Leading People in Creative Teams (Case Study on Toys “R” Us)

This case study examines the leadership failures of Toys "R" Us, a once-dominant toy retailer that ultimately filed for bankruptcy. The assignment delves into the company's problems, including inconsistent leadership, lack of customer engagement in its online business, and failure to adapt to digital transformation. It explores the implications of these issues, such as declining sales, financial losses, and the eventual liquidation of the business. The study then reviews critical literature on leadership theories, particularly transformational leadership, and discusses the importance of effective leadership and management in leading creative teams. It highlights how the lack of consistent leadership and the inability to embrace change contributed to Toys "R" Us's downfall, emphasizing the need for leaders to foster customer engagement, adapt to market changes, and provide clear direction to creative teams. The case study concludes by discussing the leadership and management behaviors needed to implement the necessary changes, providing a comprehensive analysis of the factors that led to the company's demise and the potential strategies for avoiding similar failures.

Leading People in Creative Teams
(CASE STUDY ON
TOYS “R” US)

Table of Contents
INTRODUCTION ..........................................................................................................................1
Case Study..............................................................................................................................1
(a) The problem......................................................................................................................2
Implication of problem...........................................................................................................4
Critical literature review.........................................................................................................4
Critical application of strategies.............................................................................................5
(b) Leadership and management behaviours considered pivotal to achievement of change
needed.....................................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
A creative team is a group of persons which bring up unique and ingenious ideas and take
steps so as to convert the proposed idea into action. It is essential that effective leadership and
management is utilised significantly within organisation to optimally lead such teams (Le Roy
and Fernandez, 2015). Leaders and managers in an entity set the pace of team by putting forth an
exemplary leadership that defines the way in which tasks need to be executed within the
company. This assignment is based upon Toys “R” Us which is an international clothing, toy,
baby product and video game retailer headquartered in Wayne, New Jersey, US. This assignment
will take into account the problems witnessed within the company along with its implications.
Besides this, leadership theories and frameworks are included that could be employed by
enterprise to deal with the problem. Furthermore, leadership and management behaviour required
for implementation of change is discussed.
Case Study
Toys “R” Us has been operating since 1948 by making use of its brick and mortar store
model. The company has employed amiable staff who are always willing to welcome customers
within the stores and assist them in finding the products of their choice. Yet the leaders within
the organisation failed to implement the aspect of customer touch in their online business. The
major drawback of organisation was lack of consistent leadership and management as the top
executives of company kept on changing. This happened largely due to the belief of top
management that experienced and successful leaders within the organisation will be able to drive
the company successfully and lead it to success. The inconsistency of leadership restrained the
company from direct engagement with customers. The e-commerce team of Toys “R” Us
possessed knowledge that a number of tools and techniques were required to gain additional
information about customers through which business can design and implement accessible,
engaging and specifically targeted campaigns. Yet the leaders of Toys “R” Us could not perceive
the same due to the inconsistent leadership pattern existing within company. Thus, contrary to
large scale companies like Electrolux and Whirlpool, this organisation failed to embrace digital
transformation. The enterprise was unsuccessful in building a customer touch with its online base
and consequently, the revenues as well as profits of company were massively impacted. Toys
“R” Us was not earning any profits since 2013. As a result of it, this enterprise finally filed for
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bankruptcy protection by the end of 2017. Company executed liquidation of its operations
within United States in March, 2018. Also, the Canadian unit of organisation is up for sale
together with their operations within Central Europe and Asia (What Went Wrong: The Demise
of Toys R Us, 2019).
(a) The problem
Toys “R” Us is a leading toy as well as baby products retailer. This company is
headquartered in New Jersey, U.S.A and employs over 65,000 employees. Charles Lazarus
found this enterprise in the year 1957 with major focus upon two key areas, namely, needs and
wants of customer and the way in which these can be effectively fulfilled. It has been observed
that company made a number of changes in order to be compatible with the market situations and
simultaneously meet the needs, demands and requirements of consumers. For this, enterprise
started online selling of toys by entering into a tie up with the leading e-commerce retailer,
Amazon. Yet, this failed largely owing to lack of effective leadership behaviour within the
organisation. It was noticed that management within the entity was keen on hiring successful
leaders who have led the enterprise to success in past. This led to inconsistency of leadership and
related strategies within Toys “R” Us. This is the major reason why company could not tap
advantage of the online business. The lack of consistent and effective leadership within the entity
gave rise to a number of major problems noted below:-
Lack of customer touch: Over years, organisation has been known for the personal touch
that it strives to maintain with its large customer base in physical stores. However, when the
company tied up with Amazon for e-commerce for increasing the scale of their operations,
leadership within the enterprise failed to take into consideration the aspect of direct customer
engagement with online audience. Constant manual input was required from the creative team
within Toys “R” Us to build an effective communication with online customers and keeping
them aware with the products and services being rendered by entity. This largely required
supervision and guidance from the leaders in the company so that the creative team could build
healthy communication with the customers and influence them in a positive manner to make a
purchase of company's products. Also, the emailing system of company was unwieldy and
restricted it to generic mails which were distributed in bulk quantity and optimised just for
desktop users (Ellis, 2018). This largely owed to lack of effective leadership and management
within the enterprise which was unable to lead and give a direction to the creative team of Toys
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“R” Us. Further, company did not much make use of social media platform or digital
transformation to establish a direct communication with customers as the leaders largely relied
upon the brick and mortar model stores.
Lack of differentiated products: Except establishing a brand value within market, Toys
“R” Us was unable to gain a competitive and strategic edge in market over rivals. Within US,
company had significantly lost its top position as the largest toy and baby product retailer owing
to the presence of Walmart within marketplace which offers attractive packages to consumers.
Company's brick and mortar store model has failed to render an opportunity to enterprise to gain
the trust of customers and maintain their loyalty. Also, when company ended its tie up with
Amazon, this massively impacted Toys “R” Us. In many of the markets, organisation faced
immense competition from retailer firms like Amazon, Kmart, Target and Walmart. It was noted
that the leadership and management within the company was ineffective and failed to adopt and
implement pocket friendly price models which could influence buyers to visit the store or make a
purchase online. Besides this, as the leaders and top executives within the enterprise kept on
changing, there could not be a significant communication between the managers and leaders and
the workforce. This led to inconsistency of the strategies within the organisational premises
which became a very big cause behind the lack of unique offerings by company that could attract
a large base of customers in marketplace (Lee, 2016).
Filing of Bankruptcy Protection: As a result of continuous losses since 2013, Toys “R”
Us filed bankruptcy protection in 2017. As per the investigation into bankruptcy filed in
Richmond, Virginia, this company was in a debt of $5 billion. This happened largely owing to
the late entry of organisation in e-commerce industry. It was largely observed that company was
not able to stave off the competition from key online players like Amazon. Thus, this enterprise
is considering the option of undertaking financial restructure of organisation to make sure that
Toys “R” Us survive within the marketplace. As a result of this, confidence of vendors shook in
context of the company and they have started becoming stringent about supplies to company
besides decline in credit cycles (Dickinson and Carey, 2016). All this was the result of the
massive failure of leadership and management within the enterprise which implied that the
creative team was not led in an appropriate manner. The inefficiency of leadership and
management within Toys “R' Us paid immensely to the company and the desired results
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associated while entering into online business by way of tie-up could not be met. This led the
enterprise into losses and finally, the entity had to file for bankruptcy protection.
Implication of problem
Owing to the various problems and issues noticed within Toys “R” Us, there were
massive outcomes. After 2005, the company leveraged buyout, started underinvesting in its
operations as well as employees. Stores of the enterprise were largely functioning without
maintenance. Dust collected on floors of stores and rafters as a method of cleaning services was
cut back. Employees were stressed due to massive work load. Company even started deploying
knowledgeable and competent staff while implementing cost-cutting campaigns. The focus upon
continuous customer satisfaction was ignored as a result of the changed dynamics of business.
Also, major IT systems failed at such stringent times. Besides this, at the store level, Toys R Us
deprived customers of any reason to make a purchase of any product of entity. Sales of company
started declining since 2013. Also, this enterprise did not earn any profits since 2013. Due to this,
Toys “R” Us filed for bankruptcy protection in 2017.
Post this situation, an investigation was conducted which revealed that company was in
debts of $5 billion. Further, Toys “R” us carried out liquidation of its business situated within the
United States (US). As per the website of the enterprise, company's Canadian unit is already up
for sale together with its business operations situated in Asia as well as Central Europe, including
Germany, Switzerland and Austria. Liquidation of its US operations led to loss of job for over
30,000 employees (What Went Wrong: The Demise of Toys R Us, 2019). All these outcomes took
place largely due to the ineffectiveness and inefficiency of leadership and management within
the enterprise. The frequent changing of top executives of company led to inconsistency of
strategies and tools employed by leaders. Also, it lead to lack of optimum communication
between the workforce and leaders as well as managers of Toys “R” Us.
Critical literature review
According to the view point of Dickinson and Carey, (2016), it is essential that creative
teams within the enterprise are effectively led by way of suitable leadership and management.
Managers and leaders within an enterprise should implement and formulate consistent strategies
which are easy to be adopted by the employees within an organisation. Furthermore, it is
observed that transformational leadership theory is effective when any company wants to
embrace certain strategies related with enhancing the performance of enterprise in marketplace.
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This leadership theory focuses on the building connection between leaders and the workforce. By
way of utilising transformational theory, leaders inspire the personnel within the enterprise to
enhance their performance and improve the delivery of task. Leaders which make use of this
theory are able to devise consistent strategies that can assist the personnel in performing to the
full of their potential. This leadership theory focuses upon the group members so as to ensure
that organisation is able to fulfil the needs and wants of customers. Transformational leaders are
generally energetic, enthusiastic and passionate who are concerned and remain involved in the
process of achieving organisational goals and objectives. Also, these leaders are focused on
helping each group member in a effective manner so as to encourage creativity among the
people. Transformational leaders develop new ways of opportunity to learn and explore new
ways of doing things.
Transformation leadership theory also involve encouragement of employees and offering
them support. In this form of supportive leadership, transformational leaders keep line of
communication so that people feel free to share ideas and thoughts. Here, leaders have a clear
vision and they are able to share their experience with other people to achieve their targeted
goals. Therefore, transformational leaders serve as a role model for employees as they are able to
gain trust and respect of workforce. On the basis of organisation's position and task based
responsibilities, transformational leadership assists in developing individual commitment to
organisational goals.
As per the point of view of Lee, (2016), transformational leadership can at times backfire
because these type of leaders are able to convert people to faith in what they represent which can
have a negative effect in case the leader is immoral or self-serving. Although this model has
benefits such as long term plans and good vision, critics also believe that it can have a negative
impact on the organization. Overlooking reality can be a barrier for these leaders. Sometimes,
transformational theory of leadership can be adverse because here, leaders have the tendency to
coach only selected group of members as these leaders have a difficult time with the orientation
details. Therefore, this leadership becomes risky and can create negativity among people and
organisation if the drawbacks of this theory are not considered by leaders.
Critical application of strategies
There was a large need for Toys “R” Us to embrace digital transformation so as to build
effective communication with a large number of customers and promote their online business.
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Also, the experience of their physical stores needed to be enhanced so as to compel customers to
visit and make a purchase. It was the lack of optimum management and leadership strategy that
led to the absolute demise of Toys “R” Us and company had to finally file for bankruptcy
protection. For gaining a high stake in market and enhancing its profitability, company had to
implement an effective leadership strategy.
Over the years, the top management of company believed in hiring such top executives as
well as leaders which had gained massive success in past. But this led to a lot of haywire within
the enterprise and Toys “R” Us was not able to establish their image within the audience in an
effective manner. Thus, the enterprise is now planning to adopt a strategy where they will hire
fresh recruits as leaders. The main advantage that the company will get from new talent is that,
they have innovative and unique ideas that may benefit the entity in gaining competitive
advantage. Also, they can be moulded in the structure of organization. This will Toys “R” Us
and company would directly start grabbing good position at marketplace in specific time frame.
On the other hand, it has also been analysed that adopting a new strategy would directly aid Toys
“R” Us and company in reaching to new heights.
Critical Application:
In present case, adopting a new strategy would directly impact upon overall performance
level of Toys “R” Us and because, hiring to staff would directly affect profit margins as well of
the company (Braveman, 2016). Unless the staff members (new ones) are not experienced in
recruitment, hiring good employees can be challenging, costly and time consuming. Toys “R” Us
will need to spend time and money advertising and interviewing candidates, and the best ones
may require more money than Toys “R” Us business can afford. When Toys “R” Us consider
expanding the business or team, it is required for the company to consider this factor in the
recruitment demands into its final decisions.
(b) Leadership and management behaviours considered pivotal to achievement of change needed
An individual responsible for motivating employees and aligning their behavioural
characteristics towards the accomplishment of organisational goals and objectives is a leader.
Within Toys “R” Us, leaders make use of their confidence and positive attitude to encourage
personnel for performing to the best of their potential. This ensures timely completion of tasks
and realisation of goals of company in a timely manner. On the other hand, person who possess
the authority of managing the way in which tasks are assigned and performed within an
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organisation is a manager. Leaders and managers need to possess certain behavioural
characteristics within the change, so as to lead the creative team within Toys “R” Us in an
effective manner. Such behavioural characteristics of leadership and management are described
below:-
Lead by example: Managers have fear of change because it upsets their carefully
structured way of life. While on the other hand leaders embrace change because they know that
change leads to new ways of growth and accomplishment. So, for successful implementation of
change, it is necessary that leaders of Toys “R” Us lead the creative team by setting an example
of the way in which things have to be unfolded. Also, managers of the company will demonstrate
transformational model of leadership as a landmark for ensuring that activities are being
managed in a way that are aligned with the change associated with adoption of employee
involvement (Remington, 2016).
Communicate: Communication in an organisation should be systematic and structured.
Unsuccessful leaders and managers tended to focus on the “what” behind the change. Successful
leaders and managers of Toys “R” Us should communicate the “what” and the “why.” They
should define the purpose of the change and connect that with the organization’s values and
determine the benefits, so that they can create stronger buy-in and urgency for the change.
Leaders and managers within Toys “R” Us need to communicate the need of change and its
connection with the vision of enterprise to attain the goals and to enhance the profit margins of
Toys “R” Us Company.
CONCLUSION
From the above discussion, it has been concluded that it is essential for leadership and
management to be effective while leading creative team within an organisation. Also, it is
analysed that a company which wants to adopt any change or strategy should be under adequate
guidance and supervision so that entity can effectively embrace such changes. Besides this, it is
assessed that transformational leadership is best when the business entity wants to formulate
changes across the organisational premises. Furthermore, it is assessed that leaders and managers
within any companies should continuously keep on analysing the industry so as to gain
knowledge of the latest trends and developments and direct the behaviour of workforce
accordingly.
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REFERENCES
Books and Journals
Archibald, R. D. and Archibald, S., 2016. Leading and Managing Innovation: What Every
Executive Team Must Know about Project, Program, and Portfolio Management.
Auerbach Publications.
Remington, K., 2016. Leading complex projects. Routledge.
Yoon, W., Kim, S. J. and Song, J., 2016. Top management team characteristics and
organizational creativity. Review of Managerial Science. 10(4). pp.757-779.
Thomas, P., 2017. Integrating Primary Healthcare: leading, managing, facilitating. CRC Press.
Braveman, B., 2016. Leading & managing occupational therapy services: an evidence-based
approach. F A Davis.
Peate, I., 2019. Leading and Managing Care Provision. Learning to Care E-Book: The Nurse
Associate. p.118.
Gillier, T., Hooge, S. and Piat, G., 2015. Framing value management for creative projects: An
expansive perspective. International Journal of Project Management. 33(4). pp.947-
960.
Dickinson, H. and Carey, G., 2016. Managing and leading in inter-agency settings 2e. Policy
Press.
Lee, M. R., 2016. Leading virtual project teams: Adapting leadership theories and
communications techniques to 21st century organizations. Auerbach Publications.
Ellis, P., 2018. Leadership, management and team working in nursing. Learning Matters.
Andersen, P. H. and Kragh, H., 2015. Exploring boundary-spanning practices among creativity
managers. Management Decision. 53(4). pp.786-808.
Man, T. W. Y. and Farquharson, M., 2015. Psychological ownership in team-based
entrepreneurship education activities. International Journal of Entrepreneurial Behavior
& Research. 21(4). pp.600-621.
Le Roy, F. and Fernandez, A. S., 2015. Managing coopetitive tensions at the working‐group
level: The rise of the coopetitive project team. British Journal of Management. 26(4).
pp.671-688.
Online
What Went Wrong: The Demise of Toys R Us. 2019. [Online]. Available
Through:<http://knowledge.wharton.upenn.edu/article/the-demise-of-toys-r-us/>.
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