Enjoy Your Green Grass 01

Over many years of visiting companies, I have been amazed at how many times that companies which diversified into new industries and businesses later retrenched because their base "slow growth" business turned out to be the fastest growing area in the company after all.A good lesson is to assume that you are missing the best opportunities to further exploit what you are doing today, much like the children running a lemonade stand are on a hot summer day.

Hasbro, the toy maker, was finding itself driven to distraction by the Internet. With a long history in the toy and game business, the lure of interactive offerings seemed irresistible.Temporarily soaring stock market valuations for dot-com made it seem all the more logical. The company also did well in attracting top talent, including Ms. Meg Whitman who later left to head e-Bay.After fast growth and steady, but low, profit margins in 1997 and 1998 from interactive operations, the company lost a ton in these areas in 1999 and 2000. Seeing continuing problems, Hasbro sold its stake.At the same time, the company pulled in its horns in other ways. Manufacturing had been scattered as a result of many acquisitions, and was then consolidated into three factories worldwide.

Overheads were reduced and simplified by eliminating an unsuccessful matrix-style organization that consultants had recommended.With the decks cleared of old problems, how could the company's business model be improved?As a first step, the company began to look at its old businesses in new ways. Looking around, the company noticed that some of its long-time franchises had a lot of untapped potential. With some well-done development and marketing, much growth could come from existing, well-known brands.For example, many people remember playing with Tinker Toys and Lincoln Logs as children. In recent years, both brands have been increased to vast multiples of their original size with new products and more marketing.Similar innovations with new types of the popular, classic game, Monopoly, also yielded substantial growth.

The average household went from owning one version of Monopoly to having several in the process, as Hasbro increased the game's relevance and fun for the players.Hasbro's earlier eagerness to add franchises focused the company on adding fish ponds through licensing and acquisitions, but management didn't always take the time to fully fish those ponds once they were acquired. The company had been operating like it was fishing with these brands using only one type of lure, one that was unattractive to many potential customers.Next, the company noticed that it did have some cutting-edge, artificial intelligence that was making profitable progress. The company had been a pioneer with Furby, and recently added Poo-Chi, an interactive electronic puppy using artificial intelligence.Academic researchers have recently been making remarkable discoveries about how much interactive toys that learn can accelerate human learning. By nurturing this technology and learning how to apply it more helpfully for youngsters, Hasbro has the potential to establish vast new dimensions of and applications for toys.