gonna go into the IT system because it’s all into doing the sharing of data and how we are doing.” Communication / Cascade It’s a social mechanism that starts driving change, because once you’ve written that red number up there you don’t need to be told I need to change that. You start changing it. So it’s about that. We introduced which customers were profitable. We made it very transparent. We’ve worked a lot on our communication. I write a weekly letter to all our 500 middle managers about how is the business doing. Sometimes I reflect on what’s working, what’s not working. Creating a really flat organization with a fluent dialogue where people feel that they can say exactly what they think, Management by wandering around I had some great colleagues around me who had more experience and said, “Look, don’t kid yourself by saying you want change. You need to introduce the systems, the incentives, the processes. You need to work your way into it. You don’t talk your way into it. Get out there.” So what I did was I spent very little time in my office. I joined these visual factories even though people would say, “Well we’re discussing capacity in factory number five right now” and the CEO said, “That’s a bit awkward.” He’s never been here before. It’s not like I walked in and said, “I believe you should turn that machine off and turn that one on” because I had no clue, and that would be delegating to the highest level of incompetence to have me do that, but it was more sending a signal. So it’s literally a lot of dialogue, walking around, acting, being part of the acting. New ways of doing it and then reflecting on it through my personal communication, whether it was in one-to-ones or in the weekly letter on my blog, which all employees can read. It’s about being there. 13.2 References & Books of interest Ashcroft J K [2012] Dimensions of strategy.com Ashcroft J K [2012] The Apple Case study.com Herman S [2012] Building A History - The Lego Group Jakobsen S [2008] Lego Legacy Danish Peters, T & Waterman RH [1982] In Search of Excellence Poulsen P T [1993] A Company and It’s Soul Per Thygsesen Robertsen D and Breen B. [2013] Brick by Brick. The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 25 13.3 Chart Sets A complete set of slides in Keynote, PowerPoint and PDF format are available from the website together with the ten year financial analysis in excel format.

The Lego Case Study.com from John Ashcroft and Company, experience worth sharing. Page 26

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Letovo Schoolcampus, Moscow, Russia

Letovo, the dream came true.

Letovo School is a special school for gifted and motivated children aged 12 to 17. An idea to create the school came from entrepreneur and philanthropist Vadim Moshkovich: ‘My dream was to offer talented children from all over the country access to high-quality education, regardless of their parents’ financial means. This school makes it possible for them to continue their studies at the 10 best universities in the country or at one of the top 50 universities in the world.’

New high school campus for 1000 students in southwest Moscow, including boarding facilities for 500 students, teachers residence 100 apartments, and huge outdoor sport facilities.

• Street + number: Zimenkovskaya street, Sosenskoye settlement, Moscow, Russia
• City: Moscow
• Country: Russia
• Total campus area: 20 ha
• Gross Floor area school: 20.000m²
• Gross Floor area boarding : 10.000m²
• Gross Floor area teachers residence: 9.000m²
• Start design: October 2014
• Start construction: September 2015
• Completion date: August 2018
• Opening: September 1018
• Project architects Dorte Kristensen, Pascale Leistra, Karho Yeung
• Design team Thijs Klinkhamer, Abel de Raadt, Alessia Topolnyk
• Architecture: Atelier PRO architects
• Russian co-architect: Atrium architectural studio, Moscow
• Interior Design: Atelier PRO, Thijs Klinkhamer in cooperation Nadia Fedotova Moscow
• Landscape Designer: Buro Sant en Co landscape architecture, the Hague
• Name: Letovo
• Website: en.letovo.ru

Landscape-inspired design, shape and brickworks Located in Novaya Moskva, southwest of Moscow, the campus sits atop a beautiful plot of land that slopes down to a forest-lined river. Distinctive level variations were applied in and around the school to integrate the architecture into the landscape.

The shape of the large complex brings it down to a human scale for the children: the building appears to dance across the landscape due to its dynamic design. Due to the perspective effect one only ever sees part of the building's full size when walking around, which gives the impression of a refined scale. The building’s contours and flowing curves create surprising indoor and outdoor spaces as well.

To accentuate this curved shapes and to have the building blend into the landscape brick seemed a rather obvious choice. The natural ingredients of brick such as clay, sand water, air and fire gives the school building a natural setting as if the building has been there endlessly. Brick with its solid and sturdy exposure. We choose a sandy light colored brick so in all wheather circumstances it will have a warm glance.  

Letovo School Moscow, level 0 garden level

Letovo School Moscow, level 1 entrance level

Letovo School Moscow, level 2

Letovo School Moscow. Section A

Letovo School Moscow. Section B

• Central hub, 1000 persons
• Auditorium, 200 persons
• Debating room, 50 persons
• 40 classrooms
• 3 recreational zones
• 5 library spaces
• 9 sciencelabs
• Exposition / green house
• Canteen, 500 persons
• Big sports hall
• Small sports hall
• Swimming pool
• Martial arts
• 2 spaces fitness

5 studentent houses for 500 students

3 teacher apartment blocks

• Soccer field
• Stade for athletics
• Tennis courts
• Baseball fields
• Green house

The heart of the school: the central hub

The central hub is the place where day-to-day life at the school unfolds. This flexible, transformable space will be used throughout the day as an informal meeting place. The dance studio on the ground floor can be transformed through a few simple adjustments into a theatre with a stage, a cosy living room or an auditorium that can accommodate 1,000 people for special events such as graduation ceremonies and large celebrations, as seen at the grand opening. This central hub connects the building’s three wings: the art wing, the south wing with science- and general-use rooms and the sports wing.

Learning environment with a diversity in working spaces

Letovo envisioned an innovative and modern take on existing education in Russia. In the spatial design, this perspective translates into space for theoretical education as well as special areas for group work and independent study in the tapered building wings. In the library wing there are silence spaces workshop spaces and a debating room. These are all supportive to the student’s personal development.  

Sports programme

In addition to the extended sports outdoor facilities, the indoor supply of sports facilities is substantial. These cover fitness rooms, martial arts rooms, a swimming pool, a small and a large sports hall. Around the sports hall there’s an indoor running track which can be used throughout the year. It is available to school staff and external users as well.

The interior, also designed by atelier PRO, is tailored to the aims of the ambitious programme. The design of the interior also focuses extensively on the various spaces where students can go to chill and meet up with friends. The extreme cold in this area makes the school’s indoor atmosphere important for relaxation.

Ambitous learning environment

The Russian client has established a private, non-profit school which aims to be the most prestigious school in the country and to offer the best educational programme through a Russion and an IB (International Baccalaureate) curriculum. Students’ personal development is paramount, with the school adopting a holistic approach. It is a true learning environment that provides scope for a range of disciplines, areas of interest and recreational opportunities to foster children’s development. This aim is supported by the campus facilities and functions.

In December of 2016 the architectural project of school was awarded by Architectural Council of Moscow as the best project in the sphere of education and health care.

Photography: NARODIZKIY www.narodizkiy.com Dmitry Voinov dmitryvoinov.com

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Cecilia Bobrovskaya Twenty Years in Underground Russia: Memoirs of a Rank-and-File Bolshevik

VIII. Moscow

FROM Baku I went to recuperate a little at the estate in Zhiroslavka near Kostroma which I have already mentioned, whose mistress, Elizaveta Kolodeznikova, considered it her mission in life to provide a haven for all tired and homeless Party workers. About midsummer 1905, after I had had a short rest, I left for Moscow. According to the decision of the Moscow Committee I was to start work as district organizer. I was to take up my new duties after the city conference, at which I hoped to gain a better knowledge of Moscow Party work. The conference was to be held on a Sunday in the woods near Obiralovka on the Nizhnenovgorod line.

When our group of comrades alighted at the suburban terminus of Obiralovka, the station was crowded with gendarmes, detectives, spies, and other police department officials. The "splendour" of the scene petrified us for a moment. Then we began to pretend that we were all strangers to each other. But the police only laughed at us. One of the delegates to our conference had betrayed us, so that the police knew everything to a detail. Notwithstanding all the information they had, however, they arrested only fifteen comrades. The others, who had come by an earlier train, managed to escape the trap laid for us at the station. I was arrested with several workers employed at the Guzhon Works in Moscow. I particularly recollect one dark-haired young worker with squinting eyes, who kept us merry all the way from Obiralovka to Moscow whither the police were taking us. At every stop the holiday crowd tried to get into our car. The police zealously attempted to drive the crowd away, while the dark-haired Guzhon worker cried to the newcomers:

"Ladies and gentlemen, it is strictly forbidden to come into this carriage. The ambassadors from Portsmouth are here!" (This happened at the time of the peace negotiations with Japan.)

At the police headquarters we were closely crossexamined. But I could not say anything for myself. I had just recently arrived in Moscow and had had no time to obtain a passport. I lived without being registered, at the home of my husband's mother, Sophia Bobrovskaya, and avoided the janitor. This apartment was very convenient for secret work because the house had two exits, one of which was particularly useful because it led into a yard in which there was a postoffice. If anything happened one could always pretend to be going to the postoffice. These features were taken into consideration when Sophia and her younger daughter, Nina, rented the apartment. It often happened that mother and daughter, not having had time to consult each other, both offered the apartment for meeting purposes on the same day. Once, for example, a secret meeting of soldiers--representatives of the army--was held in one room, which Sophia had lent for the purpose, while in another room the girl cashiers of the Chichkin dairies met to discuss the forthcoming strike of the employees of that firm. Nina had consented to let them have the room without consulting her mother. The house was always used as a temporary hiding place for illegal literature and weapons. Furthermore, workers frequently made appointments at the house without telling the Bobrovskys beforehand because they knew that the latter would acquiesce.

Hence, when I was arrested I could not possibly give the Bobrovsky address. The only thing I could do was to refuse point blank to give any information about myself. I was immediately charged under Article 102 of the Criminal Code and sent to the Watch Tower in the Butirsky prison. Before me was the prospect of a quiet life (as a rest from my roving one) for a lengthy period, and I planned to take advantage of this to improve my theoretical knowledge. My deficiencies in this respect hindered me in my Party work. But this dream was not realized, owing to the breathless events that occurred on the other side of the prison bars. These events freed me from the Watch Tower--a freedom gained under strikingly happy circumstances. Each day the rumours which reached us in the Watch Tower as to the growing revolutionary spirit among the broad proletarian masses were more and more confirmed, particularly after we heard the singing of revolutionary songs in the main yard (the Watch Tower looked out into the hospital yard). They were sung by the arrested Philipov bakers. The crowds of workers in the neighbouring yard which we could see from our tower, and the snatches of speeches that were carried to us also helped confirm the fact. Besides these joyously disturbing signs, during the first days of October a group of Poles were imprisoned in the Watch Tower (because there was no room in the deportation prison) in the next flight above my cell. I learned from these comrades that they had been exiled from Warsaw to the Vyatka province and had been on their way there, but, owing to the strikes on the railroads, they had had to stop for an indefinite time in Moscow. Any day now, they predicted, Russia would be in the threes of a general strike; then we would not be in prison very much longer.

The Poles were in very high spirits and from the moment they arrived, our isolated yard in the Watch Tower changed as if by magic. For example, a few days before October 17 a very curious thing happened. It had snowed the previous night, and one of the Poles who was a sculptor made an excellent snow figure of Nicholas II. When the figure began to melt, another of the Poles approached my window and said audibly:

"Look, comrade, the autocracy is melting, let's give a cheer!"

The guard in the yard informed the governor of this. The assistant governor came, spoke briefly to the Poles and to me, then, apparently feeling the insecurity of the autocracy, limited himself to a mild lecture about our "disgraceful conduct" and returned to the office scratching his head. But not all the warders were so pessimistically inclined. The governor of the Butirsky prison still held aloft the banner of autocracy. My husband had been exiled to Siberia and I expected that he would stop at the Butirsky prison on his way there from the Caucasus. I asked the governor to permit me to see my husband if he came. The governor replied haughtily: "Prisoners are forbidden to talk to each other." A week later, after this haughty refusal, I met my husband in Moscow--both of us were free. He had been released on the road by the rebellious Rostov workers.

The last few days before October 17, the cream of the Moscow proletariat gathered about our Butirsky prison. There was not a workshop nor a trade that was not represented there. Prison life became unusually intense. The senior prison officials went about looking cross and gloomy. The middle ranks looked frightened and apologetic while the lower officials, warders and the rest went about gloatingly. They would forget to lock our cells (the corridors, of course, were locked), and we became so bold, that we not only carried on conversation with the Poles, but two of them even came to my cell for a few minutes. The prison officials visited us several times a day. Representatives of the public prosecutor often came to ask if we had "any complaints to make". At night our guardians had no rest. Lights flickered in the yard and in the corridors all night. It was apparent that they were profoundly disturbed. This filled us with fierce joy and, we were curious to know how it would all end. I was not very clear as to what was happening outside and things were still very vague to me even when a vast revolutionary Moscow crowd moved toward the Butirsky prison and demanded our release. The day before rumours had reached us that a royal manifesto would be issued granting us freedom. But we were indignant at the very suggestion of such a mark of the tsar's favour and would hear nothing of it.

On the morning of October 18 everything in the prison seemed as usual. Keys rattled in the corridor. The "hot water" was brought at the usual hour, but I could not think of drinking it--there was no time for such trifles. I made my morning survey from the window sill--endangering my ribs, because the sill was very high above the ground and there was nothing to grasp but the bars--and looked out into the yard; but I scarcely recognized it. It had changed into a military camp. Machine-guns, cannon and other death dealing instruments filled the yard. Gallant officers, ready for battle, shouted orders. They all looked as though they expected the enemy at any minute. It was not difficult to conjecture what enemy. Anyway, I was not kept guessing long, for very soon I saw a huge crowd moving down Dolgorukovskaya and Lesnaya streets towards our prison. But what agitated me most was the sea of red banners. A red banner meant a great deal to an underground professional. At that moment the sight of so many red banners seemed strange to me.

The exulting revolutionary crowd approached so near that I could actually see expressions on individual faces. In front of the crowd, threading his way toward my window, was my friend Makar. He was saying something to me that I could not quite understand. He was saying that he was afraid I might be kept in prison till the evening because no telegrams had yet been received from the Minister Witte, or something to that effect. His tone implied that it was the hardest thing in the world for me to have to stay in prison until the evening--I, who had been planning a bare week ago to stay in prison for more than a year!

The most inexplicable and surprising thing about Makar and all the others was their utter disregard for any consequences their conduct might entail--a disregard that was not the least shaken by my mentioning the cannon and machine-guns which awaited them on the other side of the prison. They simply laughed in reply, exclaiming, "They won't dare!"

When the crowd demanded the release of all political prisoners, the first to be freed were the Philipov strikers. These had been thrown into the prison in whole groups. A barrel was placed at the gates of the prison to serve as a platform for speakers. One of the released bakers mounted this barrel and delivered the following "speech": "Comrades, I am a Philipov baker! That is all I have to say!" This avowal was greeted with tremendous enthusiasm. After the baker, a few railroad workers spoke. No one tried to understand what they were saying. The speeches were not important in themselves--it was the circumstances in which they were delivered that were important.

I must admit that at that triumphant moment I was afraid of being released. I was afraid that I should have to make a speech from that barrel in my thin high-pitched voice. But the god of revolution preserved me--a voiceless underground worker--from this ordeal. I was released in the evening, when the crowd had dispersed, without being forced to deliver an agitational speech--a thing I never could, nor can do. I was permitted to leave the prison quietly. Although we had been freed by the revolutionary masses, we still had to pass through all the prison formalities at the prison office. That office had an unusual appearance. It was filled with tables at which officials sat who, apparently, had been hastily appointed. They rapidly checked us off the prisoners' list. The released comrades introduced themselves to each other, congratulated one another, laughed, and tied red ribbons on their arms. At the office I had a short but very characteristic talk with the prison officials. It seemed somewhat strange to go out of prison with a valise. The first thing I wanted to do in leaving the prison was to rush to a meeting, to be out in the street; a valise would only be a hindrance. So I asked permission to leave it in the office. The warder looked at me in surprise at my request and said: "Do you still have faith in us? To which I answered, "Of course, for most probably I will have to return to you very soon".

To tell the truth, I was not at all certain that this freedom would last very long. When I found myself at the University that evening, I became still more confused by the atmosphere. Going through the University corridors. I met many comrades, but none of them could explain to me what waS actually taking place. At last I saw Martin Lyadov (Mandelstamm), a member of the Moscow Committee. I showered questions upon him about the Moscow Committee and what I was to do with myself, but he merely answered:

"Tomorrow we are burying Bauman. You must come to the funeral; go to a meeting now and make a speech. All the comrades who were released today are doing that."

The news of our Comrade Bauman's death communicated to me in such a calm tone, was a great blow to me. I recalled his cheerful disposition in Geneva and was deeply distressed at the thought hat this brave, energetic revolutionary was no longer among the living. I met Zemlyachka, another member of the Moscow Committee, and began to question her. She also replied, "Tomorrow is Bauman's funeral," and then pushed me into a meeting saying, "You go and speak after that comrade. You're just out of prison, you know," whereupon she hurried off.

"That's a fine way for the Moscow Committee to get me to understand the situation," I thought, to myself. "To speak at a big meeting without the faintest gift of oratory and with my head still in a muddle." I pondered a while and decided not to become an "object of the celebrations," but instead to mingle with the crowd.

Next day, however, during Bauman's funeral, which was far more stirring and demonstrative than I had expected, I realized that Lyadov and Zemlyachka had been right. The organization of this funeral was a big Party task with which the Moscow Committee of our Party had coped admirably. I also understood that ones own individual sorrow at the loss of even such a dear comrade as Nikolai Bauman had to give precedence to the historical significance of the funeral.

I was unable to begin my work in the Moscow district for some time after the funeral. I was dreadfully unstrung by all that had happened and became ill and suffered from insomnia. In the moments of forgetfulness I still seemed to be walking from the Technical School to the Vagankovsky Cemetery with that solid mass of workers united by a single revolutionary aim. I could still see the coffin under its velvet pall sway on the shoulders of the men who carried it and the words of the funeral march still rang in my ears:

"Dying like soldiers, fighting for labour so did you fall ..."

My illness prevented me from working for three weeks--a very long time for that period.

On November 8, 1905, Lenin wrote in the paper Novaya Zhizn:

"The state that Russia is in at present is often expressed with the word 'anarchy'. This wrong and false term in reality expresses the fact that there is no established order in the country. The war of the new, free Russia against the old serf-autocratic Russia is being waged along the whole line; the autocracy is no longer capable of conquering the revolution, but the revolution is not yet capable of conquering tsarism. The old order is shattered, but it is not yet destroyed, and the new, free order is existing unrecognized, half hiding, often persecuted on all sides by the henchmen of the autocratic system."

Towards the end of November the scales definitely swung in favour of the revolution; deep in one's heart one felt that the great struggle between the working class and the tsarist autocracy would at any moment break out in open armed conflict on the Moscow streets.

In all save the most backward districts the atmosphere reached white heat. Proletarian Moscow was impregnated with the spirit of revolt.

Our Bolshevik organizations carried on feverish preparatory work, mustering the working masses, agitating the troops, and getting the workers' armed units which had been organizing since October into military shape.

The leading figure on the Moscow Committee at that time was Comrade Shantser, or "Marat," as we called him, but all the information I have is the meagre data found in the documents of the Moscow Secret Police obtained by Comrade Minitsky for a biographical dictionary of Moscow Committee members who had fallen in the revolution. From this data we learn that Comrade Shantser was born in 1867, that his father was a German and his mother a Frenchwoman, who had become Russian citizens and had settled in Odessa. He began doing cultural work among the workers while he was still a gymnasium student and, after finishing school, was arrested in 1887 for participating in the organization of a workers' library in Nikolayev. In 1895 he was arrested again, this time for conducting propaganda in workers' circles in Odessa and for making collections for political prisoners. Later, when he was a junior barrister, in Moscow, he maintained constant touch with workers who used to come to his home and among whom he distributed illegal literature. In September 1901 he was arrested at the home of Comrade Nikiforov, another old comrade now dead, for taking part in the preparations for a demonstration in Moscow; and he was exiled to Fast Siberia for three years where he was kept under the strict surveillance of the police. From there he returned to Moscow in November 1902 and worked with even greater energy in the Party, playing a leading role in the Moscow organization whose leader he was in the November-December days of 1905.

During the uprising he was arrested for the fourth and last time at his home where a meeting of the Federative Committee--a body organized to co-ordinate the activities of all the revolutionary organizations and on which Comrade Shantser represented the Bolsheviks--was to have been held. Since all evidence about this case was lost during the days of the rebellion, he got off with administrative exile to the Turukhansk region.

Here he suffered a nervous breakdown but, ill as he was, he nevertheless managed to escape abroad where the nervous disease developed into an incurable mental disorder. Due to his hopeless condition Shantsers wife, Natalia, managed to get permission to return to Russia with her sick husband in 1910. But the tsarist officials loved to spite their disarmed foes. When he returned to his native land, this hopelessly sick and emaciated comrade was not allowed to be placed in a private hospital, but was sent to the central police lunatic asylum. Comrade Shantser, whose memory should be preserved by the Moscow workers, died on January 29, 1911.

I personally worked as the organizer of the Lefortovo district where I met many comrades, some of whom, like myself, had been sent by the Moscow Committee, while others were local workers--representatives from the mills and factories.

The Moscow Committee regarded the Lefortovo district as one of the backward ones. And in truth, as the December days drew nearer, one could witness in Lefortovo more than in any other district the heartbreaking sight of individual workers, and even whole groups of them, with bundles on their backs--turning their faces towards the village--and their backs upon the revolution.

To make the Lefortovo workers fall into step with the more militant districts (Presnya, Zamoskvorechye) we had to carry on intensive agitational work. We organized meetings from morn till night at the Vedensky People's Palace to which the workers came in crowds. Before we could clear the hall of one group, another group would pour in, while crowds of workers would be waiting their turn on the Vedensky Square.

We organizers found it very difficult to provide agitators for all these meetings. In 1905 the Party in general, and the Moscow organization in particular, had an extremely limited number of agitators at their disposal. Not every underground Party worker who was accustomed to speaking at small workers' meetings held in the woods or on a boat, or in some out of way barn, could get up before a mass meeting of several thousand and speak from a high platform in a brilliantly lit hall.

We had to resort to all sorts of ruses to get an extra agitator from the centre. Thus, for example, early in the morning I would go to Fidler's house, the headquarters of the Central Board of Agitators of the Moscow Committee led by Comrade Stanislav. There I would catch one of the agitators and earnestly plead that today was the decisive day, that the Lefortovo district was not stable, that if we managed to carry off one or two successful meetings the Lefortovites would be roused, etc.

Having played upon the feelings of my agitator in this fashion, I would obtain his promise to come to Lefortovo, knowing all the while that he could only go where the centre sent him, and not where each district organizer wanted him to go. But such is the mentality of a district worker that it always seems to him that his district is more important than any other. These difficulties were eased somewhat in the days that followed, when, besides the official agitators, speakers appeared from among the masses themselves. At our meetings in the Vedensky People's Palace, workers would get up from the audience to address the meeting. I remember a worker from the Rontaller factory who once came over to me and said timidly that he would like to speak. He wound up his long and fairly able speech with the following words: "We button makers are a big power. If we choose we can leave all Moscow without a button."

A middle-aged working woman agitator in the audience spoke about the low wages paid to women, and to illustrate the point she said: "When I, a woman, am hungry and go to buy a cucumber, do I pay half a kopek, or do they charge me a kopek the same as they charge a man?" Her speech created a tremendous impression upon the audience. It was a rare thing for a woman worker, and an old one at that, to get up on a platform and speak before a big audience.

Our Party headquarters were located in the Vedensky People's Palace and we members of the District Committee were in the office day and night: from early morning till late at night we received delegations from factories and mills who came to us with all kinds of problems.

I vividly recall a group of workers from the Dufurmantel factory, five of them, led by a middle-aged, red-bearded worker. They were sent by the illiterate workers who had organized themselves and demanded that we immediately teach them to read and to write. "It's a crime not to be able to read at such times," they declared to us. This "illiterate" delegation made a deep impression upon us. We explained to them that we could not possibly teach them to read and write in so short a time as they desired, but that we would organize a school for this purpose without delay. And indeed we organized such a school for the workers in our district, using the nearest public school for this purpose and mobilizing teachers--our own people--to help. Despite the disturbed time, regardless of the fact that towards the end of November we had reached the verge of an armed uprising, our Party organization continued, as it had done in times of peace, to organize schools, lectures, clubs, in short, all sorts of cultural work. This work was carried on "under fire," so to speak, and was often intermingled with purely military work.

For example, during the barricade fighting in the Zamoskvorechye District, furniture which was being delivered to the club was seized and used for building barricades. The club organizers began to protest against the misuse of club property, but later, realizing the urgent necessity, they not only helped to pile up the furniture on the barricade but even removed the gate of the house where the club was situated and piled that on also.

Our Lefortovo unit of armed workers, with Comrade Rublevkin at its head, was a small, poorly equipped, but extremely militant group, which together with the District Committee members was very keen on getting the backward Lefortovo district to catch up with the other districts. Later, during the uprising, when fighting was taking place in the centre in the Presnya District, and in Zamoskvoretsky District, and when we Lefortovites were still holding meetings, our armed workers went off to help the other districts.

Towards the end of November the first Moscow Soviet of Workers' Deputies, uniting 134 industries with about 100,000 workers, was organized. On December 14 this Soviet passed a resolution to the effect that: "Moscow workers must hold themselves ready at any moment for a general political strike and for an armed uprising."

In accordance with the decision of the Soviet on the morning of the fifth, meetings were held in all the factories and mills where the question of the strike and the uprising were discussed and put to a vote; and in the evening of the same day the Lefortovites went to the Bolshevik Moscow City Conference where the question was to be decided.

At this time even the Lefortovo district had become aroused and the referendum we took in all the factories on the question of the strike and uprising gave positive results. But we all realized that when the forces were counted up at the Conference, the Lefortovo district would be found to be the weakest. This knowledge filled our hearts with bitterness.

Those who were present at the conference on the night of December 5, 1905, will remember what a militant spirit reigned there, with what eagerness the factory delegates were listened to, and how they all in one voice declared that the workers were ready to revolt. The deep conviction of the inevitability of the uprising was not shaken even when the military organizer, Comrade Andrey, in his report on the conditions of the Moscow garrison announced that though the soldiers would not go against us, he was not certain that they would go with us. A few comrades urged restraint on the grounds that the workers were almost unarmed, but all their arguments were unavailing, for everybody was convinced that the uprising was inevitable.

On December 7, the first issue of the Izvestia of the Moscow Soviet of Workers' Deputies was published containing a manifesto signed by all the revolutionary organizations in Moscow calling for "a general political strike on Thursday, December 7, at It o'clock noon" and for every effort to be made to "convert it into an armed uprising".

The Moscow Committee of our Party elected an Executive Committee which was entrusted with all authority; the rest of the committee members had to go back to work in their districts. From the very first days of the uprising reliable means of communication were established between the centre and the districts through the medium of comrades who were called couriers. At first the couriers were able to penetrate into the districts despite the difficulties, but later on they were unable to do so. Thus all communication between the centre and the districts was cut off and the latter were left to their own devices. At Presnya, fighting was going on under the leadership of Comrade Sedoy (Litvin), the Zamoskvoretsky District lived its own revolutionary life....

Our first Lefortovo courier was an old comrade, Alexander Blagonravov, who later worked in the Vladimir organization and died of typhus in 1919. I can clearly recall Blagonravov with his sad smile reporting about the affairs in other districts and delivering the instructions of the centre for the coming day. The proletariat must not forget its couriers who selflessly devoted their lives to maintaining communication between the various sections of the city during the memorable days of struggle.

But soon even Comrade Blagonravov was unable to reach us, and our district was completely isolated. We, however, continued to hold meetings and to organize demonstrations. Once we marched by the Spassky barracks from which some disarmed and imprisoned soldiers cheered us. Our armed workers' units had several clashes with the Black Hundreds who were numerous in Lefortovo, but the latter were not remarkable for their bravery even though they were armed as well as, if not better, than the police.

One morning, while the insurrection was still in progress, we were waiting for the workers to come to a meeting in the People's Palace. There were only about five or six of us District Committee members in the hall. Suddenly we saw a crowd of the Black Hundreds approaching and it looked as if we were going to be lynched. Fortunately, one of our comrades had a revolver. He fired one shot over the heads of the mob and this was enough to set the whole gang running.

We began to feel that we were really taking part in the insurrection only when barricades were put up in our district, but this was very belated, when the beginning of the end had set in the rest of the city.

That day, we commenced the usual round of meetings, but we all felt that there was nothing more to be said. I remember that I was particularly irritated by the "rational" appeals of the Menshevik Semyon who continued to shout, "comrades, build up the trade unions!" The answer to this trivial appeal came from someone in the audience. It was an appeal to us all to go out into the streets and build barricades. The whole audience responded to a man and the whole mass hurried out into the street. On the square it was joined by those who had been awaiting their turn to come into the hall, and all of us moved in close ranks to the Pokrovskaya Zastava where we overturned the tram cars that were standing as they had been left in the street when the general strike was declared. We erected a huge barricade--our own Lefortovo barricade. Our armed workers' units remained to guard it, although no one threatened to attack it that night, while the rest of the workers dispersed to their homes.

That evening, a comrade from the committee, who went by the name of Alexey, and I planned to make our way to the city without fail; it was a long time since our courier had visited us and we were completely cut off from the centre. We did not know what was happening there and had no means of keeping the centre informed of events in our district-we wanted to boast about our tardy barricade. Such a trip at night was risky, it being particularly dangerous to pass the posts of the so-called Committees of Residents set up by the Black Hundreds ostensibly for the purpose of protecting property, but in reality to catch, insult and beat up every passerby who had the least resemblance to a revolutionary.

We passed several streets in comparative safety, although we frequently got entangled in the telegraph wires which had been torn down and were scattered everywhere. Not far from Basmannaya we encountered a group of civilians who stopped us. They declared themselves members of the Residents' Committee, and demanded to know who we were and where we were going. I invented a story on the spur of the moment about my husband and myself trying to go from Cherkozovo into the city to Zhivoderka to visit our daughter-in-law who was seriously ill and needed immediate help. Because of the wires and the darkness we could not find our way to Krasnye Vorota. Alexey, "my husband," beside me also muttered something about a daughter-in-law and Zhivoderka. They believed us. It was our outward appearance that saved us. I was dressed like an old woman in a wide blouse and with a shawl over my head, while Alexey was also very poorly clad.

The Black Hundreds had so little suspicion of who we were that they even warned us not to fall into the hands of the workers' units who would be sure to shoot us at the first sight. We proceeded on our journey until we had almost reached Krasnye Vorota, where we saw a group of soldiers sitting around a bonfire and were obliged to turn aside and step into the Olkhov school where we were sure to find our own people.

The school resembled a dosshouse that night--on all the desks, tables, chairs and floors sprawled comrades who had been unable to get home and were obliged to remain at the school. We too decided that it would be wiser to stop at the school. I cannot refrain from mentioning a little incident in that night's adventure. One of the teachers, whom I had never seen before, called me into the kitchen, took a pot of broth from the stove, placed me on a stool, and, without even asking my name, declared: "You have eaten nothing all day; eat this broth!" And indeed, I had had absolutely no time for eating or drinking and was feeling very weak until the broth revived me.

Early next morning the bonfire at Krasnye Vorota burned out, the soldiers were withdrawn, probably for some strategic purposes, and we began cautiously to creep out one by one from our school dosshouse. I wanted to change my clothes and wash myself before going into the city. I went to my sister Rose who lived nearby on Kalanchovsky Street, but whose house I had been unable to reach the night before. She had rented a room among our own people, at the home of the worker Polumordvinov. When I reached her room I found her table, bed and bookshelves loaded with weapons. These had been taken from Torbek, the gunsmith, whose shop our unit had raided. A group of our men were lovingly handling these revolvers, parts of guns, sabres and cartridges and they were so merry that despite my weariness, I was cheered by the mere sight of them.

On the other hand, when at last I got to the Moscow committee, the mood prevailing was anything but cheerful. I learned that our affairs were in a very precarious condition, that St. Petersburg, exhausted by the November strike, was not in a position to support us. I also learned that the promises of the railroad union leaders had proved to be empty phrases, that the Nikolayev railway was in the hands of the government, that hostile troops from Tver and the Semyonovsky regiment from St. Petersburg had either already arrived or were on their way, I cannot recall which.

I hated to return to my district with such news--a district which had only just risen to the level of insurrection and whose active workers had been exulting over their "own" barricade the evening before. I decided to spend the night at my sister's as I needed a good night's rest; but I was not destined to get any sleep. When I returned to her apartment, the weapons were no longer there, the workers having cleared them away during the day. But the police had now got wind of the fact that the weapons seized at Torbek's had been taken to this apartment. So we were subjected to a raid which was carried off with great pomp--a squad of armed policemen with a police officer at their head broke into the room. The police were obviously afraid, thinking that we were armed to the teeth. They were extremely nervous and threatened to shoot us on the spot if we did not surrender our weapons. They bullied my sister and me because we were women, but they were unmistakably afraid of the worker, Glotov, who rented the corner of the room near the stove, especially when they stumbled over a pile of coal in his dark corner. With extreme caution the officer flashed his searchlight on Glotov's "dwelling place." To the officer's tremulous "What's there?" Comrade Glotov rolled out sonorously: "This is the study of his proletarian highness!"

Finding no weapons, the police left the place without arresting any of us, even though we were all in some way connected with the insurrection.

When on the morrow I reached our district headquarters--the People's Palace--I found Alexey had been there since the previous night. He had already communicated the bad news to the other comrades; but they were surprisingly little depressed by it. Indeed, it was difficult, after yesterday's enthusiasm, to take that sharp psychological jump and become immediately conscious of the fact that our struggle was weakening, that a temporary defeat was inevitable. But we, the backward Lefortovites, were not long comforted by our illusions. The defeat of the uprising approached, and when our last stronghold fell, when our heroic Presnya--the pride of the Moscow uprising of 1905--was wrecked and burned by the Semyonovsky regiment, the Soviet of Workers' Deputies had to declare an end to the strike and uprising, and temporarily haul down the scarlet banner which, after twelve more years of stubborn struggle, was again unfurled to blaze victoriously over Red Moscow in 1917.

When the revolt had been crushed, an orgy of the Black Hundred reaction broke loose, the Moscow prisons and police headquarters were overcrowded with arrested revolutionaries. Hideous rumours were abroad that the police headquarters had been turned into torture chambers by the brutalized victors and that our comrades were being subjected to unheard of torments; and along the Moscow suburban railroads the brutal gangs of the tsarist hangman, Riman, ran riot. The spirits of the workers in the district were extremely low, and it was under these unfavourable circumstances that the Moscow comrades who had survived the defeat were obliged to renew their Party work. Once more began the painful process of returning underground. At the first meeting of the Moscow Committee held in the early days of January 1906, it was decided to send the more "notorious" comrades to other cities, while the less prominent ones were to be transferred from one district to another. Thus it happened that I was sent from the Lefortovo District to the Zamoskvoretsky District where I had many comrades even before the uprising, both among the professionals and the factory workers.

During my first days in the Zamoskvoretsky District I set myself a very concrete though modest organizational task, namely, to re-establish at least in the larger factories our former illegal factory committees. But this proved to be an incredibly difficult task. I still remember the endless visits to individual workers' homes, the arrangement of a few small meetings with the representatives of the various factories, meetings which hardly ever took place, either because our meeting place was being watched, or because the landlady who had promised us the use of her room had funked it and refused to let us in when we arrived, or because only one or two of half a dozen who were expected, arrived. It is difficult to imagine anything more trying than the knowledge that the work was constantly slipping out of our hands, that the eyes of our comrades which had burned with such revolutionary courage, with such faith in the imminent victory of their cause not so very long ago, were now utterly weary and hopeless.

However, not all our efforts were in vain. The Moscow Bolshevik organization continued to work intensively, adapting itself to the new methods of struggle even though it often had to deal with extremely dejected and morbid moods among the district comrades. I recall several of the more poignant moments which I personally had to undergo, as characteristic of these moods.

I went to visit the family of a worker in the Danilov factory, with whom I had been formerly acquainted, hoping to renew connections with the Danilov factory through them. Both husband and wife greeted me joyously and promised to assist me, but as the attempts to resuscitate the organization grew more and more futile, the worker (I cannot remember his name) became gloomier and less frank with me. Once I arrived at dinner time when their little ten-year old daughter was bustling about prettily and setting the table for her parents who were due any minute. She placed four wooden spoons on the table--one for "auntie". When my hosts returned from the factory, both the mother and the daughter insisted that I stay for dinner.

We sat around the table eating cabbage soup out of a common bowl, fishing up bits of meat from the bottom of the dish with our spoons and conversing peacefully at first about the necessity of starting Party work in the district. But towards the end of the meal, the worker became agitated, suddenly banged on the table with his clenched fist and, raising his voice, exclaimed:

"Why in the world do you come here to disturb us? I am tired, do you understand--tired, and I can't do any more!"

The little girl became frightened and started to cry. Her mother begged me not to take offence, while I in the most unexpected and ignominious fashion burst into tears and left the place.

Some time later a similar incident occurred in the tiny room, or rather the cubicle, of a young worker who was employed in the Jako factory. He had displayed a splendid fighting spirit before the uprising, had participated in many battles during the barricade days and, did not appear to be particularly depressed after the defeat. I called on him towards the end of February, or in the early days of March, I don't quite remember which. It was about ten o'clock in the evening, I believe. The apartment was used as a sort of lodging house, the lodgers living in tiny cubicles. The stairs were indescribably filthy and from the rooms emerged a veritable Sodom of drunken voices, smoke and stench. But the cubicle to which I went was very neatly kept, almost pretentiously--the bed was covered with a pink cotton blanket, the walls were decorated with pictures and embroidered towels, and there was a canary in a cage suspended from the ceiling. Near the bed hung a guitar tied with a pink bow. I surprised my acquaintance while he sat on a bench holding a pocket mirror to his face; on the table before him stood a jar of cream for sunburn and freckles with which he was diligently smearing his face. He did not cease his occupation as I entered, but motioning me to a seat, continued to rub his cheeks with greater vigour than ever, casually remarking, "My respects, Olga Petrovna, what news have you? I bet you're here about what I have already long forgotten because I've lost all my faith in it". When I suggested that he stop playing the fool, wipe his face, and talk sensibly, the fellow answered: "You shouldn't talk that way about the cream because it's wonderful for getting rid of freckles. It is called 'metamorphosis' and costs a ruble and a half. I strongly recommend it to you, Olga Petrovna, for you, too, have a lot of freckles. Now's the time to think about yourself a little. You're still harping on old days that will never return; and if they do, we won't be there to see them." I wonder whether this comrade lived to see the great October Revolution and, if he did, whether he recalled the words he uttered in 1906?

The metamorphosis of this Jako worker, who so recently had been a brave comrade in our ranks, had a most depressing effect on me. I left his room at about eleven o'clock with such a crushed feeling that it mattered little to me where I went. There were moments when I felt that there was no place for me to go and I wandered aimlessly about the streets in the Zamoskvoretsky District.

These difficulties were not merely characteristic of Moscow. The disillusionment not only spread among the working masses, but was communicated to many of our individual active comrades, both workers and intellectuals.

As for the Mensheviks, who during the heroic October-December days of 1905 were forced to go against their Menshevism and temporarily join us, the defeat immediately restored them to their natural shape and gave them many opportunities to expiate their short-lived iniquity by bitter criticism of our revolutionary Bolshevik tactics.

At the beginning of 1906 the conditions in the Party organization were complicated. The split in the Russian Social-Democratic Labour Party, which took definite shape at the Third Bolshevik Congress in May 1905 and the Conference of the Mensheviks, that was held concurrentiy with the latter, did not hinder but helped the formation of a united proletarian front during the heroic last months of 1905. To co-ordinate activities, the Mensheviks were forced to join the Federative Committees.

What was happening in the districts was beginning to take place in the centre. Preparations for a Unity Congress of the Party were being made, but these preparations coincided with the defeat of the uprising and with the weariness of the proletariat who had been pressing for a united front before the uprising. Thus, a twofold process could be observed at the beginning of 1906--preparations for a Unity Congress were continued by inertia, while at the same time new disagreements with the Mensheviks on the cardinal questions of party tactics were constantly cropping up and becoming more sharply defined (estimation of the uprising, attitude towards the State Duma, etc).

In March we Muscovites were eagerly awaiting the arrival of Lenin who was to acquaint us with the resolutions he had drafted for the forthcoming Unity Congress of the Party, which was to be held in April.

Besides the natural interest in Lenin's report, the prospect of meeting Lenin in Moscow, on Russian soil, was particularly alluring. Imagine my distress when, a few days before his arrival, while walking about in the sleet and mud, I caught a severe cold, and was not in a condition to go to the meeting of the Moscow active workers at which Lenin was to speak. I was lying in bed grieving over my disappointment when a comrade burst into the room and told me for reasons of secrecy the meeting had to be transferred to other premises and that Lenin had expressed a desire to see me during the enforced intermission.

My joy knew no bounds when in half an hour Ilyich himself appeared, filling the room with his jests and laughter and with that comradely simplicity so characteristic of him when talking with the most insignificant Party workers if he felt that the latter were connected with the actual life of the Party.

The joy I felt that Lenin was sitting in my room prevented me from studying his mood, the more so that as I was ill he spoke to me only about pleasant trifles. But I clearly recall that he was very cheerful "as if nothing had happened," although what had happened was nothing more nor less than the defeat of the 1905 uprising!

Table of Contents: Twenty Years in Underground Russia

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Letovo Schoolcampus / atelier PRO

• Curated by Fernanda Castro
• Architects: atelier PRO
• Area Area of this architecture project Area:  39000 m²
• Year Completion year of this architecture project Year:  2018
• Photographs Photographs: NARODIZKIY , Dmitry Voinov , atelier PRO
• Interior Design : Atelier PRO , Thijs Klinkhamer
• Landscape Designer : Buro Sant en Co
• Client:  Letovo
• Project Architects:  Dorte Kristensen, Pascale Leistra, Karho Yeung
• Design Team:  Thijs Klinkhamer, Abel de Raadt, Alessia Topolnyk
• Russian Co Architect:  Atrium, Moscow
• City:  Moscow
• Country:  Russia
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Text description provided by the architects. The official grand opening of a special school, Letovo School , took place in Moscow last September. The assignment entailed a 20 hectare schoolcampus with educational facilities, student housing and school staff housing. The school campus offers extended outdoor sports facilities with a soccer stade, a running track, tennis courts and basketball courts. In addition there is a greenhouse, a treeyard and ample space for wandering and relaxation in the green.

While the architecture and interior of the school were designed by atelier PRO, the landscape design was developed by Buro Sant en Co landscape architecture. Russian firm Atrium Architectural Studio was responsible for the technical execution. In 2014 Atelier PRO had won the international design competition, the construction began mid-2016 and the campus was taken into use by mid-2018.

Letovo, a dream come true Letovo School is a special school for gifted and motivated children aged 12 to 17. The idea to create the school came from entrepreneur and philanthropist Vadim Moshkovich: ‘My dream was to offer talented children from all over the country access to high-quality education, regardless of their parents’ financial means. This school makes it possible for them to continue their studies at the 10 best universities in the country or at one of the top 50 universities in the world.’

Landscape-inspired design and shape Located in Novaya Moskva,southwest of Moscow ,the campus sits atop a beautiful plot of land that slopes down to a forest-lined river. Distinctive level variations were applied in and around the school to integrate the architecture into the landscape.

The shape of the large complex brings it down to a human scale for the children: the building appears to dance across the landscape due to its dynamic design. Due to the perspective effect one only ever sees part of the building's full size when walking around, which gives the impression of a refined scale. The building’s contours and flowing curves create surprising indoor and outdoor spaces as well.

The heart of the school: the central hub The central hub is the place where day-to-day life at the school unfolds. This flexible, transformable space will be used throughout the day as an informal meeting place. The dance studio on the ground floor can be transformed through a few simple adjustments into a theatre with a stage, a cosy living room or an auditorium that can accommodate 1,000 people for special events such as graduation ceremonies and large celebrations, as seen at the grand opening. This central hub connects the building’s three wings: the art wing, the south wing with science- and general-use rooms and the sports wing

Learning environment with a diversity in working spaces Letovo envisioned an innovative and modern take on existing education in Russia. In the spatial design, this perspective translates into space for theoretical education as well as special areas for group work and independent study in the tapered building wings. In the library wing there are silence spaces workshop spaces and a debating room. These are all supportive to the student’s personal development. 

Sports programme In addition to the extended sports outdoor facilities, the indoor supply of sports facilities is substantial. These cover fitness rooms, martial arts rooms, a swimming pool, a small and a large sports hall. Around the sports hall there’s an indoor running track which can be used throughout the year. It is available to school staff and external users as well.

The interior, also designed by atelier PRO, is tailored to the aims of the ambitious programme. The design of the interior also focuses extensively on the various spaces where students can go to chill and meet up with friends. The extreme cold in this area makes the school’s indoor atmosphere important for relaxation.

Ambitous learning environment The Russian client has established a private, non-profit school which aims to be the most prestigious school in the country and to offer the best educational programme through a Russion and an IB (International Baccalaureate) curriculum. Students’ personal development is paramount, with the school adopting a holistic approach. It is a true learning environment that provides scope for a range of disciplines, areas of interest and recreational opportunities to foster children’s development. This aim is supported by the campus facilities and functions.

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Address: zimenkovskaya street, sosenskoye settlement, moscow, russia.

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