HIGHLIGHTS: Niels B. Christiansen

0:00Hi, everybody. Tune in to this short version of the podcast, which we do every Friday. For the long version, tune in on Wednesdays. hi everyone today we are exploring the building blocks of one of the world's most beloved brands lego and i'm here with nils christiansen who's led lego since 2017 and we are going to learn about their remarkable business model and what makes this company so special so a warm welcome thank you very much so i was on i was on the train last weekend down from the norwegian mountains and I happened to sit next to this lady. And I was preparing for this podcast and I asked her, hey, what would you want to ask the CEO of Lego?

0:44And then she went completely silent and she said, if you meet the CEO of Lego, you have to thank him for having made my 16-year-old son interested in engineering. Fantastic. So on behalf of her and millions of others, thank you for what you have done. It's incredible. So let's just start. What does it really mean to inspire and develop the builders of tomorrow? Because that's what you say you're doing. Yeah, it of course takes the outset in children. And we believe that children are our role models in the way they do, the creative way they attack the world. And we know that we actually provide something that helps children acquire some of the skills they need to live in society.

1:26More basic skills than when we actually teach children in school. And I think what we learned over the years, that's very applicable to children, but it's actually applicable to all of us. Why do they love building things? Yeah, I guess it's about the creativity, I think, that's built into us people. I think everything from when we, back 5 ,000 years ago, we were making a hammer out of stone, where this desire and drive to create things, I think this is what Lego bricks provide. kids change the way they spend the time just how does this digital addiction impact your business it's um i mean it makes it harder to stay relevant you could say at the end of the day we are actually we consider ourselves competing for children's time yeah more than just just competing as a toy and and you're right i mean children actually in many countries around the globe, they spend more time on school, they spend time on after school.

2:24Whenever they're off that, they're typically on a tablet or a computer. And so it's just a harder game to stay relevant on that. We know then when kids really get into it, they get super excited. We know parents like it and we know all the important development criteria. You have to use your brain and your hand in a coordinated way to build that, these methodical skills, to build the right connections in the rain earlier on, we know that. And I think we are just a prime tool for doing that. Do you think something has changed with children's fantasy and imagination? So far, not a lot, which is a positive, I think.

3:05And I also think we have to say that being on digital screens is not bad. It just cannot be the only thing you do. We typically see, if you do, do what you said before, you take this big bin of Lego bricks, you throw them on the floor, kids will build like you and I would build back then. It's not that different, which I think is quite encouraging. Now, you personally are involved and you are approving products and so on. How does this whole process work? Because it's interesting when you talk, I mean, maybe I start with saying every year we change 50 % of our product line. Yeah, and that's how many hundreds?

3:46That would be around 400 now, 450 products that have to come every year. Not many companies change the product range every two years. No. So you can say we're no better at any point in time than the creativity we are coming out with right now. So we talked about the creative side and kind of some of the things we do to allow them to be super creative. But the creative process, if you look at it from the idea to the product, it's also quite structured. So we have, we call them P-meetings. So we have a series of P-meetings throughout the year where we bring a lot of people together trying to figure out how do the ideas we have and the concepts we have, how do this play up against what are the trends in the world?

4:29Is it Formula One that's attractive? Is it Star Wars this year that's coming out with a new movie? What is it that would really drive attention? Is it Pokemon? Is it Super Mario? What are the things that are hot IPs or will be hot IPs one or two years out. Do you check with kids? We check with kids. We check a lot with kids. We check with adults. And then, of course, we have, given the strength of the brand, we have very strong corporations with a lot of brands and IPs out there. And that gives us also the privilege of having insights into what is coming. So if you know what the movie slates are that will be there the next year or two, you have a much better chance of hitting right on your prioritization.

5:10I can see why you need to spend time on sustainability, but on the other hand, you know, your plastic is kind of one of the few plastic things that we don't throw away. Yeah, you're right. You're right. It's a durable kind of pleasure. Yes. And for that, I actually think we are the, we're one of the best users of plastic. Yeah, you can think of for that reason. You can have a brick for 40 years and it keeps getting in play. you give it to your grandchildren or your children and it brings on and one of the requirements on our side is that we ensure this backward compatibility so you can buy a set tomorrow and you can bring it together with the set your grandparents bought and has probably been in the bathtub or outside in the sun and whatever and the clutch power you talked about it still works so that i think is a fantastic use that's a narrative we're trying to uh to get out there but it's not always that easy when you're in the big world of communication around plastic.

6:11How are you trying to reformulate the plastic to make it more environmentally friendly? Yeah, I mean, we're doing two things. I think the starting point is really making sure people understand the durability of the Lego plastic. That being said, there are two things that's in focus. One is that we would like to make it from more and more sustainable and recycled materials to the extent that is possible. And secondly, we would like to make sure that it doesn't end up in waste. Moving on to your leadership, how would you describe your leadership style? I guess I'm somewhere, maybe that's a good mix of, I'm somewhere on two sides.

6:45I'm an engineer by training, so I used to invent stuff of technical nature. So I have kind of the creative side to me and I can get really excited about that. But I also have this kind of that it is not worth anything unless it really gets to fruition in a way and gets executed. and there's processes behind. So I'm a little bit of both sides. I like to allow people the space to both be creative but also to make their own decisions. So as a leader, I try to be quite clear on the guardrails or the overall direction of what is we are trying to achieve in total so that there is a certain... I mean, if there's good clarity on the overall direction, then more people or more leaders within the organization would feel comfortable making their own decision because they know what we're trying to achieve.

7:41And I believe in that decision power if it's there. And I think it's only really there if the frames are clear. Why is micromanagement so bad? I guess when it's bad, I think it's like you use one brain instead of many. I read this book last weekend and it talks about the research where they figured out the difference between the people who stand still on the moving walkways and the people who walk on the moving walkways. So if you stand still, you expect your average lifetime to be 74 years. If you walk, you think it's going to be 81. If you walk, you are generally happier and you're actually wealthier and you have more sex.

8:28It's interesting. Yeah. I'm just happy that I think I always walk there.

8:35No, that's... It's written by the new dean at the Norwegian School of Economics. It's very interesting. But, you know, it's also true that you can have... I mean, you can have the best ideas in the world. If you don't get them executed with some speed, they may not be worth anything. Which is also why this, you know, your strategy, you can keep honing your strategy until it's 100%. But sometimes it's better that you execute something that is 80 % right, which rigidly, than you wait too long and you try to optimize the last percentage. What's the key to execution power? I think a lot of it is clarity.

9:17and then I think just, can you say steadfast? The way you, even as a CEO, when it's not interesting, you keep asking to it and you keep making sure that we're staying at it. And you'd probably be surprised that a company like us that are very creative, we are quite, we're quite focused on getting productivity out every year. We call it Partner for Productivity. It's a global program and we crunch out significant, significant productivity and Danish kroner every year. And I think everybody by now knows that productivity is what's paying for all the super exciting things we can do over and above.

10:00And without this, not that. And that's difficult. And that's something that, I mean, I think that you're very clear and you stay on it. I think that's important for the execution problem. tonight.