There’s a scene in “Big,” the 1988 film about a boy whose wish to be a grownup magically comes true, where the lead character, played by Tom Hanks, invites his best friend to see his new office at the headquarters of MacMillan Toy Company.
Surrounded by the latest games and gadgets, many of which have yet to hit store shelves, the friend’s response pretty well captures what every viewer is thinking: “You’re the coolest guy I know.”
It’s a line that Jonathan Hawkins has heard more than once—even if he doesn’t make a habit, as Hanks did, of wearing unbuttoned Hawaiian shirts to work (jeans, on the other hand, are quite common).
“There’s something really fun and energizing about working in a place where imagination and creativity are everywhere,” says Hawkins, vice president and general counsel for KidKraft, a Dallas-based purveyor of toys, playgrounds and the like. “It’s a lot more tangible than being in a service industry. It’s one of the reasons I came here.”
But while the vibe and environment might harken to Penny Marshall’s classic movie, for Hawkins and his legal and compliance teams, the demands are hardly child’s play—particularly in light of the company’s recent growth spurt.
While KidKraft has been around for more than 50 years, its acquisition by a private equity firm in 2015 required the creation and development of a legal department to support KidKraft’s global business—a transformation Hawkins was tapped to lead when he was brought on board in early 2016.
His earliest efforts included organizing and streamlining processes: installing a new contract management system; overhauling the company’s global insurance program; creating and implementing an intellectual property (IP) strategy for trademark and patent portfolio development; and streamlining global corporate governance matters—in the U.S., Canada, the Netherlands, the Cayman Islands, Hong Kong and China.
More broadly, Hawkins created the legal department’s role in matters of corporate strategy, ensuring KidKraft’s resulting growth—the company has nearly doubled in size since the 2015 acquisition—wasn’t just encouraged, but also properly managed.
“When you’re driven by profitability the way we are in a private equity environment, it’s critically important that the legal arm understands business operations at both a granular and strategic level,” Hawkins says. “We have sourcing and production management offices in Asia, a sales and logistics management office in Amsterdam, a U.S. distribution center near the Dallas-Fort Worth airport—all in addition to our Dallas headquarters, which houses an array of functions. All of these roles have to be understood, so we know when and where legal can and should offer support.”
That level of involvement has required Hawkins to reevaluate how he staffed and augmented his own team. To help grasp the legal department’s outlays—in particular, money spent on outside counsel and other service providers—Hawkins brought in SimpleLegal, a company specializing in legal operations software, specifically e-billing and spend management, matter management, and legal analytics.
“Working with SimpleLegal was one of the most critical things we did in terms of getting better visibility into how the company was spending money on external counsel and other legal services,” Hawkins says. “They understood what we cared about and provided us an intuitive platform that could generate comprehensive reporting. All while giving us the biggest bang for our buck. It blew me away how much value we received from their system and how easy their tools were to use.”
Thanks to insights gleaned from SimpleLegal’s platform, Hawkins was able to better align the legal department with the company’s strategic objectives, while also creating a more effective and cost-efficient roster of outside counsel, freeing up his team to focus on KidKraft’s most pressing business needs.
No need to share
One of the biggest is the company’s growing intellectual property (IP) portfolio. Given KidKraft’s international presence—it sells its wares in more than 90 countries—filing the proper patent and trademark paperwork is crucial to operations and overall value creation for the business.
However, maintaining such an expansive patent and trademark portfolio can be expensive—particularly for a company of KidKraft’s size. In order to guarantee appropriate cost controls, Hawkins developed formalized patent and trademark filing strategies that align to the strategic business objectives of the company.
“I needed to allocate these costs in the right ways, and at the right times,” he says.
Whenever KidKraft develops an innovative product idea—a new structural or assembly design concept for an outdoor playground, for example—Hawkins will meet regularly with the company’s designers to determine whether, to what extent, and in which countries the innovation warrants intellectual property protection.
Once the idea is given the green light, Hawkins works with both internal and external legal teams to execute the filing strategy and ensure appropriate protections are in place.
“The main thing we’re trying to determine is whether we can get enough elbow room within the market to give us a real advantage,” Hawkins says. “We’re not just filing for the sake of filing; we want to prevent competitors from finding a workaround and profiting from our innovation.”
As KidKraft’s global supply chain grows more complex—whether due to international trade wars, rigorous country-level children’s product safety requirements or overall increased consumer expectations with regard to safety and quality—so too have the resulting compliance demands.
In each country where KidKraft’s wares are sold, for example, members of the 50-person compliance team conduct testing for each item to ensure locally required regulatory and safety compliance.
For most regulatory criteria (lead content, for example), the standards are black and white: Either the product meets the threshold, or it doesn’t. By contrast, much of the quality assurance function (QA) and related quality control (QC)—things like minor cosmetic flaws or design problems that do not present safety concerns—often aren’t governed by specific regulations, but can be critical to consumer perception.
“It’s really important that we consider how certain decisions will impact the bottom line and the company’s perception, but I want to make sure we make decisions that address our business needs while also accounting for practical risks in an appropriate way—even though it may not be required,” Hawkins says. “When your integrity is on the line, there’s no such thing as a small decision.”
Big kids table
But while his legal responsibilities loom large, Hawkins has been an equally formidable voice on the business operations side. For instance, after taking a hard look at the company’s contractual trade terms (included in major retailer agreements), Hawkins helped investigate and recommend cross-functional process improvements related to retailer give-backs to bolster KidKraft’s margins.
He also identified the need to replace the company’s external insurance brokerage agency and managed the process of overhauling and renegotiating KidKraft’s global insurance coverage portfolio for its 18 subsidiaries across North America, Europe and Asia, resulting in a 25 percent cost reduction.
More broadly, as part of the company’s five-person executive team, Hawkins plays a critical role in helping shape KidKraft’s culture, brand development, global operations and transformation into a platform for growth—all while growing its bottom line in a way that accomplishes what is required in today’s private equity environment.
Above all, by streamlining how the company operates, Hawkins hopes to have more time to spend with his favorite kids’ games of all: the ones he plays with his two young sons.
“My goal for this year is to get my parenting skills on par with my legal and business skills,” jokes Hawkins, whose plethora of pastimes includes playing drums in an ‘80s and ‘90s cover band and brewing his own beer. “As the company continues to improve and grow on a daily basis, finding a work-life balance is becoming easier and easier.”
One thing’s for sure: Take Your Child to Work Day will never be a hard sell.
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