WHY WE NEED INNOVATIONS?

That question was asked from me two days ago. I’m not 100% sure what I answered to that, but I’ll tell you what I would answer now.

European Lotteries (EL) organized Innovation seminar here in Helsinki this week. My company Veikkaus acted as a hosting company and I believe that our team managed very well. The Innovation working group of EL did also excellent work when they planned the seminar program. We managed to get well-known keynote speakers like Dietmar Dahmen and Dave Caygill to our seminar. I’m not sure if I learnt anything specific from their presentations/shows, but at least I’m even more sure that we really need innovations! I had great opportunity to open that event and suddenly I was also asked to say the closing words and there my colleague Suvi asked the question in the heading of this blog.

The world is changing all the time. Consumers, and our customers, have more opportunities available. The competition has become tougher than it has ever before been and I’m sure that it won’t be easier anymore. I think that lottery companies have trusted that monopoly situation will secure them from the competition – I’m afraid that there still are many lotteries which are thinking that way… I’m sure that consumers don’t think that there is separate business area called lottery business or not even gambling business. Consumers just decide how they are going to use their money and lotteries and other gambling companies are in the middle of that “battle”.

If company would like to succeed in the competition, it should offer something special and different which customers would like to buy or pay for. If you are offering just an average product you could compete only with price which should be lower than the other companies have. It’s obvious that lotteries don’t have the lowest prices or the highest payout percent. If you can’t compete with the price, you should have something different compared to other companies. That’s why we need innovations!

I think that it’s already clear from my previous blogs that in my mind the customer is the King (or Queen)! We must always think about what the best solution for our customers is. It won’t help us, if we manage to develop excellent technical solution but consumers are not interested in that at all. Consumers are used to use service from great companies like Google, Facebook or Amazon and we should be at the same level than those giants are. How we can do that when we don’t have as much resources than they have? Cooperation might be the way to do that. Companies should utilize start-ups and their innovation capabilities. We should also find out good business partners, because we can’t do everything by ourselves. Companies should concentrate on areas where they are good and have strengths and let the partners take care of other issues.

The difficulty in innovation is that you don’t know what you are going to get there, or will you get anything. The scope of innovation work should be 2 – 5 years. If you are looking for something quicker innovation is probably not the solution. By improvement and development you could get something new quicker, but then the result won’t be so radical. Companies should allocate resources to all those three areas (improvement, development & innovation), because we can’t wait years to get something totally new.

Dietmar Dahmen spoke lots about customers and trust. That sounded very familiar to me. It’s extremely important that your customers would trust on you! It would be great to innovate products, services and above all business model which would responsible but at the same time profitable. I’m not sure how to make it, but I’m so keen on trying to do it. The result should customer oriented, personalized, easy, fun, modern and profitable solution for gambling business. Let’s innovate and try to make it happen!

Do it in different way

We are used to different kinds of things and habits and don’t necessarily see that there are other ways to think about same issues. That’s the case also when we are talking about Sports Betting. If you ask the definition of Sports Betting from professionals, you might get surprisingly many different answers. I’m used to visit in many gambling related seminars and events and keen on talking with my foreign colleagues. There are many reasons for that, but one is to learn something new and new ways of thinking. I know that I have strong opinions about things where I believe that I know a lot. That feature could cause big problems because I’ll do everything in a way which I’m used to. Luckily, I know that I have that kind of “problem” and I try to fight against it. When I have recognized that from myself I have noticed the same problem from many other experts too. I claim that most people have the same problem.

If you listen to the British experts in Sports Betting seminars you will soon notice that they are talking only about fixed odds betting – nowadays both pre-game and live. Asian experts will probably speak about different kinds of bet types than their European or American colleagues. Nordic Sports Betting professionals will probably have wider definition of Sports Games. They will add to fixed odds betting also parimutuel bets and Football Pools, but less different fixed odds bet types. If you think always in same way I won’t be able to innovate anything new and in long term you will lose the competition against other Sports Betting companies.

As I have mentioned in my previous blogs the competition in gambling business has became tougher and tougher. Companies should have new content all the time or at least new ways to offer & sell those products. It’s unfortunately easy to copy what the other ones have done but you won’t win the game by doing just that and that’s good! But is it worth of spending lots of money and resources for innovation and development when other companies could copy that and offer the same quite soon? Yes and no! If you don’t even try you will be at most average operator without any specialties. If you put too much effort on that it would cause you problems with cost efficiency. I believe that there are still lots of “empty base” in Sports Betting business. It seems to me that most companies are trying to offer exactly the same products and services with same conditions. The result is that Sports Betting business is nowadays more and more just “sale competition” where the company which have the best sale and marketing capability will win. I’m sure that there is better way to win that battle!

You should be brave enough to try new kind of products and services although all of them won’t work very well in your market. Don’t take stupid risk but you shouldn’t be afraid of failures! If you just try to minimize risks you will again be just an average “grey” company. What gambling companies should do? Be innovative and use also external resources in that area. Make bench marking from your own business area in other countries and continents and from some other businesses. Identify your current strengths and try to utilize them also in new businesses. Find out good partners – everything shouldn’t be done just by yourself. There are many Sports Betting products where cooperation between companies could help you to offer better products. When it’s almost impossible to prevent “copy paste” in gambling products, you should try to innovate something new which you could get patent or at least lighter protection.

What that could be in real life? Let’s take Germany as a potential example. There seems to be heavy competition in Sport Betting business in Germany although legislation is not totally clear. In principle State Lotteries (17) should have strong position there but they haven’t been able to develop their Sports Betting offering due to many reasons. I’m not sure how big market share they now have in German Sports Betting business, but I guess it to be about 10 %? If those lotteries could now introduce something new in Sports Betting business what they should and could do? They could buy services from Sports Betting odds suppliers like Betradar or Kambi but with that offering they could raise to an average level and it would be difficult to get at least active Sports Betting customers back. State Lotteries have had and still have strong position in lottery business. How they could use that strength also in Sports Betting business? They have lots of customers who are used to play lucky games with big jackpots. Would it be possible to introduce lottery type of Sports Betting products? Or would it be possible to introduce new Sports Games which would have some lottery features like for example jackpots? One practical solution for them would be introduce pool based (parimutuel) Sports Betting – something like we have here in the Nordics. The easiest way to do it might be cooperation with already existing pools. With an average fixed odds Sports Betting and special parimutuel games where they would have possibility for big jackpots it would be still possible to get quite big market share from the German Sports Betting markets.

To be honest I’m not sure if for example parimutuel Sports Betting would be huge success in all countries because customers have their own habits too. But if you won’t try you will never win!