Powerful examples for how to harness feedback loops come from video games.

By Michael Hugos

Welcome to the real-time world. It’s a place where cause and effect follow each other so quickly that everything seems to be speeding up. We work longer and harder every day just to keep up with the pace of activity. This real-time world is a place where, in many cases, it is no longer easy or effective to organize work using the linear, sequential, centrally controlled model of the assembly line. A new organizational model is needed.

The quickening pace of activity in individual companies and in the whole world economy is happening because of the feedback loops generated by the two billion (soon to be four billion and more) of us all over the world who are sharing information and opinions via social media accessed through consumer IT devices such as smartphones, netbooks, and tablet computers. This fast feedback real-time world sometimes makes people yearn for a return to simpler slower times, but the genie is out of the bottle, and there’s no going back.

The way forward is all about harnessing the power of feedback loops. The economy of the industrial world was based on the assembly line, a strict linear process that put everything in its place and maximized efficiency. The economy of the real-time world is driven by the feedback loop, a flexible circular process that maximizes responsiveness to continuous change. And powerful examples for how to harness feedback loops come from video games. Video games are examples of how to integrate technology, process, and people into operating models that generate the feedback needed to thrive in our real-time economy.

A game is an engagement engine—it attracts and engages players. You can measure the success of a game by the number of players it attracts and the level of engagement it gets from its players. Games are specifically designed to attract and engage people through the application of the four traits introduced in Chapter 1: goals, rules, feedback systems, and voluntary participation. Looking at these four traits you could say that the combination of the first three traits is what creates the fourth trait.

The goals of a game are what the game is about; they are what attract people. Rules define how players go about achieving the goals; they are the challenge of the game. And feedback systems are the user interfaces that engage the players. They present a continuous flow of information that shows people how they are doing and whether they are getting closer to or further from accomplishing the goals. The right combination of these three traits is what induces voluntary participation.

Maybe the best definition of a business these days is to say that it too is an engagement engine—it attracts and engages customers and employees. Perhaps a company in the real-time economy should no longer operate like an assembly line focused on efficiency. Perhaps it should operate instead in a more game-like manner—more like a feedback system guided by goals and rules focused on generating voluntary participation as measured by repeat customers and dedicated employees. This is illustrated in Figure 2-1.

Why Games MattterFig 2-1

Figure 2-1. Games generate continuous feedback

The driving force for success in the real-time economy is a continuous response to change so as to maintain the voluntary participation of customers and employees. Businesses that fail to do this go the way of once great companies whose names were household words but who have since faded away.  Such companies were once very efficient at what they did, but as the economy shifted from industrial to real time, they lost the participation of their customers and employees.

Their goals, rules, and feedback systems failed to interest and engage people. And their senior managers attempted to address this problem by applying industrial measures to increase efficiency such as cutting headcount, selling off business units, and squeezing suppliers. This mostly just alienated people and accelerated the loss of the voluntary participation they so desperately needed.

Excerpted with permission from Enterprise Games: Using Game Mechanics to Build a Better Business, by Michael Hugos.

Read more from Michael Hugos on Real Business: What if You Merged Video Games with Your Business Operations?