Human Capital Briefs

Capturing the Innovation Mindset at Bally Technologies

November 01, 2013

Bally Technologies, a leading provider of gaming systems for casinos, has earned more than 60 awards for innovation in just the last four years. It increased R&D spending from 7-8% of revenue before 2009 to 11-12% of revenue starting in 2010, and maximized the return on that increased investment. The result: Its return on assets tripled, from an industry-lagging position below 4% to an industry-leading position above 12%. How did Bally Technologies do it? Through an innovation excellence framework.

This framework is not new; we introduced a similar mindset in an earlier post with 3M. But while the foundational elements are the same, Bally Technologies uses them in a distinct way. It has a more rigorous organization structure that divides responsibilities between the innovation team and development team, and strengthens management around the opportunity pipeline. The company combines this with an intense focus on execution and weekly course correction — but also uses innovation as a means to get the employees energized.

Bally Technologies has achieved great success, but only after making this framework its own. Using the five tenets we introduced before, here’s a breakdown of how the company does just that.

Innovative companies find the right opportunities by providing forums for customer voices and for researchers to proactively look for new technologies to benefit customers.

Bally Technologies uses customer panels to understand the voices of its customers and to shape new opportunities. Focus groups are also used to understand how engaging the games are, whether they need to be redesigned or fine-tuned, and whether the opportunity needs to be shaped before it becomes practical. This is done in specially designed rooms, where customer behavior can be observed without the customers becoming distracted.

Moreover, researchers regularly attend trade shows and seminars that showcase next-generation technology. This helps them come up with breakthrough ideas to explore.

Innovative companies create an environment that fosters the right balance between current and future with “and thinking.”

Bally Technologies has several mechanisms to sustain “and thinking.” Its Innovation Lab focuses on ideas and technologies two to five years out, not all of which come to fruition. Once a technology prototype has been focus-group tested and a viable business model is established, it is handed over to a new product development team in the mainline business units. These teams have disciplined processes to get the technology to market, generally with a one- to two-year product horizon.

This multilevel structure ensures that the day-to-day operations of quarterly and annual performance are not disturbed until the opportunity has matured, with predictability and repeatability that can be managed by the operations team. At the same time, Bally Technologies has a portfolio of ideas and patents that ensure the organization will stay relevant in the future.

Innovative companies create systems, structures, and work environments to encourage resourcefulness and initiative.

Bally Technologies actively emphasizes innovation. “We bring to market a steady stream of innovative products and solutions. This is possible because our employees are resourceful and have an innovative mindset, and we create the right climate for them by continuing our commitment to R&D across games products, systems, and interactive technology,” Bally Technologies’ President and Chief Executive Officer Ramesh Srinivasan told us.

Bally Technologies has created a rich set of structures, systems, and rewards to encourage resourcefulness and innovation, including cash awards like the Patent Disclosure of the Quarter ($5,000) and the Patent Disclosure of the Year ($25,000). There are also “challenges” to which any employee or group of employees can respond — an organization-wide crowdsourcing approach. For example, one specific challenge was, “What is the next wave of ideas that can be used to take advantage of location-aware mobile technology for our casino customers?” Responses are vetted for viability and patentability, and the winners are submitted to the annual Best in Bally Leaders in Innovation Award.

Finally, it has Kaizen events where both salaried and hourly employees gather together for a week, mapping processes in order to solve problems and streamline operations. The Kaizen events create not only fresh ideas but also a spirit of learning and cooperation through the company. Team presentations at the end of the week have become a powerful and proud part of Bally Technologies’ culture.

Innovative companies focus on the right set of outcomes. They tailor what is measured, monitored, and controlled to suit their focus, and strike the right balance between performance and innovation.

Bally Technologies prides itself on being practical and focused on outcomes. Every senior executive submits a weekly report that answers three questions:

1. What are three things in your world that are going well?
2. What are three things in your world that are not going well?
3. Are there any exceptional employee behaviors that need to be recognized?

A summary report is then sent to all executives; this creates an openness to share weaknesses, aligns priorities, and helps keep the focus on things that matter most. Take, for example, a plane heading from Boston to Phoenix. If that flight’s trajectory were just a degree off, it would end up in the Grand Canyon. But the fact is that planes are more than a degree off 95% of the time, and most planes land where they are supposed to. How do they do it? One key reason is dynamic course correction. The weekly report and the actions taken to respond serve the same purpose for Bally Technologies. It helps the company to take actions in time to make a difference.

Innovative companies have strong mechanisms to ensure a continuing focus on expanding the pie, by effectively converting nonconsumers into consumers, and providing richer solutions to current consumers.

Instead of focusing only on individual games and machines, Bally Technologies expands the pie by creating systems that connect the entire gaming floor. This provides the casino operators an enterprise-wide view of what works, what doesn’t, and what actions to take to improve performance. It then builds on that foundation to deliver the same great game experiences on mobile devices as on the casino floor and extend a casino’s ability to market, engage, and monetize their customers on these new distribution channels with its iGaming Platform.

The innovation mindset is a game-changing asset for companies as well as individuals. Innovative companies like Bally Technologies create the structure, systems, and culture to enable their people to think and do things differently in order to achieve extraordinary success.

 

This blog first appeared on Harvard Business Review on 10/04/2013.

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