LEGO, 2003: Near Bankruptcy

It is early 2003. You are Jørgen Vig Knudstorp, the newly appointed CEO of The LEGO Group. The company is facing its first-ever deficit in its 70-year history. You are losing $1 million a day. The situation is catastrophic.

Over the last decade, LEGO has tried to "innovate" its way out of a decline by diversifying into everything imaginable. You now own theme parks (LEGOLAND), a clothing line, video games, an educational toys division, and even a TV show.

Worse, your core product catalog has exploded to 13,000 unique brick parts. Your designers have been given absolute freedom, resulting in thousands of custom-molded parts that are only used in a single, low-volume set (like the disastrous Galidor line).

The result? You are drowning in supply chain complexity. Production costs are staggering. Your core product—the classic brick system—is being neglected, and retailers like Walmart and Target are slashing your shelf space because your chaotic product lines aren't moving. You have exactly 6 months of cash left before the banks force a sale or bankruptcy.

You must decide how to save the brick. Do you keep diversifying into digital play to escape the physical supply chain, or do you perform a "Radical Surgery" on your own portfolio?

This is a Tier 1 Strategy Match. The survival of a cultural icon is in your hands.

The principle: Complexity is the silent killer of iconic brands. When an organization loses its core identity and tries to be everything to everyone, it dies under the weight of its own supply chain. The path to salvation is Radical Surgery: cut the bloat, constrain creativity to a profitable palette, and rebuild the core before attempting to diversify.