Wednesday, January 14, 2015

Games Workshop's Problems: LEGO has been there.

by SandWyrm


Many people have noted interesting parallels between the business models of Games Workshop and LEGO. But did you know that LEGO almost went bankrupt a decade ago, and for many of the same reasons that Games Workshop is struggling now? How did they turn it around? They re-connected with their fans.


From a very good Business Insider article:
"When Jorgen Vig Knudstorp came in as Lego CEO in 2004, the company was struggling to give consumers what they wanted and effectively manage costs. Knudstorp finally brought fiscal responsibility to the Danish toy maker. He also tried something novel — handing over creative direction to the core fans of the brand.
It worked. Creativity combined with smart management ultimately saved the company."
To summarize the article, LEGO was getting crushed by out-of-control costs and the lack of creativity from letting their long-time designers go.

So they slashed costs and (like Valve Software) started hiring their most talented fans instead of professional design graduates to make their sets. Ten years later, they have the cash to make hit movies.

I think that in a broad sense, GW has managed to control its design and manufacturing (if not its retail) costs. But they're missing the connection to their fans, and what we want. Maybe Kirby and Roundtree can never quite be expected to understand us. But they could decide to start hiring more people that do in their design and marketing departments. Letting THEM decide the direction of GW's product lines instead of the less creative guys running the spreadsheets.

To paraphrase Apple's Jonny Ive:
"If we make great stuff and run the business side competently, we'll always be successful."
So it's time for GW to see the other half of what made LEGO the success it is today.


16 comments:

  1. They would need the talent, but also a cultural shift so that the talent is listened to and not crushed by bureaucratic nonsense. They have too much management and not enough creativity.

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  2. Commenting directly on the Lego front. I love Legos, but isn't it weird the direction the line has gone in. When I was a kid there where no sets based around conflicts. It was all construction and exploration themed. Yeah, I'd just build tanks and planes, but it was kind of a subversive thing to do. Now even the City line is made up of 50% cops and robbers stuff. Now the subversive form of play is to build a peaceful city out of Legos.

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    Replies
    1. I think that's part of the cultural shift that LEGO had veered away from. Is it a better culture? Maybe not, but they have to make what kids/parents want to buy.

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    2. By the same token, maybe the dark appeal of 80's era dystopian British comics is declining, and GW should bring in younger talent with new, more modern Sci-Fi/Fantasy influences.

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    3. The world has moved on. GW seems stuck.

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  3. I dunno. I feel it's about time they did the Cops N Robbers kits. When I was a kid, I remember wanting to play Brickster's Revenge.

    On an unrelated note, I have access to a 3D printer...

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    Replies
    1. Made a 50x125 movement tray for my High Elf cav. Went a bit wide on it though. Also, won't have direct access to is soon. IPS gave it to my mom for her classroom, and she had to bring it home over vacation, but it's going back next week. BTW, a simple move tray like that took 45 minutes.

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  4. This is one of the first times I've read a piece about the foibles of GW and agreed with it. Cheers.

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  5. I thought that the problem was GW hired fans instead of professionals.

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    Replies
    1. It's neither actually. They hire for attitude. Attitude being a euphemism for agreeing with everything Kirby says. You should check out some of the transcripts from the Chapter House trial. The higher ups don't have much of a high opinion of the people who buy and play the game.

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    2. The closest they've done to hiring a talented fan was Alessio Cavatore, the lead designer of 5th Edition. He was a tournament player that won the Italian championship, then he got a job as a rules translator and wormed his way into a design position. Where he designed the most competition-friendly (and popular) version of the game to date. Then they kicked him out for not 'fitting in'. Releasing 6th a year later.

      Now imagine if GW actually sought out it's most talented competitive and hobby players to design the rules, fluff, and models of their games. Instead of hiring for 'attitude' from the bottom of the wage barrel.

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  6. This is toxic stock.
    Games Workshop, whether they aknowledge it or not, relies on the goodwill of its fans to maintain income. Over the past decade or so, it has gradually devolved into a company wholly detached from its consumers, (as well as financial reality.).
    By their own admission, they do not do market research. The company is notorious for being bull-headedly blind to any shift in the market. This is very well exemplified by now-ousted CEO Tom Kirby claiming that the burgeoning market for electronic games would be a short-lived "fad."
    They have continuallt cut their overhead costs, which arguably had a positive effect; however, this is the best that can be said for their Board of Directors. As stated before, Kirby was ousted last year, sadly to be replaced with an equally short-sighted and ultimately disastrous CEO from their out-of-touch board of directos. Their latest launch of a new IP, "Age of Sigmar" saw very small profits. The quality and value of their product has fallen terribly, especially in the past two years, largely due to the continuation of their "Short-term profit margins are all" policy.
    Their leadership is stuck in the '80s, and refuse to entertain the notion that strategies which may have worked in the pre-digital world do not work any longer. Ironically, the company have licensed over 24 electronic games using their Warhammer IP in the past two years alone-with a distressing lack of any oversight, support, or quality control for their most lucrative IP.
    They are now relying on inflating prices for their product as a last, desperate measure to keep them afloat. One only need take a look at their stock valuation over the past year to see how well that's working. Their IP is strong, but the company can only expect to make reliable profits if it is sold, and its board of directors wiped clean and replaced. I, for one, will not burn my money by buying this stock

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