Companies & Industries

The Game of Business


The Game of Business

Photograph by Nicholas Eveleigh

Ever watch gamers thumbing away at Fruit Ninja, World of Warcraft, or Angry Birds? They’re totally absorbed in the moment. What are they playing for? The personal satisfaction of reaching a new expert level or using a magical sword to slay imaginary monsters? Don’t scoff: The video game business is a $70 billion industry. Now imagine if you could harness that energy to get your employees and customers as engaged in your business.

The idea of making business a game is nothing new. Smart managers and marketeers have been subtly manipulating us to change how we shop and work for more than a century. (Did you really buy Cracker Jacks for the caramel-coated popcorn and nuts?) In the last few years, the concept has become popular enough to be worthy of its own buzzword—“gamification,” which, as the name suggests, refers to using video game design techniques (progressing through increasingly difficult levels or team competitions, for example) to motivate people in other aspects of life, notably anything considered work.

Kevin Werbach and Dan Hunter, professors of business and law by day and members of the Terror Nova World of Warcraft guild by night, have written For the Win: How Game Thinking Can Revolutionize Your Business, an effort to address the skeptics who dismiss gamification as the latest marketing scheme and to clear up the misconceptions surrounding the subject. As the book title suggests, Professors Werbach (Wharton School) and Hunter (New York Law School), are certain that when the hype dies down, game thinking will endure.

In an interview conducted via a series of e-mails, Werbach, 42, explains the history of games in business, shares some of the ways companies use games, and predicts how the field will evolve.

Why is gamification an important business tool and not simply another business book fad?

We live in a business world where technology and globalization have radically leveled the playing field. Motivation is the remaining differentiator. What organization wouldn’t want more engaged customers or employees? Game thinking is a method to design for motivation that fuses insights from game design, decades of research in psychology, and the new capabilities of online analytics. There are plenty of shallow implementations that will fade out, but organizations employing gamification thoughtfully are seeing measurable results.

How did you become interested in this field?

I follow emerging technology trends, especially ones the mainstream conversation doesn’t yet appreciate. Like most people under the age of 50, I grew up playing video games. Over the past few years, I’ve watched as they became not only a $70 billion global industry, but also an amazing petri dish for online innovation. Most experts ignored the rich social interactions and business models developing around games, because they didn’t take them seriously. (I had the same experience with the Internet in the mid-1990s.) When gamification coalesced as a concept 2-3 years ago, I saw it as the fusion of everything that excites me about games with everything I study as a business professor.

Games have been around for centuries. What are some of the earliest examples of games in business, and how have they evolved?

Dale Carnegie’s classic How to Win Friends and Influence People relates an anecdote about Charles Schwab, the head of Bethlehem Steel in the early 20th century. He wrote a number representing one shift’s daily output on the floor of a steel mill, implicitly challenging the next shift to beat it. The resulting healthy competition dramatically increased output. Schwab understood how feedback and competition could motivate performance, concepts we see in gamification today. Games also have a long history in marketing. It was exactly a century ago that Cracker Jack started putting toy surprises in every box of its snacks.

The difference today is that we can incorporate game elements and game design directly into business processes, because so much is built on digital platforms. And we can make those systems more responsive, social, and scalable than ever before, in the same ways the Internet and social media are changing business more generally.

Are there companies that stand out as particularly effective gamers, others not so much?

I admire the creative examples that tie well into corporate culture, such as the “Face Game” that helps employees at online retailer Zappos (AMZN) get to know each other, or the crowdsourced system for localization testing at Microsoft (MSFT). I’m less impressed with cookie-cutter PBL (points, badges, and leaderboards) systems, like Samsung Nation, even though they may increase engagement levels on a website. Those are less likely to produce sustained benefits that translate to the bottom line.

A company that understands gamification at the strategic level is Salesforce.com (CRM). It supports gamification in its core platform for sales and marketing professionals, but more important, it has a whole new business unit, Work.com, that gamifies employee performance management, and its executives evangelize game thinking as emblematic of the future of work.

Is there one industry that could really benefit from game thinking?

Probably the most important opportunity is in education. This is especially true as learning becomes a lifelong imperative in a fast-changing business environment. Many instructors at all levels are exploring ways to gamify their courses in order to motivate students, and study after study shows that educational games can produce significant learning benefits. The challenge is that simplistic gamification, focused on chasing meaningless rewards, can actually be harmful for learning. The real lessons of gamification are things like quality feedback, effective teamwork, and progression to mastery, which dovetail perfectly with educational goals.

What video games did you play growing up? Do you still play?

I was a typical kid in the 1970s. I played the usual range of board games and sports. At one point I could solve a Rubik’s Cube in a minute and a half, which wasn’t actually that great but seemed impressive to my family. In terms of video games, we had an Atari 2600 (the first mass-market video game console), and eventually a personal computer, on which I played all sorts of things that I can’t remember. I do recall breaking Bruce Jenner’s record in Olympic Decathlon, which is still my favorite piece of Microsoft software.

These days, I dabble with some Mac, Facebook (FB), mobile, and Wii games—it’s research, I tell you! But the only one I’ve stuck with is World of Warcraft, which I’ve played fairly regularly since 2005. The games that interest me the most now are the ones my kids play, especially Minecraft. It’s the largest and most innovative user-generated virtual world so far, but hardly anyone in the business community knows about it.

Within an organization, where can game thinking have the biggest impact?

Most of the initial gamification interest involves marketing, or what we call “external” applications. Gamification will become a standard part of the tool kit there, like social media, e-mail, and search engine marketing. Where it can be a real game-changer, though, is inside the organization. Companies that effectively use gamification to motivate and engage their employees will see enduring benefits. Game thinking isn’t about entertainment; it’s about creating stimulating experiences that promote growth and achievement. That’s harder to do internally, but those companies that do it well will outperform.

How are governments using game thinking for public initiatives?

The U.S. government is actually looking at ways to apply games to major public policy challenges, such as breakthrough R&D, education and health care. For example, several agencies are successfully using competitions such as the Darpa Grand Challenge (which advanced the state of the art in self-driving cars) and the L-Prize (which produced a revolutionary energy-efficient light bulb) to stimulate innovation. And there are some great private sector and research initiatives that governments could build on. Opower uses gamification to cut electricity usage, Recyclebank uses it to promote recycling, and the Capri project at Stanford uses it to reduce parking congestion. In this age of budget austerity, motivating people to do beneficial things has to sound more appealing to governments than spending more on enforcement.

How do you see this field evolving in the coming years?

Companies will talk about game thinking less but apply it more. The basic PBL functionality will become pretty ubiquitous, which will make it less of an effective differentiator. Think of how every airline has a frequent flyer mile program. We’ll see a shakeout as the market distinguishes the parts of gamification that are simple from the parts, such as design and analytics, that are easy to describe but hard to do well. And we’ll probably call it something else, because business leaders will remain skeptical that serious insights can come from games. I can live with that. The techniques aren’t going away.

Sager is director of special projects for Businessweek.com.

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