Entrepreneurship is like crack

Game Mechanics - the new black

Game Mechanics is hot right now because companies like Foursquare.com and Groupons.com are experiencing insane growth rates and valuations because of it.  But game mechanics have been having dramatic impacts on industries for decades, even going back to 1979 when Texas International Airlines created the first Frequent Flyer game and it was so successful every other airline was forced to adapt or die. There is almost no industry that can’t be changed in this same way as long as a company in the industry properly deploys game mechanics.  Over the next decade we’ll see game mechanics become ubiquitous amongst companies. Consumers will migrate in droves to companies who properly deploy game mechanics because doing business with them is more fun, rewarding and even addictive.

So what are game mechanics? 

Definition: A series of rules and functions that tap into our primal response patterns to drive a desired behavior.

Laymans Definition: Creating a game that grows your business.

Below are the four elements that Groupon, foursquare, frequent flyer programs and just about any other successful game all have in common. In addition I’ve included three nice-to-haves.

Must-haves:

  1. Action
  2. Goal
  3. Scoreboard/Feedback
  4. Reward

Nice-to-haves

  1. Competition
  2. Countdown Timer
  3. Social

Let’s take a look at some case studies.

FourSquare.com is a location check-in service so you can share with your friends where you are and where you’ve been.  It is also one of the hottest Internet businesses right now and has gotten to one million members faster than twitter thanks to game mechanics.  Foursquare is just another company called Dodgeball.com (another location check-in service founded in 2000) with game mechanics applied to it.  Let’s take a look at the simple game applied to foursquare that made it a raging success while dodgeball failed miserably and is now shut down.

Must-haves:

  • Action - Check-in at places
  • Goal - To have the most check-ins at a location and to discover hidden “badges”
  • Scoreboard/Feedback - The website shows total check-ins, Mayorships and badges earned
  • Reward - Show off badges on your profile and become the mayor of establishments(which in some cases involves free or discounted services from the business, like free drinks at a bar)

Nice-to-haves

  • Competition - Against other members for mayorship
  • Timer - no
  • Social - Tell your friends where you are and show off your accomplishments on Facebook

Groupons.com is a coupon service that just raised $135 million at a valuation over $1 Billion after just two years in business thanks to game mechanics.  Coupons have been around online for more than decade but no one had properly deployed game mechanics until Groupons. Let’s look at the features of their game.

Must-haves:

  • Action - Purchasing coupons (yes, you actually have to pay for the coupon in advance of using it)
  • Goal - Get enough people to purchase the coupon before time runs out or no one gets it
  • Scoreboard/Feedback - There is a scoreboard that shows how many coupons need to be purchased before it’s unlocked for everyone
  • Reward - Everyone gets to buy the coupon

Nice-to-haves

  • Competition - no
  • Timer - yes
  • Social - Tell your friends to buy the coupon to ensure enough people buy it so you get it

And now for an old school example

Texas International Airline - In 1979 TIA invented the Frequent Flyer game and it forever changed the airline industry.  As of January 2005, a total of 14 trillion frequent-flyer miles had been accumulated by people worldwide, which corresponds to a total value of 700 billion.  Let’s take a look at this game that we’ve all played.

Must-haves:

  • Action - Buy airplane tickets from a particular airline company which earns you points
  • Goal - Earn enough points in a given time period to receive rewards
  • Scoreboard/Feedback - There is a scoreboard where you can see how much points you’ve received and how many you need to earn to receive a reward.
  • Reward - Ranges from free flights to upgrades and other special privileges.

Nice-to-haves

  • Competition - no
  • Timer - yes
  • Social - no

All these games have one thing in common, they are very simple and easy for people to engage and get rewarded from.  Unlike video games, company games need to be simple and focused.  This isn’t rocket science, follow these simple guidelines and try out a game for your company, you just might see a Quantum Shift in your growth rates.


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