Feedback in the Real-Time Economy [Why Games Matter]

Welcome to the real-time world. It’s a place where cause and effect follow each other so closely it can make your head spin. It’s happening because of the feedback loops generated by the two billion (soon to be four billion) of us all over the world who are online sharing information and opinions via social media that we access through consumer IT devices such as smartphones, netbooks and tablet computers. This fast feedback real-time world sometimes makes us yearn for a return to simpler slower times, but alas, the genie is out of the bottle and there’s no going back.

 

The way forward is all about harnessing the power of feedback loops. The economy of the industrial world was based on the assembly line, a strict linear process that put everything in its place and maximized efficiency. The economy of the real-time world is driven by the feedback loop, a flexible circular process that maximizes responsiveness to continuous change. And a powerful model for how to harness feedback loops comes from video games. Video games are examples of how to integrate technology, process and people into operating models that generate the feedback needed to thrive in our real-time economy.

 

[ I do engaging presentations on this and related topics - www.MichaelHugos.com ]

 

Games as a Model for Business Operations

 

A game is an engagement engine – it attracts and engages players. You can measure the success of a game by the number of players it attracts and the level of engagement it gets from its players. Games are specifically designed to attract and engage people, and an influential game designer, Jane McGonigal, describes games as having four traits: Goals; Rules; Feedback Systems and Voluntary Participation. Looking at these four traits you could say that the combination of the first three traits is what creates the fourth trait.

 

The goals of a game are what the game is about; they are what attract people. Rules define how players go about achieving the goals; they are the challenge of the game. And feedback systems are the user interfaces that engage the players. They present a continuous flow of information that shows people how they are doing and whether they are getting closer to or farther from accomplishing the goals. The right combination of these three traits is what induces voluntary participation.

 

Maybe the best definition of a business these days is to say that it too is an engagement engine – it attracts and engages customers and employees. Perhaps a company in the real-time economy should no longer operate like an assembly line focused on efficiency. Perhaps it should operate instead like a feedback system guided by goals and rules focused on generating voluntary participation as measured by repeat customers and dedicated employees. 

 

The driving force for success in the real-time economy is continuous response to change so as to maintain the voluntary participation of customers and employees. Businesses that fail to do this go the way of once great companies such as Kodak, Motorola, Sears and many other icons of the industrial age. These companies were very efficient at what they did but as the economy shifted from industrial to real-time, they lost the participation of their customers and employees. Their goals, rules and feedback systems failed to interest and engage people. And their senior managers attempted to address this problem by applying industrial measures to increase efficiency such as cutting headcount, selling off business units and squeezing suppliers. This mostly just alienated people and accelerated the loss of the voluntary participation they so desperately needed. 

 

 

Feedback Systems are the Highest and Best Use of Information Technology

 

In the industrial economy the purpose of technology was to increase efficiency and productivity and information technology was applied with that end in mind. Many companies still view IT as primarily a tool to increase efficiency (and those that persist in this point of view are headed the way of Kodak, Motorola and Sears). It is not possible to cost-cut and downsize your way to success in the real-time economy. Companies have to find ways to maintain and increase voluntary participation of their customers and employees or they will simply fade away.

 

The explosive growth of social media and business networks from Facebook to Foursquare, LinkedIn and Google is fueled by their increasing use of traits and techniques borrowed from video games. Increasing numbers of