INCORPORATING EVIDENCE-BASED DECISION MAKING INTO YOUR BUSINESS MODEL
Lately, I have been evaluating how successful businesses incorporate an evidence-based decision making process to increase profits in a highly competitive economy where old business models are dying.
What is it?
Evidence-based decision making is a process for making decisions about business practices, strategies and policy developments that are founded on research and evidence from the field and relevant, contextual information. This method allows us to make decisions that are actionable and measurable.
Fierce competition from disruptive new technology and increasing online services are creating a high level of financial uncertainty for many businesses including the casino industry. So, in this fast-paced evolving business climate, does using research as a foundation to make evidence-based decisions improve financial performance?
According to a Harvard Business Review study, companies who create a “Culture of evidence-based decision making have all seen improvements in business performance.” And more alarming, in the study of 51 companies, they found those who use data are rare.
How does that compare to the casino gaming industry?
According to Raving’s 2016 Annual Indian Gaming National Marketing Survey*, a majority of properties reported that they conduct numerous types of research. However, this does not answer the question as to whether they use it.
We know we need it, and we say we are conducting it, but is there a gap between conducting it and using it to make evidence-based decisions? After interviewing numerous casino operators and two of our industry’s leading market researchers, the answer is “no.” Some level of data is collected, but typically it isn’t sufficient to credibly implement a culture of an evidence-based, decision making process.
As an example, I worked with a property with an 1100-seat bingo hall located in an area with under 30,000 people. The bingo manager was tasked with filling the hall seven days a week with matinee sessions on Saturday and Sunday. After a couple of years of losing about $250K a year and not filling the room, I was asked to help “fix” bingo. I was told that the room should be packed nightly. My first question was, “Do you have the research or feasibility study that was done to base this expectation on?” The answer stunned me, “No, we built the room this big for future gaming expansion, but we should be able to fill it because Foxwoods does and they are in a similar rural location.” Yes, the property was remote, but it was not located anywhere near the population surrounding Foxwoods. So, for two years, the property lost over a million dollars based on a flawed assumption.