Last week I posted about how the book and movie Moneyball provided great lessons for the social game industry (Lessons from Moneyball for the social game industry post). I just came across a post on the Business 2 Community blog (Game Change: Moneyball and the Reality of Social Business)that did a great job of showing how the lessons from Moneyball and the rise of Billy Beane is so similar to what happens in social businesses (including social gaming). It really makes some great points about hiring, arguably your most important task. I definitely recommend you take a look at the post.
Sometimes, a few things happen concurrently that drives home a point, and last week I had one of those moments. Last week, I taught several sections of a marketing class at Duke’s Fuqua School of Business, focusing on new product launches. One question that came up repeatedly was how Apple was so successful despite not following many of the principles I was outlining, particularly on involving customers in the product development phase.
Then, over the weekend, one of my favorite blogs (Both Sides of the Table by Mark Suster) wrote about why you should not try to replicate Instagram’s $500 million raise (read the post, Don’t Try to “Pull an Instagram.” Here’s Why …). Continue reading “You are not creating the next Apple or Instagram”
Given that many readers of this blog are in leadership positions at social game companies, I wanted to pass on the key lessons from an article in the MIT Sloan Management Review on How to Become a Better Leader. The gist of the article is that while great leaders make their work look natural, the reality is that most work very hard to manage or compensate potentially career limiting traits. Even Richard Branson, who seems like one of the most natural and gifted leaders, said he was “shy and retiring” before starting Virgin Airways.
The article points out that there are five traits commonly accepted by researchers in leadership to describe leaders. Below, I will summarize these five traits and how leaders control these traits to become great and hopefully ways you can apply them to create a great social game company. Continue reading “Becoming a Great Social Game Company Leader”
I finally watched Moneyball on DVD and it reminded me how applicable it was to the social game industry. I read the book when it was first published and immediately felt it was applicable to my company, Merscom, as a way for us to gain a competitive advantage despite not having raised as much VC as our competitors. We even asked all new hires to read it. Despite my affinity for Moneyball, I could not bring myself to see the movie as I assumed it would not do justice to the underlying concepts.
After seeing the movie, I realized even more that the lessons from Moneyball were directly applicable to the game industry. The scene where scouts sit around in a room and evaluating free agents was almost a carbon copy of many greenlight meetings I have sat through. In those meetings, arrogant game executives and creatives “pontificate” and yell until they decide what games to spend millions developing and marketing. They always argue that there many years of experience and intuition will lead to hits, and they generally end up with multiple failures for every hit.
One of my first takeaways from the movie was how important it is to overcome the old way of thinking in the game industry despite institutional resistance. The old timers are going to want to do things their way and are going to look down on making decisions via analytics. To succeed, you are going to need to push analytic solutions and potentially replace people who cannot accept this new way of doing things.
Another takeaway came from the Art Howe example, where Beane could not get Howe to make line-up decisions based on analytics so he ended up trading his starting first baseman (Carlos Pena) to force Howe to play the guy with a higher on-base percentage (Scott Hatteberg). The lesson here is that if you cannot get your organization to embrace analytics immediately, you may need to make other moves to prompt your team to take the right path.
A final lesson came from the epilogue, where the Boston Red Sox followed the A’s path in embracing analytics and ended up winning the World Series, while the A’s have largely floundered. Although not covered in the film, what largely happened in baseball is that as many team’s embraced analytics, then the A’s advantage over competitors evaporated. In the social game space, obviously most companies use analytics to improve a game’s performance, largely focusing on monetization, engagement and virality. I have argued in other blog posts how important it is to use analytics in all parts of your business, not just game development. I think the experiences in baseball show even more that the only way to sustain a competitive advantage through analytics is to expand their use into ways your competitors do not.
Although I try to be metrics driven in all aspects of running fiveonenine games, I recently caught myself taking for fact some commonly held beliefs about millennials (people under 30) as employees. A recent article in Strategy + Business (Five Millennial Myths article)dispels the five key myths about millennials. Given the need for social game companies to hire the best talent (really the need for any good company, but this blog is not intended to save the world), having preconceptions about job candidates could severely negatively impact your business. In addition, companies often devote resources to engaging millennial workers, while they may not need engaging.
Myth: Millennials do not want to be told what to do
The basis for this belief is that millennials have always been told by their parents that everything they did was great, so they are difficult to manage. The reality is that the idea that millennials will not listen to authority is wrong. According to the article’s author’s (Jennifer Deal) research, millennials presently working are more willing to defer to authority than either Baby Boomers or Gen Xers.
Myth: Millennials lack organizational loyalty
Here, the perception is that those under 30 are not committed to their employer and will switch jobs for a small salary raise. The research shows that this perception is also incorrect, as millennials have the same level of organizational commitment as boomers and Gen Xers. The author believes that this misperception is largely caused by the fact that young people of every generation change jobs more frequently than older workers.
Myth: Millennials are not interested in their work
The idea behind this stereotype is that their lack of commitment to an organization is also shown by their lack of interest in their job. Deal’s research clearly refutes this belief, as millennials are just as intrinsically motivated as boomers and Gen Xers. The research did show that people lower in an organization are slightly less motivated by the content of their jobs than people at higher levels. Given millennials are under 30, they are often lower in the organization and thus those display less interest in their jobs.
Myth: Millennials are motivated by perks and high pay
This belief is that millennials are only interested in material rewards and organizations could never satisfy their desires. The research, however, shows no correlation between age and whether the person is motivated by salary and perks.
Myth: Millennials want more work-life balance
According to this conviction, millennials want to spend lots of time outside the office, whereas Baby Boomers and Gen Xers are workaholics. Guess what, this belief is somewhat true. Millennials are interested in work-life balance, but not much more than Gen Xers. The author believes that even this difference is caused by the different stages of life the people are at, rather than a shift among generations.
My biggest takeaway from this article is that hiring and HR needs to be as analytics driven as the rest of your company. When we start to use perceptions and anecdotes to make decisions rather than data, we often make bad decisions. If those decisions lead to creating a weaker team than you had to or wasting resources trying to “satisfy” already happy employees, it could seriously hamper your company’s ability to thrive.
My Favorite Posts
Given the Thanksgiving Holiday, I will not be putting up a new blog post today. Instead, I went through and found my personal favorite posts (yes, pretty egotistical that I have favorites, but again, it’s my blog; I can do what I want ☺). Here goes, from the first one being the one I felt was the most insightful:
- The Platform Challenge for Social Game Companies (post on how to optimize ROI when choosing what social networks and platforms to develop for)
- No Winner Yet in the Social Gaming Space (although a relatively short post, I am sure we are going to continue to se a lot of leadership changes in the short- and mid-term)
- The Need to Move Beyond Performance Marketing in Social Games
- My Definition of Distance (a framework for social game companies to create an international strategy)
- Collaboration Part 2 (how to use collaboration to grow your social game company)
- The Answer to the Talent Shortage (How Social Game companies can overcome the difficulties in finding good talent)
Also, although I do not feel these were great posts, they seem to be the two people visit most:
When social gaming started to take off, many people in other parts of the game industry were very excited about finally having an opportunity to create a game that responded to all players’ needs. By using analytics, there was the hope that we would take feedback from the player to improve a game continuously and thus optimize the player’s experience.
Business intelligence (BI) is an incredibly powerful tool and could be used to increase the gameplay experience exponentially. Instead, most social game companies primarily use analytics and other BI tools largely to manipulate customers. Rather than trying to see what would enhance the player’s overall experience, these tools are used to determine how to get an extra $0.05 or have them send one more wall post. As the analytic tools become increasingly sophisticated, most of these new capabilities are focused on better controlling player behavior.
While there is a role for using analytics to improve areas such as monetization, the bigger opportunity is creating a more compelling, engaging and entertaining experience. If a game became increasingly compelling and enjoyable, monetization, virality and engagement would all follow (assuming it was properly constructed). Yet, we have the tail wagging the dog in that these areas are driving the evolution of the games, with little concern about the overall enjoyment of the player.
While the focus on “manipulation” may work in the short term (and please investors or stock-holders), it is not the way to grow a superior, long-term business. Very few industries—beyond the used car business, banking, US airline industry and a few others—are built around continually tricking your customers. Those that are either rely on discrete purchases where you do not need repeat customers (e.g., used car sales) or government regulation that keeps out most competitors and thus prevents new entrants that offer superior service (e.g., banking). You can trick some of the people some of the time, but consumers are not stupid and will gravitate to stores, games and services where they have a great experience. Long term, Amazon and Nordstrom outperform Overstock and Kmart. My point is simply that you should be using your analytics to create the next social gaming equivalent of Amazon, not Kmart.
I recently finished reading a great book on building a company that leverages collaboration, Collaboration: How Leaders Avoid the Traps, Create Unity, and Reap Big Results by Morten Hansen and wanted to write about a few ideas that are relevant to social game companies (as well as almost every other company).
Hansen’s book provided several key concepts. First is the idea of disciplined collaboration. The key take away from this concept is that not all collaboration is good; it must generate results greater than people or teams working individually. Just collaborating for collaboration’s sake (as shown by regular useless meetings, conference calls with many participants who do not add or derive value or travel between locations just to meet but not advance a plan) is as bad as or worse than not collaborating at all. Collaboration should be used to generate value for the company, not as a checkbox. As Hansen points out, good collaborators know when to collaborate, when not to, and are willing and able to execute the selected project.
Analytics can also be applied to deciding when to collaborate. People should launch a collaboration project only if the net value of collaboration is more than the return minus both opportunity costs and collaboration costs. Hansen calls this the net value of collaboration premium. Mathematically, it is written as: Collaboration premium = return on project – opportunity costs (what the person could have done individually) – collaboration cost (travel, conferencing, etc.).
Hiring for Collaboration
Hansen’s book also provides some great principles for leaders to implement collaboration throughout their organization. The first and most important is hiring the right people. As discussed above, effective collaboration is disciplined collaboration, and you must hire the right people for this strategy. No matter how effective, you do not want lone stars. It is impossible to create a culture of collaboration when you allow some contributors to work individually. Even if they do a great job, it undermines the concept of evaluating all opportunities as to whether or not collaboration is beneficial. Moreover, it sends the message to others that collaboration is not necessary for career success.
Conversely, you also do not want to hire “butterflies.” Butterflies are those who flutter from person to person spending all of their time collaborating. This type of employees ends up wasting hours and days of their co-workers time, time that may be better spent on individual projects or other collaborations. When building your team, what you want is neither lone stars nor butterflies, but disciplined collaborators who collaborate effectively when it is needed.
Leading for Collaboration
The book also provides some great guidance for leading collaboratively. It is the leader who sets the tone for the organization. If you do not lead for collaboration, expecting collaboration from your team is wishful thinking. To lead for collaboration, you need to
• Set a unifying mission. If everyone knows their mission, it is much easier for them to see the benefits of collaboration
• Provoke a common value for teamwork. You, and the organization as a whole, should reward disciplined collaboration (and punish lone stars and butterflies). Hansen provides a lot of detail on how to coordinate compensation with collaboration and I will not over-simplify it here. I recommend you read the book to see what techniques you can use to create this value throughout the company
• Speak the language of collaboration. As anyone who has been in a leadership position knows, there is nothing more important to your employees than your actions. If you evangelize collaboration and do it yourself, that will have a stronger effect on your organization than anything else could
Although my blog is focused on the social gaming space, the above lessons and practices are valuable to any company. In social gaming, however, the market evolves so quickly that collaboration is a huge tool for maintaining a competitive advantage.
I have lamented several times on this blog that social game company do not use analytics enough outside of monitoring and improving the actual games and monetization. I thought it might be useful if I posted some suggestions on other areas where game companies could apply analytics.
Marketing (non-performance). Social game companies are famous for how well they use analytics to optimize their performance marketing campaigns, i.e. Facebook ads. Despite ad budgets that rival those of FMCG (fast moving consumer goods) companies, however, social game companies have a very unsophisticated approach to traditional marketing (if they are even pursuing these opportunities); a billboard does not a marketing campaign make.
There are many analytic tools available, starting with SAS, which allow companies to optimize their marketing investment. They help direct resources to the appropriate marketing channels and adjust the deployment based on results. These tools also allow for near perfect execution of campaigns by using predictive analysis to put the right offer or messaging to the precise customer at the correct time. They help companies adapt instantly to customer interactions, making adjustments in real time between different marketing platforms. These tools work across television, print, web (banner), outdoors, PR and all marketing tools, allowing social game companies to create marketing campaigns as or more efficient than performance marketing alone. As it is getting more difficult (and costly) to acquire Facebook users with Facebook ads alone, creating an analytics driven marketing program is necessary for social game companies to grow.
Growth opportunities. Analytics are also a fantastic tool for evaluating growth opportunities. With all the data that social game companies already acquire, they can then mine this data to find opportunities others have missed. There are multiple tools that allow game companies to use this data for forecasting profitability of new initiatives. New products, new markets, new platforms, etc can all be evaluated analytically and ROI estimated rather than having strategic direction come from the last person standing after an eight hour Board meeting.
Intra-company. Finally, analytics are a great way to align everyone in a game company with a common interest. By making player data available to everyone, the data can drive all business decisions. If your company tracks, measures and shares results across all channels and business units the data provides the tool to optimize decision making. In addition, providing this data allows for a consistent customer experience (for example, between a Facebook game and a social mobile app) and multichannel marketing with a single view of the customer across all marketing and business functions.
I have not tried to create an exhaustive list of how you can be using analytics to drive growth, but I wanted to touch on some key areas and get people thinking that analytics is not just for improving monetization 5 percent in a month. At its best, it provides a competitive advantage when applied across the organization.
I have been asked on two separate occasions recently whether the social gaming wars were over; if it was impossible for a new entrant to compete. I answered intuitively that it was far from over, there were still many opportunities ranging from social mobile to targeting underserved niches. Unfortunately, I did not have any data to back up my proposition, and as I rely on analytics to drive decisions, that absence troubled me. I also understand that my intuition is not always going to be right, so finding data on this topic became crucial.
In the most recent issue of the MIT Sloan Management Review (Summer 2011), I found the evidence. They reported that 3.8 years is the average length of time before a switch in market share leadership in high-tech markets (that they studied). Out of 19 markets studied, market leadership ranged from 2 to 5.5 years and in 10 of the 19 markets there were multiple switches in market share. In the article, titled ”How Quality Drives the Rise and Fall of High-Tech Products,” the data clearly shows that product quality drives these changes in market leadership. Out of 34 total changes in leadership, 18 percent were driven by changes in quality leadership that year and 50 percent were related to a switch in quality leadership in prior years (another 20 percent was companies who always had superior products gaining leadership). Thus, 88 percent of all changes in market share leadership in high-tech companies was driven by a superior offering from the “underdog.”
The authors of the study also pointed out two key reasons that once-invulnerable companies lose their leadership position. The first is that in high-tech industries new products and technologies constantly flood the market, upsetting the status quo. Secondly, consumers of high-tech products often rely on experts or informed consumers who have reviewed the products. These two factors offset the network effects that come with market leadership.
This research confirmed my (and many others) hunch that the social game ecosystem can still change dramatically. Obviously, there will always be exceptions to the rule, but the data clearly shows it is premature and inaccurate to assume that the social gaming ecosystem cannot change dramatically.
It also points to the need to focus more on product quality than first mover advantage, as the latter does not create the long-term advantage many believed. Most importantly, there is still a lot of profit (and fun) left in the social gaming industry.