4.5. Act and Adjust What Do We Need to Do iter 3. BPM Technologies and Applcitions 112 4.9 Performance Dashboards and Scorecards 117 OPENING VIGNETTE: Double Down at Harrah's diven company tht woul! bil castomer ly (Swabey, 2007) A the tne, Hara scaly ad lle cole als dit have the capt ould new hay rine and a have cade bt they werent loyal. Neatly 63 peste OF the arabs answer was Tol Gola patented program tat snow know patho Teal gram, Nox only the program seve to reward customers With re important, provided Harahs witha vast eoleaion of high vokome, realtime the Total Rewards can which sed to econ! ges cies Of al sos, purchases highest return for pial types of catomers. The vera el at Harashas es bled “dileendated stems whe they gamble and paste inher acts at Haras properties, ine is hat cures dcreionary spending ver ther competi Substantial em year to yer, ruin a undies of mlions of dol System has won a nuber of awards (e.g, TOW Best Practices Award ad has en the mbjet of many casestudies. as been recognized asthe ost specaciay ccs example of ataltcs ination today” way, 207), OF couse, awa td accolades are no uariice of future sce, expecaly in the face of a global economic Por the 10 years leading up tthe end of 207, the US. hig Thomas 2005) Ye ke fs compen, Haass faces subse Soonomi pa84 Chapter 3 © Business Perfor ce Management when it was taken private in January 2008 by the equity firms Apollo Management and ‘TPG Capital. Today, its debt load has left it facing potential bankruptcy. So, even though Harrah's has had an award-winning performance management system in place for years and is a recognized leader in the use of data and predictive analytics, it still confronts the same strategic problems and economic issues that its “lesser equipped” competitors face. Harrah's has continued to rely on its marketing campaigns to boost demand Additionally, it has instituted a number of initiatives designed to reduce its debt and to cut costs. In December 2008, Hatrah’s completed a debt-exchange deal that reduced its overall debt by $1.16 billion, and it is in the midst of another debt-reduction and maturity-extension program involving $2.8 million in notes. Like most other gaming companies, it laid off 1,600 workers in Las Vegas, cut managers’ pay, and suspended 401K contributions during the downturn. It delayed the completion of 660 more rooms at Caesar's Palace, although it is still working on a new convention center at Caesar's, which has had strong bookings. ‘Management has also been encouraged by the results of an “efficiency-management” process, pioneered by Toyota, called Lean Operations Management. Lean Operations Management is a performance management framework focused primarily on efficiency rather than effectiveness. Harrah's has launched pilot programs at several properties and planned to roll it out company-wide in 2009, QUESTIONS FOR THE OPENING VIGNETTE 1. Describe Harrah's marketing strategy. How does Harrah's strategy differ from its competitors? 2. What is Harrah’s Total Rewards program? 3. What are the basic elements of Harrah's closed-loop marketing system? 4. What were the results of Harrah's marketing strategy? 5. What economic issues does Harrah's face today? Could the Total Rewards system be modified in any way to handle these issues? WHAT WE CAN LEARN FROM THIS VIGNETTE For a number of years, Harrah's closed-loop marketing system enabled it to execute a strategy that clearly differentiated it from its competitors. The system also provided the means to monitor key indicators of operational and tactical importance. One of the prob- lems with the system is that itis predicated on the assumption of growing, or at least sta- ble, demand. What it could not do, at least in the short run, was predict drastically reduced ‘or nonexistent demand or fundamental changes in the economy. As Loveman, Harrah’s CEO, has said, “We ate not experiencing a recession, but a fundamental restructuring of financial interaction that we have grown accustomed to over a very long period of time. And it's not at all clear yet where that’s going.” Sources: Compiled from Knowledge@W.P. Carey, “High-Rolling Casinos Hit a Losing Streak,” March 2, 2009, knowledge.wpcarey.asu.cdu/article-cfmearticleld1752# (accessed! January 2010); 5. Green, "Harrah's Reports Lass, Says LV Properties Hit Hare,” Las Vegas Sun, March 13, 2009, kasvegassun.com/news/2009/mat/ 13/harrahs-reports-loss-says-lv-properties-hithaed (accessed Janwary 2010); W. SI “Exploring the Mindset of the High Performer,” Outlook Journal, October 2005, accent Research_and_Insights/Outlook/By_Issue/¥2005/ExploringPerformerhtm (accessed January 2010); T. Stanley, "High-Stakes Analytics,” snformarionWeek, February 1, 2006, informationweek.com/shared/ printablearticlejhumPParticleID=177103414 (accessed January 2010); P. Swabey, “Nothing Left to Chance,” Information Age, January 18, 2007, information-age.com/channels/information-management/features/ 272256/nothing-leftto-chanceathtml (accessed January 2010); and H. Watson and I. Volonino, “Harah’s High Payoff from Customer Information,” Tbe Data Warebousing fnsitute Industry Study 2000—Harnessig Customer Information for Strategic Advantage: Technical Challenges and Business Solutions, January 2001, terry.uga.edu/~ hwatson/Harrahsdoc (accessed Januaty 2010),