Lego

Danish toy company founded in 1932 that faced near-bankruptcy in 2003-2004 after diversifying away from core brick business into theme parks, video games, clothing, and software. Losses reached $400M in 2004 with $800M in debt.

CEO Jørgen Vig Knudstorp executed a textbook regeneration: sold Legoland theme parks for $460M, cut 54% of SKUs (13,000 to 6,000), reduced workforce by 35%, and refocused entirely on plastic bricks. The company returned to profitability by 2007 and became the world's largest toy company by 2014.

Lego's regeneration succeeded because its root system was exceptionally strong: 97% global brand recognition, brick compatibility spanning 66 years (2024 bricks fit 1958 bricks), and manufacturing expertise. The ruthless pruning of non-core activities freed $500M+ in cash and management attention.