In a press conference yesterday, Claus, known for his usual “jolly” disposition, appeared subdued and spoke frankly of the challenges and headwinds which led to the decision to sell NPI.
“It’s become a very different world with the changes in the competitive landscape, in technology and in peoples’ belief systems in general,” said Claus. “The Santa Claus brand is tired and I am tired. It’s time for someone else to take NPI to the next level.”
There was not a single ho-ho-ho in his prepared remarks.
Among the key factors leading to his decision, CEO Claus mentioned the following, some of which were his own admitted missteps:
- Last year’s public relations fiasco when he downsized the company by laying off elves and outsourcing the work to Asia. The YouTube images of the hundreds of elves lined up at the local unemployment center brought howls of protest from the public, forcing him to reverse course and rehire many of them and to break contracts with his new suppliers;
- He failed to innovate. While his best-in-class one night delivery system showed he could execute, it has been years since his toyshop has come up with a blockbuster “must have” toy. “Wooden soldiers, sleds, and dolls are so last century” scornfully remarked one analyst who follows the industry. Amazon, eBay and other forms of e-commerce also undermined his business model;
- Claus has had trouble adopting new social media and info technology in general. For instance, the NPI Facebook site was hacked back in July and confidential information about who was naughty and who was nice was compromised, forcing a number of public figures to disclose indiscretions before leaked news became public. Also, Claus’s web service provider has been overwhelmed several times in past holiday seasons because of the millions of e-mail and texts to Santa;
- Another trend that Claus unsuccessfully struggled with over the years was the growing number of children of the world who no longer believe in him, a key performance indicator. The much-watched CPI (Claus Plausibility Index) has had a downward trend for the last 9 years and this past quarter Santa barely edged out The Great Pumpkin in the Index’s category of “Belief and Credibility”;
- Claus also admitted to having to invest an “inordinate” amount of his time and resources to battling animal rights activists who have long demanded he not “abuse” his reindeer by forcing them to make the exhausting global delivery every Christmas eve night;
- In the press conference, the CEO confided that his board has been pressing him hard for several years to name a successor and that he has failed to do so, citing a lack of viable internal and external candidates. One leadership expert observed that “celebrity entrepreneurs” like Claus “often find it difficult to think that anyone else could do their job. That puts the future of the enterprise at risk”;
- Claus also cited the intellectual property challenges he has lost in the courts worldwide. “Anyone can put on a red suit and fake beard and be featured in a movie or in a parade,” said Claus. “They are stealing my image and my brand and they need to pay for that asset. It’s incredibly frustrating…”
Claus did not indicate what he would do once the sale goes through and he steps down, but did not rule out writing his memoirs or creating a Santa Claus-themed TV reality show. “We’ve had some very promising focus group results testing out that concept,” Claus said.
One thing that looks certain is that the private equity firm which is buying NPI will make some dramatic changes which includes relocating operations to a low cost/low tax country which also has a more attractive supply chain. The North Pole headquarters will likely be razed, as there are newly discovered oil reserves in that area of the Arctic and the land is seen as far more valuable as an energy investment.
He closed the press conference by stating that “it has been a good run” but that someone else could more effectively “unlock the value” of the enterprise. With that, he wished everyone a Merry Christmas and “to all a good night” and exited. It signaled the sad end of a great era.
Mike Hoban is a management consultant in his day job and can be contacted at