Gary Loveman's lane change from tenure-track professor at Harvard Business School to his new job as CEO of Harrah's Entertainment is the stuff of Las Vegas legend. In the five years that he spent as COO and later president, Loveman used Harrah's as the ultimate testing ground for his classroom ideas on consumer retailing. It was a perfect roll of the dice. Harrah's revenue has zoomed up fivefold since Loveman came on the scene, making the company — which was once a has-been on the Strip — one of the most profitable gaming companies in the world.
From this month's Hot Seat, Loveman fills in the gaps between ivory-tower theory and street-level reality.
What works in a business-school classroom but not in the real world?
You spend a lot of time in the classroom talking about strategy — about what the company ought to do — and much less time talking about how the company can actually do it.
Flip that question: What works in the real world but isn't taught in a classroom?
The day-to-day reality in a business like mine is that when you're serving people meals, putting them to bed at night, and entertaining them in a casino, sustaining a very high level of excellence every day is remarkably more difficult than I would have imagined.
What business are you in: retail or gaming?
I think of Harrah's as a large-scale consumer business that happens to be in the gaming business. But that certainly is not its ancestry. Five years ago, it would have been very much a gambling company. Now, we still make all of our money from gambling. But the way that we think about our challenges is consistent with the broader approach to consumer retail.
What kind of thing do people associate with the brand called "Harrah's"?
Some people like to demean us by saying we're the Wal-Mart of gaming. I love that. If I can be the Wal-Mart of gaming, I will feel like I've done extremely well for my shareholders.
What's Harrah's biggest risk going forward?
It's political. The gaming business remains badly misunderstood, particularly by policy makers. My colleagues in the industry and I need to demystify the business and reposition it as a mainstream consumer business so that it won't get the somewhat hysterical treatment that it currently gets.
You came in with an academic background. How have other CEOs in the industry treated you?
I have spent scarcely any time with other CEOs in this industry. It's not a group that tends to be very collegial. There are some very big egos in this business, with names like Trump, for example.
What do you value more, Cambridge classroom smarts or Vegas street smarts?
The sophistication of concepts that were developed in other industries had never been applied in gaming. But people like me, who came from outside the industry, applied those concepts to gaming and have had remarkable results. We went out and spent 7 million bucks to develop one of the world's only hotel yield-management systems — like the systems that the airlines have — which allows a telephone reservationist to decide what to charge each customer for a room at any of our 26 hotels on any given day in such a way as to optimize profitability. By introducing that system, we've increased our gaming win per room by 15%. That's a huge number.
Do you worry more about your casinos being studied by MIT whiz kids or HBS strategy students?