Lego

No matter how hard Sam Johnson presses down on the spider, the creature known as Sparratus stays together. It was not always so. In his earlier versions, the plastic spider could withstand the pressure applied by someone like himself, an adult Lego designer from England. But when he gave the prototype to children, things were a little different. "They picked it up by the legs! The crazy things kids do," he says. "We had to make sure kids could push the body all the way down to the floor to put the figure in." Much of the six-month development of the $25 Sparratus' Spider Stalker toy set was spent making sure the legs did not snap off. A solution for wooden floors did not work on carpets until Mr Johnson introduced bricks from more advanced Technic sets. "You can end up falling in love with a brick," he says. Read MoreAmazon Stops Taking Advance Orders for 'Lego' and Other WarnerVideos It is typical of the attention to detail that has propelled the Danish toymaker from the brink of financial collapse a decade ago to the most profitable company in the sector. The Lego formula appears simple: take plastic costing less than $1 per kilogram and transform it into sets based on Star Wars, Legends of Chima or The Hobbit retailing for about $75 per kg. But the company's success – sales enjoyed compound annual growth of more than 20 per cent between 2008 and 2012 – is not just built on the humble plastic brick. It has branched out from toys into video games, board games and, most recently, film, with the highly successful The Lego Movie . But as children spend more time playing on devices such as iPads and smartphones, Lego faces a big problem that has stalled rivals: can it keep up its stellar growth in an increasingly digital world of play, or will it be trapped by its own recent success? "I think it's a really critical question," says David Robertson, a professor at the University of Pennsylvania's Wharton School who has written a book on Lego, Brick by Brick . "They really need to find that next big thing. Lego has been pretty good at finding the next little thing but not the next big thing." Read MoreLego sees digital offering 'critical' for future A decade ago the privately owned company – still controlled by the founding Kristiansen family – was having trouble even knowing what the next little thing would be. When Jørgen Vig Knudstorp took over as chief executive in 2004, it was in deep crisis. The former McKinsey consultant found a company that had lost faith in the brick, dumping its Duplo brand for toddlers and plumping for easier-to-build products such as a character called Jack Stone. "The real problem for Lego was that it did so many experiments in such a short space of time that the capabilities didn't follow quickly enough," says Mr Knudstorp, sitting in his modest office filled with dozens of Lego sets in the Danish town of Billund. Mr Knudstorp, 45, who retains a boyish air with his spiky hair and glasses, put in place a three-stage plan. The first two years were about survival: assets, such as the Legoland theme parks, were sold off and strict financial controls were introduced.

Once the bleeding stopped, he tried to make the company healthy again in 2006-07 by restructuring manufacturing. The final stage, begun in 2008, was a push for growth. Lego made a big effort in markets where it was under-represented: in the US, as well as emerging markets such as China, Russia and Brazil. It also launched new product lines. Lego had always been preferred by boys, so it started the Friends range aimed at girls. Despite controversy, it was a big seller. Other successful homegrown launches were Ninjago, based on Japanese warriors, and Legends of Chima, featuring animals fighting in a magical land. Those successes were all the sweeter because Lego does not have to pay the royalty it does for third-party sets such as Star Wars or Harry Potter. It also has full control over the characters, what they look like and can do. Read MoreToymaker Lego looks to build on success in China The result of these efforts was a company that made an operating profit of DKr8.3 billion last year on sales of DKr25.4 billion – up from DKr8 billion in 2007 – from a product with global appeal. "Kids in Afghanistan and Jordan, kids in Boston, Beijing and Berlin, they have the same perception of the product. So what we're dealing with here is one of these few companies in the world that are a bit like Airbus or Boeing or Coke or Pepsi or Apple or Samsung [and] have a global product assortment," Mr Knudstorp says. Yet he cautions that the challenges Lego faces today are very similar to the ones a decade ago. "I think one of my huge jobs over the next 20 years is to be able to adjust to globalization and digitization and not be taken hostage by our past success, not being tied by earlier decisions which then limits your ability to adapt to what is required from the future." One criticism made of Lego is that it has missed the chance to move decisively into the digital world. Minecraft, a highly popular Lego-like computer game in which players build or destroy virtual landscapes made of building blocks, was instead created by the Swedish start-up Mojang. Some Lego executives privately regret that they failed to develop such a game but Mr Knudstorp praises Mojang, with whom the toymaker is developing several big Minecraft sets for release later this year. "What we're finding is that if you are very good at writing books, you are not necessarily the best to turn that book into a great movie. You need somebody who makes movies . . . and in our case we need partners who can translate the physical Lego experience into the digital experience," he says. Read MoreWhy we can survive in the iPad era: Lego CEO So Lego teamed up with TT Games, a British games developer, to make video games from Lego ranges such as Star Wars and Chima. Many became bestsellers and Lego has had success, too, with online games. It also partnered with Warner Bros to make The Lego Movie, which is the seventh-highest grossing film of the year, generating close to $500 million globally. Mr Knudstorp says Lego will never become a fully digital company: "The one thing is that we never leave the physical brick. Our standpoint is that physical play is extremely important. Then I see digital as an extra experience layer." He adds: "I guess we could be closer to a Nike, which is trying to obviously sell a very physical product like a sneaker or golfing equipment but may add an app that improves your golfing performance." Read MoreLego builds sales with new product launches

That digital layer is making Lego's product launches more complex. WhenThe Lego Movie was released, it was not just the film: construction sets, a video game and a website in partnership with Google all launched at the same time. Such merchandising tie-ins have long been a lucrative part of film releases by Disney and DreamWorks. "This movie signals they continue to want to expand from a construction toy to a content company. They can leverage that safe brand," says Prof Robertson. A sequel to The Lego Movie is set for 2017 but Mr Knudstorp is keen to take it slowly rather than rushing out films based on its various products. Read MoreHow this $99 3-D printed drone could change the toy industry Mr Knudstorp acknowledges that complexity is growing and says he has revamped Lego's management structure precisely for that, stripping out a whole layer. But he adds: "I have a little picture of 25 minifigures each turning Chinese plates on a bamboo stick. I show it to the guys and I say: 'I know it's difficult. That's why we spent 20 years learning it and that's why we are so difficult to imitate.' So don't be sorry that we do something that's very hard to do. It'd be worse if we could only spin one plate." One concern today is that history may be repeating itself. Lego were in a mess at the end of the 1990s for several reasons that sound familiar. Prof Robertson points to examples, including a dizzying array of product launches and recruiting workers who lacked sufficient understanding of the company and its culture. Some of those issues are now returning. Lego's website lists 30 product ranges, while in February the company said it would focus on increasing staff in Connecticut, London, Shanghai and Singapore. More from the Financial Times: Illusion of inclusion at the White House

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Worstthreat to euro is a lack of trust Mr Knudstorp says: "I worry about it all the time but I think we are in a very different place." First, he points out that all Lego's growth is self-financed, meaning the payback for investments is quick and a failure is not a disaster. The

Kristiansen family are committed owners. Second, what he calls "health metrics" – such as customer and retailer satisfaction, shelf positioning, employee motivation – are at "a completely different level" compared with a decade ago. Finally, he says, underlying profitability is far better. Alook at the recently released Simpsons house, based on the cartoon TV series, shows why. The $200 set includes minifigures of the en­tire family, including mother Marge with her distinctive blue beehive. "The big blue hair. That is a bit of a costly element to manufacture to be quite honest but it is also a very special element," he says. "So the designer is basically told: 'You get that, but in the rest of the set we want to see a fairly standard execution'." That means the designer needs to use bricks from other sets to keep costs down.