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Lego to build digital future with new chief executive

Lego has ousted its chief executive after eight months, trading him in for a younger toy boy with technology experience, as the company moves to be more competitive in the digitally-focussed play market.

Lego has ousted its chief executive after eight months, trading him in for a younger toy boy with technology experience, as the company moves to be more competitive in the digitally-focussed play market.

Briton Bali Padda, 61, the first non-countryman to head the Danish family business, will make way for 51-year-old Niels Christiansen. Christiansen­—another Dane—was chief executive of global industrial technology company Danfoss, a position he held for nine years until June.

Lego, established in 1932, is controlled by the fourth generation of the founding Kristensen family, which has a 75% stake. The remaining 25% is owned by a charitable foundation focussed on children’s creativity.

The man behind the changes—Jørgen Vig Knudstorp, chief executive until late last year and now executive chair of Lego Brand Group—said the replacement was not to do with Padda’s performance, but rather his age. Padda, pictured below right, would join Lego brand group in a “special advisory role” when Christiansen replaced him on 1 October.

“It isn’t [a humiliation]. He’s definitely not disappointed us,” Knudstorp told the Financial Times. “Bali knew that I would immediately look for a successor. Both Bali and I thought it would take a long time as it’s not a trivial matter. I was just very fortunate that, relatively early, we found the right person.”

Christiansen will contend with slowing growth at the toymaker: When his predecessor reported 2016 results he described the 5.5% revenue increase to DKK 37.9 billion ($6 billion) as “sustainable”. This was compared to the double-digit growth following the company’s near-collapse in 2004—a dramatic turnaround attributed to Knudstorp’s leadership. However, 2016 saw the company struggle with competition from videogames and apps, with self-proclaimed “flat” US sales, “despite a significant increase in marketing spend in the second half of the year”.

In announcing his new recruit, Knudstorp praised Christiansen as a “great leader” who delivered outstanding results in his former role. He also honed in on his experience in “digitalisation and globalisation, implementing a transformative strategy, and creating an agile, high performing, international team”.

Lego’s biggest rival, the similar sized toy giant Mattel, also rejigged its top team towards technological expertise, hiring former Google executive Margaret Georgiadis as its chief executive in January.

Christiansen—rumoured to have approached Knudstorp personally to secure the role—said he played with Lego as a child and was “honoured” to join the company.

Christiansen spent more than 25 years in business leadership, beginning his career in management consultancy before taking his first chief executive job, at GN Netcom, aged 33. During his time at Danfoss the company doubled in size to DKK 39 billion ($6.2 billion).

The PwC 2016 Family Business Survey looked at the professionalisation of family businesses, with 79% of companies turning over more than $100 million having non-family directors, as do 75% of firms which have reached at least a fourth generation. Knudstorp was the first non-family member to head Lego.

A 2013 study from Imperial College Business School, which examined 700,000 businesses, found in family firms, the average age of non-family directors was 49.2, while family member directors were slightly older at 50.9.


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