General Tech Business – Page 17 – The Business of Social Games and Casino

It is NOT going to be different this time

One phrase has wiped billions of dollars off the balance sheets of individuals and companies: “This time is going to be different because….” It is how people often rationalize jumping on a trend or bubble, even when past experience shows it will not last. The rise of Trivia Crack (which I play frequently), and the commentary accompanying it, is the latest example of this phenomenon.

The housing crisis

During the height of the US housing market bubble, I remember seeing multiple experts explain why the steep run-up in prices was not the same as past bubbles. They explained that it was due to changing demographics, realignment of wealth, new consumer behavior that favored home ownership over other asset classes, and other arguments that made them sound very smart on CNBC. Years earlier during the dot.com boom, experts (many of them the same) explained how that was not a bubble and companies would no longer be valued on profitability (but on market share) and how the economics have changed.

In each of these boom times, experts and laymen alike refused to look at past history, such as Tulip Mania, and picked facts to justify a difference where none existed. Turns out these arguments, while factually correct in some cases (i.e. demographics have changed in the US) were simply noise and did not truly impact the underlying asset value.

Trivia Crack

This same phenomenon is evident in the technology and digital game space. A game becomes very popular and immediately the entire industry thinks there is a new formula for success. The company behind the game may sell for millions and literally hundreds of companies try to “fast-follow” or add the mechanic to existing products. Continue reading “It is NOT going to be different this time”

It is about creating a monopoly, not winning

In Peter Thiel’s hot book, Zero to One: Notes on Startups, or How to Build the Future, he makes many interesting observations (some I agree with, some I do not) but one in particular is particularly valuable. Thiel asserts that great companies are not great because they beat their competition, they are great because they do not have competition. Although he does not quote Blue Ocean Strategy, it is very consistent with their thesis and data that shows that companies that create new markets have much higher economic returns than those who come up with new strategies to defeat their competition.

Basic economics

Thiel’s point about the benefits of creating what he refers to as a monopoly, what I call a blue ocean opportunity, resonated with me as he use basic economics to prove the point. At its core, classical economics shows competition will drive out excess profits. That is why although Exxon makes a lot of money, they do not make a higher return on investment than another oil company. Whatever you are doing, somebody else will copy.

Thiel points out that, “Americans mythologize competition and credit it with saving us from socialist bread lines. Actually, capitalism and competition are opposites. Capitalism is premised on the accumulation of capital, but under perfect competition all profits get competed away. The lesson for entrepreneurs is clear: if you want to create and capture lasting value, don’t build an undifferentiated commodity business.“ Instead he advocates building a virtual monopoly, a company so good at what it does that no other firm can offer a close substitute. Continue reading “It is about creating a monopoly, not winning”

Individuality is the Key to Winning 1,000X

I often learn things from sports that are very applicable in business and Duke Basketball Coach Mike Kryzewski’s (Coach K) 1,000^th victory provided one of those moments. In all the post-victory analysis, one theme kept resonating: Coach K treats every single player differently. He takes the time to understand the player and then uses that understanding to get the most out of them (and help them develop).

The Battier story

Shane Battier, whom I have written about before, told the story that most resonated with me. When Shane Battier was at Duke early in his career, Coach K kept probing to determine what was important to him, and it was not how many points he scored. When Coach K asked, “are you ready to lead this to team and be an All-American,” that motivated Battier. Battier went on to be an all-American that year (2001) and Duke won a national championship.

The lesson

Many books on leadership and coaching extoll a strategy of what to say to employees to motivate them, but it is not optimal to pursue a one-size-fits-all strategy. A pep talk may work great for one employee while a cynical employee may get de-motivated. Motivating by financial incentives can work great with some people while others will then just do the minimum needed to get the financial incentives. A laid back approach works fantastic with certain employees while others will take advantage and spend all their time playing Trivia Crack.

If you want to be as successful as Coach K, you should spend time with every individual employee and get to understand them. Then work with them to build a plan that works for them and optimizes their contribution to the organization.

Key takeaways

Duke basketball coach Mike Kryzewski’s (Coach K’s) incredible success is largely due to treating every player differently.
What motivates one person may not motivate somebody else.
The best way to lead is to understand each individual and build a plan for each that optimizes their contribution.

Success = Vision + Process + Output

Possibly the best book I have read in the past year (not just in 2015) is The Success Matrix by Gerry Langeler. Langeler is a highly successful venture capitalist and entrepreneur who credits this concept to his success. The Success Matrix puts forth a very straightforward concept: Success needs a combination of vision, process and output. Langeler primarily uses this idea to suggest how to build and lead a successful team. Rather than trying to find people who excel at all three variables, since very few exist, great companies combine people so that the company can excel at all three elements.

The three elements of success

Vision. Vision represents a broadly understood sense of direction that encompasses competitive leadership in your industry over time.
You should ask whether you or your employee has the vision of where you need to go and what you need to do over time. This vision should be sensible, focused and well grounded with a sense of direction. As Langeler writes, “this is different than any specific task, product plans or targets. It means precisely what it says. If you are headed in a direction, you know roughly where you are going, even if you don’t know exactly where you’ll end up.”
Process. Process is the structures, methods and procedures to produce repeatedly timely, high-quality products or services, independent of changes in people. You can determine if you have strong process whether profitable products and services are
being produced with predictable regularity.
Output. Langeler defines as output as profitable products and services are being produced with predictable regularity. “Profitable products and services” is the key driver for output. It identifies if costs are in line value is recognized in the marketplace. Any Output short of profitable is wasted effort. “Predictable” regularity speaks to whether the Output is both sustained and sustainable. Short bursts of excellence are not enough.

Evaluate your team

Very few people are strong at all three components (vision, process and output) of the success matrix. If you look at vision, process and output as binaries (people are either good at them or not), there are nine possible combinations to classify everyone (e.g., good at vision and output, not process; good at process and output, not vision). Langeler actually puts labels on each of the nine possible combinations but that is the one element of his work I do not like; I feel that the labels are loaded and create unnecessary value judgments. Continue reading “Success = Vision + Process + Output”

Use smart CRM to avoid being dumb

I recently read an interesting book, Smart Customers Stupid Companies by Michael Hinshaw and Bruce Kasanoff, that made an excellent case on why you should make your CRM (customer retention management) systems more sophisticated. The underlying idea is that customers, players, users, etc., are very connected, they regularly use mobile devices and tablets, have easy access to a computers and thus can find almost any data quickly (ever hear of Google?). As customers have and take advantage of instant access to information, they thus expect the companies they deal with to be equally sophisticated.

Consumers and businesses alike research, connect, and purchase online and over their phones. As Hinshaw and Kasanoff write, “[w]ith these tools come radically higher customer expectations. Higher expectations of experience. Greater demands for personalization and customization. Lower tolerance for mistakes, for running through inane hoops, or for interactions that require mindless repetition.”

What are smart customers?

Customers these days have immediate access to almost all information, with Google, Wikipedia, Angie’s List, etc., literally in the palm of their hands. Customers can outwit salespeople, easily spot misstatements by customer service reps, and have near-instant access to the accumulated knowledge of human civilization. The trend is continuing to accelerate; with each new generation of devices people have access to more information.

Customers are also getting less patient, and younger customers never had much patience to begin with. Anyone 20 or younger has never known a world without the Web. The oldest of this generation are now adults, soon to graduate from college and start households of their own. Continue reading “Use smart CRM to avoid being dumb”

How a pizza chain provides good customer engagement

I recently read how Papa John’s deliver a great customer experience and realized it was also applicable to tech and game companies.

Query your customers

Papa John’s is highly successful in the very competitive pizza segment by constantly asking its customers how they can improve. Throughout the organization, the team is empowered to be “adaptive, and quick on [their] feet if [they] see or hear suggestions that will improve the experience.”

This attitude manifested itself in the evolution of Papa John’s’ mobile strategy. It learned that its customers equated a good experience with a good digital/mobile experience. Papa John’s then invested in creating a seamless online/mobile ordering application.

The result was a mobile app that was among the highest scoring among restaurants in the mobile experience scorecard. The translation of customer asks to a top quality application shows the opportunity of customer voice driven innovation.

Improve your LTV

By constantly pursuing customer engagement through voice of the customer feedback, Papa John’s also enjoys high customer satisfaction and surprising brand loyalty, which translates into better retention and less churn.

What it means

The Papa John’s example shows the value of listening to your customer. If you understand your customers’ needs, you can then improve and innovate to meet those needs.

Key Takeaways

The best way to deliver a strong customer experience is by asking your customers what they want.
Innovate and improve based on what your customers are asking for.
By seeking customer engagement by listening to your customers, you will have higher loyalty and thus increase your customer lifetime value (LTV).

Ignorance is a competitive advantage

I recently had a conversation with a gaming industry CEO whom I deeply respect that reinforced a MIT Sloan Management Review article, “Embrace Your Ignorance” by Michael Schrage, about how the savviest leaders promote and embrace ignorance. The thesis for both Schrage and the CEO was that you cannot accurately predict what your customers will want, like or need. Thus, you need to embrace this ignorance and run experiments to get the data.

Moneyball and The Innovator’s Dilemma

I have seen many companies where the leadership “felt” they understood the customer and would develop new products for these customers. It leads to project green light meetings very similar to the draft room in Moneyball, where people argue based on their experience which initiatives have the most potential. It is also one of the biggest contributors to the huge number of failed projects, particularly in the gaming space where we typically see more than 8 out of 10 new games fail.

This issue is actually often a bigger problem with executives who have had past successes. Even if they knew their existing or past customers very well, they do not necessarily know what a broader or new market wants. Even their existing data can skew innovation effort, which is the core point of the Innovator’s Dilemma: Companies that have been leap-frogged often create innovations for existing markets rather than new markets.

You already are ignorant—accept it

In Schrage’s article, he discusses how Microsoft’s Ronny Kohavi (a pioneer in online experimentation) challenges tech-savvy audiences when he speaks. Kohavi shows screenshots of actual A/B tests that Microsoft has run for website design. He then asks his audience to predict the outcome of the tests. Although the audience is sophisticated, they almost always fragment with different opinions. Kohavi then advises, “stop debating…it’s easier to get data.” Continue reading “Ignorance is a competitive advantage”

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