Casino Enterprise Management

The boardroom at IGT’s Las Vegas location could be a stop for tourist buses. Its windows give you a beautiful panoramic view of the Strip. For Patti Hart, IGT’s president and CEO, it’s not just a great view; it’s a reminder of what IGT is here for, and what the business is about—customers.

“In our management meetings and our board meetings, it all comes back to: Is it meaningful to the customer? Are we building products the customer wants? Are we allowing them to order products in ways that are convenient for them? Are we really thinking about measuring ourselves through their success?” Hart says, as we look out at the Strip. “It’s really about reminding yourself every day that it’s about customers.”

This idea of focusing on what’s meaningful to IGT’s customers is central to what Hart and her team are doing to move IGT to the next level.

Hart began her work as president and CEO in April 2009 after serving on IGT’s board of directors since June 2006. She says: “It has been a year and a half. I can’t believe it. Now it’s my company, I can’t say ‘them’ anymore; I get to say ‘mine.’ ” Hart says it’s exciting and humbling to take over a company with such history. “To come into these giant shoes of people who have accomplished what former leaders of IGT have accomplished, I mean, it’s a little overwhelming. That’s kind of how you feel, because it’s a responsibility to run IGT and it’s also a responsibility to lead the industry.”

Taking IGT to the Next Level
Hart says there was a great energy at IGT before she took over, and she is working to bring that energy to a new level through leading by example. “It’s really about people seeing me going the extra mile, putting in the extra effort, and being enthusiastic about the business. It’s contagious.” Hart is now seeing her enthusiasm spread to employees, investors and customers.

Hart adds, IGT is “less focused on the company we were and more focused on the company we can be.” She says the key has been removing a habit that the company had to predefine itself in a limiting way. Now, Hart says, what’s possible is looked at as a much bigger palette. This has been done by combining new thinking and institutional knowledge. “It’s about bringing new ideas and putting them inside a history,” Hart explains.

Hart is proud of many things her team is working on, including some projects her management team has moved forward.

The first is an increase in the speed of innovation. “I think it would be fair to say that the speed of innovation at IGT, and generally in this industry, has really not kept pace with the appetite,” Hart says. IGT has worked on this in the areas of new product development, up-front research investment, product innovation, tools, processes, people and measurements. Hart sees a risk when complexity curves start to become steep, and that the speed of innovation could result in increasing costs. “So we have to keep pace with the need and appetite for complexity, but we have to absorb it financially as a company. There’s a whole circular process around that, that has to do with the velocity, quality, innovation and cost of putting new products into the marketplace. It’s new for IGT and it takes time because our product development cycles traditionally have been over a year in length. It’s going to take some time to see the results, but we’re already starting to see that the rate of innovation is improving in the business.”

Robert Melendres, IGT’s chief legal officer and corporate secretary, and his team have a new focus on changing the way the company and the industry look at intellectual property rights. Hart says:  “I come from industries where intellectual property is revered and this has not necessarily been the case in this industry. So, building intellectual property and understanding where the future value creation will be, that’s really what intellectual property protection is all about.” Hart believes manufacturers should think of intellectual property as a path to monetization and moving the entire industry forward, rather than as an impediment for competitors.

On the employee side, Hart’s team has put things like employee surveys and enhanced training opportunities into place. This act echoes one of Hart’s core beliefs in life and work. “The employees are our greatest asset. When people come to work here, they’re investing in their career and they are putting their career in my hands, which is a huge responsibility. I make certain that I am providing a work environment that is motivational for them and that they see future opportunities for themselves here at IGT.”

Hart aims to challenge employees while being respectful and welcoming their ideas. “I do try to live my life that way every day, where I have respect for every person I come across in life. I don’t always agree with them—respect doesn’t mean agreeing—but I do have respect for them and their perspective and I think that’s important.”

Hart says all of this is really giving employees, customers and investors a future to believe in, which is very important to her. “I think it was something that this workforce needed and customers needed. Our customers really need to be able to count on us. They build their business based on our products, whether it’s our systems products or our gaming machines.”

A Perfect Fit
To say Hart’s resume is impressive is an understatement. She has a bachelor’s degree in marketing and economics from Illinois State University and has held the following positions: chairman and CEO at Telocity Inc.; president and COO of the long distance division at Sprint Corp.; director of alternate distribution, strategic planning at InteCom Inc.; and consultant at United Technologies Corp. Hart also held various high-level positions at Sprint before becoming president and COO of its long distance division.

Yet, Hart says she’s never had a job as great as this. “This was just made for me. It is the great collision between entertainment and technology, two of the things I love most in the world, and a history that is unprecedented.”

There are many lessons learned and best practices Hart has taken from her previous jobs in other industries, and she’s bringing them to IGT.

The first example that comes to Hart’s mind is the one she says has been most helpful so far. It’s a lesson in the evolution of technology, gained during her time at Sprint. “Watching the technology evolution and understanding that the technology evolution drives business model change. It drives how people consume your product, how they pay for your product, how they value your product.” Since the gaming business model and the experience offered to the player have been the same for so long, Hart says she is helping employees see that the changes occurring now will drive how IGT does business. She wants IGT to be on the front end of this evolution.

A lot of what Hart uses from her past experiences relates back to what she calls “Management 101.”  “It’s really just going back to my basic blocking and tackling of management: motivating people, solving problems, setting objectives, measuring, benchmarking and best practices.” Hart says she’s more of an operating executive than a strategic executive, and she is very metrics driven.

One of the things Hart has used more than she thought she would is her network of colleagues from the technology and infrastructure worlds. She says she’s found herself relying on her network for advice, resources and perspective, which has allowed her to make decisions faster.
Hart has recently added to her network, upon taking a spot at the Yahoo! board of directors’ table. She says, “It has been eye-opening for me in helping me think of IGT.” Hart says she has Yahoo! shareholders first on her mind while attending the board meetings. But then she leaves, looks at her notes and thinks of how they can apply to IGT. “I’m certain my management teams are just thrilled the day after my Yahoo! board meeting,” she says sarcastically, “because I have all my lists and notes.” Hart says the companies are surprisingly similar in that they are at the same point in transformation; they are both leaders that got rocked back a bit by new competitors and she suspects both companies are a bit misunderstood.

With Hart’s work at the highest level in the industry, it would be easy to lose sight of what’s actually happening on the Strip and at casinos around the world. However, Hart’s extended family, at home in the Midwest, and her tendency to visit casinos on a regular basis keep her grounded.

If you ever feel like you’re being watched as you play a slot machine and you get tapped on the shoulder as you get up to leave, there’s a chance you’re about to meet Hart face to face. This is what she does when she’s not playing her own games (slant-tops are her favorite) at the casino. “I love when someone gets up from a machine, to ask them why.  ‘Why did you stop playing that one? Why are you looking for a new one? What did you like about that one?’ ”  With a focus on the competitors’ products, Hart admittedly hovers over players to see how they interact with games. “I love it, I just love it and I spend too much time in there, my husband will tell you.”

The Casino of the Future
When describing what Hart sees as the casino floor of the future, she refers to what she calls the O’s of technology: social, local, video, communal and personal.

Hart expects increasing complexity and more personalization to change gaming as gaming also moves to be more social and communal. She says players want more control over their entertainment, the ability to share their experiences and more options to multi-task.

“Many, many, many more applications. People are becoming so accustomed to multi-tasking 24/7, right? And the casino industry, for a very long time, has been very singularly focused. So when you’re playing something you’re very singularly focused.”  This has started to change, with the introduction of bonus rounds on top-boxes and the ability to bet on 50 lines instead of three.

As players move to more of a multi-tasking environment, she says casinos have to follow. “And I think that will be a challenge for us in our industry, because it’s kind of grown up by capturing you.”

As the gambling industry expands and matures, Hart says localization becomes more critical for global companies such as IGT. It’s one of the growing pains the industry is facing—how to attract a new player. The key, she says, it talking to them in their language in ways relevant to their lives. “So the notion of mass customization of our games, where we’re building a game and then localizing it to make it more relevant, is going to be a very important part of growth, not just for us, but I’d say for our operators, as well.”

To do this well, IGT is making sure it has employees in all of its markets. The company uses data, but at the end of the day, Hart says, you have to have people who understand the culture and traditions of a specific market. “It’s important to have people on the ground, whether it’s in Greece or South America, or in Green Bay or St. Louis. I grew up in the Midwest and I’ve lived all over the world and people live differently in different places. And playing to their strengths and their interests is easier than convincing them that they want a Nevada experience.”

Cabinet Myth Busting 101
Hart says one thing she expects to see in casinos are game-specific slot machine cabinets made by IGT. A year and a half ago, she did not see things that way. “Originally, I thought a universal cabinet was the future, but I have come to realize the importance of distinctive cabinet design,” she explains. “We are not to the point yet that I feel like we’re done refining the box.” Hart says she now realizes that the physical interaction with the machine or cabinet itself still has an impact on how people feel about the game experience. Usability tests at IGT show that players care about every detail of the cabinet down to the number, size and spacing of the buttons. Players have also asked for changes in inches to the height of a ledge on a cabinet.

Hart says she wants to create a more powerful box. In time, manufacturers may move to one generic box or no box at all, but Hart no longer sees this as a next step. “Can we enhance the box through an expanded game library? Yes. Can we eliminate the need for ergonomics? I think we’re a ways away, I really do.”

Hart now understands that the physical machine added to game content and money velocity are the integral parts of a players’ experience and all three are still very much needed. “So myth busting 101 for me, when I joined IGT, was that, ‘Oh wow, this doesn’t move as quickly as I thought it did, and for all good reasons.’ ” 

Open Standards
Hart says adopting open standards is the only way for the gaming industry to really make many of the advances she and others dream of. She says it’s impossible to have four or five different systems. When it comes to the same open standards being used by everyone, Hart says it’s a matter of when, not if.

Hart explains: “I come from such different industries where the peaceful co-existence was just part of the game. And in this industry, it isn’t. And it’s surprising that it isn’t because this industry is small enough that you’d think it would have actually gone earlier to open systems. It’s the only way we get there.” Although Hart wouldn’t say gaming is an overly friendly industry, she does firmly believe that it is respectfully competitive.

So when will this finally happen? Hart believes it will take the manufacturers making up their minds that an open system environment is more important than working on interfaces to connect to someone else’s system.

Hart expects the economic recovery will speed up the move to open standards, as operators look to upgrade. “Then I think it’s going to take some intestinal fortitude on everybody’s part to say, ‘Nobody is going to be the clear winner of this. It’s not about who wins; it’s about getting to the right place and having a path to get there.’ ”

What will it take then, for manufacturers to make this a priority? Hart says they need help from outside parties like associations, the standards body and customers. “We’re never going to choose, because it’s not in anyone’s best interest to choose anything but their own.” She adds that from what she has seen in other industries that have been successful, it’s best to identify a future open standards environment and give companies a set time in which they are required to meet it. This puts everyone on the same playing field. “It’s a matter of mapping to a standard over time; you can’t just cut and run, because it’s too disruptive to somebody’s business.”

Finally, Hart says manufacturers need to hear a louder voice and stronger commitment from the customer. “When you get to the point where you’re inconveniencing your customer, that’s pretty motivating.” Hart says if customers would come and say, “If you build the open standards, we will buy the open standards,” it would be easier. “It’s really a circular thing. You have to have customers and the standards body and the manufacturers all around the same table, with the same objective.”

Hart says IGT is very committed to an open system environment where it can build a game and be interoperable to any open system that uses the standards. “We’re happy to build our systems to those kinds of standards as well,” she adds.

Internet Gaming
When it comes to legalized Internet-based and mobile gaming in the United States, Hart believes it’s a matter of when and how this is accomplished, not if. She says it’s the responsibility of IGT and the industry to help define how legalized i-gaming comes about in new markets to ensure it’s done responsibly and in a way that current gaming companies will participate. To do this, Hart and IGT leaders are currently working politically around the world to educate leaders and help them understand the options and why they exist. IGT is also talking with its casino operator customers about i-gaming, to help them think about how they can work together as partners.

Hart wants the gaming industry in the U.S. to avoid what happened in places like Europe, where new entrants have enjoyed much of the new growth in legalized i-gaming. “The land-based operators resisted for a very long time and by resisting that they surrendered part of their market to new entrants, which is a shame.”

IGT currently supplies online games in legalized markets to online operators. Hart says, “We would argue that we probably have the best content in the industry, so we have a really nice benchmark for what’s possible.”

The company also has a new, interactive division headquartered in San Francisco. This division is responsible for all of IGT’s online casino content across the globe. Its tasks include filling product gaps, forming partnerships and meeting the speed of innovation required for the online world.

Hart is excited about the opportunities that exist when it comes to transferring games from IGT’s land-based business to online gaming. “We haven’t leveraged that as we need to as a company. And we’re doing that outside the U.S. We’ll probably triple the number of games that we’ll introduce to our online partners outside the U.S. from what we did last year to this next year. That’s a challenge for us.” Hart says it’s a laborious process, to transfer games from land-based to online, but it’s necessary because of the little start-up shops that constantly pump out new content for online casinos.

Hart says players want a multifunctional platform, so serving just one option is difficult. Online casino customers of IGT include Paddy Power, Virgin and Party Gaming. Hart explains, “It was a strategic decision whether we’d keep all the content for ourselves or we’d distribute more broadly, but keeping the content for ourselves meant that we really had to replicate everything they had, which takes time and money.”

Hart adds that going directly to the player is not IGT’s skill. “We’ve never done it as a company. We’re a b2b company and so staying in that vein and playing to our strengths is what we really decided to do, and we’ll likely take that same approach in the U.S. when the time is right.”

Customer Relationships
Although Hart realizes going directly to players is not IGT’s strong point, it doesn’t mean she’s leaving it at that. One of the things that has impressed Hart since she entered the gaming industry is how well operators understand who their customers are. “We haven’t pushed through to that level as deeply as we should, in our history, and we’re making some changes around the globe,” she says.

IGT is doing patron research in the early stages of product development for things like brand and colors used in a game or cabinet. It also does usability testing to get feedback on how the game is playing. This, Hart says, is rewarding, especially for her. “It’s about putting real-life people in front of the machines and watching them play it. Or you can wander around the casino the way I do!”

Hart wants IGT to do a better job of helping casino operators understand the difference between a game that will be a home run for them or a strike out. She is also reaching for more consistency in the way IGT is willing to stand behind its products. “To share the responsibility when the product is not successful is something that we have to think about differently as a company than we have historically and not put operators in a position where it feels so risky.”

It’s all about the customer for Hart. When asked what her goal is for IGT for the next few years, she says: “It has to be measuring our customers’ relationships with us. That’s really what it’s about for me.” 

Hart will continue to do this through customer satisfaction surveys, IGT’s customer advisory board and personal phone calls to operators. “I poll customers. I’m on my ‘calling a customer every morning’ kick right now. Drives the customers crazy a little. But at the end of the day, the key measurement for me is if they’re satisfied with me, it means they’re using more of my product. Not necessarily just measured in revenue, but that they’re actually using more of my product.”

One Woman, Many Roles
At work, Hart’s priorities include returning more to the shareholders of IGT, having great customer relationships and ensuring that IGT employees see themselves enjoying a bright future with the company.

When Hart’s not at work, she spends most of her free time working, in a way. It’s those visits to the casinos that keep her busy. “I think I’m still on the learning curve a bit, so I still haven’t earned the right to kind of pull back and have as much intuition as some of my customers have. I have to tell you that my customers will all be happy to know I spend way too much money in their properties right now.”

Hart is proud to be working in the gaming industry and it seems like she can’t get enough of it right now. “I think it is a time when a lot of very interesting things are coming together inside the industry and outside the industry. And the need to stimulate growth in our industry has forced people to think bigger.”

She loves the passion people in the business have about what they do, and the passion players have for the products they enjoy. “I’ve never been in a business where people will tap you on a shoulder in the casino and say, ‘Where’s XYZ game?’ because they’re on a mission. I’ve just never seen anything like it. I mean, when I go in to buy toothpaste I’m not on a mission to find a particular brand. I’ll buy whatever is on sale.”

Outside of work, Hart grocery shops, goes to the movies with her husband and reads. She is a voracious reader. Historical fiction is Hart’s favorite, especially books that are set outside of the U.S. She says: “I’m kind of a life-long student. I love learning things, so I’m always reading.” While she loves to read a book off the shelf, she’s also converted to using her iPad™ for reading, and pretty much everything else she used to use her laptop for. She admits she’s turned into an iPad addict.

When it comes down to it, Hart says she just feels like a hard-working family woman. “I’m a mom and I spend time being a mom and being a wife and running IGT. That’s kind of it.”

Sarah Klaphake Cords is the New Media Editor for Casino Enterprise Management. She can be reached at editor3[at]aceme.org.

Listen and watch IGT’s Robert Melendres talk about intellectual property with attorney Greg Gemignani at www.aceme.org/video-library.