The Danish toy company, Lego, is most famous for its colourful building-block toys. It is also well known for its focus on innovation, which has guided it towards change throughout its history. Innovation at Lego has been broadly conceived, ranging from the toys, the materials, diversification into other products, and theme parks.

Not all have been successful, but the company has kept faith with its belief that innovation is at the heart of its culture. Lego has been owned and run as a family business from the outset. When the company was set up in the 1930s, Lego blocks were made of wood.

After the Second World War, the owner acquired a plastic injection moulding machine, and he shifted to plastic. The plastic bricks became popular, and Lego expanded into numerous markets. Its toys now sell in 130 countries.

Lego's success, however, inevitably led to competition from firms able to produce similar toys at cheaper prices. For Lego, the challenge was to tap into its innovative capacities to come up with new and better ideas that would excite consumers.

It now makes a variety of play materials using new technology. Its latest challenge is to shift to sustainable materials. The company now aims to shift away from oil-based plastics to more sustainable materials. The new materials can be recycled or plant-based, but they must be compatible with each other and with the traditional Lego products.

The company has invested in a centre for sustainable materials, with the aim of achieving sustainability targets by 2030. Plant-based plastics involve lower emissions and are being gradually introduced. Plant-based polyethylene is already being substituted for oil-based polyethylene in a number of pieces, but this is only a first step.

The greater challenge is to eliminate ABS (acrylonitrile-buta-diene-styrene), which is used for the classic bricks. Even when scientists have found a suitable substitute material, the further challenge is to produce it on a scale that can be used in large manufacturing operations. Despite competition from low-cost rivals, Lego saw its profits grow by 4% in 2018. Profits grew at double that rate in the Chinese market, where families were particularly taken by the educational and skill-development dimensions of the company's toys. Lego keeps its ultimate goals of innovation in sustainable materials to the forefront.

Questions:

1. How has Lego managed to compete effectively in global markets?

2. Sum up (explain) Lego's approach to innovation.