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Issue Date: Vol. 53, No. 2, February 2013, Posted On: 3/1/2013


Can Innovation Save Coin-Op?


Marcus Webb
TAGS: TAGS: vending, Vending Times editorial, Marcus Webb, coin-op amusements, jukebox, digital jukebox, amusement operator, industry innovation, business buzzwords, General Electric, GE Innovation Barometer, CEO survey, multidisciplinary


Beyond the music and games industry, the hottest buzzword in today's business world is innovation. From the Fortune 100 to tiny startups, companies are eager to portray themselves as innovative innovators who are innovating endless innovations (innovatively, of course).

Actually, innovation has been one of the most popular business buzzwords for years, now. Lately, however, deployment of this word has reached new heights of intensity.

It's not hard to figure out why. There is a strong sense abroad in the land that economic conditions, financial challenges, technology and the global business environment are changing so fast that if you don't innovate, you can't keep up. It's innovate or die.

Last month, General Electric released the results of its annual poll on the subject. The 2013 GE Innovation Barometer surveyed 3,000 top business executives in 25 countries, all of whom head their companies' strategies for innovation.

The poll provides some fascinating tidbits. Of CEOs surveyed, 64% said successful innovation requires coming up with new business models ... and 52% admitted their own current business model is an actual impediment to innovation.

A near-unanimous 91% of the chief executives also said understanding customers and markets is crucial for successful innovation, while 79% said their companies should improve products or services to boost future performance.

The CEOs also identified their toughest barriers to successful innovation. Among them: not enough good workers out there who can think creatively. The instinct that many managers have to protect their turf. Sheer inertia, or the desire of everyone from chief executives to floor-sweepers to "keep doing what we've been doing."

More collaboration helps promote innovation, the CEOs told GE. A whopping majority, 68%, said they have developed new products or business models by collaborating with other companies.

The value of collaboration is the reason why another big buzzword out there today is "multidisciplinary." From R&D labs to think tanks, and from the executive suites to the university research centers, organizations are placing more and more emphasis on getting different kinds of experts around one table to share many points of view on a single challenge.

The idea is simple: everybody can contribute something different yet useful, and when knowledge is combined in unexpected ways, the results can be ... you guessed it ... innovative. If nothing else, collaborators can at least get a 360-degree perspective on the problem. (Remember the classic story of the six blind men and the elephant.)

What about developing new technology? About 42% said new tech is crucial to successful innovation, a relatively low number. Surprisingly low, considering how tech-crazy today's consumers are.

The music and games industry has been looking for technological innovation to ride to its rescue for many years now. To some extent this has happened. The most obvious example? Digital jukeboxes. Yet anyone familiar with the history of this product recalls the early resistance that many traditional music operators and distributors displayed toward digital jukes.

What about innovation through collaboration? The industry's record here is also mixed. On the one hand, we're seeing solid political cooperation among operators, distributors and manufacturers these days, perhaps the best in decades. And, the aforementioned jukebox manufacturers have brought in some powerhouse executive talent from other fields.

On the other hand, the industry remains skeptical of outsiders -- marketers and consultants who may bring fresh, dynamic approaches to the industry, but who, by the same token, "don't understand the business," like someone who toils in it daily.

Perhaps the most fascinating area for potential innovation to help the music and amusement machine industry lies in the realm of creating new business models.

We've heard about business model innovation in amusements for decades (although it wasn't always called that). For example, many leading operators have shared their strategies for expanding the goods and services they provide to locations beyond music and games to include water, restaurant supplies, security systems and even outdoor heaters.

Leagues and tournaments offered a new business model when they arrived. So did redemption and merchandising. All of these came with new technology or at least new applications of technology, too.

Yet some of the industry's most innovative business models have also been its most controversial. Just think of "revenue sharing" (between manufacturers and operators) and direct sales (bypassing distributors or operators).

What new business models can operators, distributors and manufacturers dream up to leverage their assets in creative new ways, without having to rely on new talent or new technology? The answer to that question may be the shortest path from stagnation to innovation -- and new levels of profitability.


Topic: Editorial: Music and Games

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