Protect Your License - Establishing Strategic Direction

Up to now my commentary has focused on regulatory issues. It may be both timely and appropriate, with the Global Interactive Gaming Expo and Conference on in Toronto next month, to turn attention toward the business issues. To this end, the next few months will focus on strategic direction, project planning, and related matters.

Surely, a vehicle is used to move your body from A to B. Now stop and think about the last few vehicles you purchased, go and dig out the old photo album. Did you purchase those vehicles, not knowing what you wanted: a truck, a four-wheel-drive, a bus, a pushbike, a road-bike? If it was a car, did you purchase it without looking under the hood/bonnet? You surely wanted to know it had an engine in it and was not just a pretty shell.

Now consider technology is a vehicle to get your profits from A to B!

If you would not buy a vehicle without knowing if it meets your needs and what drives it, then you would not put the fate of a business in the hands of technology without understanding: (a) what is required--the specifications--and (b) what drives it--the functionality, the architecture and the technology used.

You need to move from A to B. Given available time and resources, do you require a pushbike or a Jet?

Can you really know what vehicle you want to use until you know where you are going, how much time and money you have? Step 1 must always be the strategic definition and business planning.

Don't rush onto a Jet and launch an expensive project without knowing where you're going. Otherwise, the jet will be put in a holding pattern as a review committee is formed to work out direction as the fuel gauge (i.e. cash reserves) drop. The shareholders get nervous--they want movement--so a strategic decision is made which results in change of altitude. When panic sets in, the shareholders want greater movement, so the jet goes in bigger circles. Time and money are being wasted, the market becomes nervous as the project is going nowhere.

Those staff who are smart, parachute to safety and competitors collect them up, just as the Jet and the shares crash.

So what's the moral of the story?

As the Cheshire cat said to Alice in Wonderland, "If you don't know where you are going, any road will get you there."

Know Your Destination

I don't believe time-to-market is the driving issue, especially not for those companies who have an established brand and licenses at stake. It is important to put a stake in the ground, but be careful where you place it, how you place it, and make sure you can shift it without too much trouble. Perhaps test the water with a pseudo brand. Perhaps, go with the least-risk option and commence the probity and planning process in a well regulated market. That is, until you fit out your building, install the systems and employ the staff, the business is largely portable to anywhere on the planet at minimal cost.

If you don't have time to do it properly when will you have time to do it again? Do you really want to expose your license and your brand by moving into unregulated markets to get in quick?

So in identifying where you are going please consider the following matters:

The Road Map

Perhaps a business has a good idea of where it is going if it can at least answer these questions:

1. How does taking you product on-line fit into the strategic direction for the company?
2. Who are the stakeholders (board, shareholders, market, regulator, users, etc.)?
3. What are the requirements of the stakeholders? (What does your research say about where you should go?)
4. Do your financial models add up?
5. Do you understand the law? (Locally, nationally, internationally, it is a minefield out there.)
6. Do you understand what's happening internationally?
7. Have you partnered with organizations that are forward looking, not retrospective in their methodologies?
8. What is the scope of the project (much more than just technology; it includes operations, security, documentation, etc.)? What are your success criteria for the project when you plug it in, have a licence, have your first customer, break even, make your first billion? It is important everyone is working toward a definite objective and understand when the project ends and the serious business commences.

The Specifications for the Vehicle

If a business has defined where it is going, perhaps it has a good idea of how to get there if the following considerations are made:

Business Plan

Has the "where" been interpreted into strategic direction of "how," in your business plan?

Risk Assessment

Have you undertaken a risk assessment (both project and operational) and developed a risk management plan?

Has this risk assessment considered the legislation, legal and licensing implications at a regional, federal and international level? Don't forget that if you don't have a license, you don't have a business.

Consider that the risk assessment can be a useful business tool for justifying who should have a shareholding and who should simply obtain a financial remuneration. For example, if you identify that a significant risk to your business operation is having good product differentiation and there is only one Web development company that can provide this, you might then look at a profit-share or shareholding or acquisition. If your assessment identifies that the reliability of the network solution presents a major risk to your business, but you have identified there are 100 suppliers that have the expertise to mitigate the risk, you would simply pay the company you choose for time and materials and have a second supply company identified as a contingency. Having described that process, I must point out that an independent testing company such as my company, GGS (which conducts the compliance assessment), must not take an equity position or profit from the revenue of gaming.

Project Plan

It is said if "you fail to plan, you plan to fail." This is very true in establishing an Internet gambling operation. All stakeholders (including the regulator. . . good luck) should have a project plan they are committed to. The operator should have a project director responsible for administering the master project plan. Avoid the tendency to appoint an exceptional operations, marketing or financial person as project director (unless that person is also a good project director), as an exceptional operations person's true value is not realized until the project goes live. . . if ever. Some technical, regulatory and industry expertise as selection criteria for project director would not go astray either. The project plan should at least address:

1. Resource requirements (human and equipment).
2. Roles, responsibility and authority of all parties including the regulator.
3. Establishment and logistics of project office.
4. Reporting requirements. (What should be reported and when? One is generally interested in: On time? On budget? What's done? What's next? Problems? Proposed solutions?).
5. Specifications. (This one is a recurring nightmare that will receive special attention in one of my future articles).
6. Time lines indicating milestones, dependencies and critical path.
7. Standards and methodologies.
8. Deliverables.
9. Project budgets.