Games: The Next Organizing Paradigm for Your Business

Michael Hugos, Principal, Center for Systems Innovation | 12/5/2012 | 10 comments

Michael Hugos
Business is at a crossroads, moving from the assembly-line structure required by the last century's industrial economy to a responsive, flexible model that today's real-time economy demands.

Business is speeding up, customer desires are changing rapidly, and product life cycles are shrinking. At the same time, we are surrounded by a bewildering and rapidly evolving array of social media and consumer IT. The path to business success in this real-time economy involves meeting the challenges of the former by using the capabilities of the latter. It's time for CIOs and other IT leaders to consider new technology and management approaches to organizing their operations.

Games provide a useful organizing framework for thinking about how to do this. A prominent game designer, Jane McGonigal, defines the four traits of a game.

  • Goals: what the game is about, its mission
  • Rules: what players can and cannot do to accomplish the goals
  • Feedback systems: keeping players informed about the results of their actions, showing if they are getting closer to or farther from the goals
  • Voluntary participation: understanding and accepting the goals, rules, and feedback systems, leading to enthusiastic engagement

Sound familiar?

At their core, games are engagement engines. The success of a game is measured by the number of players it attracts and the level of engagement it generates. Likewise, a business can be defined as an engagement engine that uses goals, rules, and feedback systems to engage customers, employees, and partners. The success of a business can be measured by the commitment of its employees and partners, as well as the number and voluntary participation of its customers. This is illustrated by the diagram below.

Games Process

Continuous response to change and emerging trends is a powerful driving force for success in our real-time economy. This level of responsiveness is required in order to maintain the enthusiastic participation of customers and employees. Companies that fail to do so will fade away, because they cannot maintain the engagement of customers and employees.

The recent past is littered with examples of companies whose products and services failed to keep up with changing times. These companies were very efficient at what they did. They organized their operations using the model of the assembly line -- the great organizing paradigm for business in the industrial economy of the last century. The strict linear process put everything in its place and maximized efficiency and productivity. In the industrial, assembly-line economy, the goal of technology was to increase productivity and efficiency.

In today's real-time economy, efficiency alone is not enough. A company must match efficiency with responsiveness to thrive. In the real-time economy, the goal of technology is to generate enthusiastic participation and drive responsiveness to changing situations. Video games can guide us as we explore ways to accomplish this goal. The games are field-tested models for generating responsiveness. They integrate people, process, and technology to create enthusiastic participation and continuous response to changing circumstances.

The first widespread effort to apply technology to increase participation is known as gamification. At present, gamification focuses on creating feedback systems through the use of points, leaderboards, and badges on company websites. It's a start, but the game model goes far deeper than that.

Professor Byron Reeves and the venture capitalist J. Leighton Read, working together at the Stanford University business school, make a case for using games to change the way companies operate. In their book Total Engagement, they state: "We believe the highest use of games will be to redesign work so that it is more like a game and to allow work to be conducted within games." Based on their research, they go on to say: "Work will be hopelessly confused with play and the result a possible win-win for the players and the businesses that sponsor them."

Games provide an organizing paradigm for business and (as we've discussed before) a model for applying technology that will become even more powerful in the real-time economy than the assembly line was in the industrial economy.

[Editor's Note: Learn more in Michael Hugos' newest book, Enterprise Games: Using Game Mechanics to Build a Better Business.]

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MDMConsult   Games: The Next Organizing Paradigm for Your Business   1/1/2013 1:56:31 AM
Re: games are trully everywhere
Yes and productivity, interactivity and stronger management communication is important. I believe these are just a few areas where gamification really stands out.
Susan Nunziata   Games: The Next Organizing Paradigm for Your Business   12/8/2012 6:46:56 PM
Re: A New Era
@Michael: thank you, these are excellent examples and good resources for our community for further explore and develop these ideas for their own organizations.
Michael Hugos   Games: The Next Organizing Paradigm for Your Business   12/7/2012 1:50:11 PM
Re: A New Era
Hi Hammad - it sounds like your company already lives in the real-time big data world of continuous feedback from you market and your customers. The things your company and others like it are learning now will become examples that companies in other industries follow. 

Business agility is more than just a slogan or abstract concept in your world. I believe the game-like operating model based on the four game traits is the foundation for a new business operating model that enables companies to thrive in this new real-time world.

What are some of the techniques and approaches your company has found to be effective?

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Michael Hugos   Games: The Next Organizing Paradigm for Your Business   12/7/2012 1:42:48 PM
Re: games are trully everywhere
Hi Pedro - Yes Domino's Pizza and other companies are adopting games for training. The term for these training games is "serious games" meaning that these aren't games for entertainment, they are for learning serious business skills.

You ask a good question about how a business transitions from an assembly line to a real-time strategy. I will write next week's post on this very topic. 

The key in this transition is to identify the focus of effort and take steps that create momentum for change and also build support for this change. In my experience I have seen that means setting up effective feedback systems. I'll expand on this in my post.

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Pedro Gonzales   Games: The Next Organizing Paradigm for Your Business   12/7/2012 1:03:18 PM
games are trully everywhere
I find gammification fascinating.  I read somewhere else that domino's pizza is using games to train their potential workers and staff.  I think it makes sense with a game, as you indicated in the article it allows for collaboration and engagement of people.  I would be interested to know how a business transitions from an assembly line  to real time strategy. 

Great article.
soozyg   Games: The Next Organizing Paradigm for Your Business   12/7/2012 9:09:56 AM
Re: A New Era
@Hammod, I would think, regardless of customer feedback or biz type, the business model (those same 4 traits) would remain the same. In your gaming world, how could the analytical results change that?
Hammad Masood   Games: The Next Organizing Paradigm for Your Business   12/6/2012 3:56:01 PM
Re: A New Era
Well, my question is what if the company is itself involved in Game development ? I work for a social games company and the requirements are frequently changing based on the analytical results we get from the customer behaviour.

very well compared Michael !
stotheco   Games: The Next Organizing Paradigm for Your Business   12/6/2012 1:28:26 PM
Re: A New Era
I agree. I never thought to look at business organization frameworks in this manner. Like a game, this representation makes it a tad more fun when trying to understand the whole concept.
Michael Hugos   Games: The Next Organizing Paradigm for Your Business   12/6/2012 8:52:50 AM
Re: A New Era
Hi Susan - In my book Enterprise Games I feature several companies that have embraced the game paradigm and talk about the results they are seeing. I talk about companies that employ a "game-like" operating model that incorporates the four game traits as defined by game designer and thought leader Jane McGonigal. Those four traits are: everybody knows the business goal and has input in setting the goal; everybody knows the rules for achieving the goals; everybody gets clear daily/weekly/monthly feedback showing them their progress; and because of the first three traits there is enthusiastic participation in the effort to achieve the goal. 

One company I highlight is a midsize industrial services company called North American Coatings that does work such as painting of bridges and pipelines and factory and machinery maintenance. Everybody gets weekly P&L statements for the projects they are on and monthly financila statements for the whole company. The company bonus pool is composed of 25% of pretax earnings and everybody can see it grow during the year and it is paid out at year end pro-rated by people's position in the company. People have been earning more than 50% of their base salary in bonuses over the last few years and their CEO says the 75% of earnings that goes to the company owners is larger than 100% of earnings that accumulate to owners of their competitor companies.

He attributes this to the enthusiastic participation of everyone in achieving company goals. Where his competitors hire more supervisors to make sure people don't take longer lunch hours, his company lets everyone see relevant performance data and gives people a reason to care about the outcome and that produces the results they want.

There is another company called Springfield Re-Manufacturing based in Springfield Missouri that uses a similar process. Their CEO has written a book about it called The Great Game of Business in which he goes into much detail on their game-like operating process that the results they get.

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Susan Nunziata   Games: The Next Organizing Paradigm for Your Business   12/5/2012 10:01:36 PM
A New Era
Great comparison between today's real-time business environment and the assembly-line structure of yesteryear. I have noticed that far too many otherwise modern companies continue to structure their operaitons and their rewards systems upon the old assembly line model. Can you share some examples of companies that have succcessfully embraced the "game paradigm" and what their results were?

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