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IBS Case Studies

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Date: 13/08/2013 Time: 13:01:13

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IBS Case Development Center

Project Platypus Mattels Unconventional Toy Development Process

This case study was written by Subhadip Roy, Professor, Department of Marketing, IBS Hyderabad. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources.

License to use for IBS Campuses Sem-III, Class of 2012-2014

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Project Platypus Mattels Unconventional Toy Development Process

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Were a toy company, but we werent playing enough.[1]

To really shift thinking you need to shift environments.[2]

If you put a bunch of creative thinkers in the right environment and drop the job titles, youll discover amazing creativity.[3] Ivy Ross, Senior VP Worldwide, Girls Design and Development, Toy Giant Mattel THE TOY BUSINESS Global toy industry was worth $60 billion as per 2003 estimates. The US toy industry accounted for a third of the toy business. The industry has been in the grip of change caused by rapid changes in tastes and preferences of children. Power Rangers[4] were the rage during the early 1990s. New trends had arrived by the late 1990s. In 1998, Beanie Babies[5] sold out within minutes of hitting retailers shelves. By 1999, the Pokemon series of toys, cards and games (from Japans Nintendo) became popular. Children were turning away from traditional favourites in favour of electronic video games and interactive computer software. The product life cycle for many toys was very short: the birth, growth, maturity and decline stages lasted only a couple of years. Huge turnover in the product line was typical of the industry. For example, US toy maker, Mattel (a world leader in toy business like compatriot Hasbro Inc.), has had to change as much as 80 percent of its product line every year.[6] By 1999, the market had become dynamic and unpredictable and companies needed to respond fast. Mattel led the industry in the design, manufacture and marketing of toys and family products (that included familyoriented entertainment products such as Adventures with Barbie: Ocean Discovery). The company had its worldwide headquarters in El Segundo, California. Mattel had been selling its wares in over 150 nations, having over 25,000 employees. The company had its manufacturing units in China, Indonesia, Italy, Malaysia and Thailand. The toy giant had signed license agreements with third parties. Such licenses allowed Mattel to use trademarks, characters or inventions of the licensor in its product lines. Mattels vision has been to be The Worlds Premier Toy Brands Today and Tomorrow. Barbie, the most popular fashion doll ever introduced, was from Mattel. The fashion doll appeared for the first time in 1959. The Barbie doll line expanded over the years. Barbie led Mattel to the forefront of the toy industry and fascinated generations of young girls. Barbie started its television marketing in the 1960s. Most women in the US, below 50 years of age, have played with Barbie dolls as kids and later collected a vintage Barbie as an adult. Mattel, brilliantly marketed Barbie collectibles to this collectible community. The company has sold over a billion Barbies since 1959, making it the best-selling fashion doll in almost every major market across the globe. As of December 6th 2001, Barbie commanded a 90% market share of the fashion doll industry.[7] Barbie fetched Mattel an estimated $2 billion in annual revenue as of 2001.

MATTELS CONCERNS We (Mattel company) are such a machine in terms of what we deliver on an annual basis that it doesnt allow time to think[8], remarked Adrienne Fontanella, president of the Mattel Girls Division. The companys established brands such as Barbie and Hotwheels required hundreds of new product introductions every year with the result that Mattel, like other big toy companies, had few resources left to develop new toy categories or brands. I have 450 people who work for me. Everyone is busy all the time practically 24/7 just growing our existing brands. No one has time to become truly immersed in the possibilities[9], said Ivy Ross (Ross) senior vice president worldwide, Girls Design and Development, Mattel (Annexure I). This was not just Mattels case. There was little by way of originality in an industry where usually everyone copies everybody elses ideas.[10] CEO, Eckert himself admitted that he spent less than 1% of his time on product development. Changes in consumer behaviour accounted for much of Mattels failure to meet revenue projections.[11] By Eckerts own admission, Mattels customers were zero to eight years oldcan be very fickle. And unforgiving.[12] For instance, little girls stopped playing with Barbie dolls at a younger age than before. This phenomenon often called age compression in industry circles, could make a huge difference to Mattels bottom line, given that Mattels Barbie doll accounted for 29% [13]of Mattels revenues and an estimated 40% of
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profits in 1999. Mattels revenues fell $500 million short of projections promised to investors. Again, the 1990s witnessed an increasing recognition of the centrality of womens empowerment[14]. Barbie lost favour with girls in the late 1990s because the company failed to pick up on the girl-empowerment trend. The fashion doll came under fire from feminists on occasions. For them Barbie was a tangible representation of the sexism of society. Feminists have been critical of Barbies unrealistic body shape, which in their view made young girls go crazy, become anorexic[15] and run out and get breast implants to be like her.[16] Mattel struggled to move beyond products such as Barbie by creating an innovative and original product. With flat sales through the first half of 1999, Jill Barad, chairman and chief executive, Mattel, was under pressure to prove that she could deliver the goods through that holiday season. In 2000, Mattel suffered a $430 million loss. In February 2000, Mattels Board of Directors ousted Barad. Robert Eckert took over as chairman and CEO, in May 2000. Toy designers, copywriters and model makers at Mattel worked as different departments in a compartmentalised manner. There was not enough collaboration and interaction. Baton passing[17] prevailed. For instance, the marketing department would pass on the business objectives to the design department. The designers there would create the visual and then pass it on to engineering hands who would in turn pass it on to the packaging section. Each one competed with the other and worked in silos.[18] Designers needed to let colleagues from other departments into their design process and not try to own it.[19] A toy touched so many hands before its eventual release, with the result that the original idea behind the toy was often lost. The cubicles encouraged competitiveness and protectiveness. A typical corporate setting was like a narrow box within which the employees operated. The rigid ambience did not allow the employees to dabble with new ideas. For employees to develop new ideas and roll out innovative toys, they had to move out of the rigid corporate setting. The potential of the employees lay untapped. For one, an employee might not realise his true skill/ potential as there was never a platform (in the company) for him to try and discover what he was good at. Again, when a company employee has performed in a certain way for a number of years, it is hard to think differently. The findings of Mattels in-house focus groups suggested that Mattel employees were looking for a flexible environment to work in. They also longed for the freedom to design outside the box. CREATING A NEW BUSINESS OPPORTUNITY FOR MATTEL Mattel responded rapidly to the new trends in consumer behaviour by changing existing product lines and expanding into new markets through a series of acquisitions (including the Pleasant Company that made the popular line of dolls based on historical characters and books for older girls aged seven to twelve, in 1998) and through product changes and innovations. To create new brands, Mattel needed a recurring product development process with emphasis on open idea sharing. Ross looked up the definition of platypus (Annexure II) and it said, an uncommon mix of different species.[20] Ross project with its uncommon mix of cross-functional employees on board was dubbed Project Platypus. The title signified the unusual nature of the creative sessions. It was an unconventional product team with the mission of developing a new hit in a new market.[21] Project Platypus was a toys skunk works (Annexure III) that brought together a dozen people from various parts of the company marketing, licensing, engineering for 12-week stints.[22] Project Platypus was basically about being able to think in an imaginative way and understand the sociology and psychology behind childrens play patterns[23], Adrienne Fontanella said. It stimulated designers to think differently, move the creative process closer to the consumer, and create new opportunities for growth. Initially, the Human Resource Department at Mattel was sceptical about Project Platypus. They felt that employees would be unwilling to return to their normal jobs at the end of the project. The first Project Platypus session concluded in December 2001. Ello, (Annexure IV) a whimsically-shaped construction set for girls[24] emerged from this session. Ello was a hybrid toy: part toy construction set and part craft kit. Mattel called it a creation system for 5-to10-year-old girls. In Ello, the traditional bricklike blocks (typical of construction sets) were replaced by colourful cartoonish panels, balls, miniature flowers and other quirky pieces that could be interchanged to build houses, furniture, people, pets, necklaces just about everything. The Platypus team made a formal presentation to senior managers wherein they addressed everything concerning their creation, Ello, from profit and loss projections and marketing plan to line extensions. The team recommended that Ello be launched as a brand. The $19.95 Ello hit the market by the end of 2002 and was received well by the market (Exhibit I).

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PROJECT PLATYPUS The first Project Platypus lasted three months. Ivy assembled an interdisciplinary team consisting of designers, model makers, copywriters, child psychologists and various other departments. By assembling a product team from various departments, Ross encouraged employees to stretch beyond their jobs, apply skills that they did not ordinarily use, and even discover new talents. Innovation, for her, consisted in exploring new possibilities, not realities. The Project began with 15-20 of these members taking a three-month (the maximum period for which companies could typically spare their employees) break from their routine jobs. Their co-workers willingly covered for them while they attended the Project, fully knowing that they would also get a chance to attend the project at some later date. Nothingsparksnewidealikeanewenvironment[25] and to really shift thinking, you have to shift environments.[26] The team members, leaving their jobs and titles behind, moved to the venue of Project Platypus: a 2000 square feet building (resembling a playground) across the street from the Mattel headquarters in El Segundo, California. This helped to distance these employees from the distractions of their old job with Mattel. Typically, the manager and subordinate relationship would be greatly affected by the location, layout of offices and the manner in which the two were separated. The studio was dramatically different from the companys design center. It had an extra high ceiling, grass-coloured carpet and a red door bearing the definitions of platypus. Beanbag chairs and foam cubes littered the floor. The employees felt like they were airdropped into a totally new locale. Ross felt that the setting with such high ceilings sans walls encouraged regular exchange of ideas, spurred creativity and out-of-the-box thinking. Unlike traditional officescapes where workers sat in cubicles or desks at desktop computers with little mobility, here the desks came with wheels to encourage spontaneous collaboration. They were not given any deadlines typical of companies. All they were told was that in 12 weeks time they had to develop a new opportunity for Mattel that doesnt yet exist.[27] At the close of the project they were required to conceive and develop just about everything related to this new opportunity, ranging from the business plan to product packaging, etc. To start with, for the first two weeks the participants were not required to do anything. As Ross put it if you want to get milk out of a cow, you have to give it time to graze.[28] Experts were brought in from outside. Employees could listen to these voices from outside the company. One of these experts, a Jungian analyst, spoke on the patterns and archetypes related to toys (Exhibit II). Since the project centered on a construction set toy, architects were roped in to speak on building design. An expert on improv-comedy (a kind of improvisational theater without formal script wherein the actors created the dialogue and action and incorporated suggestions from the audience) was also present. Improv-comedy (Annexure V) reportedly enhanced group thinking. The improvisational artist asked team members to throw a stuffed bunny at their colleagues as a way to release inhibitions that stifled the process of sharing ideas.

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Normal company environments gave employees the best equipment and environment to work with but left them with little time for what-ifs (suppositional and exploratory questions). Ross seemed to have a way out. Employees could be urged into imaginative exploration through feeding their soul, their mind and creating an environment that each of them can grow in.[29] Brain expert, Jeffrey Thomson recorded team members as they hummed collectively, a process designed to measure their brainwave frequencies. Having listened to these frequencies, Thomson isolated one of these and incorporated it into a musical soundtrack. All through the three-month session, the group would listen to the tape as a way to achieve group brain synchronicity.[30] Members were made to sit in special recliners[31] and listen to music. The sound was said to cause vibrations that permeated the whole body. The vibrations were set at a frequency designed to put the participants in theta state, one of the four categories of brainwaves. Theta state was a positive state wherein it was possible to disengage mentally from the task on hand and engage in free-flowing idea generation, unrestrained by either guilt or censorship. Rapid-fire storytelling (Annexure VI) was yet another activity. One person in the group would start off a story, On Saturday night, Dr Field The story would unfold with each team member taking turns to add a line, phrase or even just a word to the story. This served as a means of sharing experiences. Such shared experiences bound the group together. It was an exercise in building on the others ideas, (be it half-baked ones) rather than judging them or what could be worse, ridiculing them. Team members even shared stories of their fears and frustrations. There was even a joint group cry. The idea wall (a 40-by-10 foot wall of chalkboard) in the studio was another open idea-sharing exercise. Project director, David Kuehler[32] called it, a common desk for 12 brains. It all began when someone in the team got on a roll and an idea for a toy was born. He would walk up to the idea wall and scribble his idea of a toy on it. For instance, one member would sketch an inflatable house and put it up on the idea wall. Suddenly everyone else would realise he/she had some brilliant idea on hand. No one owned the idea. Yet everyone was present at its inception, felt a sense of ownership and worked as hard as he/she could to make this idea tick. Another group member would have a brain wave on what material to use to put the house together. He/she would scribble it in the corner of the sketch. Another designer would fasten an orange sticker on the drawing. It was his/her way of telling the group that the sketch needed to be more juicy. Ross believed in letting ideas grow organically and come to fruition in this manner. Five weeks into the project and much ahead of schedule, the wall was covered with 33 toy ideas.[33] Platypus (that of effectively breaking down hierarchy and encouraging collaboration amongst participants). In the past, Ross would wonder, We are a toy company, but we were not playing enough.[34] Hence, some seemingly playful but intellectually stimulating activities formed part of the project. One such activity (aiming to release the participants from inhibitions that stifled the idea-sharing process) consisted in throwing a stuffed bunny at a colleague. Still another activity designed to stimulate imagination involved devising a method to prevent an egg from breaking when dropped from 14 feet. The winner in this case came up with an egg bungee cord. Participants talked to parents and called on schools. They were encouraged to visit the Labrea tarpits and even zoos and come back with a fresh perspective. The experience at Coach (Manhattan, US-headquarters of specialty leather goods and custom fabrics) told Ross that fresh ideas often sprang from the study of things unrelated to the project on
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hand. While at Coach her design team saw how a door opened and an idea came to them like a flash. Can you imagine a handbag opening like that?[35] To resolve conflicts in the group, Ross brought in a mediator who asked team members to sit back, join arms and repeat: All of your truth is welcome here. Ross herself graduated from innovator to facilitator spurring her teams creativity. Ross also brought in a group of girls to enable the toy makers to see first-hand how girls played with pipe cleaners, cardboard and other basic supplies. The girls went about constructing rooms and house, but only after they had figured out what was going on in a house. They started with a narrative. They also made jewellery and characters. They went on to tell stories about the world they had thus created. By the end of the year, the project team unveiled a hybrid toy: Ello. PROJECT PLATYPUSS MATTELS RECURRING TO DEVELOPMENT PROCESS Ross did not want the project to end with the return of the participants to their office. She wanted them to share their experiences with their colleagues. On a trip to Seattle, Joyce Kim (a participant at the Project) led her fellow designers in a platypi group- storytelling exercise. Ross wanted members to pass on their energy, passion and what they had learned to the other employees through such exercises. Such diffusion of ideas, she believed, would transform Mattels culture. There were signs suggesting that the project was taking an effect on Mattels corporate culture. Departments were increasingly resorting to the storytelling technique with their designers. People were being encouraged not to judge others ideas. Mattels Boys Division had reportedly put up feedback walls. Employees were keenly awaiting their turn to join the Project. In fact there was a waiting list of such employees. The company proposed to conduct three such sessions the following year. Ross felt that if these Platypus sessions resulted in a new brand a year for Mattel, then it could be considered a success. CEO, Eckert observed, Project Platypus is an impressive example of how we can find exciting ways to inspire creativity and empower our people.[36] Ivy Ross was amused to find that All around her, the platypuses are starting to multiply.[37]

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[1] Salter Chuck,

Ivy Ross is Not Playing Around, www.fastcompany.com/online/64/ross.html, October 2002

[2] Ibid. [3] Ibid. [4] Popular character from Bandai of Japan. On June 21st 1999, Mattel was reportedly considering a marketing, sales and product development alliance with Bandai. Under the agreement, Mattel would market Bandai products in the US and Latin America [5] Westmont, Illinois-based Ty Inc. made Beanie Babies. A Beanie Baby was typically a stuffed animal filled with plastic pellets [6] Toy Story, http://www.cio.com, May 15th 2002 [7] Mattel Implements Microsoft Technologies, www.microsoft.com, December 6th 2001 [8] Bannon Lisa, Toymakers having fun? Now thats a novel concept,www.southcoasttoday.com, June 9th 2002 [9] Ivy Ross is Not Playing Around, op.cit. [10] Christopher Byrne, long-time toy industry analyst and Contributing Editor, Toy Report and Toy Wishes, quoted
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in Ivy Ross is Not Playing Around, www.fastcompany.com, October 2002 [11] Mattel Recharges its Batteries, www.nyse.com, 2000 [12] Ibid. [13] As of July 2003, Barbie accounted for about one-third of the company revenue. [14] Womens empowerment has five components: womens sense of self-worth; their right to have and to determine choices; their right to have access to opportunities and resources; their right to have the power to control their own lives, both within and outside the home; and their ability to influence the direction of social change to create a more just social and economic order, nationally and internationally [15] AnorexiaNervosa is a serious eating disorder, primarily among teens and women in their early twenties, that is characterised by a pathological fear of weight gain leading to faulty eating patterns, malnutrition and usually excessive weight loss. [16] Dusty Rhoades, She Must Have Converted, www.dusty.booksnbytes.com, 2003 [17] Bannon Lisa, Toymakers having fun? Now thats a novel concept, www.southcoasttoday.com, June 9th 2002 [18] Silo is a trench, pit, or a tall cylinder (of wood or concrete), usually sealed to exclude air and used for making and storing silage. [19] Womack David, Project Platypus: An Interview with Ivy Ross, http://gain.aiga.org, March 6th 2003 [20] Ivy Ross is Not Playing Around, op.cit. [21] Ibid. [22] Mattel Recharges its Batteries, op.cit. [23] Toymakers having fun? Now thats a novel concept, op.cit. [24] Palmeri Christopher, Mattels New Toy Story, www.businessweek.com, November 18th 2002 [25] Ivy Ross is Not Playing Around, op.cit. [26] Ibid. [27] Project Platypus: An Interview with Ivy Ross, op.cit. [28] Ibid. [29] Project Platypus: An Interview with Ivy Ross, op.cit. [30] The coincidental occurrence of events and especially psychic events (as similar thoughts in widely separated persons or a mental image of an unexpected event before it happens). [31] A chair with an adjustable back and footrest [32] Actor,director and engineer, David Kuehler worked for Disney and Sundance Film Centers before Ross hired him as director of Project Platypus. [33] The Japanese Tea Ceremony, www.holymtn.com, February 16th 2001 [34] Salter Chuck,Ivy Ross, www.myneweconomy.com, November 2002 [35] Ibid. [36] Annual Report 2002, www.mattel.com [37] Ivy Ross is Not Playing Around, op.cit.

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