Feedback Systems Make the Game

Michael Hugos, Principal, Center for Systems Innovation | 12/10/2012 | 11 comments

Michael Hugos
Most companies still use traditional business operating models based on the assembly line, that great productivity engine of the last century. But that model needs predictable prices and reliable demand forecasts, and those things are hard to come by these days. Because it requires people to conform to pre-defined plans and schedules, the assembly line and organizations based on that model donít do so well in high-change and unpredictable environments.

Games are as powerful for organizing knowledge and creative work in the real-time economy as the assembly line was for organizing industrial and repetitive work in the industrial economy. We arenít talking about making work into a game; weíre talking about using game mechanics to restructure how work is done. A game-like operating model is more flexible and adaptive because it enables players to continuously respond to change instead of demanding they adhere to pre-defined plans or schedules.

The most important step to take to begin experimenting with game-like operating models is to create an effective feedback system. There are three conditions for creating an effective feedback system. Those three conditions are: 1) real-time transparency of relevant data; 2) authority to act delegated to each player; and 3) a stake in the outcome for all parties. This is illustrated in the diagram below:

3 Feedback Conditions

When people are given real-time or near real-time data that provides adequate insight into the area of their concern, then everybody is able to see for themselves what is happening and they can self-organize and respond quickly without having to wait around to be told what to do. The problems that happen when only a few people can see what is going on is that those few people have to do all the thinking for everybody else, and thatís a lot of thinking to do. In many situations there isnít enough time available to do all the needed thinking. So the orders these people give to everybody else often produce results that are less than desired. Itís better to let everybody share in the thinking by letting everyone see the data. (See: Games for Better Supply Chains.)

When people have local authority to act on what they see, they donít have to ask permission and wait to get confirmation before they act. They can act quickly, and because they act in a timely manner, their actions are likely to produce the results people desire. Organize people into autonomous operating units and give them authority to act as long as their actions fall within predefined ranges (as defined by the goal and rules of the game).

When people have a stake in the outcome their actions produce, they are motivated to act and motivated to learn from their actions and keep getting better. This stake in the outcome can and should be a variety of elements from increased prestige and reputation to more interesting work and money rewards as well. People are motivated by various combinations of these elements depending on the situation.

Once called into being, a feedback system is a powerful creation. The trick is to guide it toward useful ends. Guide business feedback systems by providing people with goals to accomplish and rules defining what they can and canít do. (See: Games: The Next Organizing Paradigm for Your Business.) If the goal is clear and the rules are coherent, they will be accepted. People will continuously steer the feedback systems they participate in toward accomplishing their goals, and they will use behavior defined by the rules. Now you have harnessed a most powerful form of organizational energy.

The purpose of IT in the industrial economy was to support assembly line operating models and increase efficiency. The purpose of IT in the real-time economy is to support feedback systems that bring games to life and enable companies to respond effectively to ever-changing circumstances. What kind of feedback are you providing your business?

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michaelsumastre   Feedback Systems Make the Game   2/26/2013 7:53:06 AM
Re: feedback
I share the same sentiments as well, Syerita. But a couple of job posts I have seen online these past few days are literally asking for links in Facebook and Twitter. In fact, one of these postings is created by a religious organization. I was completely dumbfounded. And to be blunt about it, a huge percentage of the people in Facebook or even friends are hiding in their Facebook identities. In other words, most of their posts and even their lives are superficial! Seriously, who loves to post their sad lives for all the world to see? 
Syerita Turner   Feedback Systems Make the Game   1/2/2013 11:17:56 AM
Re: feedback
WOW! I often have said that I believe companies really do read your private posts and make inferences about you by what you say. I think that this is an invasion of your privacy. It is something that you have said on your off time and an expression of how you feel at that moment. I think that being fired or even suspended is not right and should not happen but it does. I also think that companies use social networking as a way to determine if they should hire you or not as well. They are basing this on your friends posts as well. So I think that knowing this I keep my page as squeaky clean as possible until there are some standards in place to protect people from this happening to them in the workplace.
michaelsumastre   Feedback Systems Make the Game   1/1/2013 1:35:07 AM
Re: feedback
You are right, Syerita. The kind of power these social networking and social media websites are giving to everyone is incredibly amazing. It gives you a lot of push to say what you really feel or think.


I'm interested to know, though, what people here think about the growing cases of employees getting fired or investigated because of the feedback they leave in these websites? What do you think of businesses that are using these areas to know other people's feedback? Do you find it intrusive? A friend of mine was suspended from work for a week because he said a Saturday job in the office is lame. Well, he quit because he felt it was such an invasion of his privacy.  
michaelsumastre   Feedback Systems Make the Game   1/1/2013 1:30:03 AM
Re: Need good communication for this one
kstaron, perhaps organizations that are using this model should set up parameters by means of clear-cut policies. That would prevent any kind of issues relating to overlapping responsibilities. Let's face it, if the supervisor is the one in charge of making or agreeing to decisions and someone opted to make it for him since he's not around, I don't think it will please the former even if the move was right. Second, parameters can also serve as guidelines on how to perform the feedback system more effectively, especially since people in organizations leave or move to other departments or handle other jobs or roles. 
michaelsumastre   Feedback Systems Make the Game   1/1/2013 1:23:06 AM
Feedback Systems Make the Game
This article is very insightful, especially when it touched on providing authority to act through delegation. For me, bureaucracy or at least the rigid centralization system is already passé. In fact, a lot of organizations now implement a flatter hierarchy model simply because it allows those below to be more motivated to do their job right due to the additional responsibility and higher accountability. It also relieves the pressure from the higher-up, plus the decision-making process doesn't rely on him alone. It's a collaboration, and when many heads converge, almost always decisions are right. 
kicheko   Feedback Systems Make the Game   12/29/2012 4:56:29 AM
Re: feedback
The other disadvantage of company owned forums as opposed to facebook and twitter, is that on those private forums there's no much incentive for people to visit you and give feedback. And if they do, maybe only when they really have something to lament about but rarely on the positive things or the minor you could also use.
Syerita Turner   Feedback Systems Make the Game   12/19/2012 6:32:29 PM
Re: feedback
Stotheco...You make a very interesting point. For feedback that is now sckewed, Facebook does seem to be the network of truth. People are not ashamed or scared to really speak their minds on there and get their point across. When it comes to business however, a certain level of professionalism still needs to reign supreme. Staying in your lane will more than likely get your idea or issue heard and resolved than ranting and raving which takes place on Facebook or Twitter. 
stotheco   Feedback Systems Make the Game   12/16/2012 6:39:39 AM
Re: feedback
Exactly. There is little value in skewed or biased feedback because you can't really take much away from them. Feedback from Twitter or Facebook (provided they are the real, legitimate accounts of the users) carry more truth to them because they are attached to the real user behind the name.
Michael Hugos   Feedback Systems Make the Game   12/13/2012 10:31:21 PM
Re: Need good communication for this one
Hi kstaron - you are right that this operating model calls for good communication within and between automomous operating units. And without good communication plenty of things can go wrong. That's why we have adhered to a more slow moving, top-down, command and control model in business up until now. But now the dangers inherent in the slow moving top-down command and control approach are becoming significant so it's worth exploring other ways to operate. Plenty of once brandname companies from the last century have gone bankrupt or faded to shadows of their former selves primarily because they were incapable of making timely decisions and of acting effectively due to hidebound and obsolete operating models.

The military has been using a decentralized operating model in combat situations for the last 20 years. You can do a Google search on "Maneuver Warfare" and see lots of articles on that. It emphasises that commanders give clear statements of WHAT they want and then delegate authority to tactical operating units at the scene of the action to decide HOW to accomplish their mission. There is a lot of learning here that can be adapted and put to use in business operations.

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kstaron   Feedback Systems Make the Game   12/13/2012 7:54:27 PM
Need good communication for this one
I like this idea, but any organization trying to operate this way will need to make absolutely positive they have good communication within those local authority segments to make sure they know their predefined limits for acting. Without it they may be able to get the entire company in trouble.
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