From the Publisher
By Paul Jason, Publisher, Public Gaming International Magazine
U.S. Lotteries find ways to say “YES”
to technological progress
What drives companies to push for inno-
vation and change?
It might seem like it’s the consumer who drives
change. But is that true? In answer to the question as to why he does
not conduct consumer focus-groups to try to discern what the consumer
wants, Steve Jobs famously remarked that consumers do not know what
they want. The consumer did not know that they wanted a graphical
user interface (GUI), or many of the attributes of the i-products. Neither
the consumer nor the pioneers at Netscape and AOL realized that e-mail
would turn out to be the “killer-app” that would propel the internet into
the transformational technology of the last three generations. And no
consumer would have said “yes” to Ted Turner’s vision for a 24-hour
news channel or a library of old movies (in fact, the entire TV and media
industry thought he was a fool).
Those three examples have something in common. They were enter-
prises which had little to lose by disrupting the status quo. Recall that
Nokia ruled the smart-phone roost in the early 2000’s. Apple was strug-
gling and without a viable growth strategy when it created the i-products
and the i-phone. AOL and Netscape were start-ups which had nothing
else to do but dive into their mission and hope for the best. Ted Turner
was, well, let’s just say Mr. Turner is iconoclastic and was not beholden
to the conventional risk-assessment models of the day. Why didn’t Mi-
crosoft invent the internet, or Xerox capitalize on its ownership (or at
least first rights to) the GUI, or Nokia be the one to transform the smart-
phone industry, or CBS introduce cable television? I would submit there
was little compelling reason for any of these established companies to re-
shape consumer expectations. They were already highly invested in the
existent state of consumer behavior which was already buying billions of
dollars of their products. And this is not a new phenomenon, something
emanating from the age of the internet. Consider
power steering
in the
automobile. It was invented in 1876. General Motors developed the
technology to be commercially viable in the early 1930’s. But it was
Chrysler which introduced power steering to the mass-market, and they
did not do that until 1951 (so long after its invention that the patents had
expired)! Of course, as soon as Chrysler put
power steering
in auto-
mobiles, General Motors followed the very next year, installing power
steering.
It does not have to be that way. General Electric’s Jack Welch was
one of the first to try to break out of that Big-Company-Stasis syndrome.
GE was formed in 1892 and was one of the original stocks to be listed
on the Dow Jones Industrial Average. It does not get much more old-
school establishment than GE, operating successfully if conservatively
for almost a century before Welch was appointed CEO in 1981. He trans-
formed business strategic management by inventing new risk-assessment
models and applying entrepreneurial principles to a multi-billion dollar
enterprise with fully established markets. He showed the world that a big
company can act entrepreneurially, that it is better to “change before you
have to”, that it is better to obsolete your own products before someone
else does it for you. GE grew by 4,000% over the twenty-year period of
his tenure to become the most valuable company in the world in the early
2000’s (and still in the top ten most valuable companies).
The U.S. lottery business is becoming the GE of the modern era, driv-
ing new products and innovation while preserving the value of its $70+
billion business. The vision, creativity and flat-out intelligence that went
into
MONOPOLY Millionaires’ Club™
is awe-inspiring. Consider the
collaborative effort to bring multiple lotteries together to conceive, nur-
ture, and then implement this complex project. Consider the complexity
of integrating this into the existing portfolio of games. Consider the
zero-tolerance for jeopardizing the brands and the revenue streams so
vital to the support of good causes.
But it’s more than that. When it comes to real-world business deci-
sion-making, the top priority is to protect that $70 billion revenue stream
and the brand equity associated with it, right? That is a pillar of risk-
assessment that is not unique to Lottery, and rightly so. In fact, Lotteries
are clearly managing risk while driving growth much more adeptly than
its counterparts in other industry sectors. Accomplishing the balancing
act of driving growth and innovation while preserving the foundations
of success that took decades to build is key, and Team Lottery is demon-
strating to everyone just how that is done.
Haven’t we all been thinking that the government-gaming sector is
conservative, risk-averse, even slow to change and adapt? This self-
image may be betrayed by this new reality. I’m reminded of the title of
Andy Grove’s (the genius CEO of Intel who led it from start-up to be the
most valuable company on earth)
Only the Paranoid Survive
. Maybe,
ironically, it is our keen sense that there is so much more we can do that
is driving the government-gaming sector to be thrust into this leadership
position?
A no-nonsense index for the measure of business acumen is the fi-
nancial community, the ultimate arbiters of resource allocation. And it’s
placing its bets on the government-gaming sector and its commercial
partners! The acquisitions of IGT by GTECH; and Bally and WMS by
Scientific Games are momentous, with huge implications for the entire
games-of-chance industry. This would have been inconceivable just four
or five years ago. The allocation of financial resources is coalescing
around the two largest suppliers to operators of government-gaming.
This is, I would submit, reflective of the leadership role that the govern-
ment-gaming sector is taking in the broader games-of-chance industry.
Leadership as relates to consumer and player trends, leadership in terms
of business model that aligns with public policy objectives, and leader-
ship in terms of drive to innovate and evolve with the consumer and
distribution partners.
Thank you to our interviewees and editorial contributors for shar-
ing your vision and ideas for how this industry will continue to exceed
the expectations of the modern consumer and stakeholders of Lottery.
Government-gaming operators are innovating in ways that are resetting
consumer expectations, causing the entire industry to adapt to a new nor-
mal. In partnership with its vendors, they are carving out a leadership
role that will benefit consumers, stakeholders, and most importantly, the
good causes supported by the long-term success of government-gaming.
See you at Lottery Expo Miami, and then at NASPLAtlantic City, and
then at the World Lottery Summit in Rome!
u
Public Gaming International • September/October 2014
6
