ALISON BEARD: Welcome to the HBR IdeaCast. I’m Alison Beard.

Lots of companies talk about transformation, but few successfully reinvent themselves while staying true to what made them break through or stand out in the first place. Mattel is one of those rare success stories.

In recent years, the company has evolved from a traditional toy manufacturer into an IP-driven entertainment business, turning brands like Barbie into cultural phenomena that extend far beyond the toy aisle.  That transformation took a lot – but most importantly it took strong leadership.

Today’s guest is Mattel CEO Ynon Kreiz. He joined me as part of our recent HBR Leadership Summit. And we spoke about rethinking talent, redesigning organizations, building the right technology, and never forgetting the customer.  Here’s our conversation.

Ynon, thank you so much for being here today.

YNON KREIZ: Hi, Alison. Great to be here.

ALISON BEARD: As I said, you have gone from toy company to maker of movies, games, live events, and more in a very short time. The most notable example, of course, being the Barbie blockbuster three summers ago. So, how have you reorganized the business and shifted your talent strategy for this new era of Mattel?

YNON KREIZ: It has been an evolution of our purpose and strategy from being a toy manufacturer company, manufacturing company that was making items, to become an IP company that is managing franchises. And we evolved our strategy to grow our IP-driven play and family entertainment business.

And this really brought together two very important concepts. The first is the continued expansion beyond physical product. And the second is an increased orientation around a holistic brand management to capture the full value of our intellectual properties across both toys and entertainment. Toys are foundational to Mattel, and we believe there is significant upside in the industry, but success in our toy business will drive success in entertainment, and success in entertainment will drive even greater success in toys.

So, we’ve been through a period of transformation. There was significant focus on operations, improving how we work. We went through a period of optimizing our workforce. We reduced the non-manufacturing workforce from 13,500 people to 8,000 people. And within the 8,000 jobs that we kept, we made even more changes in terms of strengthening capabilities and bringing new leadership to certain key parts of the company while we continue to drive innovation and expanding our core business.

ALISON BEARD: So, when you make big changes like that, when you reduce the workforce, when you’re cutting costs in some areas, even as you’re adding in others, that can be tough for an organization. And I’m sure a lot of our audience members are maybe being asked to do this in their own organizations right now as a result of AI. So, as CEO, how do you make those tough decisions? And then how do you bring the workforce through it in a way that keeps them excited and engaged to stay?

YNON KREIZ: I think it’s really important to communicate and be very clear about the vision and the purpose. And very early on, when I started, what we did is we took the old strategy that was in a binder that was three-inch thick, and we redefined the strategy and brought it down to one page. It doesn’t make it necessarily easy to execute, but at least it’s very clear to understand. And we communicated the strategy across the organization whereby every single employee in the company knows exactly what they need to do at the start of the year and how that ladders up to the overall purpose and objectives of the company overall. So, clarity and being crystal about your purpose and mission we believe is very important to our success.

ALISON BEARD: And then what were the key steps in revolutionizing the culture of Mattel, being more innovative, more creative, basically to build these muscles of exploring what else could be done with your existing assets? How do you get people to start thinking more out of the box, especially when it comes to new technologies like AI?

YNON KREIZ: At the core, Mattel is an innovative company. And what we wanted to do is to bring that out and amplify that beyond the day-to-day operations. And it’s not that we don’t manage a complex operation. We make product. We make physical products. We sell toys and different product in over 500,000 stores globally. This is about 75 percent of our business. The rest is online retail and e-commerce. So, there is complexity in the business, but we simplify that. We reduce the number of items that we made, the number of SKUs, by over 40 percent to make sure that what we do is actually productive and additive.

And with that, we also continue to evolve our purpose as a company which is to create innovative product and experiences that inspire fans, entertain audiences, and develop children through play so that everything that we do is through that lens and to make sure that our work is channeled for that purpose and a very clear mission for the company so that we all understand what we’re trying to achieve.

ALISON BEARD: So, you restructured around franchises. How did you shift your thinking in terms of the talent that you wanted to have and bring in?

YNON KREIZ: This something that we are very focused on every day. It is all about the people. We all know that, especially in a company like Mattel, where you try to really amplify the innovation, as I mentioned earlier.

And perhaps, in line with the shift that we made, the biggest change is to make sure that people who run the business today are brand managers, not just people who understand toys, and we do that very well. We are a leading player within the toy industry, and we have the best people in the industry working for Mattel. But it was also important to make sure that our people focus on brand management holistically.

This is not just about physical product. It’s about understanding the entire ecosystem with the consumer journey and make sure that toys is a still very fundamental part of our business. But beyond that, the opportunity is to capture full value from our IP in other highly accretive business verticals, and you can only achieve that if you change and evolve the orientation around a holistic global franchise management.

ALISON BEARD: And then you have this strategy document. You have the culture. You have the talent in place. How do you set up systems to ensure that you’re executing on that as quickly as you would like, given all the new initiatives that you green-lit when you came in?

YNON KREIZ: We had to evolve the back office and continue to upgrade that. It is a journey and it’s still ongoing. For a company that has been around for 80 years, you’re bound to have legacy systems and processes that you need to upgrade and evolve. And this is part of the job. This is part of the journey. And we all know that, while we do make physical product, our brands are so much more than toys.

Barbie is not just a doll. Barbie is a cultural icon, and Hot Wheels inspired the child to pursue the next challenge. And that is core of what we do. So, in order to do that and continue to infuse brand purpose and clarity to our mission, you have to rely on systems and processes that enable you to achieve that at the high level. And it is an investment. We believe it’s an important investment to make, but it is part of the day-to-day, and we continue to focus on execution.

ALISON BEARD: Speaking of investments, we’re going to talk about gen AI in every conversation today. How are you building up that technology in your organization? And what role is it playing internally in helping you all operate more efficiently?

YNON KREIZ: We announced a partnership with OpenAI to leverage their technology across our business. And the way we think about AI will manifest in two sides of the company. First, it is how we work and how we do what we do. This is about accelerating time to market, amplifying innovation in terms of design and capabilities that we didn’t have before, and operating with much greater efficiency, improving our execution.

The second part is, how do we infuse AI into product and experiences to amplify and elevate existing play patterns? This is not about speaking a chatbot Barbie, for example. But it is about how do you infuse the technology and do that in a way that will elevate the experience and create a much more engaging and satisfying play pattern? We, of course, are very mindful of safety, privacy, and all other important factors, given the customers and fans that we serve. So, clearly we want to remain a trusted partner for parents and families in raising the children. In that regard, we take what we do very seriously and make sure that whatever we do with AI will be responsible and will serve the purpose of elevating the play pattern without compromising on safety, privacy, and other important issues.

ALISON BEARD: I want to dig into each of those sides of your AI use separately. So, first, in terms of your internal operations, could you give me an example of where you’re seeing gains in that internal use and employees excited about it rather than scared about it?

YNON KREIZ: Well, we actually see the organization embracing AI, and we believe you can infuse and integrate AI in almost everything that we do day-to-day. Every one of our employees has access to the latest technology and most advanced AI capabilities, and we challenge and encourage people to integrate that even in the most simple tasks.

When it comes to design, for example, physical toy design, you can only imagine the capabilities that you now have at the tip of your fingers to shorten the development cycle and reduce work that used to take weeks and even months to a matter of days. So, efficiency there is very important. Time to market, especially in our business, is crucial. What we do is much more akin to fashion and, of course, entertainment. So, you have to be very close to the consumer. You have to be in sync with cultural trends. And in many cases, you are setting the cultural trends. And to do that, you need to move fast. So, having tools that can accelerate time to market and reduce the sequence from product ideation all the way to having product on shelves or coming up with new ideas that will otherwise take months to develop is a crucial improvement in how we work.

ALISON BEARD: So, is your strategy to offer these best, greatest tools to the employees and let the best practices bubble up?

YNON KREIZ: Well, we have an office of AI, and that’s where we set up certain guidelines. And we also are very mindful of IP protection. Not everything is set out there in the optimal way in different systems and different platforms. So, we have to be our own best guardian of our own IP and, of course, how we integrate the technology whenever we work with third parties. So, we do have our own guidelines. This is part of the early start of the journey. And we all know that this will evolve, and there’s more to come, but this is where you have to be innovative and at the forefront of technology but, at the same time, see where the industry is heading and be mindful of challenges and potential pitfalls.

ALISON BEARD: So, then, on the consumer-facing side, you talked about responsible AI, privacy protections. How are you working with industry partners to ensure that AI is developing on that good path?

YNON KREIZ: Child safety and responsible engagement with fans is what we do. This is one of our core capabilities, core competences. Our brand promise is trust, and this is what we represent. When parents buy a product that has the Mattel mark on it, we want them to trust that a lot of thought and consideration went into that product and how it was developed, what purpose does it serve, and how it will impact and benefit their child.

This also applies to how we think about AI and how we infuse AI into our product and experiences. And it’s not just about AI, for that matter. It’s all different type of technologies and capabilities and tools that we use to develop the best product and create the best experiences.

ALISON BEARD: When you have a success as big as Barbie was, there can be a temptation as an organization to just sort of try to replicate it exactly, which obviously is hard to do if you don’t have Greta Gerwig and Margot Robbie again, but how are you thinking about repeating that success, tweaking the formula, for other franchises?

YNON KREIZ: Well, the goal of the Barbie movie was not to create a film that will drive toy sales, necessarily. And it wasn’t even about making a movie for the purpose of making a movie. It was about creating a cultural event. And this goes back to my point earlier that our brand stands for so much more than physical product. They are cultural icons. And we wanted to bring that to bear on the big screen. The approach is to collaborate with leading filmmakers and trust their vision and let them reimagine our brands and create standout quality pictures that will be based on our brands and represent our brands but will resonate in culture across the world. This is exactly what we did in partnership with Greta Gerwig on the Barbie movie with the incredible cast of Margot Robbie and Ryan Gosling and other incredible artists.

And while we know that not every movie will be the next Barbie, it is the same approach and the same relationship that we’re looking to build and foster with prolific filmmakers. And we’re very proud to be working with some of the most creative and innovative filmmakers of our generation. We’re about to launch our second movie, Masters of the Universe. This is a completely different genre, different demographic, different look and feel, but very much in line with our approach to trusting the creator, Travis Knight in this case, and let them reimagine and interpret our brands and make them current and relevant to today’s audiences. It is a great movie, and I think it will represent the breadth of our offering from the pink world of Barbie all the way to the dark world of Eternia and everything in between.

ALISON BEARD: Why are you so confidently betting on IP and traditional media like theatrical releases in a world when AI and social media are really disrupting how people both make and consume content and also really overcrowding the market?

YNON KREIZ: Well, we own one of the strongest portfolios of children and family entertainment franchises out there. In today’s world, the importance of big brands is higher than ever. In a world of unlimited shelf space, ubiquitous distribution, so much competition for share of mind, it’s getting harder and harder to reach and engage consumers in aggregate audiences. With our brands, we believe that we can make a difference, not just in toys, but in film, television, consumer product and merchandise, live experiences, publishing, music, and so much more.

We are pushing into open doors. We see that our brands resonate. When we set up an UNO experience on Fortnite, this is a platform that has over 150,000 different islands or experiences. UNO went up, percolated to become a top 10 property on the platform on its first day with zero marketing. Barbie was the number one branded game on Roblox for more than a year with no marketing, just by sheer existence. So, we know that people are proactively searching and looking for our brands and want to engage with our brands.

We still need to create an incredible experience and satisfy their curiosity and demand to be entertained and inspired. This is our job, but we know that we start the journey with a built-in fan base, an engaged, emotional fan base that has an emotional connection, I mean, and that is a very important competitive advantage for Mattel and a core part of our strategy. And it’s not that we’re moving away from toys, but looking to build upon that and on top of that and grow our business in highly accretive verticals that are driven and dependent on big brands.

ALISON BEARD: Well, we have some great questions coming in from the audience, and there’s one on competitive advantage, so I want to turn to it.

Bob Rowe, who works on executive direction and portfolio management at Morgan Stanley Parametric, asks, “As you reduced your SKUs, that is variety of products, how did you think about ensuring that you didn’t degrade your competitive advantage versus competitors? Feature bloat is real and, many times, due to a misunderstanding of how much is required to differentiate.” So, he’s wondering how you thought about that.

YNON KREIZ: It is a combination of art and science, what to make, how much you actually manufacture, and when do you actually place it on shelves to satisfy demand. We specialize in doing exactly that. We understand the consumer. It’s a combination of getting ahead of the consumer because, in some cases, the consumer doesn’t yet know what they would benefit or enjoy engaging with. And we need to imagine that and be ahead of the consumer in many ways.

But, ultimately, it is about employing the right judgment, the right expertise, the right capabilities backed by research. So, it’s not just intuitive and based on our own expectations or imagination, but it is based on deep research that we do across the organization with Play Labs in different locations around the country and continue to make sure that we understand the consumer, we understand where the industry is heading, we evolve our own demand creation, which is different for marketing. It is about, how do you create demand across the year and continue to elevate that relationship, that emotional relationship, that people have with your brands?

And I would say emphasize the point that the biggest change culturally in how we work was to realize that people who buy our product are not just consumers. They are fans. They are fans that have an emotional relationship with our brands, and this is where we stand apart from other brands that sell product off a shelf. And in our case, we need to satisfy that emotional relationship.

ALISON BEARD: I want to hang out in a Mattel Play Lab. That sounds like a really fun job for whoever does that in marketing.

So, another great question from Dr. Indira Bunic, I hope I’m pronouncing that right, CEO and founder at EmpowerU. She asked, “From a governance and institutional accountability perspective, where purpose must be embedded in structure and not just narrative, how did the board’s role and accountability model change as Mattel transitioned from a product company to an IP company? And what governance mechanisms ensure that purpose doesn’t become marketing language?”

YNON KREIZ: Yes. Many of the things that I am describing here is our own internal vocabulary. We infuse brand purpose in each of our product, and often you wouldn’t even know it outside the company. In certain cases, it’s very obvious. In some cases, it’s all internal. In the case, we all know that Barbie’s purpose is to inspire the limitless potential in every girl. Or, Hot Wheels is to ignite the challenge the spirit in every child. But other brands that have a defined purpose we use for our own internal work, and that is the lens through which we develop product and think about the brand journey.

The other thing that we do is make sure that we infuse cultural relevance into everything that we do. And this is about taking brands that have been around for decades that stood the test of time that we know stand for quality and deep engagement over years. But to today’s fan, they don’t care that Barbie has been around for 65 years or that American Girl is celebrating her 40th anniversary this year, only to the extent it’s relevant to them today.

And we need to bridge that. We need to traverse from the past, the legacy, the heritage, the deep quality that is vested in our brands, and transpose it to today’s world to make it relevant and current to today’s fans. And this is what we did with the Barbie movie. We made it relevant to today’s fans, to today’s consumers, to today’s audiences. And this is a very different approach from living in the past and dwelling on legacy brands that have not evolved with the time.

ALISON BEARD: Melissa Konick, who’s a partner at Robertson, Anschutz, and Schneid, and Crane and Partners, PLLCasks, “What advice do you have about how to create a trusted brand in the first place? So, before you can build that cultural relevance, you need the trust. So any thoughts on that for other organizations trying to do it?”

YNON KREIZ: Our journey is a bit different, obviously, because we start with an existing portfolio of iconic brands. However, I would say that the common theme that would apply to any brand is to make sure that you define a clear purpose, what is the reason for people to engage with your brands, what is behind the look and feel of it, the logo, the product, what is the reason people will have an emotional relationship with your brand.

And beyond that, it is about, how do you ensure that the brand is authentic and organic? Especially when you market and engage a product with children and families, you have to be true to the brand DNA, you have to be authentic, and it has to be real. You cannot fake marketing campaigns. You cannot fake marketing slogans, and especially with children who are the most sophisticated consumer out there. We believe that authenticity and organic relationship with fans is paramount. It starts there. And once you establish that relationship, and there’s a built-in trust, you can continue to evolve and do things beyond that. But it is all about authenticity and organic relationship.

ALISON BEARD: Because you’re a toy manufacturer, I have to ask about the current uncertainty over tariffs and fuel costs. I’m wondering how you’re planning, budgeting, or even exerting political pressure to protect yourself from negative shocks like these.

YNON KREIZ:  We have a very sophisticated advanced global supply chain that is very agile and experienced in dealing with changes, let’s put it this way, and different challenges. And we continue to watch the tariff landscape and geopolitical developments. Of course, this is part of our day-to-day. We factor that into our planning, into our guidance, into how we communicate internally, and continue to remain agile in terms of being able to respond and adapt and shift to a changing landscape. And it’s not just about tariffs. Today, it’s geopolitical unrest. It used to be COVID and other challenges. And at the core, we remain agile and able to adapt and respond in real time.

ALISON BEARD: One last question, and it’s a fun one from Julia in Boston: “What was your favorite toy to play with as a kid?”

YNON KREIZ: I grew up playing Hot Wheels. I love the product. It’s an incredible innovation, really, still today. If you take a car that we sell for $1.25, and you look at the complexity, the articulation, the performance, these are performance cars. It’s inspiring. And I love touching and feeling these cars still today.

ALISON BEARD: I love them too. Ynon, really appreciate your time. Thank you so much for joining us.

YNON KREIZ: Thank you so much.

ALISON BEARD: That’s Mattel CEO Ynon Kreiz, speaking to me as part of the recent HBR Leadership Summit.

On Tuesday, Adi speaks with The Atlantic staff writer Josh Tyrangiel, about how AI companies can start really solving problems to make our lives better.

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Thanks to our team: Senior producer Mary Dooe, and senior production editor Kristin Murphy Romano. And thanks to you for listening to the HBR IdeaCast. We’ll be back with a new episode on Tuesday. I’m Alison Beard.