Play’s still the thing as the new COO of Mat­tel tries to in­ject joy back into toy mak­ing — with help from a New York de­sign firm

Los Angeles Times - - BUSINESS - By Shan Li

$ 26.67 Mat­tel’s Fri­day clos­ing stock price

44% Stock price de­cline since end of 2013

6 Straight quar­terly sales declines

16% Drop in yearly Barbie sales in 2014

The Hot Wheels photos on awall at Mat­tel’s de­sign cen­ter are rid­dled with post-it notes: “Cool idea,” one says. “Like it,” goes a sec­ond, “but it’s miss­ing some­thing.” And another, more bluntly: “Bor­ing.” There’s lit­tle minc­ing of words by Richard Dick­son, Mat­tel’s chief op­er­at­ing of­fi­cer, when he cri­tiques ideas for new toy cars, trucks and other toys for kids. Dick­son can’t worry about of­fend­ing egos or wast­ing time, not given Mat­tel’s re­cent trou­bles. It’s a rad­i­cal de­par­ture for Mat­tel. “The speed — there’s not a lot of dis­cus­sion,” Dick­son said, snap­ping his fin­gers. “We don’t even have a meet­ing. You don’t have to wait for any­thing. We can work in real time.”

For years, the El Se­gundo com­pany’s de­vo­tion to Power-Point slides and lay­ers of bu­reau­cracy dimmed the cre­ative spark at a busi­ness that lives and dies on hot play­things. The bot­tom­line suf­fered as sales dropped for six straight quar­ters. Barbie sales have fallen for three years, and core brands such as Fisher-Price also strug­gled.

But with the ouster of Chief Ex­ec­u­tive Bryan Stock­ton in Jan­uary, Mat­tel is try­ing to in­ject joy back into the toy­mak­ing process.

Dick­son, who over­saw Barbie’s last surge in pop­u­lar­ity around2010, is in­charge of rein­vent­ing the com­pany. Hewas brought back to Mat­tel last year af­ter a stint at Jones Group, and pro­moted to chief op­er­at­ing of­fi­cer in April. An­a­lysts said he is the heir ap­par­ent to Christo­pher Sin­clair, a long­time di­rec­tor who took over as chief ex­ec­u­tive af­ter Stock­ton.

He has a lot of work a head. The com­pany must strengthen its ties with en­ter­tain­ment com­pa­nies like Dis­ney, roll out more tech­no­log­i­cally driven prod­ucts and, above all, jump-start sales.

Mat­tel is al­ready tak­ing one un­con­ven­tional path to­ward fix­ing the prob­lems: It’s out sourc­ing cre­ativ­ity. Mat­tel part­nered with New York de­sign firm Quirky, which func­tions like a sifter for in­ven­tions. Tak­ing sug­ges­tions from around theworld— ev­ery­thing froma gen­der-neu­tral doll to a trivia game that shoots wa­ter at los­ing play­ers— Quirky will help turn out “dozens and dozens” of new toys for Mat­tel, said Ben Kauf­man, Quirky’s chief ex­ec­u­tive.

Even though Mat­tel is al­ready try­ing to stream­line its process, Quirky be­lieves it can help Mat­tel hus­tle toys into stores at warp speed— two or three months— com­pared with Mat­tel’s usual16-month prod­uct cy­cle.

“In meet­ings they talk about prod­ucts they want to launch in hol­i­day 2017,” Kauf­man said. “That’s not how the world works. ... We cango from an idea from a mother in A labama to a full prod­uct roll­out in

a cou­ple of months.”

Although in­dus­try ex­perts said Mat­tel is headed in the right di­rec­tion, it’s too soon to say whether their bets will trans­late into hit toys.

Jaime Katz, an an­a­lyst at Morn­ingstar, fore­casts that the com­pany will grow sales by a mod­est 1% next year. Mat­tel’s stock, which closed Fri­day at $26.67 a share, has dropped about 44% since a high of $47.82 at the end of 2013.

“In the toy in­dus­try, prod­uct is king. That is the big­gest area they need to fix,” said Jim Sil­ver, editor in chief of toy re­view web­site TTPM. “But it’s not like flip­ping a switch. ... You can’t turn it around overnight.”

An­a­lysts and for­mer ex­ec­u­tives de­scribe Mat­tel as a com­pany ham­pered by a cul­ture that val­ued cost-cut­ting over in­no­va­tion. Some crit­ics blamed Mat­tel’s ten­dency to pro­mote busi­ness­savvy em­ploy­ees in­stead of cre­ative types.

When Stock­ton took over as chief ex­ec­u­tive of­fi­cer in 2012, he brought an even more in­tense fo­cus on cost con­trols and profit, for­mer ex­ec­u­tives said. In­no­va­tion was of­ten a ca­su­alty.

“It got to the point over the last three or four years, the up­side on tak­ing risks was not as great as the down­side to fail­ure,” one ex­ec­u­tive said.

Dick­son read­ily ad­mits that Mat­tel lost itsway.

“We be­came very email cen­tric, we be­came very data-cen­tric, we be­came heavy in process,” he said in a re­cent in­ter­view. “So what we’re try­ing to do is frankly have more con­ver­sa­tions, hear about more ideas, al­ter dif­fer­ent ways for ideas to rise to the top quicker.”

Dick­son says his “most vi­tal” goal is to kick-start the core brands, in­clud­ing Amer­i­can Girl, Barbie, Fisher Price and Hot Wheels. He has al­ready re­or­ga­nized the brands into sep­a­rate busi­ness units and pro­moted peo­ple with deep back­grounds in toy de­sign to head Barbie and Hot Wheels — jobs that tra­di­tion­ally, he said, would have gone to “busi­ness-ori­ented, mar­ket­ing” types.

Within each brand, Dick­son is also work­ing to re­duce the hur­dles to mak­ing de­ci­sions.

Take Barbie as an ex­am­ple.

Now ev­ery two weeks, em­ploy­ees in­volved in each slice of the leggy doll’s life cy­cle— from prod­uct de­vel­op­ment to public re­la­tions — gather for a face-to-face meet­ing

The group hashes out what they’re do­ing and en­sures Barbie’s story stays co­he­sive as it passes from one depart­ment to the next. That pre­vents “frag­mented” ideas that don’t hang to­gether in the public’s mind, Dick­son said.

We get to “make de­ci­sions on the spot to say ‘Oh, we gotta stop do­ing that,’ ” he says.

At his of­fice in Mat­tel’s de­sign cen­ter, housed in a for­mer air­plane parts fac­tory, Dick­son pointed to a row of poster boards il­lus­trat­ing the fi­nal prod­uct of all that talk­ing: a new line of eth­ni­cally di­verse Bar­bies with dif­fer­ent skin tones, eye shapes and hair col­ors. One board showed an advertising spread in Ital­ian Vogue, another a mu­sic video of the mul­tira­cial Bar­bies strut­ting their stuff on a city street.

“As you look at the brand as a whole, it’s in­cred­i­bly con­sis­tent,” he said. “It’s sur­gi­cal in its pre­ci­sion and mes­sag­ing.”

Tech­nol­ogy will be another area of fo­cus at the new Mat­tel.

In an era when toy mak­ers are hus­tling to in­cor­po­rate tech­nol­ogy into prod­ucts to en­tice chil­dren who are drawn to smart­phones and video games, the com­pany part­nered with Google to up­grade its clas­sic ViewMaster.

The orig­i­nal ViewMaster, now 75 years old, used card­board reels to give view­ers a 3D view of tourist at­trac­tions and scenic spots from around theworld.

To use the new it­er­a­tion, users have to down­load an app and then in­sert their smart­phone into the gad­get. Users peer at a plas­tic reel— of San Fran­cisco, for ex­am­ple— through the ViewMaster, and aug­mented re­al­ity icons pop out. Fo­cus­ing on Al­ca­traz and then click­ing a but­ton will bring a sweep­ing panoramic view of the is­land when­ever you turn your head.

The ViewMaster, which will de­but in Oc­to­ber for $29.99, will take 10 months from con­cept to hit­ting shelves, com­pared with 14 or 16 months be­fore.

“Even our teams were like, ‘I can’t be­lieve we’re do­ing this, I can’t be­lieve how fast we ’re­mov­ing,’ ” Dick­son said.

Both the Google and Quirky part­ner­ships in­di­cate that Mat­tel is will­ing to lis­ten to good ideas, no mat­ter where they come from— a welcome change from re­cent years, an­a­lysts said.

“Over a pe­riod of years, they were cre­at­ing more prod­ucts in­ter­nally and work­ing less within ven­tors,” Sil­ver said. “It ap­pears they have put a sign on the door now say­ing ‘Open for busi­ness’ to all in­ven­tors.”

ViewMaster is also one of the toys com­ing out of Toy Box, a new group within Mat­tel de­signed to in­no­vate faster and take more risks.

While core brands could de­liver sin­gle-digit growth, Dick­son said he be­lieves Mat­tel’s “next big break­through is go­ing to come from Toy Box.”

The last piece of the Mat­tel rein­ven­tion in­volves strength­en­ing its part­ner­ships with en­ter­tain­ment com­pa­nies.

That’s an es­pe­cially im­por­tant goal af­ter Mat­tel was dealt a huge blow when it lost the doll li­censes to Dis­ney’s hit “Frozen” and Princess prop­er­ties to ri­val Has­bro start­ing in 2016.

The prob­lems that has plagued Mat­tel in­ter­nally also hurt its re­la­tion­ship with part­ners like Dis­ney, Dick­son said.

“We be­came in­cred­i­bly in­su­lar in the con­text of our process,” he said. “So the speed at which we were mov­ing, the de­ci­sion-mak­ing process, the frag­mented ap­proach to how we were driv­ing brands and re­la­tion­ships was be­com­ing a frus­trat­ing place to be part­nered with.”

Dick­son said he be­lieves Mat­tel has en­tered its next chap­ter: the tod­dler phase. But he ac­knowl­edged there’s much more to do: “It takes a while to move cul­ture.”

Science & So­ci­ety Pic­ture Li­brary via Getty Im­ages

BARBIE, circa 1980. Mat­tel plans a new line of eth­ni­cally di­verse Bar­bies with dif­fer­ent skin tones, eye shapes and hair col­ors.

Mark Lennihan As­so­ci­ated Press

A CASE of HotWheels is dis­played in the Mat­tel show­room at the North Amer­i­can In­ter­na­tional Toy Fair in New York.

John Ewing Getty Im­ages

AT THE LEWIS­TON Public Li­brary in Maine, Amer­i­can Girl dolls and their ac­ces­sories are avail­able for check­out.

Sang Tan As­so­ci­ated Press

TMX ELMO was in­tro­duced by Fisher-Price in 2006. Here two of the fuzzy red dolls yuk it up at Ham­leys toy shop in Lon­don.

Carolyn Cole Los An­ge­les Times

BEN KAUF­MAN is founder and chief ex­ec­u­tive of Quirky, a New York-based com­pany that helps in­ven­tors re­al­ize their de­sign dreams. He says Quirky will help turn out “dozens and dozens” of new toys for Mat­tel.

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