Can you guess the first rule I saw at LEGO headquarters?

By Brad B McCormick · From the classroom

That’s me in the red square. A much younger me.

In 2008, my colleagues and I went to LEGO headquarters in Billund, Denmark. We were working on pre-launch events for LEGO Universe, a massively multiplayer online game.

LEGO World Headquarters. Very exciting. Also a little intimidating.

We were sitting in a conference room, waiting for the client, when I noticed a list on the wall. Across the top, it said “10 High Speed ground rules.”

I tell this story in my SMU class, and this is where I stop and ask everyone a question.

What do you think the first rule was?

“Be creative” is a popular guess. So is “Have fun.” Someone usually suggests not stepping on the bricks.

I give them a hint by revealing the little pictures beside the rules. More guesses.

Take a moment. What would you put first?

There was a reason that message made sense

A few years before our visit, LEGO had come close to financial collapse. Its crisis peaked around 2003 and 2004. The company had expanded into new businesses and added complexity faster than it could manage profitably. [1]

Its recovery involved careful cash management, a clearer focus on its core products, and a better understanding of customers. By 2008, LEGO was profitable and growing again. [1] [2]

I can’t tell you whether that particular sign was a product of the turnaround. But knowing the history, I can understand why commercial discipline mattered. They had already experienced what happens when growth and activity get disconnected from profitability.

That rule became a useful question to carry into a marketing meeting: how does what we’re proposing help the company make money?

Then the game we were helping promote closed

LEGO Universe launched in late 2010. It closed at the end of January 2012.

LEGO’s annual report described positive feedback and plenty of participation in the free part of the game. The problem was that not enough people became paying subscribers. [3]

My part in the project was pre-launch events. Looking back, the broader business story is what interests me.

The later accounts describe a complicated combination of development challenges, costs, technology requirements, organizational support, and questions about how much time the business needed. There were talented people working hard on a product they believed in. [4]

But reflecting on that outcome reinforced something important for me. People can like a product without enough of them being willing to pay for it. A recognizable brand does not settle that question. Neither does a successful event.

As I read it, the game ran into the most basic business strategy questions: how it would create value for players, and how many of them would pay enough for that value to sustain it. The enthusiasm was real. The economics didn’t hold.

It also raised questions about competition. An IMD case later compared LEGO Universe with Minecraft, including their different approaches to development and involving users. [5] For me, the useful question is what customers are actually choosing between, and why they would choose one experience over another.

Those are business questions. Marketers need to understand them.

I learned a lot about strategy at LEGO. How to balance the big picture with what has to happen this week. And how easy it is to fail to connect the dots between big aspirations and cold, hard business reality.

This is the thinking behind the Strategy Staircase

The LEGO experience helped shape what I call the Strategy Staircase. It connects five levels of decisions:

Every step depends on the one above it, and every step starts with the customer.

Play it again

1. Business strategyHow do we create value, for whom, and can we sustain a business delivering it?
2. Brand strategyHow do we express that value so customers understand why they should choose us?
3. Marketing strategyHow do we use finite resources to reach those customers and influence their decisions?
4. Channel strategyWhere and how will we reach them?
5. Tactical executionWhat will we actually make and do?

Every step depends on the decisions and assumptions above it.

You can have excellent LinkedIn content. You can run an excellent campaign. You can articulate a brand beautifully. But if the underlying business proposition does not create value that enough customers will pay for, those things cannot solve the problem by themselves.

Individual activities might still perform. The post gets attention. The event fills up. The dashboard turns green. The business can still struggle.

That’s why I want marketers to be able to connect the dots all the way up the staircase.

Take a single blog post. Who is it for? What should it help that person understand? How does that support our positioning? What might the reader do next? Why would that matter to the business?

You don’t need to attach a sale to every paragraph. You do need a credible explanation for why the work deserves the investment.

Making money also requires thinking beyond this quarter

I teach marketing budgets partly because somebody has to decide how much money and time we can commit, where we’ll put it, and what we expect it to accomplish.

Some investments capture demand that exists today. Others help customers understand, remember, and eventually choose the company. They work over different time horizons. We need to plan for both.

The LEGO rule is a reason to ask better questions about those investments. It doesn’t mean every activity should produce an immediate transaction. It also doesn’t mean cutting the budget is automatically good discipline. Building a new business can require patience and capabilities that take time to develop.

The responsibility is to make the assumptions explicit, decide what evidence to look for, and keep learning. What must be true for this investment to work? How long should we reasonably expect it to take? What would tell us to change course?

How I turn that thinking into a plan

The Strategy Staircase and my work on budgeting helped inform the framework I teach at Southern Methodist University: PB² GOST³. My students call it “Peanut Butter Ghost.”

Yes, ghost has an H. Being easy to remember is part of the point.

The framework walks teams through nine decisions: People, Brand, Budget, Goal, Objective, Strategy, Tactics, Tracking, and Team. It gives us a way to work through the questions before we spend the budget doing things.

That means understanding the buyer, explaining why they should choose us, setting a realistic investment, connecting marketing objectives to business goals, and making sure someone owns the work and the measurement.

The Brand Truth Workshop is where we work through these decisions with leadership teams. You can read the full framework on our Approach page.

Start with the question behind the budget

When someone asks me how much they should spend on marketing, I want to understand what they’re trying to accomplish and the assumptions behind their plan.

The Marketing Budget Benchmark gives that conversation a starting point: context on what other companies spend. It does not tell you whether your proposition is sound or which strategy will work. That still requires judgment.

If you’re responsible for a marketing budget, start there. Then pick one activity in your current plan and trace it up the staircase. Can you explain how it contributes to the business?

That’s the question I brought home from a conference room in Billund. I’m still asking it.

Leading a team that needs help connecting these decisions? See how the Brand Truth Workshop works.

Sources

1. Harvard Business School, HBS Cases: LEGO. Turnaround history and management decisions.
2. LEGO Group, Annual Report 2008. Financial performance. LEGO reports archive.
3. LEGO Group, Annual Report 2011. LEGO Universe launch, subscriber shortfall and closure. LEGO reports archive.
4. Bits N’ Bricks, episode 13, “LEGO Universe: Death of a Dream.” Retrospective hosted by LEGO.
5. IMD, LEGO in the Age of Digitization (A), 2017. Public case description.