I wrote a blog “Digitalization of Lottery Business” two months ago. I will now continue with the same theme and this blog will partly be the same than that previous one. I believe on principle “Repetition is the mother of learning”. I got the impulse for this one from the virtual SBC Digital Summit event where I participated in panel discussion last week. I discussed with Steen Madsen (A Game Above), Stuart Godfree (Mkodo) and Chris Armes (GiG) about mobile and digital opportunities for lotteries. I have thought that issues a lot during last few days and believe that we could help operators, lotteries and the other ones, who would like to develop their offering and service in that area.

It is already now obvious that Covid-19 has changed our lives. It has been amazing how fast that changed has happened. Unfortunately, it has not been good changes, but I would say that it hasn’t been totally bad either. Of course, I’m not talking about the number of dead or sick people, but how we have changed our habits to buy things and spend our free time. That “damn virus” has also showed to companies that there should be agile ways to change business strategies and plans very quickly. Those companies who have managed to do that, have better possibilities to stay alive during that crisis and after that.

Covid-19 has shown one big weakness from gambling business which is mainly problem for casinos and lotteries. That weakness is to big role of retail business and the lack of digital online business. It’s not good solution if you have “all your eggs in the same basket”. We have the best/worst examples of that in Las Vegas where casinos have been closed now some weeks and most of them have just minor online business going on or in many cases not at all online business. That has meant 95 – 100 % lost of sales and profits have changed to losses. Too many lotteries have faced similar problem. When places where you are used to sell your lottery tickets are not allowed to be open, you don’t have any places where you could get sales if you don’t have online/digital channel. There are examples where big lotteries have been forced to stop whole operations when they haven’t had online sales at all, or the share of that business has been too small.

The other example of “all eggs in the same basket” problem is sports betting. Those operators who have had just sports betting business without any other gambling verticals have faced extremely big problems. If you have offered only sports betting and there are no sports events going on, what else you could do than stop your operations? Those sports betting operators who have had for example virtual sports and/or online casino games in their product portfolio have had possibility to continue their businesses.

I said in panel discussion last week that hopefully Covid-19 is the wake-up for lotteries. Actually it should be wake-up call also for some other gambling operators too! It is not useful to say that lotteries should understand the need of change already many years ago. It is better to concentrate on the future and how they could make things better. As a skeptic guy, I‘m not sure how many of them are willing to change and how fast they are ready to do it. The time for action is NOW not sometimes in the future!

There are many things what gambling operators should have learnt from the crisis we have faces during last 2 -3 month. Companies should have adaptive strategy which means capability to react on big changes fast. They should also have capability to move changes in strategy to business plans and further to operational level as quickly as possible but in the way which their organization and customers will understand. The main problems in that area are slow processes, the fear of change and the lack of communication with employees and customers.

There are at least four areas where the most of lotteries should make improvements. Those area are digitalization, customer centric operations, products & services, and technology. All those areas would be worth of own blog, but I try to explain the main changes now shortly.

Although retail is really important part of lottery business, lotteries should have digital business too. Lotteries should understand that online sale is not against retail business but rather will support that. The next step for more developed lotteries will be omni-channel solution where retail and online will establish “one package” and work as a one sale channel. We have noticed that it is easier to offer services for customers in digital channels than in traditional retail network. But it would be possible to offer those supporting services and new kind of products also in retail network if companies could utilize digitalization in all channels, not only in online channel. Lotteries should start digitalization immediately if they haven’t done that yet.

Lotteries should have capability to serve their customers whenever and wherever they are willing to buy products. It is old fashioned way to think that good product would be enough to get customers and sales. Companies should understand and admit that customers are kings and queens and they will decide what, when and where they are going to buy. We should understand more about our customers and data is one important part of that. Lotteries should put more resources on data utilization and automatization. I’m sure that it would bring them more satisfied customers and better business.

I already wrote about “all eggs in the same basket” dilemma. Gambling companies should have wider product portfolio than the most of them have at the moment. That is big problem for lotteries mainly. There are still plenty of lotteries who are offering just basic lottery products like Lotto and scratch cards. There might be legal reasons for that, but I would say that in many cases those legal and regulative problems are just too easy explanations. I don’t believe that it would be impossible to add for example horse and sport betting to product portfolio. From business risk management point of view it is better to have wider product portfolio than limited one.

I have always seen technology as a tool for business. I must admit that it is extremely important tool which allows you to develop your business. Gambling operators should have as modern and agile technology solutions as possible. Companies should have as fast time to market time as possible and technology is the most important element there. I think that one big challenge in that area for lotteries is unwillingness to make changes to technology which they are used to use. The most of lotteries are used to buy everything from same technology supplier and that would block the possibility for change and opportunity to use the best solutions in different areas.

Lotteries should be more ready to take more risks, controlled ones of course. I’m extremely keen on helping lotteries, and other gambling operators, if they would like to start to change their business now. The game is not over, but Covid-19 has showed that time for change is now!

How to fail in the strategy work?

I just read stories from Harvard Business Review and got idea to write about strategy. It has been interesting to notice how so many companies have made same kind of mistakes in doing strategy and implementing that to real life. I have been involved in strategy work many times in slightly different positions and circumstances but I’m not willing to act as a strategy consultant. I try to write my learnings in unusual way. I would like to tell you how you could easily fail in strategy work.

In old days companies used to make new strategy for next 5 years and some of them is still doing that. I don’t understand how that could be possible nowadays when the speed of change and development is so quick? You should analyze longer trends and possible changes and make scenarios about the future. Those scenarios could be for next 10 – 20 years but you should realize that they are just scenarios which hopefully help you to notice how fast and to what direction the world is changing. The company should have view what it’s willing to reach and how that would happen in big picture – there should be mission and vision for the company. There are at least already two mistakes which you could make at this level. The first one is to make long term strategy and business plan instead of scenarios. The other mistake is to write unrealistic and not so inspiring mission & vision.

The next way to fail in strategy work is decide exact strategy for next x years. If management and Board have idea that now strategy is ready and company will follow that plan forever they won’t have so nice future ahead. It’s nowadays ”must” to have adaptive strategy which could/should be checked many times a year because the speed of change is so fast.  You will fail even more if you don’t change annual planning and budgeting processes.

For some reason the top management quite (= too) often thinks that they have ”all wisdom” in the company. I don’t understand why so many companies are preparing their strategy in small group where are only directors as members. That kind of model would make the strategy process quicker and easier but will cause for sure big problems when the strategy will communicate to employees. I think that Board of Directors should be decision making body and of course Management Team has also important role, but it shouldn’t mean that they are doing that alone. That kind of process guarantee “nice” failure.

I guess that management might think that they are involved in experts to the strategy process when there have been some subgroups preparing special parts of the strategy. In practice that work normally concentrate on finding out support/explanation to already made decisions and it won’t create any commitment to new strategy. Board and management should describe ”the big picture” – main challenges and possibilities and then ask experts to find out solutions and new ideas to make it happen. It should be two-way process. It’s possible to involve in all employees to strategy process! Someone could participate in planning and preparations. The most of staff could give their ideas and opinions via surveys which should be organized during the strategy process. If you would like to fail in your strategy process forget your staff and let them just know what you have decided on behalf of them.

The next step is the content of strategy. Quite many companies seem to have full packed strategy where are everything what company is doing. That kind of companies haven’t been brave or/and wise enough to decide what are the most important elements in their business. In that kind of case all directors will be happy in short term because they could keep their roles but in long term they will face “some” problems when business won’t develop so well. Strategy should describe what are the most important assets and capabilities for company. You should know where you could get competitive edge compared to your competitors and put lots of efforts on those things. If you would like to fail put efforts on everything and keep it as it has always been! It would also help if you won’t analyze the competition in your market at all – great failure ahead!

The last stage is implementation. Strategy should give guidelines to annual planning and budgeting. Annual planning should describe how company is trying to reach goals described in the strategy. Separate units should understand what their role is in “big picture”. When units know what they should do also single employees would know what they should do to help the company to reach the goals. In the ideal world all employees would know what the main goals of their company are and how they should work to make it happen. If you would like fail won’t strategy to guide the practical work at all. It would also help if you don’t communicate the “big picture” to your staff at all.