Collaboration, part II

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).

Disciplined Collaboration

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.

Non-traditional Uses of Analytics with Social Games

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.

No Winner Yet in the Social Gaming Space

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.

My Definition of Beta

In the social game industry, financial beta is often overlooked, especially when crafting an international strategy. In financial circles, beta is a measurement of risk for stocks and other investments in relation to the market. This is how closely the financial instruments performance is correlated with the overall market performance. Continue reading “My Definition of Beta”