The last couple of weeks, I wrote about how Bayes’ Rule is the strongest tool for making good business decisions. In this post, I will address one of the most important decision and how Bayes’ Rule can help, deciding what games or products to green light. In the game space, the green light decision is when a company decides whether or not to fund fully a project and put it into production. Some companies have a highly defined process, while others rely on intuition. The lessons of Moneyball already say who is going to win between those using a process and analytics and those using intuition, so I am going to focus this post on how to apply Bayes’ Theorem so you apply the right data. Although I am focusing the post on green lighting game projects, it can be applied to any new product.
One of the most common green light mistakes I have seen in the game industry is companies deciding on the merits of a game primarily based on how much fun the demo or prototype is. Related to this, they look at how the features of the demo/prototype compare with competitors and if it has enough competitive advantages they move forward. With the latter approach, you may feel you are looking at the opportunity very analytically but you are actually neglecting the most important data points.
Bayes’ Rule shows that often the best information for decision making is most likely the data from all previous game releases. As I wrote about last month, Bayes’ Theorem is a rigorous method for interpreting evidence in the context of previous experience or knowledge. Bayes’ Theorem transforms the probabilities that look useful (but are often not), into probabilities that are useful. It is important to note that it is not a matter of conjecture; by definition a theorem is a mathematical statement has been proven true. Denying Bayes’ Theorem is like denying the theory of relativity. Continue reading “Bayes’ Theorem Part 3: Making the best green light decisions”