GiG’s chief strategy officer Cristina Niculae says the crisis caused by the pandemic presents a good opportunity for igaming businesses to reassess their culture, use of technology and value innovation.
We are living in extraordinary times. Not only we are potentially facing the biggest economic crisis in history, but we are facing it at a time when the pace of technological change is more rapid than our ability to understand it.
Covid-19 has brought some sectors to a complete standstill. Businesses that took decades to build have seen their business models become non-existent in less than a month.
The world’s biggest economies are expecting recessions of a depth not seen since the Second World War. Entire industries are unsure when they will be able to rebound from the shock.
Analysts such as Goldman Sachs are projecting a V-shaped recovery for the remainder of the year but have yet to factor in the worrying surge of new Covid-19 infections (now exceeding 40,000 per day in the US and Brazil), the impact of a potential second wave of infections, the huge drop in tourism worldwide and its impact on so many other sectors, and the overall drop in the spending power of consumers.
Most of our governments are clinging to structures and actions that worked in a distant past and hoping they will work again now and in the future.
However, for most businesses, the incredibly fast pace of change and the difficulty in planning long term in such a complex economic environment make it nearly impossible to compete using past successes as a guide.
The €400bn global gambling market is projected to decrease by 18% in 2020, with land-based operations seeing a significant drop. Cities that just a few months ago were the landmarks of land-based casinos, like Las Vegas, are looking in disbelief over empty streets as the tourists they were forecasting to welcome this year are cancelling their travelling plans and heading to their local casinos instead.
The closure of sports events has drastically reduced sports betting revenues and although some of the biggest sports events have resumed behind closed doors, it is uncertain how the lack of fans cheering from the sidelines will impact the overall sports betting experience.
The €52bn online gambling market is set to retain the levels of 2019 but not without challenges. Some countries, such as Latvia, closed down all online gambling operations during the lockdown and the Swedish government has imposed even more restrictions on licensed online operators in their way of applying past thinking to a new world and hoping that it will work in protecting consumers.
In such a challenging environment businesses need to formulate, communicate and execute upon a vision that will help them navigate the waves of change.
There are some of the key points we should consider:
How to adapt, and why culture eats strategy for breakfast
What matters most today and has since the beginning of known history is how quickly one can adapt to constant change in the economic environment. To be able to navigate the downturn, businesses will need the ability to reinvent themselves over and over again without dwelling over past mistakes or successes. But resetting the bar is not as easy as it sounds.
‘Quick to adapt to challenging market dynamics’ is just a generic phrase included in executive presentations. Every executive team understands this need but few know how to actually achieve it. And there are no easy answers.
However, there are ways to drastically increase the odds of success. While communicating a clear set of priorities and continuing to plan for the potential risk scenario is vital, it is also fundamental that this is not done in isolation, but by using the leadership team.
Businesses need to create a culture that brings together the leadership team to develop and fully understand the strategy and be quick to raise issues as and when they arise. The power to adapt lies in how well your leadership team is working together and executing upon its set of priorities.
As McKinsey research has found, most strategies fail due to dynamics in the strategy room. Your ability to lead from the back and drive these dynamics will be a key factor in the success of the definition of a strategy, its implementation and ultimately, its execution.
The role of technology
I have repeatedly observed in the gambling industry that technology is sometimes seen as a buzzword, used too many times and often inspired by Silicon Valley success stories. But the focus is still being placed on the gambling approach of the past, something I see as shortsighted.
The truth of the matter is that technology is impacting everything we do today, from the alarm that wakes us up in the morning to the car we drive, how we work, how we shop, how we learn, how we interact and so on.
However, the percentage of people who understand how technology works, and the advantages it brings, versus those who just take it for granted is greatly decreasing. This is an unprecedented period in human history that the gambling industry should not miss out on.
Due to social distancing measures, consumer sentiment is changing drastically towards online. It is now the time for technology to help us regain purpose in industries that are facing challenges. In online gambling, we will see the pace of the land-based-to-online transition being accelerated by social distancing measures.
People are starting to discover the benefits of online gambling technology, which plays a big part in helping reduce problem gambling, protecting the underaged and bringing entertainment closer to the end user’s reach.
As consumer sentiment is shifting towards more essential categories of spend, home entertainment remains at the top of the expected spend trend. The industry has so much further to go in terms of innovation and reinvention in this space. As the transition from land-based to online accelerates, so will consumers’ expectations.
Ensure your company gives the right priority to developing the technologies to sustain online gaming as a means of entertainment for the future in a safe and secure environment that protects the end user.
The concept of value innovation
While building technology is an inspiring endeavour, companies often get caught in a confirmation bias that leads to a loss of product market fit. There are always better ways to build new technology, but the focus should remain on the value added to end users.
The speed to market or the drive to explore new technologies often gets ahead of the value-added question but failing to ask this question frequently enough causes products and technology to fall behind customer expectations.
What is the value we are bringing to our client? Can we quantify it? Is it above what our competitors are offering in the same markets? Can we enhance it? Rarely have I seen leadership teams discuss this topic, but it might well be the difference between success and failure for certain businesses.
It sounds so simple but is easily overlooked: by understanding the value you are creating for your customers, you are setting a purpose for your employees to deliver, setting the fundamentals for capturing market share and ultimately creating value for your shareholders. The opportunity to create something better always comes from observing something that does not bring the intended value.
A year ago, I mentored a group of young women who were looking towards a career in the field of strategy. One of the questions they asked me was: “Can you maintain a long-term vision in a challenging regulatory environment when so many aspects are still unknown?” Back then, it did seem like a difficult question, but in hindsight it was really nothing compared to the questions raised by the economic downturn environment created in such a short period this year.
We often fall prey to the illusion of control and forget that we are just stardust floating in a vacuum, blissfully oblivious to the fact our mere existence is just a glimpse in a universe of constant change. We cannot predict the future, but we can definitely have the courage to adjust our thinking every day and ultimately create the future we imagine.
Cristina Niculae is chief strategy officer at Gaming Innovation Group and has previously held a number of senior roles at companies such as Oracle and Ericsson. She has been recognised with a number of awards throughout her career and featured in the Top 5 to Watch in iGaming Business’s Most Influential Women 2019.