Building a Sustainable Startup: Guest Post on C-Suite Insider

This week I had the honor of writing a two part guest post on CSuiteInsider.com about how you can tell if your start-up is heading in the wrong direction and what founders can do to boost their chances of building a sustainable business.

You can read my first post on how to figure out if your company is heading toward a premature end here.  And the second post on the ways to improve your likelihood of success here.

Both posts focus on the following nine critical success factors:

1. Get Lots of Customer Feedback
2. Know Your Fanatical Early Adopters
3. Focus on Your Company Culture
4. Bring Together People with Diverse Skills and Backgrounds
5. Find a Problem that Matches Your DNA
6. Make Sure You Have the Right DNA for the Solution
7. Do Not Focus on Advertising Revenue
8. Find Paying Customers
9. Be Paranoid

I learned the importance of these success factors the hard way advising and working at several early stage startups. I have seen first hand how brilliant well-executed ideas can lead to wasted time, money and effort when those ideas are not validated by customers early and often. I've experienced how petty politics can threaten to destroy a what you're working so hard to create, and how replacing dysfunctional team members can reignite the sense of passion and purpose that make real breakthroughs possible. I know that early revenue streams is where the rubber meets the road whether you are trying to bootstrap using your own savings and credit or trying to get better terms from angel investors or VCs.

What are the warning signs that you look for? What are the key things that you do to make sure your company stays on track?

Gamification Consulting Boom Revisited

     Last year, I predicted that 2012 would be a big year for gamification consulting. This trend seems to be in full swing with consulting heavyweight Capgemini's recent announcement that they will join with gamification software provider Badgeville to accelerate large scale enterprise transformation.

     In a joint press release with Badgeville, Capgemini Consulting's VP of Digital Transformation, Maggie Buggie said:

"The bringing together of Badgeville's gamification expertise with our track record in large-scale strategic transformation is very exciting. Large and complex digitally enabled business transformations are often dependent on a significant cultural and behavioral shift, and the use of smartly-applied game mechanics as part of a behavioral change program can tackle that need in an innovative, engaging and meaningful way. Today's announcement also demonstrates Capgemini Consulting's commitment to innovation and our leadership in Digital Transformation."

     In the press release, Capgemini sites studies with the MIT Center for Digital Business as a motivating factor for this partnership. According to their studies, companies on the leading edge of digital transformations invest significantly in the soft side these efforts.  Gamification offers a creative and innovative way to foster collaboration around strategic priorities.

Gartner Hype Cycle

     Another unstated factor that may have been at play is the growing feeling that most gamification projects are poorly designed and would fail to meet their business objectives. Just last week, Gartner predicted that 80% of current gamified applications would fail by 2014 due to this reason. Gartner stated that "Gamification is being driven by novelty and hype." Thus, on Gartner's hype cycle, I'd place the industry somewhere on the peak of inflated expectations but sliding into the trough of disillusionment. This point is where seasoned consultants like Capgemini can help speed the gamification industry's transition to providing true productivity gains. Capgemini and other consultants can bring focus to "the more subtle and more important game design elements, such as balancing competition and collaboration, or defining a meaningful game economy" that Gartner finds missing from poorly designed gamification initiatives.

    The Gartner report combine with the Capgemini announcement indicate that the gamification industry is maturing but still isn't out of its awkward growth stage.

How to Make Love to Your Customers

Fanatical Customer Intimacy as an Organizing Principle for Startups

     In The Discipline of Market Leaders, authors Frederik Wiersema and Michael Treacy argued that market leaders succeed by narrowing their business focus, not by broadening it. Specifically, companies gain by concentrating on one of three value disciplines--operational excellence, customer intimacy, or product leadership--and aligning their operations behind their chosen discipline. For example, by focusing on logistics, companies like Walmart become market leaders on price. By focusing on R&D, companies like Apple become product leaders. Finally, companies like Disney become leaders in customer experience by focusing on customer intimacy.

     One of my favorite presentations from the Warm Gun design conference this year was made by Kevin Hale, one of the founders of Wufoo, on how they used customer intimacy as the organizing principle for their company.

According to Hale, Wufoo decided from the start to build their company around the discipline of customer intimacy. They became fanatical about creating meaningful relationships with their users and in particular building those relationships by eliciting positive emotions, not by just appealing to rational ideas. This interest lead them to the science of creating and building long-term relationships and to applying dating research to new users and marriage research to existing users.

     Wufoo is an freemium online form builder that was acquired by Survey Money in 2011 for $35.0M. This acquisition netted Wufoo investors a 29,561% return on their investment of $116K. At Warm Gun, Hale described of the secret to their success.

First Impressions
Setting the right tone at the start of a relationship matters

Cutting Cookies with a Metal Press

A Deeper Look at Richard Bartle's Player Types, Part III

Cookie Cutter Overkill

"Don’t use a metal press to cut cookies!"
- Richard Bartle, Multi.Player Conference Keynote, July 21, 2011

Richard Bartle does not mince words when he describes how his landmark player type model has been misapplied by others. He used the metal press analogy above to describe how the gamification industry often applies Bartle's model without adapting it to fit the context.

If you're not familiar with Richard Bartle's Player Type model, part one of this series delved into the definitions of each player type, how players of different types interacted with each other and amongst themselves, and how multi-user games need to achieve a balance between types.  In part two of this series, we looked at Bartle's full model and how players move between types.  We also investgated how to design applications that support the entire user life cycle.

In part three, we delve deeper into Bartle's own critiques about the misuses of his theory and discuss a framework for how players types might be properly used outside of the narrow confines within which Bartle's model was originally conceived.

What Bartle Says

Player Types: Watch for Moving Targets

A Deeper Look at Richard Bartle's Player Types, Part II

[This blog was also posted on http://gamifyforthewin.com.]

Since the Bartle Test of Gamer Psychology was created in 1996, more than 740,000 people have taken it. Gaming circles have seen the old saw "What's your sign?" transformed into "I'm an KEAS. What's your type?"  For example, I found this comment on a gaming blog:

"So I took the test again today.
Apparently I’m a little bit more into PVP these days and a little bit less in socializing.
Killer 93%, Explorer 60%,  Achiever 33%, Socializer 13%"
                                                              --Loregy.com

This comment hints at a two interesting subtleties about Bartle's player type model.  First, most players exhibit a combination of all four player types, and second, and just as important, players may change their type from time to time.  In fact, as we will see, players will often move through a predictable progression of types over the course of playing any given game.

If you're not familiar with Richard Bartle's Player Type model, my last post delved into the definitions of each player type, how players of different types interacted with each other and amongst themselves, and how multi-user games need to achieve a balance between types.  The fact that players often exhibit behaviors of all four types provides another reason to avoid designing applications that don't cater in some way to all of the player types.  In this post, we'll take a deeper look at how Bartle's full model explains the movement between types. 

Expanding Bartle's Original Model
Bartle's original model mapped players on a two-dimensional grid with the two axes expressing each player's degree of preference for acting on or interacting with the game world itself or its players.[1]  In his 2005 paper "Virtual Worlds: Why People Play", Bartle notes that there were several flaws in this model:

"Although this model has been generally accepted as a useful tool among designers, it
nevertheless has flaws. Two are of particular importance. Firstly, it suggests that players
change type over time, but it doesn’t suggest how or why they might do so. Secondly, all
of the types to some degree, but especially the one for acting on players (that is, Killers),
seem to have sub-types that the model doesn’t predict."[2]

What's the Big Deal about Bartle's Player Types?

A Deeper Look at Richard Bartle's Player Types

[This blog was originally posted on http://gamifyforthewin.com.]

Achievers are motivated to win.  Explorers like to discover the intricacies and secrets of their world.  Socializers enjoy human interaction, helping others, and building alliances, while killers like to dominate those around them.

If you've played any kind of multi-player game or been involved in a community organization (whether online or in the real world), you've run into all of these player types.  This player typology was developed by Richard Bartle, a multi-user dungeon (MUD) creator and academic, during the 1980's and formally published in 1996.  Since then Bartle's Player Types has become one of the best known design patterns in online gaming and in the burgeoning gamification field.

The appeal is clear.  Player types provide application designers with a new way to look at psychographics and motivations and at the different ways we have fun. Once they understand Bartle's typology, designers can easily enable specific social interactions targeted at each type.  Amy Jo Kim provides an excellent an example of how to do this in her Gamification 101 workshop:

Amy Jo Kim's Social Actions Matrix

In this series of posts, we will be taking a deeper look at Bartle's player types.  We will look at his original 1996 treatise and subsequent writings and explore why Bartle's typology has been more appealing and enduring that other possible models. 

What Bartle Says

7 Steps to Successful Gamification

Last October I wrote about the impending consultification of the gamification industry.  I predicted that consulting and professional services would become an increasingly important part of the gamification industry.  At Gamification Summit in June 2012, Venture Capitalist Tim Chang described this trend in context of previous technologies:

"The best gamification is done seemlessly.  It's built into the core of the product and experience, and it is aligned with the business' goals.  You don't just slap it on and hope that it fixes user engagement or conversion rates. If it is, it looks really cheesy.  Users see through it.  They develop an immunity to it and they don't want to see any more of it.  So, that's why the know how of how to apply gamification is probably even more important than the technologies and tools behind it right now.  That's always true in embryonic industries.  It was the same for CRM, analytics and all these other fields as well."

"People don't really want self-service tools.  They want you to tell them what to do."

Gamification done right is not easy.  It requires the integration of complex systems and uses engagement strategies and tactics from a diverse set of disciplines from sociology and psychology to human computer interaction design and of course game design.  Furthermore, unlike other enterprise software projects of the past which required large up-front efforts and minimal work to maintain, gamification typically requires as much effort to monitor, maintain and update as it does to launch.

The 7 Step Plan
The seven step process that follows can help manage this complexity and move gamification projects from promise to reality.  I developed these steps based on my work with clients and lessons learned from designing and managing games at Fastpoint Games.  They also incorporate many of the concepts first articulated by gamification pioneers Amy Jo Kim, Jesse Schell, Gabe Zichermann, Mario Herger, Nir Eyal, Nicole Lazzaro, and Jane McGonigal.

GSummit: Gamification Industry to Grow 150% in 2012

Wanda Meloni presented the latest gamification industry market research from M2 Research at the GSummit in San Francisco in June. M2 estimates that revenue in the consumer and enterprise gamification market would grow to $242 million by the end of the year, which represents over 150% growth year-over-year and would reach over $2 billion by 2016.

Industry Segmentation
M2 also reports that in 2012 the enterprise gamification will represent 38% of the market compared to 10% in 2011. In fact corporate initiatives represented the largest market segment (25%). The entertainment and media segments followed at 18% and 17% respectively.  Consumer goods and retail segments came in at 10% and 9%. Telecom had 5%. The Health & Wellness, Education and Financial all had 4% share with government and utilities each representing just 1%.

Survey of Platform Vendors
Ms. Maloni also present results from M2's survey of four gamification platform vendors (Badgeville, Bigdoor, Bunchball, and PugPharm).  The first part of the survey asked each vendor to specify the features they currently supported across several different categories.

Note: Leading vendors are the ones that currently have the most complete set of features for a category. Additional features include mobile support, user groups, consulting support, education, maintenance and marketing support.

Startups - Ideas You Can Test

     In my last post, I provided a broad overview of how lean manufacturing principles are being applied to the process of innovation.  Lean thinking is ultimately about eliminating waste from a process and being as efficient as possible.  In the context of manufacturing eliminating waste means producing Toyota's with fewer and fewer defects.  In the early stages of a new business, eliminating waste means finding a sustainable business model quickly and efficiently.  All startups begin with an idea.  Here are a few examples:

• People will pay more for self-serve frozen yogurt sold by the ounce
• Let's make a digital version of a Sony Walkman that plays MP3s
• Let's make a digital Walkman, make it super simple to use and connect it to a digital music store
• We should gamify the job search process

These ideas may be good or bad or somewhere in between.  The goal of a lean startup is to quickly discard the bad ideas, optimize and scale the good ones, and figure out how to move the so-so ideas into the good or bad categories.

The FroYo Test

Lean Thinking and Entrepreneurship

With the release of Eric Ries' bestselling book The Lean Startup two months ago, the Lean Startup movement has received tremendous exposure in the business press and general media.

So, what are lean startups?

Lean startups use a scientific approach to creating and managing innovation and to get profitable products to customers faster.  The approach adapts concepts from lean manufacturing to reduce waste in the entrepreneurial management process and attempts to reduce the likelihood that a startup creates a product doesn't lead to a sustainable business (eg. a product that no one wants or that no one will pay for).  Of course, using this approach doesn't mean that lean startups won't experience product failures.  Rather, it allows entrepreneurs more opportunities to test their business hypotheses and learn from customers given the same amount of time and money.

Ries has five guiding principles for lean startups:

The Art of Lean Game Design

One of my favorite books on game design is The Art of Game Design by Jesse Schell.  As I was re-reading this week, I was struck by how similar Schell's game design tenants are to the principles of The Lean Startup by Eric Ries.

In the forward to Game Design, Schell posits that the only way to become a game designer is to design games that people really like and that some people may view this statement as a Catch-22:  "If only game designers can design games, and you can only become a game designer by designing games, how can anyone get started?"  Fortunately, Schell also gives us a way out.  Be a game designer, and create a game.  Any game.  Act like a game design and become one.

"[But] simply jotting down your game idea isn't enough," writes Schell.  "You must build your game, play it yourself, and let others play it.  When it doesn't satisfy (and it won't), you must change it.  And change it.  And change it again, dozens of times, until you've created a game that people actually enjoy playing."

If you change the words "game" to "product", "game designer" to "entrepreneur" and "play" to "use", you have the essence of how a lean startup should go about validating their product hypothesis though continuous iterative learning and customer testing.

Build a Better Business with Games

 

Earlier this year, famed game designer Will Wright proclaimed that "we are in a Gambrian Explosion".  Like the Cambrian Explosion, which witnessed the rapid acceleration of biological evolution, we are now seeing the rapid evolution of games.  Games are showing up everywhere and everyone is becoming a gamer.

This rapid introduction of game thinking into every day life (aka. gamification) provides companies of all types with the opportunity to build a better business with gaming in mind.  Gamification can help companies improve their bottom lines by increasing user activation, engagement and retention.

1. Activation:  The best games make it easy for Newbies to get up to speed quickly.  Tutorials introduce key elements and goals without requiring users to digest lengthy instructions and documentation.  Novices are also give clear, easy-to-earn rewards.  In the parlance of user experience design, games a great at on-boarding users.
2. Engagement:  Games sustain user engagement by matching challenges and quests to a players current level of mastery.  As players enter the flow of a game, the level of difficulty increases and the player increases their skills.  Regular players also gain more power tools, status and personalization.
3. Retention:  Epic meaning and story arcs add interest and motivation and retains users over the long-term.  Master players can also be given exclusive access, activities, and unlocks.  And ultimately, players should be given an increasing sense of autonomy, mastery and purpose.

References:

Think of Social Games as Video Arcades: You Gotta Pay to Play

Last night, game design rock stars John Romero and Brenda Brathwaite held a Q&A session in front of a packed house at the Cogswell Polytechic's Dragons Den in Sunnyvale, California.  Romero is a game designer, self-taught programmer and artist who has published 97 games and is the father of the modern first person shoot genre.

Brathwaite is another game industry veteran with dozens of games to her credit including the Wizardry series and Dungeons & Dragons.  In November 2010 Romero and Brathwaite co-founded social game company Loot Drop.



Here are some of the tidbits that they revealed:

• The energy game mechanic in many social games is simply another version of arcade games that require players to drop quarters to continue playing.  
• Since gaming is an industry and not an art form, all game successful designers need find ways to get their players to pay them.  If you don't like a monetization mechanic, design a different one.
• Sound design is an important aspect of overall game design.  Sound designers and composers should attempt to make the sounds in their games distinctive.  Sounds and music can lend a unique signature to a game.
• The core second-to-second game mechanics are the most important elements of a game to get right.  Once this part of the game is solid, then other mechanics and longer story arcs can be layered on top.
• Mechanics are the message.  Distilled to their essence, games are defined by a structured set of rules. 
• Tidiness theory.  The natural human design to keep things tidy and organized can be expressed in a variety of game mechanics.  For example, PacMan can be seen as a game about cleaning dot from a maze.  Other games encourage players to clear each level.

If you'd like to find out more about Romero and Brathwaite you can check out Planet Romero and Brathwaite's Applied Game Design blog.

[The sponsors of the event said that they'd post a video of the entire session.  I'll post a link to it once it's available.]

The Gamification Consulting Boom of 2012

     Most of the buzz these days is around the raft new gamification start-ups and a smaller number of established players. These companies are the ones who are raising capital and building the products and platforms that will sustain this fast growing market (see my previous post on Enterprise Gamification Going Mainstream).  But professional services is one of the overlooked parts of the gamification ecosystem, and as the industry heats up, we should expect consulting to be the next big growth area.

     We've seen this all before in the enterprise space. Take a look any out-of-the-box product built over the last 20 years (ERP systems, document management solutions, SaaS CRM applications, or the current crop of cloud-based services). While the companies behind these products aspired to provide world-class self-service platforms, inevitably only the smallest companies with the most vanilla implementations have been successful on their own.

     There is no reason to think that Gamification will be any different. As Kris Duggan, CEO of gamification company Badgeville, recently told the Wall Street Journal, "adding gamification to the workplace drives performance but it doesn't make up for bad management. If you are a bad manager, gamification won't help you."

     The Journal article went on to say, "Companies need to make sure that the games are designed to actually reward desired behaviors and are not just doling out meaningless awards or badges.  Firms also need to make sure that friendly competition doesn't get out of hand, fostering animosity among employees."

     In other words, there's a right way to do gamification and there's a wrong way.

Enterprise Gamification Goes Mainstream

Gamification of the enterprise has officially gone mainstream with the October 10, 2011 coverage of the industry in the Wall Street Journal.  This spring Forbes Magazine featured an article on how enterprise application giant SAP is applying game thinking to their offerings in order to create a more engaging experience for their users.

SAP's Lead-in-One iPad App

Companies from IBM and Agilent to Goodrich and Deloitte Touche Tohmatsu are introducing game mechanics into the workplace to make everyday tasks like training, data entry, and brainstorming more fun.  Employees boost their egos by earning badges and engage in friendly competitions with their colleagues.  Companies can improve employee health and wellness and drive down healthcare costs by implementing fitness competitions or spur new product development with innovation tournaments.

Job Slayer Rules: How to Gamify Job Hunting

     In my last post, I wrote about how the time was right for gamifying job hunting and how two fellow bloggers, Brooke Allen and Jon Loomer, had recent written about the subject in separate posts.  Even before I wrote that post, I had been thinking a lot about what the essence of a Job Slaying game should be.

    My goal is to create a game that is both supportive and transformative.  The game would need to support the job hunting process as well as transform the way people think about jobs and work.  (Note that the game I've designed is heavily influenced by the rules for Jane McGonigal's game SuperBetter as published in her blog and Brooke Allen's No Shortage of Work philosophy.  I have also gotten valuable insights from Job Slayers, Jon Loomer, Dylan Holmes among others.)  With that said, here we go.

     At its core, the game should emphasize the following five game mechanics:

     1.) Recruiting allies.  Having a strong social support network will help bolster Job Slayers as they pursue their quest and face inevitable set backs.  Therefore, folks who are out of work first and foremost need to identify a go-to team of people who can help then track their progress and keep on track, boost morale, and think outside the box about what they want out of their next jobs and how to get it. 

Superbetter for Job Slayers

Author and game designer Jane McGonigal recently announced the beta release of SuperBetter, a gaming platform designed to help people achieve their health goals — or recover from an illness or injury — by increasing personal resilience.  This site developed out of McGonigal's real world experience with recovering from a Mild Traumatic Brain Injury in 2009.  In addition to traditional game mechanics, SuperBetter features insights into the latest scientific and clinical research.

With serious games like SuperBetter taking off and unemployment at post-Depression highs, what time would be better than now to gamify the job hunting process.  Two of my friends, quite independently, have been doing a lot of thinking about this.

A casualty of the ailing economy, digital marketing strategist Jon Loomer recent launched a social media game called #GetLoomerAJob.  In this game, friends can earn points by publicizing Loomer's job search on Twitter, Facebook, or LinkedIn, or by making introductions.  The person who gets Loomer a job and the person who helps out the most are eligible for some cool prizes including a day donated to the winner or company/charity of his or her choice.  Whether or not Loomer lands a job thru this game, Loomer displays his digital marketing chops in spades.  Total creative brilliance!

Brooke Allen, the creator of No Shortage of Work (a blog dedicated to the proposition that there is NEVER a shortage of work, and that there are always ways we can collaborate to accomplish things, and to learn from each other), approached this problem from point of view of making it fun to learning new skills and hunt for a job.  In a recent post, Allen discusses how "Jobsville" can help put America back to work with gamification expert, Gabe Zicherman.

What do you think?  What would get you to play the Job Hunting game?

Website Relaunched

I am proud to announce the relaunch of kennethjhong.com.  The old site was really two separate blogs (one for personal musings and the other for company-related announcements) and was barely held together by a common menu bar.

The launch of the new website coincides with the creation of Harvada Consulting, a private consulting business focused on helping company founders and senior executives with product visioning and strategy.  This business is an extension of what I've been doing informally for several years.

Fig 1. New website home page

Creating Social Websites

Making your Corporate Website Relevant A great presentation by Jeremiah Owyang discussing a road map for social integration on corporate websites.

Understanding Social Plugins
Official Facebook video explaining how social plug-in are meant to add social content to websites.

Counterpoints & Cautions: the Use and Abuse of Game Mechanics

My last post covered how game mechanics are being used inside [video and social] games and in real world applications and why the use of game mechanics is good and engaging.

In this post, I look at what's being said about the dark side of gamification.  The following articles warning against the gamification of our world and the need, at a minimum, for more thoughtful application of game mechanics than the shameless application of manipulative and meaningless badges or achievements that we currently see in many places (including Social Games).

• Badges? We don’t need no stinkin’ badges | ZDNet 
• GDC: Hecker's Nightmare Scenario - A Future Of Rewarding Players For Dull Tasks | Gamasutra
• GDC Presentation: Achievements Considered Harmful? | chrishecker.com (Video and Notes)

See my summaries and take aways after the jump: