|
|
|
Archives
Innovation: Underrated or overused?
By Doug Reed and Hai Ng
June 26, 2016
|
  |
 |
|
|
|
|
|
Are you tired of reading about innovation? Is it as important as all the hype would lead us to believe? According to Merriam-Webster, innovation is defined as the introduction of something new, such as an idea, method, or device. If you look at the use of the word “innovation” in English books according to Google Books Ngram Viewer, there has been a dramatic rise in the use of the word — an increase of 506 per cent from 1900 to 2008. So, what happened?
There are a number of “bizspeak” words that are either overused or, like other industry jargon, just unnecessary when plain English will make you sound like a person and not a corporate institution. Clearly the use of the word “innovation” has grown to a point you could argue it is overused. The more important question may be: Is innovation, in fact, pointless?
Ask yourself: If we never changed the business we are in over the past 30 years, would it be thriving? Surviving? Hanging on? Or dying?
Innovate or Die
Well, we won’t pretend to know your answer, but our guess is most businesses that have thrived and led their industry over the last few decades have made significant changes or innovations. If a company still does business exactly the same as was done 30 or 40 years ago, it is likely no longer a leader in the field, and may even be on the road to extinction.
Why is innovation, changing, or making something new so important? There are many reasons.
Forty years ago, competition was more local, not global; customers’ expectations today are higher. There is at least a perception, if not fact, that things are changing more rapidly.
Perhaps change and innovation occurs more rapidly today due to technology, or perhaps it just seems that way because we are living it, and now more aware of it due to 24-hour news and the technology we carry with us every waking minute.
|
|
|
|
Consumer Expectations Rise
Our expectations align with the perception; more competition gives consumers more choice, and their expectation of more frequent change therefore accelerates — which is part of the reason customers’ expectations have sky rocketed.
There are numerous companies that have both succeeded and failed. According to the American Enterprise Institute comparing the Fortune 500 firms from 1955 versus 2016, only 12 per cent remain on the list that were there in 1955. There are many failed companies and many new rising stars. According to Forbes from 1920 to 2013 the lifespan of a company on the Fortune 500 list has dropped from 67 to 15 years.
Where are Blackberry and Nokia compared to Apple or Samsung? What about Blockbuster contrasted to Netflix? Amazon versus Borders? Polaroid, once an “innovative” company did not see the digital future. Do you remember MySpace and their fast rise and fall? Even Yahoo has fallen from number one to four in online advertising revenue behind Google, Facebook, and Microsoft. The apparent conclusion is that companies that innovated were the rising stars and survivors in their industry. Clearly, what is necessary and vital for business success is to evolve, change, innovate, launch, or introduce something new.
Change is Constant
The gaming business is no different, and is certainly changing like any business going through the product life cycle, facing new challenges, or having to adapt to new technologies. Like other industries, gaming must innovate and make something new to survive.
According to the University of Nevada Las Vegas (UNLV) Center for Gaming Research, gaming revenue as a percentage of total revenue in Nevada has declined from 61.95 per cent in 1984 to 42.64 per cent in 2016. On the Las Vegas Strip, the decline over the same years was from 58.63 per cent to 34.24 per cent . Clearly, the gaming industry changes their revenue model and experiments with new products all the time. What if Nevada had to rely only on the old business model?
For example, we can look at one segment of the market and why creating something new (innovation) is important: How will Millennials' needs and expectations change the gambling industry, and who will innovate to meet the new needs and expectations?
The Perennial Millennial
Many are talking about the Millennials like it is a new species. Think back to your youth — apart from advances in technology and a change in environment, is it that really that different from the one Baby Boomers or GenXers were raised in? Most of us, no doubt have parents of a different generation. (Do you think they didn’t question your behaviors and lifestyle?) No doubt many of us are parents of Millennials. That means nothing more than people and times are changing and will continue that way.
The environment and activities you participated in while growing up influenced your behavior and what you do today. It’s no different with today’s Millennials, and therefore, expect them (much like you when you were young) to behave and enjoy different lifestyles from past generations.
We did not grow up with video games, virtual reality, drones, the Internet, and a computer in our pocket 24 hours a day, but like Baby Boomers, the Millennials are an attractive market with needs.
Change may be the only constant. Robotics, avatars, machine learning, artificial intelligence, self-driving vehicles, quantum control, new work environments/lifestyles, and more will change our business, jobs, and the needs of customers.
A book copywritten in 1994, entitled “Competing for the Future,” by Gary Hamel and C. K. Prahalad, still has a number of applicable messages about remaining competitive and innovative.
|
|
|
Customers + Need = Opportunity
It is still about needs and customers. It is hard to see a need and innovate ways to fill those needs when you’ve been a part of one business or industry too long. “Whole industries become vulnerable to new rules when all the incumbents accept, more or less, the same industry conventions. An industry full of clones is an opportunity for any company that isn’t locked into the dominant managerial frame.”
Being able to innovate and anticipate changing needs is a form of sustained competitive advantage. When you form a culture that can continuously implement change, experiment, and introduce new products, you have a chance to compete. Your competition surely is not standing still. Your competition may not even be in the gambling industry currently. For example, look what Apple did to the cell phone industry beginning in 2007.
Many managers are risk adverse, which is surprising when you think that many of those managers are in the gambling industry! Leaders often worry about incremental savings or costs and thus avoid risk. Cost-control, while still important, is a defensive strategy. Coupled with the common asymmetric management styles that punish failure more than rewarding success, the typical corporate environment discourages change and innovation in favor of the status quo.
Adopting a Strategic Mindset
Innovation is an offensive strategy. Those that have breakthrough innovation are not afraid to experiment and take calculated risk. They are not afraid of failure. The only people that don’t make mistakes are the ones that don’t do anything. There are many changes and experiments that lead to change. Some are incremental and others, like the Internet, are disruptive (yet another fancy buzzword for what we used to call revolutionary). The idea in business is to create a customer, and there are many new ones where innovation can intersect opportunity.
Innovation is not solely about new products. It can include many other aspects of an industry such as functions, logistics, and the experiences offered. Another myth about innovation is it takes a special type of person or a lot of creativity. Often, innovation simply involves many people interacting, and evolves when the environment is receptive and rewarding to innovate—don’t wait until you have to innovate out of necessity.
For example, one new market garnering much press is eSports. Is there a perfect model to follow if you want to participate in this emerging market? No, but those experimenting and trying will be those with a competitive advantage as the market matures.
It really doesn’t matter if you think the word innovation is overused. Change is one constant, so if you’re tired of innovation, you can certainly use other words like, rebuild, reform, reinvent, change, make new, usher in, launch, or unveil. Let’s just be sure your business is focused on keeping up with change and is innovative! It is vital to competitive advantage and in some cases survival.
You might start by challenging everyone in your organization with the question: “If something new was possible…” Something new is not a bad start to innovation for your organization. Make innovation, or whatever you call it, part of your strategy. Make the first step by innovating management.
Doug Reed, principal at Racing, Gaming & Entertainment LLC(RGE), a consulting firm with an emphasis on operations, strategy and innovation, has 40 years’ experience in racing, gaming and education. He is also director emeritus and former director of the University of Arizona Race Track Industry Program. His current focus includes eSports/iGaming, strategic operations and innovation for change. For further information email: dougreed27@gmail.com
Hai Ng is co-founder of Neomancer, a unique technology consultancy and advisory firm. Hai applies an anthropologically pragmatic approach when using technology to solve problems. Hai Ng is also co-founder of Spawn Point whose mission is to build and produce solutions to integrate Esports and Gaming. Hai tweets on matters of IGaming as @HaiOnGaming.
|
|
< Back Copyright © Canadian Gaming Business Magazine. All rights reserved.
|
|
|
|
|