by by Andrew MacDonald and William R. Eadington
“GOOD TO GREAT IN GAMING” – GAMING COMPANIES DOING WHAT THEY KNOW BEST BY KEEPING IT SIMPLE.
by Andrew MacDonald and William R. Eadington
“The fox is a cunning creature, able to devise a myriad of complex strategies for sneak attacks upon the hedgehog. Day in and day out, the fox circles around the hedgehog’s den, waiting for the perfect moment to pounce. Fast, sleek, beautiful, fleet of foot, and crafty—the fox looks like the sure winner. The hedgehog, on the other hand, is a dowdier creature, looking like a genetic mix-up between a porcupine and a small armadillo. He waddles along, going about his simple day, searching for lunch and taking care of his home.
“The fox waits in cunning silence at the juncture in the trail. The hedgehog, minding his own business, wanders right into the path of the fox. ‘Aha, I’ve got you now!’ thinks the fox. He leaps out, bounding across the ground, lightning fast. The little hedgehog, sensing danger, looks up and thinks, ‘Here we go again. Will he ever learn?’ Rolling up into a perfect little ball, the hedgehog becomes a sphere of sharp spikes, pointing outward in all directions. The fox, bounding toward his prey, sees the hedgehog defense and calls off the attack. Retreating back to the forest, the fox begins to calculate a new line of attack. Each day, some version of this battle between the hedgehog and the fox takes place, and despite the greater cunning of the fox, the hedgehog always wins.” From Jim Collins, GOOD TO GREAT.
“There is a line among the fragments of the Greek poet Archilochus which says: 'The fox knows many things, but the hedgehog knows one big thing'. Scholars have differed about the correct interpretation of these dark words, which may mean no more than that the fox, for all his cunning, is defeated by the hedgehog's one defense. But, taken figuratively, the words can be made to yield a sense in which they mark one of the deepest differences which divide writers and thinkers, and, it may be, human beings in general. For there exists a great chasm between those, on one side, who relate everything to a single central vision, one system less or more coherent or articulate, in terms of which they understand, think and feel-a single, universal, organizing principle in terms of which alone all that they are and say has significance-and, on the other side, those who pursue many ends, often unrelated and even contradictory, connected, if at all, only in some de facto way, for some psychological or physiological cause, related by no moral or aesthetic principle; these last lead lives, perform acts, and entertain ideas that are centrifugal rather than centripetal, their thought is scattered or diffused, moving on many levels, seizing upon the essence of a vast variety of experiences and objects for what they are in themselves, without consciously or unconsciously, seeking to fit them into, or exclude them from, any one unchanging, all-embracing, sometimes self-contradictory and incomplete, at times fanatical, unitary inner vision. The first kind of intellectual and artistic personality belongs to the hedgehogs, the second to the foxes…” From Sir Isaiah Berlin (1953), THE HEDGEHOG AND THE FOX.
Jim Collins’ classic business book, BUILT TO LAST (1994), was followed by his 2001 contribution, GOOD TO GREAT, where he examined the principles of companies that had made the leap from being “merely good” to being “great.” In conducting the research for his book, Mr. Collin’s focused only on companies that were able to progress from a track record of good performance to a sustainable period of “great” performance in the long term, i.e., 15 years or more. As such, his conclusions are about principles that deal with transformation: principles that allow a company to transform from Good to Great and stay there.
Collins borrowed from Sir Isaiah Berlin to develop his essential principle in GOOD TO GREAT: the Hedgehog Concept. He defined this as “a single organizing idea, a basic principle or concept that unifies and guides everything within the organization.” It does not matter how complex the world really is; a Hedgehog Concept reduces all challenges and dilemmas to simple—indeed almost simplistic—Hedgehog ideas. Anything that does not somehow relate to the Hedgehog Concept has no relevance.
The good-to-great companies studied by Mr. Collins and his team were found to have built and zealously focus on strategies that were founded on three key dimensions.
1. What is it that you can do better than anyone else in the world? (And, equally important: what can you not do the best?) This discerning standard goes far beyond core competence. Just because you possess a core competence does not necessarily mean you can—or ever will—be the best in the world at it. Conversely, what you can be the best at might not even be something in which you are currently engaged.
2. What drives your economic engine? All the good-to-great companies analysed by Mr. Collins attained piercing insight into how they could most effectively generate sustained and robust cash flow and profitability, by identifying and focussing on a single common metric—i.e. profit per x—that had significant impact on their economic performance.
3. What are you deeply passionate about? The good-to-great companies focus on those activities that ignite their passion. The idea that needs to be carried forward is not to stimulate passion but to discover what makes a company passionate.
The intersection of these three dimensions becomes the core defining Hedgehog Concept for the organization. Such a concept should not be a blindingly complex statement of strategic objectives, but rather it should follow Occam’s razor by offering the simplest and best possible solution for a variety of challenges.
When we apply these ideas to gaming companies, can we find some that have made the leap from Good to Great by following a defining Hedgehog Concept? We begin by looking at a couple of gaming organisations that may have taken that leap and arguably can be characterised as having achieved greatness.
Wynn Resorts is a relatively new company founded by Steve Wynn which went public in October 2002. Wynn is often given credit for having been the visionary and driving force who redirected Las Vegas and helped transform it from what it was into a world-class destination—arguably the world’s most popular tourist destination—from the end of the 1980s to the present. Indeed, he is sometimes referred to as the Walt Disney of the gaming world.
In 1989, when Wynn and his then-company Golden Nugget (later to become Mirage Resorts) built and opened The Mirage on the Las Vegas Strip, Las Vegas carried a somewhat mixed reputation among potential visitors. Its casinos could be divided between “carpet joints” and “sawdust joints,” and popular casino design of the day could unkindly be characterized as “modern bordello.” The business philosophy of many casinos was that every part of the operation had to serve as a loss leader, with a purpose of funnelling customers into the casino, which would serve as the only real profit centre and “cash cow” for the entire operation.
The image of Las Vegas up to that era had more than a few rough edges. Las Vegas was considered by many—though not all—as being “cheesy,” “tawdry,” “mob infested,” “cheap,” and “nasty.” All-you-can-eat buffets were a cornerstone of the destination’s marketing image. Cheap rooms, cheap food, escort services, and a reputation tarnished by years of mob influence and political scandal had left many cold to the idea of visiting Vegas. As a result, Las Vegas was tapping into only a moderate portion of its potential market.
But Steve Wynn saw something different – a vision of a Las Vegas reborn – that would cater to affluent Americans and foreigners who were prepared to spend more for quality, and who would willingly extend their leisure and after-hours lifestyles to the places th
Date Posted: 01-Aug-2007
Andrew MacDonald is founder of urbino.net and is also Executive Vice President with Genting Berhad in Malaysia covering that group's global activities. He can be reached at email@example.com
Bill Eadington is a professor of economics and director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno. He is an internationally recognized authority on the legalization and regulation of commercial gambling, and has written extensively on issues relating to the economic and social impacts of commercial gaming. Eadington can be reached at firstname.lastname@example.org.