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July 02, 2010

Company Focus

Discovery Toys: Re-Discovery of an Old Friend

by Lauri Dodd

Look again! Once floundering, Discovery Toys gets an infusion of fresh energy to usher in a new generation of parents and children playing together.

Somewhere along the way, Discovery Toys lost their spark. Their flame is growing in intensity now, after many years of near-darkness. But there was a time when their candle was flickering, teetering on extinction. And yet, before it was completely snuffed out, a small band of renegades swooped in and fanned the flame. Now, what has emerged is tantamount to a young startup—but with the added benefits of being a seasoned pro. Today, Discovery Toys shines as a beacon to guide others who have lost their way.

It was 32 years ago that early childhood educator Lane Nemeth set out with a small loan to create a company that would soon become an icon in the direct selling industry. Her mission: to foster an environment where parents and children could grow and learn together in play. That single, solitary goal led a team of dedicated educational consultants to grow the company to an estimated $5 million in the first five years. And within two decades, the company’s worth shot up to $100 million, when it caught the eye of an industry giant, Avon. Then ownership changed hands again to another group, who some say didn’t quite understand the value of what they had acquired or the beauty of what made it so successful. And the downturn had begun. Although it was a rocky road at times, many consultants chose to stay, and throughout it all, they had their mission to see them through.

On the Upswing… Again

Discovery Toys may be uniquely matched with the direct sales model in a way few other companies are. The party plan system works well for them, because the educational consultants need the small setting to help parents learn how to play with their children.

Jeremy Hobbs, ChairmanThe company serves a very serious need parents have to talk with someone and get feedback about their child’s developmental progress. “Our products are designed to provide an answer,” says Jeremy Hobbs, Chairman of Discovery Toys. “You can read 1,001 books on various child development topics, but no place else has the type of discussion of the problems and solutions to help further learning.”

When parents peruse the aisles in a toy store or a discount mart for the perfect educational toy, they are often left to languish, because the same level of expertise about what toy is best suited to a child’s specific needs is a rare find. “Our educational consultants become experts who are ready and eager to help parents strengthen their bonds with their children,” Hobbs says. “They learn about maybe five toys to start with, and then their knowledge base grows from there.”

So in stepped Hobbs, who had eyed the company for several years before taking over in 2007. Coming from a family of lifelong teachers, Hobbs caught the spirit of the mission and saw great potential in the company’s ability to help further his other passion—helping women succeed financially.

“As a lawyer and a businessman, I worked with a women’s cancer group, where I saw a lot of moms who were forced to choose between poverty and not staying with their children,” Hobbs says. “It left a lasting impression on me, and I wanted to do everything in my power to help prevent people from ever having to be in that situation.”

One of the exciting things about being involved with the resurgence, he says, is that people within the direct selling industry are genuinely happy to see them succeed. It’s a testament to the respect for the way Discovery Toys was built.

“People want to work with us again,” Hobbs says. “For a number of years, we didn’t even send anyone to the international toy shows. And now, when people see us, they say they’d love to work with us again. It’s a validation that we’re going in the right direction.”

Mountains to Climb

As was to be expected, rebuilding has not been without its challenges. Admittedly, one of the most difficult has been rebuilding the trust of the field. “We’ve had to overcome the mistakes of the past,” Holland says. “The consultants were promised, then overlooked and underfed for many years. And yet they still stayed connected because of their deep love for what Discovery Toys had been in the past, and had the potential to become again.”

Meryl Holland, Chief Creative OfficerLooking in, as outsiders with loads of business experience, it was clear to Hobbs and Holland that the job of revitalizing the failing company would be a daunting one. But they were up for the task. “I’m a renovator. I take on something that’s been struggling and work to improve it—revive it,” Hobbs says. “There was a strong core that was surviving. It took a lot of effort and hard work to bring back the opportunity they deserve.”

For starters, the field’s needs weren’t being met. “Two things that were most vital to the company’s success were the people in the field and the product—the high-quality educational toys that the company was founded on,” Holland says. “Both of those things were being neglected, and the company was bound to suffer.”

The problems were mounting. Leadership and training had all but gone by the wayside, and business had become solely about individual sales. Product quality and ingenuity had taken a hit. To get back on track, Discovery Toys required an almost complete overhaul… from the ground up.
Meryl was brought in as a consultant to rebrand the company a year and a half ago, and she became the Chief Creative Officer in February 2009. “We took it all on in the first year,” she says. “And when we saw the new logo, we knew the company was on the mend.”

After eight months of refit, the ship is turning around. “For fourth-quarter 2009, we posted an increase in sales and recruiting for the first time in seven years,” Holland says. “In addition to that, the productivity per person is up 15 percent, which tells us that people are getting that much more out of the business.”

Since Holland and Hobbs came from outside the direct sales world, they probably infused the company with the new ideas it had needed for a long time. But they learned the business quickly, and they also brought in reinforcements by adding a vice president of sales who had virtually grown up in the industry. “Leslie Boyd-Bradley is our new VP of Sales, who worked her way up through the ranks in direct sales and has a solid understanding of the industry,” Holland says. “She is helping to turn the company around and present the results to the field. Her enthusiasm is so infectious and real.”

Another important part of the recovery process has been to completely change the compensation plan. “It was not designed to propel people to the top,” Hobbs says. “And it was no doubt responsible for many people leaving over the years.”

Almost nothing is the same since 2007, except the 10 core products Discovery Toys has had since the 1970s. “It has become somewhat of a running joke around the office,” Hobbs says. “It probably would have been easier to start up an entirely new company.”

The big turning point came in August 2009. At their convention, they rolled out all the new changes they had been working on, and basically introduced people to the new Discovery Toys. “It was simply amazing—everybody loved it,” Holland says. “The field was energized, and clearly that carried over when they went home, because we had the biggest August we’ve ever had.”

The new executive team has amped up the professionalism in the way the business is run as well. At the convention, in the midst of the relaunch, attendees were treated to a toy fair and a visit from guest speaker Suze Orman. With close to 300 people in the audience, the world-renowned author and trainer had an intimate setting that allowed her the unusual and welcome ability to interact on a more relaxed, personal level with the crowd. “Suze had fun at our event,” Holland says. “Before she left, our social network speaker, Liz Grumbiner, got hooked up with her on Twitter, and the next day sent her a tweet from the stage. When she got a response, everyone went wild!”

Layers of Support

Inside every toy are multiple layers of learning. There are activity guides and skill cards built into every package so that now customers have a chance to learn beyond the party. “We feel like we can never do too much,” Holland says. “We’re still playing catch-up at this point. However, the foundation has been articulated and has given us the springboard to do other things to make this company greater than it ever has been.”

And just like the layers of learning to enhance the experience with their products, Discovery Toys is dedicated to increasing the level of support to help their educational consultants thrive. “In the past, the field never really cared if the home office went to their kickoff meetings, and I thought that was sad,” Holland says. “Now we travel to be there for those meetings. We have more of a presence and are there to support our members in the field in every way. The field went crazy. Our planned visits gave them a great advantage that they never even knew they were missing before.”

Last August, 40 of 110 toys were all new, and another 20 or so were added this spring, so the management team just produced a video to highlight the features of the latest products. “You don’t have to be an expert from the start,” Holland says. “Most of our educational consultants do become experts, which makes them a valuable resource for parents, but there’s a lot of support to help them achieve success.”

Retaining Their Roots

Initially, the story of Discovery Toys conjures up images of the phoenix rising from its ashes—an amazing rebirth of a once-great company steadily limping its way back to health. But that would not be an entirely accurate, or fair, representation.

First off, the company was never really dead—at least not completely. And most important, the new executive team in place has gone to great lengths to preserve the company’s heritage, the strong foundation that once paved the way for it to become a direct sales staple, beloved throughout the industry for many years.

“When Lane was gone, the company lost a little bit of the magic,” Holland says. “In many ways, she was the reason people loved Discovery Toys. That heritage piece is still intact. We tried to recapture some of the magic she instilled in this company when she first started building it from the ground up.”

Ultimately, Hobbs says, it was the powerful Discovery Toys brand that has brought them most of the way through these tough times. “We’ve heard time and again about women in their mid-40s who see one of our shirts and say, ‘Wow, Discovery Toys, I always loved that company! I had no idea it was still around.’ ”

Together, Hobbs, Holland and their team have stripped away the parts of the business that weren’t working, and clung to the solid foundation that made Discovery Toys great from the start. And in doing so, they’ve embraced a new future filled with limitless possibilities. “Back in the late ’70s and early ’80s, when Lane started the company, developmental learning was very new,” Holland says. “Now we face a smarter, more knowledgeable group of parents, and they are eager to have us hold their hand to help them learn new ways to connect with their kids.”

In a way, it seems that not growing for a period of time has offered its advantages. Working with the leaner and meaner version of their company has given leaders a rare opportunity to rediscover all that was good about Discovery Toys. “We have been able to shake things up a bit,” Holland says. “What it  comes down to is that we are passionate about helping children learn and about helping women make money. We lost our way with both for a while, but we are definitely back in business.”