Boosting Sales Is No Game to LeapFrog
The growth continued in 2004 with $55.2 million in net sales, a 47-percent increase over 2003.
Then, in late 2004, the company’s growth spurt came to a halt. The decline started when, according to The Washington Post, “The president of SchoolHouse, LeapFrog’s education division, [Bob Lally] resigned in December after the California company found that he had broken [undisclosed] ethical rules.” The Post reported that Lally’s resignation was related to a company investigation that was launched into the sale of nearly $1 million in educational software to a Prince George’s County (Maryland) school official, whom another LeapFrog employee (who also resigned) was living with at the time.
In early 2005, news of the COO’s resignation, a “string of high-level management changes at the firm” (SFGate.com, Feb. 15, 2005), and what some considered an abrupt resignation by a board member added to the company’s woes.
That year, net sales for LeapFrog SchoolHouse fell to $40.3 million, down 27 percent from 2004. In 2006, net sales dropped another 8.4 percent to $36.9 million.
Marketing guru and best-selling author Seth Godin believes that LeapFrog SchoolHouse hit what he calls “ ‘a dip’—a temporary setback that will get better if you keep pushing.”
“Breaking through that difficult spot isn’t easy, and the only way to do it is to stop most of what you’re working on and focus obsessively on being the best in the world at one thing,” Godin says. “They have to dominate a niche, not be mediocre at many things.”
In late 2006, LeapFrog Enterprises President and CEO Jeffrey G. Katz announced major changes to the LeapFrog SchoolHouse division, with a plan to focus on its strengths. “Going forward, the SchoolHouse division will focus on what we do well and what we are known for—innovative, technology-based approaches to early literacy and reading,” said Katz. “As a result, we are reducing the size of our SchoolHouse organization, and focusing our sales and product-development resources on reading curriculum for core grade levels.”