Lego

In 2003, LEGO was drowning in $800 million of debt after years of misguided diversification into theme parks, clothing lines, and video games. New CEO Jorgen Vig Knudstorp made a radical bet: strip away everything that wasn't the brick. That decision turned LEGO into the world's most profitable toy company, growing revenue from $1 billion to $7.5 billion by 2020.

By 2003, LEGO was on the brink of bankruptcy.

By 2003, the most beloved toy brand on earth was nearly bankrupt. It had chased growth into theme parks, clothing, video games, and tens of thousands of new parts - everywhere except the plastic brick. The turnaround is a masterclass in a counterintuitive truth: sometimes saving a company means doing less, not more.

In 2004 Lego posted a net loss of DKK 1,931 million—more than double the prior year. The story says innovation saved it. The truth is the opposite: it survived by killing the theme parks, the video games, the jewelry, and going back to the brick.

Everyone credits the 2014 film with the turnaround. But Lego was already profitable by 2006, eight years earlier. The flywheel works for one reason: every adjacency points back to the brick — and stalls the moment Lego lets go of it.

The legend says Lego nearly went bankrupt in 2003 because it strayed from the brick, sold its theme parks, and refocused. But Lego lost DKK 935 million that year on a supply chain a decade out of date — and 14 years later the family quietly bought the parks back.