Disruption in the age of technological innovation

Can you imagine sitting in the board room of Kodak and suddenly realising that your business model is completely outdated? Kodak, best known for its photographic products, failed to foresee the mounting threat of the smartphone to its market share.

Jon Duschinsky, a social innovator from Canada, has the hypothesis that a lot of people in the Lotteries behave like Kodak, pretending that such disruption will not happen to the sector. Duschinsky’s theory is that you either disrupt your own business model, or somebody else will do it for you, from the outside. Before revenues start declining, first gradually and then more rapidly, he advises that companies commit 10 to 15% of their overall revenue to a “failure strategy”, so as to constantly test new tools and methods. The risk of being disrupted by external forces is simply too big. Think of the disruptions caused by major tech companies in the past 10 years. Uber’s business model is not about owning cars, Airbnb is not about owning hotels and Amazon is not about owning stores. Yet, each of these companies has fundamentally changed the face of their respective industries.

Robert Chvátal, CEO of Sazka from the Czech Republic, who heads the largest private lottery group in Europe, confirmed that there is a false sense of security in the sector. He explained that a lot of investors are asking about the duration of licences, whereas the Lotteries are focused mainly on speaking and promoting their brand, and are convinced that this alone is a sufficient guarantee of success. Chvátal also fears that revenues could be declining because younger people no longer go into small retail stores as previous generations did. Therefore, the Lotteries have to avoid navel-gazing and must focus on leveraging new technologies and innovations.

New technologies – Blockchain and augmented reality

Kevin Alderweireldt, Founder of Cousteau in Belgium and California

In terms of new innovations, Jon Duschinsky, amongst others, suggested that the Lotteries closely examine the potential of blockchain technology. With this tool, people could be informed about which social or cultural cause they are supporting with the purchase of a lottery ticket, even if they lose.

Kevin Alderweireldt, the Founder of Cousteau in Belgium and California, explained the potential of virtual reality and augmented reality for the Lotteries. He argued that the latter has more potential. Rather than creating an entirely virtual world in which players could participate in lottery games, augmented reality adds digital layers on top of the real world, through the view of a pair of glasses. Similar to the concept of the popular Pokemon Go game, Lotteries could develop a real treasure hunt in several geographical areas for customers to find scratch cards. These could become available all across the city, and would no longer simply be a piece of paper bought in a retail shop.

Small and big data

Ellen Van Den Berghe, Business Development & Innovation Manager of the National Lottery in Belgium

Ellen Van Den Berghe, Business Development & Innovation Manager of the National Lottery in Belgium, made a plea for an increased focus on small data and putting analytics of customer behaviour to good use. She explained how her organisation gradually shifted towards optimizing data, and how they worked to improve the purchase funnel. She gave practical examples for recruiting new players and re-activating players, such as sending an automated e-mail notification 14 days before a player’s account would be closed after a period of inactivity. This can be done in full compliance with the new General Data Protection Regulation (GDPR), which enters into force across the EU in the end of May.

A thorough, data-driven approach to management leads to continuous measurement and improvement. Data have the ability to show the managers of Lotteries, amongst others, what the funnel of conversions per phase looks like, which a customer goes through after he or she has clicked on an ad. Such data allows Lotteries to identify bottle necks as well as successful strategies.

Last but not least, the importance of big data cannot be understated. Sarah Taylor, the Executive Director of Hoosier Lottery in the USA, recommended that Lotteries draw on big data in order to customise their interactions with consumers. Big data can lead to better personalisation, and is a tool to make sure that the services offered are akin to the customer’s needs. Such data can be used to personalise outreach for a specific product, whilst real-time data can improve engagement with customers. Real-time data can also help customers avoid disproportionately disappointing experiences.

In closing, Ms. Taylor mentioned that with the great power of data comes great responsibility. Lotteries have to uphold the highest standards of privacy at all times. The privacy policy needs to be clearly stated and visible, mentioned with customer transparency, on every website.

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Synopsis

Français

Perturbation à l’ère de l’innovation technologique

Beaucoup d’entreprises refusent d’admettre que leur industrie va être bouleversée par les nouvelles technologies, jusqu’à ce qu’elles soient placées devant le fait accompli. Jon Duschinsky, un innovateur social canadien, considère que de nombreuses personnes travaillant chez les opérateurs de loteries ne pensent pas que les avancées technologiques impacteront le secteur des jeux. Mais il explique que souvent, si vous ne bouleversez pas votre modèle économique vous-même, quelqu’un s’en chargera à votre place.

Le risque d’être impacté par des facteurs externes est tout simplement trop grand. Il suffit de penser aux révolutions causées par les grands noms de l’Internet durant les 10 dernières années. Le modèle économique d’Uber ne repose pas sur la possession de véhicules, le modèle économique d’Airbnb ne repose pas sur la possession de chaînes d’hôtels et le modèle économique d’Amazon ne repose pas sur la possession de boutiques ou de centres commerciaux. Mais chacune de ces entreprises a révolutionné son industrie.

En termes d’innovation, M. Duschinsky suggère, entre autres, que les Loteries se penchent de plus près sur le potentiel de la technologie Blockchain (chaîne de blocs). Cet outil pourrait informer les consommateurs de la cause sociale ou culturelle soutenue par l’achat d’un ticket de loto, même si ce ticket n’est pas gagnant.

Ellen Van Den Berghe, Directrice du développement des affaires et de l’innovation de la Loterie nationale de Belgique, a plaidé pour que les opérateurs se concentrent davantage sur le « small data » et exploitent mieux l’analyse du comportement des clients. Sarah Taylor, Directrice générale de Hoosier Lottery aux États-Unis, a de son côté recommandé que les opérateurs exploitent le Big Data de façon à personnaliser les interactions avec les consommateurs. Le Big Data offre des possibilités de personnalisation de l’offre et représente donc un outil permettant de s’assurer que les services proposés sont alignés avec les besoins des clients. Ces données peuvent servir à personnaliser la diffusion de produits spécifiques, tandis que les données en temps réel vont permettre d’améliorer l’engagement avec les clients.

Español

Alteraciones en la edad de la innovación tecnológica

Muchas empresas no creen que su industria vaya a sufrir alteraciones a causa de las nuevas tecnologías hasta que sucede. Jon Duschinsky, un innovador social de Canadá, cree que mucha gente que trabaja en las loterías no cree que dichas alteraciones vayan a afectar a su sector. Sin embargo, explica que, a menudo, o alteras tu modelo de negocio o alguien lo hace por ti.

El riesgo de sufrir el impacto de fuerzas externas simplemente es demasiado grande. Pensad en las alteraciones provocadas por grandes empresas tecnológicas en los últimos 10 años. El modelo de negocio de Uber no consiste en tener coches en propiedad, Airbnb no dispone de hoteles y Amazon no es propietario de tiendas. Aun así, cada una de estas empresas ha provocado cambios fundamentales en sus respectivas industrias.

En lo referente a nuevas innovaciones, el Sr. Duschinsky, entre otros, sugirió que las loterías deberían examinar detenidamente el potencial de la tecnología “blockchain” (cadena de bloques). Con esta herramienta, se podría informar a la gente sobre qué iniciativa social o cultural están respaldando con la compra de un billete de lotería, aunque no ganen.

Ellen Van Den Berghe, directora de desarrollo empresarial e innovación de la lotería nacional de Bélgica, hizo un llamamiento a centrarse más en el small data y a dar un buen uso a los análisis de comportamiento de los clientes. Por otro lado, Sarah Taylor, la directora ejecutiva de la Hoosier Lottery de EE. UU., recomendó que las loterías recurriesen al big data para personalizar sus interacciones con los clientes. El big data puede llevar a una mejor personalización, y es una herramienta para asegurarse de que los servicios que se ofrecen se ajustan a las necesidades del cliente. Esta información se puede usar para personalizar el alcance de un producto específico, mientras que la información en tiempo real nos puede hacer conectar más con los clientes.

Deutsch

Marktumwälzungen durch technologische Innovationen

Kaum ein Unternehmen glaubt, dass seine Branche durch neue Technologien extreme Umwälzungen erfahren könnte, bevor der Fall tatsächlich eintritt. Jon Duschinsky, ein sozialer Innovator aus Kanada, vertritt die These, dass viele Mitarbeiter von Lotterien ähnliche Ansichten haben. Oft jedoch, so der Experte, müssen Unternehmen selbst drastische Veränderungen lostreten, um ihnen nicht zum Opfer zu fallen.

Das Risiko, sich zum Spielball externer Kräfte zu machen, ist zu groß. Denken Sie nur an die dramatischen Neuerungen, die die großen Technologienunternehmen in den letzten zehn Jahren ausgelöst haben. Uber kommt ohne eigene Autos aus, Airbnb besitzt keine Hotels und Amazon unterhält keine Filialen. Dennoch haben all diese Unternehmen ihre jeweilige Branche revolutioniert.

Hinsichtlich aktueller Innovationen schlägt Herr Duschinsky wie auch einige seiner Kollegen vor, dass die Lotterien das Potential der Blockchain-Technologie ausloten sollten. Mit diesem Tool könnten Menschen sich informieren, welchen sozialen oder kulturellen Zweck sie mit dem Kauf eines Loses unterstützen, auch wenn sie selbst nicht gewinnen.

Ellen Van Den Berghe, Business Development & Innovation Manager der belgischen Staatslotterie, vertrat den Standpunkt, sich mehr auf Small Data zu konzentrieren und Kundenverhaltensanalysen effektiv anzuwenden. Andererseits empfahl Sarah Taylor, Executive Director der Hoosier Lottery in den USA den Lotterien, Big Data zu verwenden, um ihre Kundeninteraktionen individuell anzupassen. Big Data sorgt für eine ausgeprägtere Personalisierung und kann so sicherstellen, dass die angebotenen Dienstleistungen die Bedürfnisse des Kunden tatsächlich erfüllen. Solche Daten sind nützlich, um Kampagnen für bestimmte Produkte zu personalisieren, während Echtzeitdaten die Kundeninteraktionen optimieren können.

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