In a team of four, we created over the course of 3 months a new toy design. Here is a picture of the final product - SpaceShifter. 
The game was conceived as a concept and compared against several competing ideas and then prototyped and child-tested. We made foam models, laser cut samples and hand-tooled parts for child testing to test different game mechanics, how well the game held attention, and what was the most exciting (and troublesome) part of the play pattern. 
After kid testing, we created a few more prototypes and explored the final game mecahnics. This meant creating small electronics for the game pieces, and defining the rules set and accompanying accessories (walls, tokens, cards, etc...). 
Finally we had a game that was both fun to make and fun to play! 
Examples of the kid testing models - built from foam models, laser cut pieces, and hand tooled parts. 
Examples of us fleshing out the final mechanics. We made prototype cards for the gameplay, tested fit of acrylic walls in the black box, designed and cut acrylic game tokens, and created small electronics for the game pieces to respond to the play. 
Here is the final shot of the toy, with the cover taken off to expose the maze hidden underneath.