We are currently in the most challenging times to do business. Virtually all of the industries are getting disrupted by the changes generated by the exponential growth in technologies -- from wrist watches that hardly anyone wears anymore, to taxi cabs that have to deal with new on-demand transportation services, to changing school curriculums to Common Core, etc. In fact, at this point, we have been conditioned to expect constant changes in our lives, to which we have to adapt over and over again.
Charles Darwin said, "It is not the strongest of the species that survives, nor the most intelligent, but rather the one most adaptable to change." This holds true for the companies, as well. In business, historically, we've relied on a set of learned processes and activities -- such as best practices -- that enable a company to produce a particular outcome. Dr. David Teece, a professor at Berkeley, calls these "ordinary capabilities." They are imperative to have, but on their own, will not get you to the best outcome anymore. Teece states that in order to be successful, companies must also develop "dynamic capabilities" that, unlike ordinary capabilities, are idiosyncratic: unique to each company and rooted in the company's history. They're captured not just in routines, but in business models that go back decades and that are difficult to imitate.
One of Mattel's strongest dynamic capabilities is our strong future-forward focus. Our slogan is, "Creating the future of play." This means that we have to constantly redefine the way we do business to take advantage of new opportunities and drive the innovation within the market of toy categories. We manufacture more than 5,000 different products each year and rotate about 80 percent of them to ensure our future forward focus. Through our open innovation initiatives, we are reaching out beyond our internal resources to stay on top of what is coming next and take advantage of new ideas, technologies, business models, and partnerships. Just in the last several years, we've tapped into our consumers' creativity to help us create content, generate new line extensions, as well as experiences. We not only track trends -- we strive to create them. After all, as Timothy Mack, former CEO of the World Future Society, said, "All of us are going to live the rest of our lives in the future." It will be best if we are prepared for it.
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