Toy Wars: The Epic Struggle Between G.I. Joe, Barbie, and the Companies That Make Them.

by G. Wayne Miller Times Books, $25

In Billy Wilder's 1954 film, "Sabrina," Humphrey Bogart plays the crusty old mogul who tells a radiant young Audrey Hepburn that he's not in business to make money, but to make products that do some good in the world. The success of a corporation, he says, should be measured not just by its profits, but by the quality and value of the things it actually makes.

Bogart's approach was, of course, successful in charming Audrey Hepburn. But it's been the opposite approach -- the one that says getting a hefty return on your investment is what really matters -- that ended up seducing American business. The result has been what you might call the financialization of the corporation. As Roberto Goizueta, former CEO of Coca-Cola, was fond of pointing out, good business essentially consists of borrowing money at one rate of interest and investing it at a higher rate of interest. And what you invest the money in matters much less, ultimately, than that rate of return.

This picture is exaggerated, of course. Even Bogart's company could only stay in business if it made a profit, and presumably investments are profitable in part because they provide a good or service that someone wants. (Coke, after all, is still the real. thing even if it made Goizueta a billionaire) But there has been a sea change in American business since the 1950s, one that has forced corporate managers to concentrate harder on the bottom line, to evaluate products ruthlessly in terms of their potential profitability, and to place the goal of ever-larger earnings over all others. Not coincidentally, this sea change has made American corporations more efficient, more profitable, and perhaps more productive. But it's also made them much tougher places to do business the Bogart way.

In an oblique way, it's the story of this transformation that G. Wayne Miller is trying to tell in his new book Toy Wars. Focusing on one corporation, Hasbro -- makers of G.I. Joe and Mr. Potato Head -- Miller shows how the pressures of being a publicly traded company forced Hasbro to replace its traditional product-driven mentality with a profit-driven one. Instead of worrying about whether a new toy was the best toy that could be made, were meant to understand, Hasbro's executives now had to worry about whether that toy was going to provide an appropriate return on investment. More than that, the executives also had to worry about whether that toy was going to boost the company's stock price, and about the future of their jobs if they failed. So Miller gives us the shadowy figures of consultants called in to help restructure the corporation, consultants who ask workers to fill out surveys explaining what they do all day and who slash payrolls on the basis of incomplete information. With the "suits" on one side and the "people who knew toys" on the other, this is a movie we've seen before, and in the down-sized '90s we know how it ends.

The problem with this movie, though, is that in Hasbro's case the story of cold-hearted consultants sabotaging the work of the creative toy people just won't fly. In part, that's because the "suits" seem to have been completely clueless, going about restructuring in a haphazard fashion. And in part it's because Miller's "toy people" don't really seem to have a good a sense of what makes a toy succeed or fail. Watching Hasbro execs wager $4 million in promotional spending on a $50 Elvis doll meant to entice "middle-aged women with memories and money to bum," all one can say is, "What were they thinking?"

The point, in other words, is that neither the restructuring gurus nor the old-time toy executives had a real solution to Hasbro's problems. As a result, although Miller suggests that Hasbro's experience tells us something important about the deleterious impact of bottom-line thinking, in fact all Hasbro's experience teaches us is that if you don't know where you want to go, you're going to have a hard time getting there. The restructuring was not a well-considered attempt at making the corporation more productive, but substituted cost-cutting for real reinvention. On the other side, Miller's toy people come off as overconfident in their ability to read the minds of eight-year-old children, slow to adjust to changing tastes, and much too comfortable in what amounted to executive sinecures. There are no Bogarts in Miller's boardrooms.

The really interesting thing about Toy Wars, then, is that in its attempt to show how the abandonment of a product-driven mentality hurt Hasbro, it actually shows how Hasbro used that supposed abandonment as an excuse to cover up its own product-driven miscues. Throughout Toy Wars the need to satisfy shareholders is an omnipresent one. "Wall Street was interested only in earnings and the price of stock -- and how the chairman intended to multiply both," Miller writes. The implication is that the pressure to satisfy Wall Street forced Hasbro to make decisions it did not want to make, to replace creative geniuses with consultants and old friends with new suits. But while Wall Street's single-minded emphasis on earnings can be disastrous for a company, greedy investors have become an easy scapegoat for managers looking to explain their own failures. "Wall Street made me do it" doesn't work as an excuse when what you've done is create a mess.

In that sense, the real lesson of Toy Wars is not that Wall Street is a hard master, but that successfully managing a billion-dollar company is a hard task, especially when your target market consists of consumers with "the attention span of a gnat" Management is a skill that's difficult to analyze, but it is a skill that is real, and it's a skill that distinguishes companies that are continually more productive and efficient from those that are not. Hasbro imagined that its problems were little boys and Wall Street suits. But what Toy Wars shows is that for Hasbro, as for most companies, the problems that really mattered were inside.