Toying with innovation

Written by Rick Spence

In Anton Rabie’s line of work, product lifecycles are shrinking fast as jaded customers demand increasing innovation. Finding new products is tough, but getting it right could mean millions in new sales worldwide.

Does Rabie work in high tech? Fast food? The auto industry? None of the above. Rabie is president and co-CEO of Toronto-based Spin Master Ltd., Canada’s fastest-growing toymaker. But his adventures in the ultra-competitive world of yo-yos, toy airplanes and kids’ furniture offer many lessons for growth-minded entrepreneurs in other fields.

In less than 10 years, Spin Master has grown from a humble startup, founded on $10,000 in capital, to one of Canada’s largest toy companies, with sales in the hundreds of millions. In a speech last month to entrepreneurs and investors at the Toronto Venture Group, Rabie credited his firm’s success to its ability to find world-class products ahead of its giant competitors — household names such as Mattel and Hasbro.

“Product is king,” says Rabie. “We search the world for great product.”

Most of Spin Master’s hit toys — such as Air Hog flying airplanes, or the McDonald’s McFlurry Maker — originate with independent inventors. Others spring naturally from new trends (hit TV shows, video games, etc.). Rabie says Spin Master’s job is to be the first to spot trends, as well as the first company that marketers and inventors go to when they are looking to license new toys. Here’s how Spin Master does it.

Put feet on the street The best new toy concepts come from three countries, says Rabie: the U.S., the U.K. (think Harry Potter) and Japan (one word: Pokemon). Spin Master’s managers spend most of their time talking to Americans, but they recently posted a senior executive to Japan, to talk to marketing and entertainment companies to scout the latest trends. “You’ve got to go where the great ideas are coming from and get these people to show them to you,” he says. “You have to get someone embedded in these countries.”

Pamper your innovators According to Rabie, “We treat our inventors better than we treat Wal-Mart” (one of Spin Master’s biggest customers). Recently, for instance, Spin Master feted 25 U.S. toy inventors at a fun weekend getaway in British Columbia. Its cost: $30,000. “But the ROI is just mind-boggling,” says Rabie. “We go that extra mile because we want them to show their products to Spin Master before Mattel.”

Be obsessed with new ideas Whenever he meets with retailers and other key business partners, Rabie slips in his key research questions. In a recent meeting with the executives of, he posed such questions as “What are you seeing that’s new?” and “What has excited you most in the past 10 days?”

Asking questions such as these paid off when an Australian distributor mentioned that flip-out foam sofas for young kids were suddenly hot. But he criticized the fabric designs selected by the furniture manufacturers, and suggested that a toymaker who knew the licensing business could sell a lot more products by featuring popular kids’ characters, such as Dora the Explorer and Barbie. That’s now a $20-million business for Spin Master.

Know your competition “Competitive intelligence” is common in the toy industry, where hit products are copied almost overnight. Rabie said he’s arranged to regularly receive confidential data from a major retailer on its 100 top-selling toys. That lets him spot trends and gauge how his products are faring against the competition. Rabie also spends a week every two months prowling the toyshops of North America. And he regularly visits a favorite toy store in Toronto, after hours, to talk with the owner about trends and new opportunities.

Make idea generation part of your company’s culture Every month Rabie hands out a prize to the staff member who has come up with the best idea to propel the company forward. Recently, one staff member suggested that Spin Master promote this year’s 100th anniversary of powered flight for 2003. That one idea led to additional Air Hog sales of $10 million.

Qualify your ideas fast Spin Master runs its new ideas by experienced market veterans to check their potential. Consulting with an industry expert helped Spin Master avoid a big mistake recently, when the company was looking at marketing a $50 videoconferencing adapter for the red-hot Game Boy Advance. The company dropped the idea fast when the expert said he had never seen a Game Boy accessory succeed that was priced over $20.

“You’ve got to put your ego in your pocket,” says Rabie.”Your company is not going to grow from your ideas, but from the ideas and experience of the people around you.”

© 2003 Rick Spence

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