Reinventing Hot Wheels

Transcript

So when I was a kid, my brother and I used to take these planks of wood left over from a backyard fence my dad had built. And we created a whole highway system across our backyard with tunnels and bridges. And it was all for playing city. And for racing, our hot wheels cars.

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I had like this one little white bug and I had this double Decker bus that was so cool and big and red. But despite the fact that I and everyone I knew had Hot Wheels, even my kids today have their own sets. This next fact came as a huge surprise.

Steve Totzky:
Hot Wheels is the number one selling toy in the world.

And not just number one in toy cars, but number one of all toys. Yeah, I had no idea. But despite this success, the future for Hot Wheels isn’t guaranteed. Because these days, kids aren’t necessarily into playing with physical toys like they used to be.

Ron Friedman:
And we had this one video where a kid was describing playing with a play set…and it had like four different tracks that released the cars at the same time, and then you could build around it. And the kid was describing it as if playing with that toy was a chore. And he said, “Imagine doing this for an hour” as if it was torture.

At the core of that customer research video from 2016 was a shift in how kids play today. By the time kids reach 8 or 9 years old — what used to be the sweet spot for Hot Wheels — they would rather play video games.

Steve Totzky:
When you’re in an industry and you’re the leader in the industry like Mattel is, you’ve got a consumer that is starting to age out of your core product lines, you need to do something.

But how do you fix a toy that isn’t broken? Can you make something new, out of something old, that appeals to how kids play today? And how do you convince a huge, legacy company like Mattel that they need to invest in change, big time?

Chris Down:
So from a product development point of view, we knew, if we were ever going to take a risk and consider new ways to play now and in the future, this would be the moment. If ever we were going to do it. This was the time.

It was a risky time because Mattel was in crisis: other toy lines were struggling and they couldn’t afford Hot Wheels crashing and burning. But the story you’re about to hear – how an innovative team inside Mattel works in a new way to change this iconic toy, work that ends up changing Mattel as an organization – well, it’s not going to cross the finish line like you might be expecting…

I’m Gabriela Cowperthwaite and this is Teamistry — an original podcast from Atlassian, makers of teamwork software like Jira, Confluence and Trello. This show is all about the chemistry of teams – and how some teams can change entire organizations and even whole industries with new ideas and unconventional ways of working.

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Chris Down:
My name is Chris Down, and I’m the chief design officer for Mattel. And what that means is I manage product development and product design and packaging across our various brands.

Chris’ love of cars was inherited from his dad, who was from Detroit—Motor City—and a major car guy. Not to mention an industrial designer. So it was kind of inevitable Chris would get into Hot Wheels as a kid.

Chris Down:
I had one in particular, this was in the mid ’70s, and there was this, imagine a green sports car with red lightning bolts on it, and a Chrome interior and a circuit board on the back… it had this printing in tiny, tiny, like eight point font that said 200 miles per hour. And in my head it was like “2000 miles per hour” that thing could go the speed of light.

As much as Chris loved Hot Wheels as a kid, he never imagined a career in toys. But after studying industrial design, he landed a job at Mattel and became entranced by the story of Hot Wheels, going back to its start. That’s when co-founder Elliot Handler, after watching kids playing with their kinda slow, clunky old matchbox cars, tasked his engineers to come up with something better.

Chris Down:
The story goes that he took the first Hot Wheels car that his head of engineering, who is also an ex rocket scientist, brought into him, and he rolled it across his desk. And as the story goes, he said, “Those are some hot wheels”

That’s the thing, though, do most kids today find Hot Wheels just as exciting as back in 1968?

Chris Down:
The toy industry is a risky business. It’s hit-driven. You can’t predict what a four-year-old, five- year-old, 10-year-old is going to be into day-to-day let alone a year to a year and a half in the future, which is kind of the timeline that we make our toys against.

It’s not just that. Something we’re hearing as parents is that kids are wanting more and more screen time and that it’s starting when kids are pretty young.

Chris Down:
Kids consistently ask and demand for screenplay, whether that’s just video games, digital games, apps, or drawing on the devices, but there’s a fascination with the devices.And what we saw was a little bit of an alarming acceleration of kids at a younger and younger age becoming just as interested and then more interested in digital play.

Well, in 2016, this all came to a head at Mattel just two years before Hot Wheels was to celebrate their 50th anniversary.

—————-

Ron Friedman:
I am Ron Friedman, currently head of Go-to-Market for Key by Amazon, used to work at Mattel, as marketing manager for Hot Wheels. I grew up in Mexico. And I remember playing with my Hot Wheels to either story tell or build a track and see my cars speed through the structure that I had built with my bricks.

When Mattel studied how kids were playing with their toys in 2016, it’s fair to say that’s the kind of reaction they were expecting from the new Hot Wheels sets. At the beginning of the podcast, we heard about a video with a kid building a Hot Wheels playset, like Ron used to…

Ron Friedman:
And he said, “Imagine doing this for an hour” as if it was torture.

Even that basic joy of just rolling a Hot Wheels across the floor didn’t appeal any more.

Ron Friedman:
And he put the car on top of the play set, let it go, and you see a car roll down the hill and stop when momentum finishes, and that’s it. And he was like, “That’s all it does.” Everyone in the team that saw that video felt a punch in the gut where we were all really hurting inside because this is something that we had put a lot of effort in building, and it was meant to drive joy and elation with kids, and it was doing the exact opposite.

This was an existential threat for Hot Wheels. And it was coming at a bad time for Mattel. They had just lost a major brand license and a fashion doll brand was rapidly shrinking. They couldn’t afford Hot Wheels also suffering a downturn. Chris Down.

Chris Down:
And it’s a little unsettling because I think that the skeptics or the fatalists in the room might suggest, oh, toys are dead. And I’ve heard this headline before, the physical toy is dead, and it’s going to be all about video games and digital. And to me, it felt more like a door opening than a door closing. This new play pattern was either an opportunity that we were going to investigate, or it was going to be one that we potentially ignored and even potentially at our peril.

But where Chris saw an opportunity to bring together physical and digital play, other folks at Mattel saw potential problems.

Chris Down:
In some ways we had become a bit shy of digital and physical. The investment and the complexity and all of those things were things that, for Mattel, especially in a little bit of an overall corporate slump, taking the kind of risk and expense to engage in something that is outside of our core toy making discipline, those were a little bit harder at that moment in time.

But what was Chris going to do? And with Hot Wheels’ 50th anniversary just two years away, could they do it in time?

Chris Down:
And one of the ideas that fairly early came about was look, we’ve got this Hot Wheels car. It’s the most ubiquitous toy in the world. The number one selling vehicle. I mean, we’re making half a billion of them a year. What if there was a chip in every car or a chip in some of the cars? What might you be able to do with that?

Even though Chris wasn’t sure what this could become, he was looking at “mixed play” as a solution, combining physical and digital. He called it “Hot Wheels i-d”

Chris Down:
The idea of being able to determine who crossed the finish line first, or how fast your car actually went based on more than just what I see with my eyes was hugely compelling. So for me, the idea of mixed play and Hot Wheels became really, really vivid.

And even with the dire warnings from that tortured kid, there were still many folks at Mattel who weren’t sold on mixed play.

Chris Down:
There were a lot of people sitting around the table that are like, “Don’t fix what’s not broken. Why would we do that when we have decent growth. We know what the business mechanics of this category and this brand are. Why would we invest in something and disrupt?” At the time we didn’t have a structure or an organization that actually supported this type of product. Not in a way or at a scale that we were looking at it.

In order to innovate, to keep up with what kids were looking for, not only would “I.D.” require a whole new approach to building cars and tracks, even targeting a slightly older demographic of kids, through the Apple store instead of Walmart, it would take longer than development usually did. Long enough that they might miss the 50th anniversary.

And, most importantly, there wasn’t a team in place to do all this. Not to mention someone who could lead that new team. The way Mattel usually worked is that there were separate teams for different aspects of the company like design, manufacturing, marketing. And they would sometimes come to the table with their needs, not necessarily the needs of the product they were all working on. But this wasn’t going to work if they wanted to create something entirely different and on such a tight timeline. So, Chris knew Hot Wheels i-d needed its own team with expertise from each discipline focused on one clear objective: doing whatever it took to launch this new mixed play toy. And Ron Friedman, the marketing manager who felt the kid research video was a punch in the gut, felt that the new team needed its own champion.

Ron Friedman:
There was more of a design by committee type of working relationship between the team. And there was a lot of disparate opinions sitting around the table, trying to pull to their side of the table. And it was sort of like a tug of war all the time within different aspects, especially between design and engineering. And I think that that’s where we needed to change because we needed someone that would be like the CEO of the product, that would be able to arbitrage between those different areas and set a vision of what we needed to do, and even make decisions on postponing launch, or changing the price structure, or adding or removing a feature that didn’t require a debate between the team.

Ron was right, Hot Wheels i-d needed its own CEO. What Ron didn’t know is who that person should be.

Ron Friedman:
And I remember a moment where we went into Chris’s office with another colleague of mine, Bert Ruler, who worked on the innovation side and on the tech team, and we were talking about this. “…We need someone to be the real product manager, that will be able to rally the team, have the singular vision and lead the team forward when we’re facing with all these decisions… And who’s making those calls?”And Bert turned to Chris and said, “But Chris, you already have your product manager. It’s Ron. He’s sitting right here.”

For the first time at Mattel, a team would be led by someone not based on their role in the company hierarchy, but based on the role as a manager of a product. This new way of organizing would speed up decision-making and create, in the team, a sense of ownership and trust. That the decisions the team made would “stick,” even after they were shared with upper management.

Ron Friedman:
It was both incredibly scary and incredibly exciting.

But it was also a pivotal step towards something completely new and revolutionary for Mattel: a dedicated product team that brought together expertise from around the company.

Ron Friedman:
And it required a pretty big team of functional experts that span across product design to product marketing, to engineering, to mechanical engineering, to electrical engineering, manufacturing, quality control, packaging. It was a very large cross-functional team that needed to come together to figure things out.

Chris Down:
Creating kind of a dedicated Hot Wheels i-d team, there is an aspect of belonging, that when people see kind of why you’re doing something and what the overarching objectives are, that goes beyond just the product or the item that you’re doing, but really they’re believing in the future of Hot Wheels and the potential and the learning that we’re going to get out of this, the energy is infectious.

The team needed that energy because, as Ron points out, what they were doing was something brand new for Hot Wheels.

Ron Friedman:
I think the biggest challenge was, again, you have a requirement for a new chip that needed to be read from the bottom of a vehicle, that needed to be able to be read at over 40 feet per second when the car was running. And you needed to maintain the same aerodynamics, and needed to maintain track compatibility for all of our cars. And combining those things together was a really difficult challenge that the team needed to rally around and figure it out together.

Ricardo Briceno:
The idea was equally thrilling and terrifying.

Ricardo Briceno is the Vice President of Franchise Management at Mattel but in 96 was the head of brand marketing for Hot Wheels. One of his main concerns about putting a chip inside a car was cost. Most Hot Wheels cars cost, and have always cost, a buck a car.

Ricardo Briceno:
So the idea of undoing all of the work that we had been doing in cost reducing and controlling cost, by now all of a sudden adding a chip to a car was terrifying. And if we need to increase prices, what are our partners at Walmart going to think? So it’s not like we were playing with some little line, experimental line on the side. This is Procter and Gamble changing entirely the formula for Tide, or for Pampers diapers. “I know that there’s something really interesting here but there’s a lot that can go wrong.”

It wasn’t as simple as saying “let’s put a computer chip in a toy car.” Who would make the chips? How would that change manufacturing the cars? How would tracks need to change? Not to mention, building and selling an accompanying app. A relatively simple toy would have to become its own toy line.

Chris Down:
So because we’re a traditional toy team, the marketing team, the brand marketing team, the product design and development team, we’re really good at making traditional toys. Something like this, you’ve got software development, you’ve got electronics development, including a unique manufacturing source. So in short, it was a very, very rude awakening as we started considering what had to be true in order to make this happen.

This was a tense time for the team. And not just because of the challenge they faced building this new toy line.

Ron Friedman:
There was a lot of skepticism at Mattel that we could do it, and did we have the right team to build it? Did we have the right technical expertise? Could we build a quality game?

But Ron feels that having challenges coming at them from all sides was actually helpful.

Ron Friedman:
I think that having skeptics and antagonists within the team and within our leadership structure, within our steering committee, was incredibly helpful, because it hardened our processes, it made us better. It ensured we were answering those tough questions and raising up to the challenges where they arose.

The Hot Wheels i-d team hunkers down for the next 12 months, not only manufacturing a toy line that was brand new for Mattel, but planning a whole new kind of product launch.

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Chris Down:
Launch day comes up and I have to describe this. It’s summer of 2019, June 14th, 2019, the worldwide launch date at Apple stores. We have a launch party live at an LA based Westfield Century City Mall, where there’s a big Apple store and we took over this outdoor courtyard. So we have full-size Hot Wheels cars out there, we have a bunch of play areas set up and there’s a big stage. We had our internal team from engineering and design and marketing and PR. I mean you name it, everybody was there.

Ron Friedman:
And I think it was like maybe 5:00 A.M. in the morning, we were setting up the event, the app had just released the night prior, and we were just waiting with anticipation, “Will people show up? Will kids have fun? Will the toy sell in the Apple Store?”

Chris Down:
And the moment that is so clear in my head and I will remember forever is walking up and there being a line out the door at the Apple store. And on the stage, there’s a Hot Wheels i-d set, set up in a drag race configuration and a huge, I mean, it must have been like a 50 foot screen behind the stage kind of elevated up jumbotron style. And I will never forget it. There’s an announcer up there, there’s a big leaderboard showing the best times for all of these Hot Wheels cars and this kid launches it, it goes through a loop down the drag race and pops up his high speed. It was like 432 miles an hour or something like that. And I was just blown away by this little car that you can put in your pocket and the results in what looked like an arena sports event up on the jumbotron giving the live real-time speed of these cars as this announcer up on the stage was basically winding the audience up.

Ron Friedman:
It was an incredibly proud moment. The only way I can describe it was almost, not quite, but almost like the birth of your child.

Chris Down:
People yelling and screaming and hooping and hollering. That was a moment that really, it felt like the perfect moment to illustrate what this toy could do that it couldn’t have ever done before.

Ron Friedman:
And I went to the shelf, and I actually grabbed a car and bought a car because I wanted to have a receipt, which I still have here in front of me, of that day when Hot Wheels i-d launched, and I was one of the first to buy one of those Hot Wheels cars in the Apple Store.

Chris Down:
Looking around and in that crowd were the dozens and dozens of people that were not just involved, but took a risk. They had belief and they worked more closely than probably they would have ever worked on any other type of project inside of Mattel, standing around enjoying this moment.

Hot Wheels i-d Commercial
“I can do 15 laps with two cars.” “Prove it.” You can scan any Hot Wheels i-d car, connect the new smart track, and race against the clock. Are you the master of laps? Now you can prove it, with new Hot Wheels id. Set comes with 2 cars, smart device not included. App and wifi required. Now available.

Here’s where you’re expecting me to say “Hot Wheels i-d was a massive success.” But that’s not what happened. Steve Totzky is Mattel’s Chief Commercial Officer.

Steve Totzky:
I think from a commercial proposition, I would say it was unsuccessful. Unsuccessful versus our ultimately ultimate goal and aspirations. It certainly did not hit our volume expectations, and I think it had trouble connecting with the consumer in the way we wanted to, both in its physical manifestation, as well as its digital manifestation.

But Steve and the leadership at Mattel didn’t think Hot Wheels i-d was a failure because it changed how toys are developed at Mattel. Since the i-d launch, Mattel has embraced product teams like those seen at tech companies. Product teams who’s process is led by design and centered on the consumer. Plus, the experience of giving the product manager…the product’s CEO…the ability to make decisions – without worrying that those decisions would be reversed by leaders outside the project – gave the team a real sense of ownership over the product’s success.

Something else happened as a result of Hot Wheels i-d. The team created a culture of “yes” at Mattel.

Ricardo Briceno:
I know that this process, along with other things, definitely created and solidified the culture at Hot Wheels of saying yes to everything. Or for the first answer to be yes. And to be open to possibilities. To pursuing possibilities. To think about what could be and not worry too much about, what are the potential roadblocks? Or at least approach things from a “yes and” point of view, while at the same time being very thoughtful about making sure that things are executed properly.

Steve Totzky:
I think we were inspired by the boldness and the innovation and I think when other product teams were looking at what Hot Wheels was trying to do, it was kind of inspirational. And I think it was shaking up the company to think more boldly, to take bigger swings. So that legacy, I think, lives on today.

Chris Down:
The belief that we can do things that are different, that are difficult, and that are hard, both from a what you make, how you sell it, and how you market it point of view was proven out. So the muscle has been further developed and I believe that we are set up to be more effective at taking these kinds of risks now and in the future. And we’re seeing that manifest through our behaviors today.

This culture of “yes” that Chris is talking about means Mattel is supporting new product development that’s outside of their old toy making process. Toys that are in the pipeline right now and launching soon and that might be more successful than i-d has been. But they’ve all been inspired by or adopted aspects of the i-d team’s approach.

Ricardo Briceno:
At times organizations focus too much on everything that could go wrong and that doesn’t allow revolutionary ideas to even come to fruition. People are gonna come up with crazy ideas. We need to foster that ideation process and allow people to come up with crazy ideas and give those ideas a chance before we write them off because it’s hard, it’s complicated, or so and so could go wrong. Because if all you focus is on the things that could go wrong, then you never do anything different.