Archive for the ‘Nike’ Tag
Over the past year, our firm has received more calls on Gamification than any other new business topic. Two client questions stand out: What is Gamification? And, what problems does it solve? When answering, I begin with a tale of two employees, Mary and Greg.
Mary is one of thousands of disengaged employees working in a typical call centre. Her year-old job is lonely and repetitive with little autonomy or creativity. Mary’s daily tasks have become so routine and measured that she vacillates between boredom and fear. Although she is supposed to receive quarterly performance reviews, her boss spends most of his time recruiting and fighting fires. Senior management regularly mandates her department to implement process redesign and change initiatives, many of which are divorced from what really goes on in her job. Most likely, Mary is monitoring online job postings, a prudent strategy given that the COO regularly muses openly about outsourcing her function. The chances of Mary staying another 12 months are only 50%.
Ten months ago, Greg was fortunate to get a call centre job call in a firm employing gamification principles and technologies. Greg can’t wait to start his day by logging into his firm’s “gamified” workflow management system. The first thing he sees is an Avatar — a virtual and personalized representation of himself. His Avatar acts on his behalf, taking customer calls, going to meetings with other Avatars and updating his skills. Information about his team’s progress is fed to Greg in real time, including critical customer issues and company social outings. Instead of the usual call centre metrics, Greg competes with his colleagues for badges and ranks. Moreover, he accumulates a virtual currency (that can be exchanged for special perks) when he distributes best practices and assists co-workers with problem solving. A combination of game-enabled fun, friendly competition and subtle peer pressure has helped Greg become a fully engaged employee. Not surprisingly, he has developed new leadership, communication and collaboration skills that put him on track for a promotion.
The first story is illustrative of many companies. The second tale is fictitious but will soon be commonplace. Firms as diverse as Adobe, Whole Foods, Nike, Microsoft and Duane Reade are using games to transform routine and mundane tasks into more useful, fun and financially rewarding activities. The business outcomes are compelling: improved consumer loyalty, increased employee engagement and higher levels of collaboration & information flows.
Gamification is hot. According to a 2011 Gartner Report, more than 70% of Global 2000 organizations will have at least one gamified application by 2014. Even if you square root these numbers, Gamification is destined to be the next big thing.
The most common definition is the use of on and offline game principles, techniques and technologies in an organizational context to improve business results. At their core, Gamification programs use stories, missions, incentives, and real-time feedback to change a person’s behavior over the long term. Stories can be anything that captivates and catalyzes a person’s interest over an extended period. Incentives can range from simple leaderboards, ranks and badges to the creation of virtual currencies that can be traded.
Gamification has been used in a variety of applications, including:
- Improving operational productivity – Microsoft uses team-based competition and leaderboards to more quickly and thoroughly find software bugs.
- Driving consumer awareness and engagement – Duane Reade uses location-based, competitive gaming to build awareness of their stores and merchandise selection.
- Deepening product usage – Adobe has gamified their Photoshop tutorial to improve a trial user’s knowledge of core functionality.
- Facilitating employee learning and participation – Deloitte uses Gamification to better address employee concerns and manage performance in areas like training, document creation and community engagement.
- Increasing employee engagement – One of our pharma clients used a game to better align around corporate goals, teach workflows and promote cross department collaboration.
- Triggering lifestyle changes – The Nike+ game promotes exercise by allowing people to track their results and compete against their friends and others.
Winning Gamification strategies artfully combine four elements:
- Business strategy – Powerful Gamification programs are tightly coupled to core business strategies and metrics
- Motivational science – Successful games leverage key precepts of behavioral and social psychology such as the importance of continuous feedback, competition and public recognition.
- Video game learnings – Popular video games have been shown to increase brain endorphins, which lead to higher levels of blissful happiness.
- Collaborative technology – A variety of companies like Bunchball and Salesforce.com have deployed enterprise-level Gamification platforms that can run different games
Both consumers and employees just want to have fun. Indulging them is becoming a sure path to business results (when the Gamification program is properly designed). Ensuring this happens will be the subject of the next Gamification column.
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Microsoft, following other major brands like Apple, Nike and Ralph Lauren recently launched their first company store in Phoenix Arizona to showcase their latest Xbox, PCs and Zunes. The Microsoft move is widely seen as a bit of catch-up with rival Apple, which at the end of 2008 operated some 247 retail stores around the world. Considering Microsoft’s product dominance, what took them so long to get into retail?
There are many good reasons for manufacturers to display its wares within their own retail environment. For example, a company can create the best merchandising and brand experience for their products and services. As well, companies can use retail space to build a footprint in underdeveloped markets or learn more about their consumers. Despite these benefits and Apple’s trailblazing, Microsoft may have delayed retail expansion out of concern for triggering major channel conflicts with its retailers (or, cynically, to cope with an onslaught of walk-in users with buggy software).
On the other hand, perhaps Microsoft uncovered what a Wharton School of Business and INSEAD study recently concluded. Namely, that operating company stores in the same market as your retail channel does not saturate markets, create inefficiencies or promote channel conflict. In fact, the opposite is the case: the rising tide of a company store lifts all retail boats.
The researchers used a series of mathematical models to simulate and analyze the marketing and price-setting behaviors of independent and manufacturer-owned retailers. The model showed that when company stores and independent retailers compete in the same market, manufacturers typically set relatively high prices for goods in their own stores. Higher price points creates room for independents to reduce discounting (versus when company stores aren’t present) thereby improving their margins. Additionally, the presence of company stores can induce independents to increase their marketing efforts resulting in greater support for the manufacturer’s brand and overall brand sales in the market.
Given these conclusions, do company stores end up putting the manufacturer brands at a disadvantage? Not according to the research. Independent retailers end up charging more for a given product when competing against a company store than they would if competing only against other independents. Having higher pricing is crucial for the manufacturer to preempt channel conflict and to support its premium brand positioning. Furthermore, the research shows that independent retailers will undertake greater marketing effort when competing against a company store since they can benefit from significant “effort spillover” from the manufacturer’s store – the phenomenon of one retailer’s marketing and product education efforts helping to create a sale for another.
As for Microsoft, the question remains whether their stores will mirror the success of Apple or the failure of Gateway, a computer company that gave retail a try during the 1990s and closed its 188 retail shops in 2004. A major reason for Gateway’s failure was its inability to create any in-store or brand sizzle for their discount PCs-in-the-box. Microsoft’s first store is not lacking in “experiential” impact but many things can still go wrong.
Microsoft rarely undertakes an initiative without considerable research and investment. Look for them to make an impressive retail debut, although achieving Apple or Nike standards may require a 2.0 launch.
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