Effectuation Stories

Fail to Succeed - The Story of MGA Entertainment

Written by Effectuation Team | May 10, 2016 7:33:54 PM

Of Modest Means

Isaac Larian is a busy man. Since his immigration from Iran to the United States 38 years ago, he has washed dishes, studied engineering, imported brass goods from Korea, and sold refrigerators and microwave ovens. Building on his Asian connections, he was the first to bring Nintendo handheld LCD games to the U.S., and from there he expanded into the toy business by licensing popular brands like Mighty Morphin Power Rangers, Hello Kitty, and The Hulk.

Taking Control of his Toys

All that got Larian started, but the reason you likely already know him is because of Bratz. In 2001, tired of making profits for his licensors, Larian decided to create his own toy brand and launched a line of fashion dolls. A runaway success, Bratz dolls successfully challenged Barbie's supremacy on toy store shelves and created more than $2B a year in revenue for Larian's firm ? MGA Entertainment -- within just three years.

"(Bratz) are everything Barbie is not. Who in Britain can identify with a six- foot-two blonde? The Bratz exist in a changing world ? children today are exposed to change at a very fast pace, so the Bratz change too"_ In 10 years they will be something completely different."ù -Isaac Larian

Shaping and Contingency

Two elements in the story thus far help to understand Larian's remarkable achievement. The first is his willingness to control his own environment and create opportunity for himself, while creating uncertainty for existing players such as Mattel in the process. And the second is his openness to change. While it would be tempting to try and cling to the Bratz fortune, Larian anticipates the changing nature of opportunity, and is clearly prepared to shape Bratz in order that change benefits him.

Look at his Failures to Understand Success

And he is a man recognized for creating opportunity. In 2007, Larian was Ernst & Young's Entrepreneur Of The YearŒ¬ overall national winner. Bittersweet, though, as 2007 proved a difficult year for Bratz. Panned by the critics, the Bratz Fashion Pixiez movie he released with LionsGate Entertainment generated less than $3M in revenue. And adding insult to injury, 4Kids.TV cancelled the Bratz animated television series. A closer look at these disappointments offers a third insight into Larian's entrepreneurial expertise. In neither case did he put MGA Entertainment at grave risk. His investment in the experiments was sufficiently low that failure of the project did not translate into catastrophe for the firm. Instead, and in both cases, he shared both the risk and the potential reward with partners. "You should not be afraid of failure. In order to succeed, you need to fail."ù -Isaac Larian

Entrepreneurship as a Portfolio

Looking back at Larian's career offers a fourth insight. Entrepreneurship is less about vision and more about the journey of creation. From his start, it would have been impossible to predict that he would become the head of the 3rd largest toy company in the world, yet in retrospect the pieces come together and make sense. The question for you is what puzzle pieces you have and how you will put them together next.

Written by Stuart Read, professor of marketing at IMD and Saras Sarasvathy, associate professor of business administration at the University of Virgina's Darden School.

Publication: British Airways Business Life
Author(s):
Stuart Read

BABL Bratz