Werbach and Hunter on For the Win: How Game Thinking Can Revolutionize Your Business

This post looks at Kevin Werbach and Dan Hunter’s new book, For the Win: How Game Thinking Can Revolutionize Your Business. I have posted about it, but Kevin and Dan were gracious enough to answer some questions. We go into what is gamification, the differences between internal and external uses of the technique, how it relates to super-crunching, and the ethical and legal implications of the technique.

Kevin and Dan, you have drilled into an area, gamification, that seems almost arcane, a technique known to initiates. Why do it?

[KW] We actually think gamification is quite relevant for a broad range of audiences. First of all, video games have a huge impact on our culture. The games industry generates more revenue annually than Hollywood does at the box office. According to a Pew survey, 97% of American teeagers play video games, and it’s not just young people: the Entertainment Software Association reports that the average age of a gamer is 30, with almost half of them women. We can dismiss video games the way we used to dismiss social networking… and e-commerce before that… and the Internet before that… or we can look at why they are so powerful and apply those lessons in other contexts.

Second, the core goal of gamification is motivation. Think about all the situations where motivation matters: at work, at home, as consumers, in legal compliance, in social activism, and in collective action, to name a few. In all these cases, greater engagement drives material results. If there were motivational techniques that were proven in real-world businesses, consistent with decades of psychological research, and synergistic with big data and other leading-edge technology trends, wouldn’t you want to understand them?

And third, gamification is happening. It’s a rapidly growing business trend among startups, Fortune 500 companies, non-profits, and even government agencies. It raises a host of significant legal, operational, and ethical issues, as well as a variety of practical business concerns. We felt that my work on emerging technology and policy trends through the Supernova conference, and Dan’s scholarship on virtual worlds and background in cognitive psychology, gave us a unique ability to tackle these questions in a serious way. That’s why we put together the first gamification course at Wharton, and wrote For the Win as business guide to this emerging field.

OK, so what is gamification?

[KW] Gamification means applying design techniques from video games to business and other problems. In other words, it’s the process of motivating customers, employees, and communities by thinking like a game designer. It doesn’t mean turning everything into a game. Quite the contrary! Gamification involves incorporating elements of games into existing activities, the way Nike weaves levels and awards into its Nike+ system, or Microsoft motivated employees to review half a million Windows 7 dialogue boxes for localization errors with a competition among offices.

When you look at it that way, the basic concept of gamification is pretty simple, but doing it well is hard. Even experienced game designers often create games that aren’t much fun. Executing gamification effectively requires a combination of skills and knowledge, which we describe in For the Win.

Right. I see games are important in that they are big business and a big part of many folks’ lives. Let’s talk a little more about motivation. Is this approach a sort of applied behavioral economic one? Someone identifies levers and then builds systems to nudge or indeed shift the way others engage and behave?

[DH] The material we talk about in the book on motivation comes from the same place as the insights in Nudge or in behaviorial economics, since they’re all about psychology and behavior regulators. In fact Kevin and I are planning a law review article on exactly this topic. But the book takes a really pragmatic approach to the question of “How do we make people do things that we’d like them to do?” and shows the reader how to go about understanding their users (or “players” as we prefer to call them) and how you can use game thinking to regulate their behavior. So that they can have fun at the same time. We demonstrate some simple steps and also some counterintuitive examples: like how monetary payouts can give you the opposite effect you’d expect, or how competition can turn certain types of players off.

Great. As I read, I was wondering about the upsides and downsides. Now for some specifics. You say that gamification is not about salary, yet the MS example is about out competing each other. Doesn’t winning end up equaling promotion and more money? In a similar way, badges may work short term, but over time why would one stay with it? I personally love games, but did not buy into the badges etc. at Google.

[DH] Ross Smith does some amazing work with gamification in his department at Microsoft. The example you mention is a helpful one, because it shows that the motivation for doing productive work wasn’t salary at all, it was just the enjoyment of solving puzzles (“is there an error in this dialog box”), the validation of finding more errors than others, and competing in “national” teams to squash bugs. The MS players fixed tons and tons of bugs, but didn’t do it for the reward of being paid.

But you’re right about badges being a pretty limited way of gamifying any process, and most users are over badges by now. We talk about the limits of these sorts of mechanics in Chapter 4 of the book, and explain how you can avoid these problems by having richer game environments and better design.

Moving to external gamification, is it really a cost shift where the users are engaged, get a small token, and the money flows to the newspaper or other company using the game?

[KW] I’m not sure what you mean here. Are you asking whether the financial investment in a gamification program actually produces a positive return? As Dan said in the previous response, one of the points we stress is that gamification, even for external marketing goals, is broader than “getting a small token.” In the book we provide a framework for organizations to assess whether gamification is right for their situation. And even when gamification makes sense as a general matter, implementation and execution questions need to be addressed. We talk in the book about potential risks, deployment options, and how gamification relates to overall business strategies, because it shouldn’t be viewed in isolation. Frankly, that’s the problem with much of what’s out there today about gamification, especially for marketing: a lack of context. It’s one reason we wrote For the Win.

Let me try that again, with the newspaper example, when a company uses gamification for external engagement, it seems that users generate value for the company by building content, and coughing up their data, and creating more views and more ad revenue. Where’s the user piece here? Or does gamification tilt to the one offering the game in this situation?

[DH] This is a really interesting question, and one that we address when we look at the ethics of gamification. The simple answer is that gamification offers players the opportunity for fun and engagement, two attributes which are really high on the list of human needs. If done well gamification will actually improve people’s lives, even if only for the short amount of time that they’re involved in the gamified process. In this it’s a little like advertising or casinos or even user-generated content infrastructure providers like Youtube or Facebook. All these systems provide personal and social good for a large number of people, but this value comes at some cost. The question that we’re all grappling with is, how high is this cost with gamification? We provide some answers to this question in the book, about how to assess this cost. The majority of situations won’t impose much in the way of personal costs to the individual.

Are there scale benefits in gamification? Does it allow for testing the way Google and others do and that Ian Ayres looks at in Supercrunchers? Is gamification used to supercrunch? If so, how?

[KW] I haven’t read Supercrunchers, but based on what I know, the answer to your question is definitely yes. Our gamification course at Wharton is actually cross-listed with the Department of Operations and Information Management, because it connects so well to data analysis.

We like to talk about gamification as a fusion of psychology, design, and analytics. A big reason it’s taking off now is that it’s so much easier to assemble and analyze real-time behavioral data in online systems. Gamification takes advantage of the same technology trends that are driving other software-based systems: cloud computing, big data, social networking, and so forth. As as a result, gamification designers can create and tweak feedback loops based on what players actually do. These are the same kinds of insights that allowed social online game developers like Zynga to grow so quickly.

Game designers have long known that playtesting is the only way to really discover what makes a game fun. They’ve also long recognized the need to design for multiple player types and motivations: For example, some players care more about winning while others want to explore the boundaries of the game. In traditional game design, you can do behavioral testing at the design stage, but once the game ships, it’s locked down. With online games and gamification, A/B testing and evolution of features can continue once the system is in production. So having lots of data to analyze can definitely improve performance.

The main difference in gamification, as compared to online games, is that there are a set of ultimate business goals in addition to the engagement goals. The gamification system can tie into existing performance indicators and business metrics. That allows a designer, for example, to choose a feature that maximizes revenue instead of one that maximizes the number of badges earned. All this is still pretty new, though. The analytics built into gamification systems aren’t yet as sophisticated as they need to be, but they are clearly going in that direction.

Given that humans are part of the experiments in games, is there a movement to regulate gamification techniques? Perhaps with an IRB process or some other mode of regulation?

[KW] Dan and I are both law professors, so we’re sensitive to these kinds of questions. If you’re using gamification to achieve business goals in your company, it’s not an experiment. At a general level, it’s another mechanism for the sort of persuasion that marketers and managers already engage in all the time. There are important legal and ethical lines that divide legitimate gamification from, for example, stealth marketing or employee manipulation. We talk about this in the book. For the most part, though, these boundaries will be common sense: An abusive gamification system is unlikely to be effective for very long. Existing laws and regulations should be broad enough to encompass most any gamification scenario we can imagine. As the gamification community becomes more sophisticated, a code of conduct could clarify best practices. Make no mistake: There will be abuses. Enforcement of the law is important. I just don’t think we need a prophylactic process like IRB review for human-subjects research in universities.

O.K., as you’ve opened the door (with perhaps a little nudge from me), what are the legal implications of gamification? The argument that gamification is simply persuasion but there are practices such as stealth marketing that are a concern seems to indicate some law may be in play. After all the privacy folks might argue that abuses are not curtailed in that space, why or how is gamification different?

[KW] The legal issues around gamification will be pretty self-evident to any technology lawyer: for starters, privacy issues around the personal data involved; undisclosed manipulation that could run afoul of labor, employment, or stealth marketing regulations; the FTC’s disclosure requirements for compensated endorsements through social media; and rules about sweepstakes, gambling, banking, or stored value cards that might apply to virtual currencies. We go through these in the book. There are some challenging issues here, but they aren’t new. If you think a good terms of service agreement and privacy policy can address concerns about behavioral targeting, you won’t be too worried about gamification. If you don’t, you’ll see gamification as another, analogous threat.

More interesting than how law might limit gamification, though, is how gamification might expand the law. We’re exploring this topic now. If you think about it, law operates as a form of behavior regulation. It’s a system to make people do things that society decided to mandate. Economics gave us a set of tools to understand legal rules as incentives, and more recently, behavioral economics corrected for some of the limitations of the neoclassical economic worldview. Neither, however, poses the question we address in For the Win: How to design systems that foster genuine motivation to act in a certain way? The intriguing question, then, is what happens if we apply gamification techniques to the design of legal regimes. Of course this idea isn’t a complete substitute for traditional rules, and it will work better in some areas than others. We’re already seeing governments use games and gamification to motivate behaviors such as healthy eating and learning personal finance skills. There is also growing use of game-like contests and prizes for government R&D. The next step will be to find ways to make legal compliance more engaging or rewarding. That’s one place I expect to see gamification go in the coming years.

Kevin and Dan, thank you for sharing your thoughts. The project is great. It maps to many things I have seen while around the technology world. Having a resource to get into gamification and see where it may take us is not only welcome, it is needed. Congratulations and I wish you the best going forward with your work in this large and growing field.