Toymaker Lego returns to Danish roots with sudden CEO switch

The Danish firm said it had appointed Niels B Christiansen, 51, who joins Lego after nine years

Lego abruptly removed its chief executive Bali Padda after just eight months on Thursday, replacing the 61-year-old Briton with a younger Danish industrialist in a battle to become the world's biggest toymaker.

The Danish company said it had appointed Niels B Christiansen, 51, who joins Lego after nine years as CEO of Danfoss where by focusing on digitalisation he increased sales and turned the firm into a global leader in energy efficiency.

Lego is hoping Christiansen can revive its flagging growth by increasing sales in Asia and fully embracing the digital era.

After flirting with bankruptcy after 2000, Lego saw a decade of impressive growth under the leadership of Jorgen Vig Knudstorp, who is now chairman of the family-owned maker of the distinctive plastic building bricks which have been enjoyed by generations of children.

When the toy market shrank after the financial crisis, Lego bucked the trend by tying up with movie franchises like Star Wars, Harry Potter and Indiana Jones in deals spanning Lego sets, video games, movie franchises and smartphone applications.

But while Lego now vies with Barbie doll maker Mattel to be the world's largest maker of toys, revenue growth slowed from 25 percent in 2015 to just six percent last year with sales of 37.9 billion Danish crowns ($6 billion).

Enter Padda, a Lego veteran and the first non-Dane to lead the firm, who took over from Knudstorp, a Danish national who had overseen average annual sales increases of more than 15 percent and made Lego the world's most profitable toymaker.

Founded in 1932 by Ole Kirk Kristiansen, his grandson Kjeld Kirk Kristiansen is now the main family representative at Lego.

Before Danfoss, Padda's replacement Christiansen was head of hearing aid firm GN Store Nord. He has also been on the board of A.P. Moller-Maersk, Danske Bank and Bang & Olufsen.

"Niels managed to transform a traditional industrial company into a technology leader," Knudstorp told Reuters, adding that his experience in digitalisation and localisation will help improve products and efficiency at Lego.

Padda will now take on a special advisory role within the Lego Brand Group, which is headed by Knudstorp.

Danish Values

Knudstorp says he started looking for a younger successor to Padda, who is the oldest person on the Lego management team, immediately after his appointment but admitted that the transition had come faster than expected.

"It can take a long time to find the right one, but when Niels stepped down at Danfoss, I faced one of the country's absolute best persons to lead a big global company. I suddenly saw a chance to shorten the process," Knudstorp said.

"It could easily have taken two to three years," he said, adding that while it was not essential to have a Dane leading Lego, it was important to understand its roots.

"(Christiansen) has a solid rooting in Danish values, where you have authority because you're a competent, credible and authentic leader, not because you're the boss who sits at the end of the table and smokes big cigars," Knudstorp said.

And as far as the chairman is concerned, Lego's new boss already has the building blocks he needs to revive growth.

"We still have a very strong brand even though growth rates declined last year," Knudstorp said. "At Lego, we make significantly more money than our closest competitors combined."

($1 = 6.3534 Danish crowns)