Editor's Note: This article is part of a series that examines the lessons behind disruptive products through the lens of design.

After 80 years in business, LEGO remains one of the most iconic toymakers in the world and a beloved brand for parents and children alike.

Founded by Danish carpenter Ole Kirk Christiansen as a wooden toy company in 1932, LEGO first began selling tiny plastic bricks that snapped together in the 1950s. During the next four decades, the company enjoyed extraordinary commercial success by reinventing the play experience for children, only to fall apart almost completely in the early 2000s.

During the past 10 years, LEGO has mounted a remarkable comeback, hitting just over $4 billion in sales in 2012 and $4.7 billion in 2013--the best year in the company's history. LEGO's historic turnaround culminated earlier this year with The Lego Movie, a major motion picture that's grossed more than $500 million worldwide, helping grow global LEGO sales 15 percent during the first half of 2014.

So how did LEGO reclaim its position atop the global toy industry after nearly going bankrupt in 2004? 

Here are three design lessons that helped LEGO build--and rebuild--one of the most successful toy companies in the world.

Be fun and consistent. 

LEGO first took off as a company when it shifted from designing individual toys to an entirely new system of play where the more stackable bricks customers bought, the more they could create. For many years, however, the toys were not all the same size, an inconsistency that reduced the company's potential.

"They were all fun toys but they weren't in the same scale with each other," says Wharton professor David Robertson, author of Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry. "There was a LEGO family set in the 1970s that stood about 12 bricks tall and it wouldn't fit in the LEGO train and it towered over the LEGO house." That changed in 1978 when LEGO introduced the minifigure, the scale for which would be used for all future sets."That let you combine sets in a way," Robertson says. "It takes the idea of a system of play one step further."

Innovate to widen your customer base.

Two of LEGO's most important additions to its core product line were entirely new sets of toys that expanded the company's target demographics. The Duplo set of larger blocks, introduced in 1969, was aimed at children aged 5 and younger, while the the more sophisticated Technic line, a system of interconnecting beams, pins, motors and gears launched in 1977, appealed to older children. 

Tell a story.

Perhaps the most important lesson LEGO ever learned was a relativley recent one. Around 2004, the company realized that adding stories to its products helped build a stronger connection with children. This realization came following a number of successful tie-ins, such as LEGO Star Wars and LEGO Harry Potter, both of which were bestsellers. "Parents may want to buy bricks for their kids so that they have a construction experience and they learn about 3D spacial reasoning, fine motor skills, and creative construction, but kids get involved for the stories," Robertson says. "If all LEGO offered was a box of bricks, they'd be irrelevant and probably out of business by now."

During the past six years, LEGO has enjoyed sales growth of 22 percent per year and has grown profits by 38 percent per year, according to the company.

"When LEGO tried out-of-the box innovation, it almost put them out of business," Robertson says.  "When they went back to the brick and innovated around the brick, that's when they became successful again." 

Published on: Sep 24, 2014