Stephen Schwartz, 36, spends 12 hours a day thinking about toys.

Right now, he is working on toys for Christmas -- 1987. Schwartz loves the childlike aspects of his job, but lives with the very grownup title of senior vice-president for marketing at Hasbro-Bradley, one of America's biggest toy companies. Working out of Hasbro-Bradley's cramped offices in Pawtucket, R. I., Schwartz commands a staff of 150 people and a $75 million budget to sell to children around the world at Christmas, everything from futuristic Transformers to Mr. Potato Head. After graduating from New York University with a B.A. in psychology and working at an employment agency, Schwartz stumbled into the toy field by accident, starting as a salesmen at the now-defunct Ideal Toy Company in Denver. He was marketing director for infant and toddler toys at another toy company before joining Hasbro. Visitors queue up in Hasbro's constantly buzzing waiting room to talk toys with Schwartz. One day this month that crowd included a thick-necked fellow named Sgt. Slaughter, a professional wrestler, who is going to be a figure in the GI Joe doll series. Schwartz and his wife, Honey, have three unwitting test subjects: Joshua, 9, Danny, 6, and Katie, 1. Lee Michael Katz is a freelance writer.

Lee Michael Katz talked recently with professional toy wizard and senior vice president for marketing at Hasbro-Bradley, Stephen Schwartz.

Q: How do you decide when to bite the bullet and when to go on your gut instinct with a toy?

A: I'd say 90 percent is gut, 10 percent research. A lot of my competitors tend to be more research- oriented than we are. About three years ago we were testing a doll to bring to market and we put the doll into research and what came out was that girls thought it was ugly and had no idea what adoption was about. We elected not to do the dolls because of research. It was a little doll called "Cabbage Patch."

At that point I decided that I will never again let research make a decision for me. I will trust my gut and the guts of the other people who work around me who have experience in this business more than I'll trust a 4-year-old girl who's exposed to something for 30 minutes.

Q: So you blew the Cabbage Patch dolls.

A: We didn't blow it. It would have been nice to have, but we're not ashamed to say that we missed Cabbage Patch. I mean, we made Transformers, GI Joe, My Little Pony. You don't catch them all in this business. If you sit there and all you're afraid of is catching the next one, you're going to buy everything, youre going to mark it down. The president of the company likes to say more people die of indigestion than starvation. You can't be afraid to pass.

Q: Cabbage Patch dolls are not particularly outstanding in their design.

A: Sure they are. They have a look that has caught on. You or I may look at it and think it's ugly. A little girl looks at it now and thinks it's beautiful. (What) made it different from anything that had ever been done before was the fact that every one was different. I would go to the stores and I'd watch mothers: "No, I don't want a blonde. I want a brunette." "No, I don't want a boy. I want a girl." "I don't like that name."

Q: How much is the doll with purple hair on your desk?

A: This is the newest generation of My Little Pony called So Soft Pony. They flop and have a fuzzy feel to them. It was My Little Pony that did in Strawberry Shortcake (a little doll with red hair made by Kenner.) We were able to catch Strawberry Shortcake in a down year and the explosion of My Little Pony just absolutely killed Strawberry Shortcake.

Q: It's all sweet and you've got pretty ponies and in the meantime you're scheming ways you can do in Strawberry Shortcake, right? It's competitive.

A: We're always looking for ways to take business from our competitors. That's the name of the game. Strawberry Shortcake had a great run. And I tell you, whoever comes in and does in My Little Pony isn't going to feel sorry for My Little Pony and me. That's the nature of business. That's what makes the business great. It's competitive. I like nothing better than to go against my competition head to head and try to beat them. We're about to face one of the biggest challenges we've ever faced and that's going against Barbie next year. We think we have an alternative product to Barbie for little girls.

Q: But of course your goal isn't to make Mattel a better competitor?

A: Of course not, it's to make "Jem" the hottest thing in the girls market next year. That's my goal in life for next year.

Q: A 36-year-old man and your goal in life is to make a doll the biggest thing in the country?

A: Absolutely. It's fun. She's a 21- year-old girl of today. A rock-'n'-roll star (with) her own band.

Q: She happens to have pink hair and makes Barbie look like Phyllis Schlafly.

A: That's the whole idea. Barbie is 25 now and Jem is brand new.

Q: Are you going to knock off Barbie?

A: We're not knocking off Barbie. We're bringing something new to the party. Girls play with Barbie today for the most part because mothers remember playing with Barbie when they were children and they want their children to share the experience, which is very similar to what's happening with GI Joe in its second generation. A lot of the fathers of today who have little boys are fathers who played with GI Joe when they were children. They want their children to have the same types of toys. It's the reason why Mr. Potato Head's been around for 35 years, not because kids really want Potato Head, which they do, but because mothers want them to play with Mr. Potato Head. It's the same reason for Monopoly and things like that. That's what makes a classic. Growing up with Barbie is Americana.

Q: Do toy executives do research by taking toys home and letting their kids play with them?

A: We call it kitchen research. You go home, put it down and say, what do you think it is? I don't do that. I bring the toys home after we make them and I learn from watching how my children play with the toys. (I learn) what we could have done better, or where we really excelled and did it right. I'm not the kind of person who works for Hasbro and says my kids can't play with Mattel or Fisher-Price toys. I learn more from my competition by having the toys in the house and watching what's turning them on. I know a guy who is very high up in Mattel (whose) son has a full GI Joe collection. In fact, a couple of Christmases ago, I sent him GI Joe and he sent me Masters of the Universe. My son has a full collection.

Q: How many toys do your children have?

A: I can't even count. We have a whole third floor full of toys. My oldest son's biggest frustration is that he still hasn't been able to design a toy for Hasbro. He'll sit and draw a new GI Joe characters and can't understand why he can't sell it. I keep telling him, it's just not right.

Q: Do you think he'll eventually sell them?

A: No, but what I like is it draws out the creativity.

Q: You ever had a kid who's come up with a great idea?

A: Not since I've been here.

Q: So, creating toys is an adult's game.

A: People really think that I've got a great job. I'm not complaining but they think I sit here and play with toys all day. They don't understand (we're) trying to figure out what's going to turn a 5-year-old on two years from today. It's not easy. They don't understand the investment in making a toy in terms of time. People. Tooling dollars. Advertising dollars. To bring a product to market takes a year-and-a-half to two-and-a-half years. And it's a very, very complex situation. It's very much like the packaged-good industry, except that we will bring our 300 new products next year compared to Procter and Gamble who may bring out 30.

Q: You have this whole staff of elves or whatever back there designing. What does their conversation sound like?

A: "What's the next step we can do with My Little Pony? Can we flock her? I don't know if we can flock her. Kids like to take her in the bathtub, is the flocking going to be safe? How are we going to print on flocking?" These are adults. "What's the next GI Joe? Should we put GI Joe in space or underwater? Airpowered or groundpowered this year?"

We also have our fun in the meetings. We sit in a room for 12 hours looking at toys. It's tough to be serious for an entire 12 hours. Once in a while a product will sneak through that really has no reason to, that nobody can see. I can look at it on a Friday and there might be something there. I can look at it on Monday and all of a sudden I say what did I ever see in this thing?

People crack jokes and we have some great advertising that we get really excited about. I remember the first time the creative head of our agency played the music of the GI Joe Real American Hero. It almost brought tears to my eyes. It was so perfect. The whole management team just got up and gave him a standing ovation. A lot of emotion goes on in the meetings.

Q: Do you play with toys in the meetings?

A: Absolutely. If it's an action product, or a game, we all play. If it's a GI Joe vehicle that has an action to it, we demonstrate. We all get down on the floor and play with it. We have dual identities here. We're children at heart and savvy, astute business people on the professional level.

Q: What's been your most spectacular failure?

A: "My Puppy Puddles." An interesting idea. I think we got a lot of bad PR. Little kids all love to have dogs. A lot of kids live in apartments and can't have dogs. We were going to develop a surrogate puppy for little kids and make it realistic. And what does every puppy go through when it comes home from the pet shop? It goes through being papertrained. My Puppy Puddles was a puppydog people could papertrain. It would only wet on its paper. It would drink water, have a soft touch, floppy ears. It was really a very sweet product. Some people thought it was a little inane, I guess, as best. Didn't sell. I guess that goes in my Hall of Shame.

Q: How many people a year submit toy ideas to Hasbro?

A: We probably look at 3,000 to 4,000 ideas a year and probably seriously evaluate 1,200. We generally don't see nonprofessional ventures because of the legal ramifications. Everybody I know has invented a great toy game that everybody in the neighborhood loves. "I got the greatest thing! I play it with my kids. They absolutely love it. All their friends love it. I think you can sell 20 million of them!"

What happens when you start to see people like that? Somebody will come in and show you something. Three years later, a new designer or inventor brings to us an idea which we don't consider even remotely close but it may have one small element that this other person had. There's a lawsuit and the money involved and the litigation and the management time spent and everything else -- it's not worth it. So we generally don't see any people off the street.

Q: Does you wife ever catch you engaging in talk or interest about toys or things that would interest a 5-year-old?

A: It's something I have to be careful about in terms of mix of friends. I go to a movie with somebody from Hasbro and we try and figure out where the toy aspects of that movie could be. We look at the toy world as a microcosm of the adult world and figure out what we pluck out of the adult world and bring down to children. We know that preschoolers like to emulate their parents. Next year, I should say 1986, we're making a flashlight.

Q: The Glowbug. When did you come out with that?

A: We tried to introduce Gloworm in 1982. They showed me the product. They turned off the light, they squeezed it and I said, "My God. That's incredible." It's a light-up security blanket for a young child. If they're in bed and they have a nightmere or have to go to the bathroom, they just squeeze its belly, it lights and they can walk to the light switch and turn it on. What a fabulous idea.

We had costed it out so that it would wholesale at around $7.99 and we brought all the big toy people, five of the biggest accounts, to look at the product. Four of them absolutely laughed at us. "You can't sell that. That is terrible, the most expensive flashlight I've ever seen in my life." Sears came in and said, "We really like that. It's sensational." Sears put in the catalogue, gave us a half a page spread. They laid down very big numbers on it. It was a total sellout. We were short hundreds of thousands of pieces. Just out of the catalogue. In 1983, we brought Glowworm national. And wouldn't you know all those accounts that came in early never remembered seeing it? But bought it big. There are no guarantees in this business.

Q: Basically, you merchandise fantasy as well as the product.

A: Absolutely. A toy is a fantasy for a child. He learns through fantasy play about his real world. GI Joe is a fantasy. Transformers is a fantasy. But Mom's not buying the fantasy. She's buying the product. And Mom is the one who lays down the money. Perceived value has to be there. Mothers are very astute toy buyers. They have an idea of what a $20 toy looks like or a $10 toy or a $50 toy. Or a $100 toy. And it's real difficult to pull the wool over their eyes just as it to pull it over the children's eyes.

Q: What kind of homework do you do? Is it walking up to a lot of five- year-olds and saying, "What do you want in a toy?"

A: I can go to our swim club in the summer and spend half an hour talking to six five-year-olds. I'll ask these kids, "What toys have you seen on TV lately? What toys do you want? Why?" Try and pull out of them the elements. Sometimes it drives my wife a little crazy that she's sitting there talking to adults and I'm sitting there talking to five- year-olds. The business never leaves you. I don't know a lot of people who've been in the toy industry who've been able to leave.

Q: How does a 36-year-old man know what kids want?

A: By watching what they're doing. By trying to understand where they're going. By trying to understand what rock 'n roll music means to a 6-or a 7-year-old. Understanding what action adventure means to a boy, what pretty and soft and sweet means to a little girl. You come up with a product that's really exciting, that the kid wants to play with over and over and over and over again. And wants to add on to, build his fantasy bigger and bigger and bigger.

Q: You guys saved Raggedy Ann from extinction. A lot of people get emotional over that. Is it a heavy responsible deciding whether Raggedy Ann lives or dies and whether to phase out Mr. Potato Head?

A: It's certainly a decision we take seriously. When it comes time for a product which has lived its life to go to the big toy heaven in the sky, we do it with heavy heart, but we know it must be done for good business purposes. If Raggedy Ann just stopped selling, certainly we won't continue to market it. Nobody was buying it, so nobody was going to miss it. That's the philosophy you have to take. If they really wanted it, they'd buy it.

Q: Sixty percent of the toys are bought between October and December. Can you ever afford to have a bad Christmas?

A: Absolutely. The toy business has become a 52-week business. We launch toys all year long and we launch nothing this late. The report card was written probably back in June or July.

Q: But you don't get a little nervous when you pass stores this time of year?

A: I don't get nervous. I get excited when I go into Toys-R-Us or Childworld and I see shopping carts full of my toys. That's a real high. I'm real nervous, come see me March, April, May when we're launching.

1985 Lee Michael Katz