Monday, May 25, 2009

A Technology Panel for Racing? How About Right Now?

Clayton Christensen, Harvard management guru and author, has written some fine books. Perhaps his finest, The Innovator's Dilemma, discusses why large companies fall behind start-ups who have filled a niche, and capitalized on new markets.

In a nutshell, old business (in any time, really) fall prey to what he calls "disruptive technologies". These technologies are faster, easier, cheaper and niche oriented, until one day they are no longer filling a niche - they become mainstream. The large firms on the other hand, are dominated by "sustaining technologies" which are incremental to their business. In racing, a sustaining technology would have been telephone betting, or adding a superfecta. In contrast, for poker, it has all been one big disruptive technology - taking an old game and making it different.

The reason this tends to occur lies in the fact that a large business can innovate and can be disruptive, however the marketing department, and accounting departments see little reason to. First, the marketing department's answer to any disruption is "our existing customers do not want it". Second, the accounting department says "we can not model sales because the data in incapable of being modeled." For a parallel think Betfair in 2000 when they came to racing. Racings marketers said "our existing customers will not like it"; the accounting department said "cannibalization".

New companies on the other hand who embrace disruptive technology have a different mindset. Because they are smaller, they only need to grow with a niche. This is exactly what Betfair did, what fantasy football did, what poker sites did.

Does that mean that existing businesses can not do anything at all to find and embrace new ways of doing things, and create their own "disruptive technologies?" Not according to the author. He tables examples of how these companies many times have created new technologies (for example, Seagate who in the 1980's created a smaller disk drive, they just did not run with it), but because they were placed under the same corporate umbrella, they tended to fail.

His solution is simple - take it out from under the umbrella and let the innovators roll.

For racing this would mean something pretty simple: an off book technology panel, funded from a central organization, or the racetracks. This panel would find out what might work tomorrow, and instead of going to a Board of Directors that would look at them like they were from Mars, their ideas would be embraced in a positive, yet business oriented way.

Will we have a tech panel for racing to try and grow this great sport to tomorrow's customer today? Probably not. But make no mistake, with storage capacities growing exponentially, with 4 year olds surfing the internet, with faster and faster processor speeds, if we keep working on sustaining technologies, rather than disruptive ones, our market share will continue to decline.

4 comments:

ITP said...

Maybe, if the racing leadership gets real ambitious or desperate, they might have something like this ready by 2025.

malcer said...

Agree.

I think this week's HANA Pool race has been an eye-opener in that direction:
MN residents couldn't bet their own track online, Canadian horseplayers couldn't bet a track that regularly attracts Manitoba shippers (probably in retaliation for Fort Erie not taking US$ from their US customers any more).
Video signals were available - or not. And of course, bettors had to guess about the eventual odds of their bet.
Finally, it wasn't until 20 minutes before post time that I learned the race was off-the-turf (effectively throwing an hour of handicapping into the bin, I'm sure trying Cby again!). Although there were no changes in the weather the whole day, the live stream still indicated that the race would be run over a yielding turf course. It's like in an age of instant messaging, racing still uses the telegraph office.

Whoet's Picks said...

It's more severe then what you have said,

Race tracks have never gotten over the KENO revolution,

when they had a betting monopoly, and the stands were filled,

Race Tracks thought and still think that people love Horse Racing and they can Gouge them

with paying to Park, Entrance fees(Why), $5 beers, $3 hot dogs, ETC

The don't understand they need to make their money from handle.

Moan, Keno has been out for along time, the gamblers who migrated to the cheapest place

have left the Race Track, because the Rack Track does NOT compete for the betting dollar.

Why can't I bet on Horse Races in 7-11's ????

Off to a Flying Start said...

We were up to the Harness Hall of Fame this past weekend in Goshen, NY.

It is a nice mixture of traditional and newer - more advanced - displays and exhibits.

They are running nonbetting races on weekends in June and over the July 4th weekend.

I love the harness action and I familiar with all of the technical difficulties, but going there just reminded me there is so much more to it than betting simo from CBY.

Bill