In July, the strategy discussion explored what appears to be a growing trend, gamification. In fact, by the time I managed to write up the observations from the discussion there were a host of new articles and research posted. So whether you did or didn’t attend the discussion, I hope you will find the following reflections and questions valuable and I encourage you to share your thoughts, reactions favorable or otherwise.
If you have not yet encountered this new word, let me assure you, the word may be new but the concept is as old as Adam and Eve.
Wikipedia defines Gamification as:
“the use of game design techniques, game thinking and game mechanics to enhance non-game contexts.”
Overall, play is big business and the small game companies,by Gamespot’s estimate represent a small but significant fraction of the industry. Erik Sinclair’s comparison sized the diverse software and entertainment giants (e.g. Sony and Microsoft) ,at least $220 billion in revenue, against the small upstart, dedicated gaming companies (e.g.Zynga, Take2) less than $8billion all in. The sabre rattling threat these small companies pose in part comes from the changing nature of the US market.
Take the mobile market, Smart phones and Tablets are fast growing with higher penetration rates among households with higher than average disposable incomes. Online and mobile games revenue estimates for 2012 total $2billion, with 10% annual growth expected.
Add in the realization of changes in the average computer and video game player’s profile and you quickly begin to recognize a different business environment that the small gaming companies are tapping. A 2011 Entertainment Software Association study reports 72% of US households play games, with the average age of gamers being 37. “Additionally, more than half of gamers play on their phones and other handheld game devices, and women now represent 42% of the gamer population.”
Social games continuing to grow and develop in depth and richness, eventually being able to appeal more to core gamers. Growth rates in this segment expected to exceed 10% annually.
Is play merely a tactic?
When do we play or more realistically, are we ever not playing? The expressions for serious work often use the same metaphors associated with play. In a difficult negotiation, the party with their game face on seems more serious, or more determined to win. The contradictions, cross signals and mixed metaphors are everywhere.
When there’s little time to spare, or the manager feels “under the gun,” the race on, play is shoved aside. Generally we perceive play as diversionary though in reality the energy, cooperation and inherent competition of play builds relationships and focuses attention on less obvious , but critical elements.
Success at work, requires some degree of impromptu problem solving, or creativity, and often on demand. Faced with obstacles, challenges or problems, people frequently assume a more serious disposition and cut off creative responses of humor, doodling and imaging. When looking for answers, we try to think or work harder. The added time pressures and stress tend to produce more predictable, less inspiring and less lasting results. In this context, the move to gamification represents a positive shift and opens the door to greater opportunities, made possible through tinkering, playful recombination of ideas and averted concentration.
Traditionally, marketers used gaming techniques to engage customers and promote product sales. The relationship between understanding the psychology motivating peoples attitudes while playing games connect quite naturally to motivating people to like or use your product or service. On face value, the merit of games differentiates them from real life. Their self-contained outcomes make them fun, less serious, relevant or central to the driving demands of business leadership and management needs. Or so we thought.
Play, Great Leadership and Skill Practice
Talking through the articles collectively we realized these distinctions were fuzzy and perhaps false. Games often have consequences for losers. Severe consequences result from not playing along at work or in school; as is the flip side magnifying the flow of rewards to those who play well. The value of a poker face, for example extends beyond bluffing in a poker game. Likewise the valuable experiences women gained in team competition with the passage of Title9 has been well documented. Direct data and studies on the impact of gaming on business run the gamut. Surveys by M2 Research and reports by Gartner on the use of gaming in companies show games help achieve a higher degree of employee engagement and boost overall performance anywhere from 10% to 80%.
In spite of these numbers, attitudes and perceptions around play as diversions, rather than serious experiences, are slow to change, though researchers like Jane McGonigal continue to trumpet the benefits. (FYI, learn more about the brain science behind gaming in her recent book Reality is Broken is a good read, as are her TED talks.)
The Role of Metaphors
Similarity in metaphors intentionally blur the distinction and may be part of the problem. When describing work activities, frequently we include a discussion of roles and rules which are similarly found in descriptions of play. Ever encounter your boss and their gameface and perceive anything other than their motive to win? Tadhg Kelly, a game developer, researcher writing for TechCunch describes gaming motives this way.
“Players play to achieve, to do, to build, to create, to explore, to destroy and to win. They need the game to provide them with a fascinating system which enables them to do all of those things, and usually for the game to also provide an absorbing fiction.”
“Our research discovered that fostering progress in meaningful work is the most important way to keep people highly engaged at work — even if that progress is a “small win.” “
Doesn’t it sound like the way companies behave? Isn’t there a difference between personal value gained from achievement and the collective value, or returns play generates for the enterprise?
Setting and Environment
Educators have borrowed from games to make learning fun for a long time and in the wake of legislators seeking to make education matter, many software vendors and game efforts got relegated to closets as they weren’t serious enough. The findings of brain researchers are now confirming what many have suspected all along. Games are effective tools that help, rather than hinder, learning as they encourage people to experiment and discover behavior conducive to a wider set of problems. Making training fun can also prove effective; but it can also prove motivating to learn. For example, Adobe engages in a great deal of game research to understand how to help users of their software more of its functionality. The business service arm, LEGO Serious Play, generates significant revenue and trains people to use Lego to develop leadership skills. These examples blur the distinction between fostering play for advancing personal knowledge, skills or abilities and accumulating reward. Simultaneously, these activities breach the physical boundary separating work and play and results further blur our expectations, attitudes and perceptions of work.
Zappos may be the extreme case of work as fun, but bringing more play into work align with higher employee engagement and higher performing organizations.
Kelly however notices danger in this trend, and the quick replication of the simple game model in a variety of settings. ” There comes a point in all genres where linear improvement and broadening subject matter becomes obvious to the audience. Their play brains start to realise that they are seeing the same frames again and again, with the same actions and the same constraints.” This familiarity translates quickly into lost attention, all the positive attributes of engagement fall off and boredom surfaces.
There’s great subtlety in this observation. Take Tic Tac toe for example, the rules are familiar and yet something keeps many of us playing it over and over. Are the lines between boredom and continuing engagement too fine to draw?
Strategic Opportunities Play Makes Possible
If military strategy is about troop movements for advantage, and business strategy focuses on gaining advantage, specifically competitive advantage, then games offer the perfect parallel frame. TicTacToe once you’ve played becomes more a contest in strategy and yes, game theory.
Business strategy and game theory have a long shared history, so for many, it isn’t that hard a stretch to recognize the value of using games in business.
David Levine, UCLA Dept of Economics likens economic game theory with psychologists theory of social situations. He goes on to explain that game theory applies to parlor games such as poker or bridge, but the research focuses on the two main branches that describe how groups of people interact: cooperative and noncooperative. “Noncooperative game theory deals largely with how intelligent individuals interact with one another in an effort to achieve their own goals.” This is the more classic extension into business, scenario planning complete with estimation of risk are often included in budget exercises as well as more elaborate evaluations of mergers or entry into new markets.
What’s new is the strategic use of social games, which I presume, fall in Levine’s former category of cooperative game play. Social play is complex and the more independent work becomes from physical settings, the greater our independence of action, freedom from traditional forms of managerial oversight. Social norms are less binding and on the flip side the value of social games cooperation prove apt replacements if they can lead toward mutual advancement. The challenge becomes obligated employees to buy in to the social game, or the social network.
Humans naturally are social, its part of our DNA and survival instincts, play extends that instinct.
The strategic value of rewards or loyalty schemes are everywhere. A significant number of applications are designed to promote customer engagement and interaction. Who doesn’t value their loyalty points or reward cards that a variety of businesses extend to customers to grow revenue and increase the demand for their brand? These too fall easily on the cooperative side of game theory with their strategic advantages and risks limited by the size of the rewards and the rules made clear on all sides.
Like life, not all play operates in transparent settings. The complexity of a game often increases with greater ambiguity in both the rules and conditions of imperfect information. In a prisoners dilemma scenario, the rules for winning are clear but the isolation of players raises the stakes. The multi-player social games require cooperation but is entirely voluntary. Customers choose, but what about employees? Distributed global workforces, such as IBM rely on cooperation and the participation is contractual in nature.
Organizations such as BESTBUY also leveraged the coincidence of their techsupport teams love of play in multi-person games and their discovery of its contribution to creating a more cohesive, collaborative and effective team. In addition, the employees trust their instincts, grew their confidence and proved to be more effective and efficient solving problems for customers. Playing does not have the same connotation as practicing, but in many ways it’s more powerful.
Daniel Pink’s book Drive reminded leaders to consider the difference between intrinsic vs. extrinsic motivation’s relationship to employee performance and engagement. The growing gamification trend demonstrates the evolution of new tactics to educate, train and engage employees. In the process as the lines between play and work blur, games and their application inside the enterprise extends to every major discipline and includes a dose of strategic decision making. Don’t underestimate the power of play to alter and adapt behavior especially the comfort level that comes from knowing what’s possible, probable and what’s not.
If you have any other examples or strategic use of play that you’d like to share, or have some added feedback from the discussion that I missed or just want to tell us what you think, please do. All comments and questions are welcome!
Recommended Articles and links to review in advance:
On Friday, April 20, 2012, the strategy professionals/ peer discussants couldn’t wait to talk about Zombie companies. An assessment of companies that Sydney Finkelstein, Tuck Professor uses to describe companies who were missing out. His list of obvious signs sparked great conversation and opinions were easily expressed in the comfort of the cozy board room of Bank of America’s Chicago offices, our host. In no time we were talking about the responsibility as well as the difficulties associated with changing underlying beliefs and the cultures that perpetuate them.
” in business, vision has come to mean something abstract or even inspirational. But the quality of any vision depends on its accuracy, not just on its appeal or on how imaginative it is….”
An accurate vision fits with wider realities, and as Heifetz says, it helps others around you face that reality too. That’s the challenge, and few leaders seem able to develop and demonstrate both capabilities. Or, perhaps it’s only possible to recognize the failure after the fact?
True enough, some of the same observed behaviors that identify a zombie also represent winning companies, at least in one window of time. Are these companies vampires, resilient in the face of change?
Consider Goldman Sachs, what saves them from becoming a zombie company? Their leadership and culture perceived as arrogant and smug led discussion participants to wonder about their perennial ability to stay on top amidst significant public outrage.
Their record on customer relations is far from stellar. Are they really consistently better at the game than all the other players? Because this is the blog, we can share the link reference example of racy tweets allegedly from the elevator at Goldman Sachs.
In contrast, one of the bubbling realities that companies need to consider is their impact on the community. The measures of success exceed those shared in conversation with and among shareholders. Companies that do consider the community impact in their vision could never continue to behave, or perform, like Goldman.
The one-dimensional success perhaps may be the reason too few companies recognize that they need to keep pushing, reaching and imagining if they wish to also succeed in the future. N-dimensional cultures and visions CAN deliver ROI but they may need some support or latitude.
In celebrating success, its easy to overlook the paradox. As instruments of your success, the values and efforts may lead to myopic thinking. If the goal is to get straight As the ability to acquire the wider learning may get lost. Short term focus also impairs the long-term.
What if any responsibility does investors and public accountability play in the failure of a CEO? Poor fits between stakeholder expectations and company performance often result in shorter CEO tenure. Failure results when CEOs fail to communicate their vision, and spread it within the ranks. Whatever the reason vision plays a central role and performance suffers when it is often poorly conceived, confused with a mission or altogether missing.
Change is hard, but help is available to those leaders willing to learn. Charles Duhigg recounts the story of Paul O’Neill as he took the reigns at Alcoa, and turned the company around based on a vision of safety. There’s more in his book The Power of Habit. For example, such as Charles Duhigg illustrates in his recent book The power of habit. [Note this was a topic the discussion took up earlier this year and notes can be found in the archive.]
Company leadership must be wary of their susceptibility to single dimension focus, the zombie factor. That said, we have to forget that there are always outliers to this rule. For example, one might find these same factors have created vampires or resiliency within some companies. There’s always more to the picture than what the media framing reveals.
How can and do leaders inspire, and manage the natural tension that may arise between strategy and charismatic leadership? Vision and the organizational mission must be shared across stakeholders. Leaders need to recognize their role as stewards of the vision and then cooperate with others, especially outsiders, to make the appropriate adjustments to remain timely, and relevant in the marketplace. Zombie companies, by Finkelstein’s definition, lack a vision; and not victims of a poorly conceived or applied strategy.
How do companies stay relevant amidst the wider turbulence in the environment? Companies lacking a vision altogether represent a different kind of failure. But for those with a vision, their ongoing challenge is to develop and support the vision as their guiding star. Not in an overly dedicated, reverential fashion, but they also need to adjust it from time to time.
Absolutely important for organizations to get their distinctive vision and mission right, but equally important is to pass and communicate them to all stakeholders.
Tough task to balance the creative tension between leader as steward of the vision and holding it at a sufficient distance to also recognize changes on the wider landscape. The skills and strengths to make the course corrections as needed while still driving execution is much more complicated and certainly not an envious task.
How can CEOs be compensated for the vision while being paid to deliver EBITDA?
In closing, we hope you’ll add your thoughts or inspirations, we’d love to keep the conversation going.
Next month the topic is BIG DATA–real challenges to strategy or a just another sheep that we’ve mistaken for a wolf in sheep’s clothing.
Below are the series of articles we reviewed and engendered a valuable discussion. Do feel free to add your comments and/or thoughts.
Perspective from Sydney Finkelstein, a strategy and leadership professor at Dartmouth Tuck, who warns against a culture too insulated and prideful in their success.
How to Spot a Zombie Company (followed by How to Destroy zombie company mentality)
Sydney Finkelstein, Tuck professor of leadership and Strategy.
In 2011, among 673 companies from 32 countries, Apple topped the list as most admired and respected by both industry peers and overall. CNN’s Money magazine survey used several criteria to compute an overall ranking and then shared on a single criterion those companies who made the top ten spots. A composite summary appears below. Surprisingly, no company ranked consistently across all criteria –not even Apple who ranked #1 only on innovation.
Top 50 Overall Rank
Long Term Invest-ment
Quality of Products/Services
Goldman Sachs Group
Procter & Gamble
Royal Dutch Shell
Nike, Google,Walt Disney and Amazon have similar rock star status. But the failure of many of the remaining companies to even make the top ten on other categories, or the inconsistency of the company rankings is a bit confusing.
If analysts and directors evaluate companies using different criteria , which criteria should management prioritize?
The best case for management 2.0.
Imperfect an instrument as surveys of directors, industry peers and analyst rankings of companies may be, the disconnects between perception and management is unsettling.
Perhaps, the problem is complexity itself. Siloed, hierarchical , central, command-control decision-making styled organizations struggle to keep up. As the world moves faster, successful business outcomes require simultaneous attention to multiple interdependent factors. Consistency in your approach across your markets may prove disastrous.
In compiling the chart above, I initially focused on three indicators: people management aka Talent; overall management quality; and innovation. The diversity of companies across these criteria rankings lend credence to the rallying cry to change existing talent and management approaches. Traditional, internal organizational frameworks or operating design warrant alignment on more than these three factors. Gary Hamel, long down this path, wrote The Future of management in 2007; and often describes traditional management practices as obsolete, calling for revolution within the ranks. More pertinent, values alignment do not seem to be a priority. After all why would any organization undergo a major cultural transformation for the sake of upping this score?
Remember Total Quality Management, or the movement to adopt Six sigma cultures? Though well-intentioned, both turned out to be somewhat of a passing fad, the impetus for effective and efficient operations did lower bottom line costs, but the residual streamline approach undercut the very capability for resilience necessary to succeed in the current global, rapidly competitive environment.
More contemporary buzzwords rippling through the management literature continuously call for new adjustments, and a shift in style to accompany if not better accommodate technology changes. Simplifying access and transmission of multiple media, aka web2.0. may indeed require a different management approach. What exactly are we describing? Apart from branding , a series of common threads unite the work of three thought leaders.
Ron Heifetz describes The Practice of Adaptive Leadership (2009), its associated risks, and why our attachment to authoritative leadership needs rebooting. Gary Hamel’s book, Leading the Revolution (2002) explored ways to reinvent business models in light of the dot-com technology bubble; his more recent title is The Future of Management (2007). The monthly strategy discussion readings (links at the bottom of this post) also included the insights of Bob Thomas, author of Crucibles of Leadership (2008), from Accenture’s Institute of High Performing Leadership.
All of these thought leaders describe embracing unconventional thinking, full transparency, initiative, experimentation, learning from experience or basically creating adaptive cultures. Sounds a little like innovation doesn’t it?
What about the social media factor?
Coincident on the day the monthly strategy discussion met to review these authors theses on management, the Chicago Booth Annual Management Conference keynote panel focused on the most visible evidence of these shifts– “The economics of Social Media.” In 2011, it’s impossible to be in business and not be inundated with headlines about Linked In’s public offering, Facebook’s 600 million and counting users, or Twitter’s 200 million strong. Of course these are just a few of the applications business must evaluate, not so much to buy, but to watch, listen and learn to respond to many stakeholders associated with their enterprise.
The shift of control over your brand and business between stakeholders and business leaders and managers is close to parity. If web2.0, or social media is the people’s network where they can transact, share, express and discover–Business has to be present, flexible and responsive 24/7. if you had doubts, now you know why Management 2.0 is critical to an organization’s survival.
Social media’s ubiquity challenges the most traditional organizations and their decision-making hierarchy. Customer facing roles increase risk, especially if individuals are scripted or their flexibility to act and access to information is limited by the system. The parameters around interaction, once engineered to reduce costs and maximize returns, need adjusting and consider indirect factors. Typically, an organization expects customer service to buffer or clean up “messy” or “problem” concerns from the public. The focus measure is efficiency–avg handle time and the number of calls/hour. Management did not track the quality or effectiveness of the interaction in the unit performance report. The push for further labor savings resulted in outsourcing and offshoring these units, adoption of automated voice response systems or encouraging online users to check out the FAQ section of a website before contacting support. Sure, customer satisfaction and customer relationship systems are important, but the breadth of possible outbound responses remain tightly controlled. In the same manner that marketing and PR manage the company message and often write the release printed by limited media outlets.
Integrating Web2.0 and the interaction tracking within the operation exemplify internal innovations or managerial adaptation, right? Management learned to take advantage of technology to lower its delivery costs and use CRM systems to learn about the customer and track transaction behavior. All signs of adaptation. But do they go far enough?
Back to the Future
Facebook launched in 2004 and quickly spread to all university campuses and entered some corporations, opening to any user in 2006 and quickly became the 7th most trafficked website.
The leaders of companies on this year’s BusinessWeek-BCG list of the World’s Most Innovative Companies recognize that developing breakthrough products, revamping operational processes, and coming up with new business models doesn’t happen overnight. Instead of relying on gimmicks or incremental line extensions, they’re working to build organizations that are capable of sustained innovation. They understand that requires taking risks and investing for the long-term. And they focus on the things that really matter, such as hiring the most talented employees and providing them with the environment they need to thrive.
…Getting people to step out of their comfort zones can do a lot to spark new ideas. But if they’re not paired with more fundamental changes, all those efforts will go nowhere. Fortunately, some companies have been waking up to that fact…. the proper care and feeding of employees in creative cultures takes much more than training. …best companies seem to be managing a balance of a few high-profile programs aimed at getting employees to think differently and more fundamental processes that make sure the work actually gets done.
Of the top 10 companies (Apple, Google, Toyota, GE, Microsoft, P&G, 3M, Walt Disney Co., IBM and Sony) 3M had dropped to 7 from 3rd in 2006, while Walt Disney had catapulted from 43 in 2006 to #8. Surprised?
We compared these messages and found them to echo some of the authors’ admonishment of the management 2.0 revolution.
Marching orders for Management 2.0 Advocates
Note: The original article citations are found below.
Gary Hamel talks about inspiring and changing the environment, aggregating human capabilities toward the collective and mentions three big organizational challenges:
Adaptability–how to build self-transforming organizations
Engagement–on both the emotional and intellectual so people bring all of their capabilities to their work.
Ron Heifetz talks about adaptive leadership means changing the way people do business in many places in the organization. In other words, innovation isn’t just for marketing. Leadership has to orchestrate the connections between the possible, or the abstract strategic imperative and the tactical or working level. The question is not merely whether to establish accountability; but how to help all levels of the organization challenge and push the frontier of their current constructed environment and create room for experimentation, where people are free to make mistakes and learn.
Finally, Bob Thomas suggests that experience has to be turned into leadership capabilities and focus on the ability to learn lessons. Provide the imperative around durable processes in three facets of learning:
Prepare — how do/could we frame the problem, understand how we learn and focus on accelerating the possibility to learn
Deploy–activate our sense-making skills, emotional IQ, story telling, practice with multiple decision-making and leadership styles to close the gap between theory and practice. (Heifetz expresses the gap as the difference between knowing and abstraction).
Renew–Points of view are teachable as well as adaptive. Managers should build and exercise their own advice networks.
Sounds easy right? The 2007 article profiled GE, Disney, IBM and Boeing. By 2011, the companies rated by their industry peers and then overall only identified Google, Apple and only the Walt Disney company made the top 10 list.
Stakeholders for some time have been raising the bar for accountability on a variety of non-financial indicators. In partnership with the UNEP (United Nations Environment Program) Finance Initiative and the UN Global Compact and investor initiative created the Principles for Responsible Investment (PRI). The 2010 annual report (for FY April 2009-March 2010) noted that in just under four years, approximately 22 $trillion US of assets globally have signed on to the PRI, or 10% of total global capital markets. They count over 800 signatories and seeing concrete progress in how mainstream investors integrate ESG, Environmental Social Governance into their investment practices.
In case you weren’t aware of how significant this practice is, I happened to pick up a Tweet from a recent global conference hosted by Global Reporting Initiative (GRI). I thought it worth sharing a few of my notes.
Who and What is GRI?
Vision: A sustainably global economy where organizations manage their economic,environmental, social and governance performance and impacts responsibly and report transparently.
GRI provides the world’s most comprehensive framework for producing sustainability reports. These guidelines offer standardized assessment and comparability of performance and disclosure that is similar to financial reporting. The latest annual report was issued on the 11th of May 2011; however the accumulation of company stats reported Calendar year 2010. Only 16% (180) of US companies are being assured by GRI guidelines, though they produce more sustainability reports than any other country. (this is also an increase by 28% up from 140 in 2009).
Based on Sector, Financial services, Energy and Food and Beverage product companies top the list of reporting companies.
79% (197) of Global Fortune 250 companies now release CR data, up from 62% in 2007
Doubled since 2005 – up from 37% p
Increasingly driven by economic concerns
74% of top 100 US companies published corporate responsibility (CR) information in 2008 either as part of their annual financial report or as a separate document. The Reasons cited:
70% cited ethical considerations as primary driver for CR disclosures
50% cited economic concerns as the leading reason
In 2008, 77% of G250 (Global Fortune 250) and 69% of N100 (100 largest companies by revenue) in 22 countries used GRI.
Alternatively, BSR -Business for Social Responsibility , works with its global network of 250 member companies to develop sustainable business strategies and solutions including cross-sector collaborations.
Many US companies are obviously involved and engaged in a variety of Corporate Social Responsible (CSR) initiatives that are at this stage primarily voluntary. BSR, a member organization, provides research and support and comparative reporting to its members, but the data is not available publicly.
In April the monthly Booth alum discussion considered how these ideas play out, who benefits and what might be the risks of engaging in going down this path. We’d love to get further feedback and reaction. Any thoughts? or further data are welcome!