The Gamification Backlash + Two Long Term Business Strategies

[#1]

Michael Wu, Ph.D. is Lithium's Principal Scientist of Analytics, digging into the complex dynamics of social interaction and group behavior in online communities and social networks.

Michael was voted a 2010 Influential Leader by CRM Magazine for his work on predictive social analytics and its application to Social CRM. He's a regular blogger on the Lithosphere's Building Community blog and previously wrote in the Analytic Science blog. You can follow him on Twitter or Google+.

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Gartner predicts that by 2015, more than 50% of the organization will gamify their innovation processes. Only time will tell if this prediction is accurate or not, but what is certain is that gamification will become more prevalent and more pervasive throughout our lives.

So this brings up an interesting question. What happens when you gamify everything in life? Will people really do everything we want them to do? This just sounds a little too good to be true! Intuitively, it seems likely that at some point, consumers must get tired of gamification. They will probably get into a state of point/badge fatigue and start to resent any type of gamified activity. This is known as the gamification backlash.

So the million dollar question is, “Whether gamification can be a long term business strategy?” And if so, how? This is precisely the question we wanted to address at the Wharton Gamification Symposium.

The Gamification Backlash: No Games Last Forever

IMHO, no single gamification strategy can bring long term sustainable values, because no games can last forever. Even avid gamers rarely play the same game for an extended period of time. Games that were once fun, may appear very boring and stupid now. People change and move on; games, as well as gamification, must adapt. Otherwise, you risk the big backlash.

A gamification backlash is often caused by the blind use of points and badges, which are extrinsic rewards. Since extrinsic incentives will ultimately decrease a person’s intrinsic motivation for the gamified behavior (a phenomenon known as overjustification). When extrinsic rewards can’t keep up, you get the backlash. Although there are gamification techniques that leverage intrinsic motivation, most commercial applications use extrinsic incentives. These include perks, special privileges, and cash prizes, which are only feasible up to a certain scale; then there are points and badges, which are virtual and scalable to the entire social web. Nevertheless, these are all extrinsic rewards, and as such, they are NOT sustainable.

Overjustification: The Moral Hazard of Game Play

One of the greatest dangers of gamification is that people may become too focused and entrenched in the actual game play (i.e. the game mechanics and game dynamics) rather than the gamified activity. Prof. Jesse Schell from Carnegie Mellon calls this the moral hazard of game play. This is precisely the overjustification effect. Although this phenomenon may sound counterintuitive, it is very real. It is well-documented in the experimental psychology literature, and books have been written about it (see Punish by Rewards).

Several psychological mechanisms have been proposed as the underlying reason for this seemingly strange human behavior. I will talk about two here:

1. Attention Shift: Because external incentives are more tangible and measurable than intrinsic rewards, people will inadvertently focus on the external incentives, which are more easily attributable to their actions. Consequently, their motivation shifts from intrinsic to extrinsic.
2. Insatiable Expectation: Because external incentives are more easily attributable to one’s action, people develop a stronger expectation for external rewards, which increase over time due to adaptation. And when external rewards cannot keep pace with people’s internal expectation, they become less motivated intrinsically.

This poses a serious problem for gamification, because most gamifications in business use external incentives that will ultimately lead to the moral hazard of game play. A classic example of these backlashes is that when the external incentives can no longer keep pace with the users’ expectation, they will lose all their motivation to perform the gamified behavior. That means, they will become harder to motivate and more resistant to doing the task that you want them to do. And if this happens a few times, user will quickly learn the recurrent theme and develop a psychological barrier to all your future gamification strategies. When that happens, it’s game over... and you lose!

Making Gamification Sustainable

Although any one gamification strategy is not sustainable, it does work in the short term. In fact, it works very well during a short period of time (i.e. its effective window). This is why the churn rate on Foursquare is so high, and it remains very high. With this understanding, there are two effective strategies that can lengthen the effective window of your gamification. Both strategies use extrinsic rewards with gamification to jumpstart some activity.

In strategy #1, while the player is carrying out the gamified activity, he creates something that has long lasting values. When the player begins to realize these values, the extrinsic rewards will become less important to him. The whole reward system becomes secondary and serves to reinforce the value he creates, which will become the primary motivator. Subsequently, the long term value created by the player (together with the secondary extrinsic reward) will self-reinforce the gamified activity. This creates a positive feedback loop that ultimately turns the gamified activity into something intrinsically motivating for the player.

So even though gamification doesn’t work long term, it doesn’t have to. It just has to work long enough for the player to realize the value he creates. The crucial requirement for this strategy to work is that the gamified activity must create something that has long term value to the player. In other words, gamification won’t fix your business problem, if your products and services don’t bring enough value to the customers. In fact, blindly applying gamification may even lead to adverse consequences. You may still drive a huge increase in awareness, but everyone will be aware of how bad your brand is.

In strategy #2, while the player is performing the activity, he leaves behind many digital footprints in the form of activity data. All of these data must be recoded and analyzed, because this strategy attempts to discover the intrinsic motivation of the player through data analysis and statistical inference. Then external rewards are used only as secondary motivators to reinforce the inferred intrinsic motivation of the player.

Again, gamification doesn’t need to work long term in this strategy. It just needs to work long enough for the gamification platform to collect enough data to accurately infer the player’s intrinsic motivation. This strategy is quite challenging, and there are three basic requirements for it to work.

1. The gamification platform must provide the player a very wide range of activity, so he can choose what he likes to do with full autonomy, and eventually discover his intrinsic motivator. If none of the activities on your platform are intrinsically motivating to the player, then clearly this won’t work at all.
2. In addition, the platform must be able to track every single action by every player on the platform.
3. It must have the analytics capacity to accurately infer the player’s intrinsic motivation before the effective window expires.

Conclusion

This post covers a lot of concepts. It is quite involved and getting a bit long. So I will stop now and save the examples and case studies for the next post.

So far, we talked about two problems that gamification will encounter in the near future. In fact, some would say that the gamification backlash has already started.

1. The Gamification Backlash
2. Overjustification, which will exacerbate the backlash

So it seems that gamification can’t possibly be sustainable; and therefore it cannot be a long term business strategy. It is unfortunate, but this is the fact of life: Gamification won't solve your business problem; it only solves your (short-term) engagement problem. Gamification alone will not work in the long term, especially those that use extrinsic rewards.

However, there are also tried and true strategies that employ gamification in a sustainable fashion. The key realization is that gamification doesn’t have to work long term to create sustainable value. It just has to work long enough for some other processes to take over as the primary driver of value. Subsequently, gamification will become a secondary reinforcement system that facilitates the primary value drivers.

Next time, we will look at some examples of these strategies at work. In the meantime, I welcome any comments and criticisms. As usual, kudos are always welcome if you like what I wrote. I hope to see you next time.

[#2]

Michael, had difficulties following your post for the first time. It might be due to the two liter of beers in my blood but I didn't get your two examples of overcoming the overjustification without having examples. I'm very interested to hear and understand them though as I'm exactly stuck at this point. We're trying rather to follow path no 2 and have even identified what we believe are 19 underlying needs by our customer but it's hard to match that to really underlying intrinsic motivation in all cases and therefore also observing them in our behavior data is quite difficult. Looking forward to your next post with examples Andreas

[#3]

Michael, I'm going to have to respectfully disagree. Based on our experience:

1. Games don't last forever because they run out of new content. The game IS the experience, and it has an end. There are a large class of businesses whose whole reason for existence is fresh content: news sites, Facebook, Flickr, YouTube, Stack Overflow. For these sites, with a never-ending supply of fresh content, which is the core experience (the intrinsic value that they provide), gamification programs designed to magnify and amplify that content experience can be everlasting. 
2. Your Strategy #1 is a good one - but not as a way of making a gamification strategy sustainable. It's a very focused approach in which gamification is useful only in the onboarding & acquisition phase. Foursquare clearly demonstrated the power of this - getting people to push the check-in button when there was no other value to the service. Their problem is that they haven't figured out the intrinsic value that the gamification is scaffolding the user up to. So then they get bored and churn out. Our customer HopeLab is doing something similar in trying to get tweens to exercise more. Use gamification to drive physical activity, with the hope that the kids will feel the benefits and then maintain that physical activity level on their own. 
3. Not all game experiences need to last forever. Training is a perfect example - when you have a complex piece of software, how do you get people exposed to the functionality and feeling mastery? There is a limited amount of content, and the goal is to get the user to completion. Microsoft's Ribbon Hero does this incredibly well, as does the work that we've recently done with Adobe Photoshop and Jive.
4. I think your Strategy #2 is too complicated to be useful.
5. I find the discussion of intrinsic vs. extrinsic rewards that many people bring up with respect to gamification to be really lacking in subtlety. Many people state these as clearly black and white, and that's not the case - they're very person and context-dependent, and there's actually a continuum, with rewards often being a mix of both. 

best, - rajat

Founder, Bunchball

http://www.bunchball.com

http://www.gamification.com

[#4]

Hello Andreas,

I apologize that my writing hasn't been as clear as it can, but contrary to what most people think, gamification is very complex and actually very hard to get right. I guess the complexity underneath the apparently simple concept has slowly creep up and start to surface.

Following path #2 is a challenging endeavor as there are much requirement for it to work. But first I must clarify that needs are not the same as intrinsic motivation. Maybe I am not understanding what you meant by "underlying needs."  Only some intrinsic psychological needs are intrinsic motivations. I guess part of the difficulty is the difference between intrinsic vs extrinsic motivation. Maybe I should devote a whole post to discuss the difference.

Please stay in tuned and see if the examples in the next post clarifies the confusion.

Thanks for commenting on my blog. I appreciate it. And I hope to see you next time.

[#5]

Hello Rajat,

Thank you for taking the time to comment. I appreciate the different perspective and alterior view points very much. But I can’t say that I see it as a disagreement. In fact, I think we agree more so than disagree.

1. First, I agree 100% that novelty definitely has some intrinsic value of its own. Bottom line is that people get bored from playing the same game over and over again. So people will get tired of points and badges that do not offer them meaningful choices. If you can continue to provide new and interesting content, then that falls into the Strategy #1. The value of new and interesting content will sustain the behavior that gamification kick starts. In other words, points and badges without the fresh new content is not going to work long term.

2. I don’t see what is the disagreement here either. In your example, the activity you try to gamify is exercise (physical activity). So you use your repertoire of game mechanics and dynamics to get people to start exercising. But while people are exercising, they feel the benefit of exercising (e.g. health benefit, in better shape, look better, feel more confidence, etc.) And these benefit that they realized will maintain the that physical activity, the behavior you tried to gamified. So in a way, the value it generate, sustains the gamified activity.

3. Certainly, not all gamification need to last forever. In fact, I mentioned this specifically in an earlier post (see Gamification beyond Business and Future Challenges - Open Question #1). Totally agree that if you just want people to learn something (e.g. in training, onboarding, etc.), then after they’ve learn what they need to learn, that is it.  In fact, trying to get them to re-learn something they already learned can be condescending and annoying and actually drive people away.

4. Complexity is never an excuse for innovative enterprises. At least not for me. How your car works, how your cell-phone works, how to fly and airplane, etc. are all complicated. But enterprises make it work and make it useful to the consumers, so that the consumers don’t have to deal with the complexity. Consumers simply pay the company for those complex services. If some gamification is too complex for you, you don’t have to do those. Go ahead and do the simple ones that you are comfortable with, and let us handle the complex one. People are different, have different abilities, and what is complex to me, may be really simple to you and vice versa. That is why people collaborate and share their expertise.

5. Intrinsic vs. extrinsic Motivation is indeed a deep and touchy subject. It will probably require a post of its own to explain the difference. But I agree with you that it is not so black and white. And there is probably some continuous gradient between the two.

But I will say this: Intrinsic vs. extrinsic is not about what comes from within the person vs. external rewards. Intrinsic motivations are things we find satisfying just for the sake of doing it (i.e. a hobbies, for example singing). Intrinsic means intrinsic to the activity or behavior. It doesn’t mean coming from within the person.

Therefore extrinsic means all the other reason that people might give themselves to carry out the behavior, such as points, badges, money, or any rewards (even psychological rewards) they may get for singing, or punishment for not singing. As you can see, this is not something that I can just explain clearly in just a few sentence. Let me try to write a post to explain the difference. Thanks for inspiring the idea.

Anyway, I appreciate your lengthy comment and the discussion. I also appreciate the apparent disagreement, but I really think that we agree more than disagree. So game on... and I hope to see you again next time.

[#6]

Michael,

I also respectfully disagree.  You are trying to refute the ascertion that gamification is a long-term business strategy.  But who said it was a business strategy?

Gamification is a marketing tactic.   It is a way to build community around your product or service,and game mechanics actually fulfill intrinsic needs.  I encourage you to read my colleague Scott Rigby's book:   "Glued to Games:  How Video Games Draw Us In and Hold Us Spellbounc."   Gamea are unequivocaly intrinsically motivating stimuli.

Today's "digital natives" require frequent rewards and instant satisfaction.  if you have a compelling product or service, using game mechanics (at GameTap, we called it the "metagame") will make switching more difficult, because as a user, you would have built up substantial equity in the form of external rewards and status, the latter which is VERY important to today's consumers.

Bottom line is that gamification is a marketing strategy.  And while it's a valuable tactic, it will only be beneficial if the underlying product or service is worth consuming.

Al Meyers

www.reinventedsolutions.com

[#7]

Hello Al,

Thank you for the comment and your unique perspective. I really appreciate the different perspectives, so thank you for voicing your point of view.

If you disagree with the statement that “gamification is a business strategy,” then let me clarify that I am not saying that it is ONLY a business strategy. It can be. If you are reading my statement as exclusive, than I would also disagree with your statement that “gamification is a marketing tactic.” Because I certainly don’t think it is only a marketing strategy. I don't think gamification of education is merely a marketing tactic, nor is gamification of innovation processes. What about gamification of work in the enterprise 2.0 setting?

I see gamification as really the application of behavioral economics and behavioral psychology. As such, I believe it can be apply to many situations. It can certainly be used as a marketing tactic, and many company are doing just that. But it can also be used as something much more, even as a business strategy.

At Lithium, we certainly use gamification as a core part of our business strategy. Lithium has been around for 10+ years, and we have been doing gamification way before the term “gamification” has been popularized recently. And it is a very successful business strategy as we currently have about ~400 Fortune 1000 clients. The reason gamification is such a core part of our business is because our founders were professional gamers. They intuitively know what drive human behavior, and they did not even realized what they did was “gamification” until the recent popularization of the term.

I’ve met Scott Rigby at the Wharton Gamification Symposium couple months ago and had much interesting discussion with him about intrinsic motivation vs. extrinsic motivation. Game mechanics can be intrinsically motivating, but not always. It has to do with the locus of causality, and does it really satisfy an intrinsic psychological needs of the players. The way many marketing organizations use gamification with shallow game mechanics, such as points and badges, is unfortunately not very motivating intrinsically. But thanks for recommending his book though. I will definitely check it out.

Finally, I totally agree with your bottom line “gamification is a marketing strategy.  And while it's a valuable tactic, it will only be beneficial if the underlying product or service is worth consuming.” Gamification is a marketing strategy, but it is not only that! And gamification of a product or service that do not have value (not worth consuming) won’t work. That is precisely the strategy #1 in this post. Thank you for making this point succinctly clear.

So again, I don’t really see that we disagree that much at the fundamental level. It’s merely terminology and application. If you feel gamification can only be used as a marketing strategy, then go and use it that way. We believe it is our business strategy and we will continue to use it that way. You can certainly use a hammer as a paper weight, but it can also be used for other functions beyond that, even for things that a hammer is not designed for, such as a weapon.

Thanks for the great discussion. I sincerely appreciate the contrary perspective. I missed this kind of academic debate very much. So I hope you will come back again next time.

[#8]

Appreciate your response, Michael.   Getting two psychologists together is a scary proposition!

Al

[#9]

Hello Al,

Thank you for the interesting discussion. Hope you come back next time.

It's totally not scary... Because I am not a psychologist.  :-)  I'm a computational neuroscientist by training. But I am more like a mathematician/statistician and data/analytics scientist now. I develop the inference and predictive algorithms on our platform, which is responsible for prediction a variety of user attributes, including their potential motivation intrinsically. So it is rather fun for me to meet all the psychologist, game designers, gamification practioners at the Wharton Gamification Symposium.

Cheers...

[#10]

Excellent post Mike,

happy to see someone in a position like you start to address this while nearly everyone else in "gamification" today sweeps the extrinsic reward problem under the rug. Granted, the potential undermining effects (or at the least, the short-term-only effects) of extrinsic rewards for many things is a VERY inconvenient truth for those selling services based upon it.

Al, the book you are referring to is extremely clear on this point: extrinsic rewards are NOT what leads to sustainable behavior, in fact the authors make a strong point of referring to this as a trap (especially in the chapter on the use of "serious games" for heath and education). The entire book is based around Self-Determination Theory which, as I am sure you know, considers extrinsic rewards to be very problematic. However, SDT *does* support that some forms of extrinsic *motivation* are very useful, but only the forms that are NOT from extrinsic "rewards".

Confusing language, I know, this idea that not all extrinsic motivations are extrinsic rewards...

Also, SDT (and the book you refer to) are quite clear that the intrinsically rewarding (rewarding, not rewards) aspects of games are the result of the the three aspects of SDT: autonomy, competence, and relatedness. These are as far firm extrinsic-reward as one can get, and the ONLY extrinsic rewards that work on these three areas are when the rewards are being used as crucial and timely feedback to increase competence.

Extrinsic rewards have a place where dull, rote, always-tedious or painful chores/tasks are involved, and assuming you can find no other way to craft intrinsically rewarding activities. Extrinsic rewards can also be used -- very, very carefully and artfully -- in the earliest stages of an activity, to help bridge participants into what WILL become an intrinsically motivating activity. But the research is staggeringly clear on this point: extrinsic rewards do NOT produce intrinsically motivating experiences. Just the opposite has been found over and over: the use of extrinsic rewards (or in some cases, just asking people to THINK about extrinsic rewards without even GIVING them one) has the potential to DE-motivate.

[#11]

Hello Kathy,

Thank you for such a great comment. Somehow the formatting didn't go through, and it shows up as a big blob of text. So I simply put in some line breaks in places that make sense to divide your comment into paragraphs. I didn't change a single word though. It's perfect.

Yes, I remember we had a interesting discussion with Scott Rigby at the Wharton Gamification Symposium about the his 3 intrinsic motivator (autonomy, competence, & relatedness) vs. Dan Pink's 3 intrinsic motivator (autonomy, mastery, and purpose). There is clearly a parallel between the first 2 intrinsic motivator (b/c competence ~ mastery), but the 3rd one doesn’t seem to connect (i.e. relatedness vs. purpose).

Deci and Ryan's Self-Determination Theory (SDT) is probably one of the most well tested theory on motivational behavior. However, I believe that there are also much to be learn from other theories too (i.e. Bundura’s Self-Efficacy Theory, Festinger’s Cognitive Dissonance theory, Maslow’s Hierarchy of Needs theory, Csikszentmihaly’s Flow, Skinner’s Behaviorism, etc. etc.). Being a physicist, models and theories are just one interpretation of the reality, so I never really believe that there is a best model. The important things is know the limits of each model and choose the right model that is just good enough to address your scientific inquiries. Newton's Mechanics are still a very good model of the world, even though technically it is an incomplete theory and supersede by Einstein’s Relativity.

And I am so glad that you bring up the point about the difference between extrinsic reward vs. extrinsic motivation. I’ve explain too many time at talks that rewards can be a motivation for some people, but motivations are not necessarily rewards. I will have to make time to write a post to explain the difference between them.

Thanks again for the great discussion. I certainly hope to see you again next time.

[#12]

What's striking to me is that, at first glance, gamification is all about intrinsic motivation.  Achieving business goals by making the work experience inherently fun can be an alternative to using monetary or other extrinsic rewards.  And yet, the focus by some gamification practitioners on rewards points in the other direction. So threads like this are helpful to highlight the distinction. 

In the gamification course Dan Hunter and I are teaching now at Wharton, we use readings from Deci & Ryan and Dan Pink as the centerpiece of our discussion on motivation and pscyhology.  It's also important to understand how loyalty programs and slot machines can be very successful, but as Kathy rightly points out, that needs to be put in the proper context.  Fortunately, the Self-Determination Theory literature is quite nuanced, as are most of the well-researched psychological theories mentioned in this thread. 

And thanks Michael, for giving credit to the symposium we held this summer.  One of our major goals was to bring together together different perspectives so that gamification could be examined more seriously.  That continues to be a focus of our For the Win project. 

[#13]

Hello Kevin,

Thank you for stopping by and for commenting on my blog.

For those of you who don’t know, Kevin is one of the organizer of the For-the-Win Gamification Symposium that took place at Wharton couple months ago. It was a meeting of the minds from various disciplines ranging from psychology to policy making. It was a very interesting meeting.

To your comment, I think that at first glance, gamification is definitely all about motivation (although not necessarily intrinsic motivation). However, most of the practitioners didn’t know the distinction nor the effect of intrinsic vs. extrinsic motivation, they just blindly apply extrinsic rewards with perfectly good intention of making work experience just a little more fun and rewarding to drive productivity. The problem is that extrinsic reward actually works fairly well in the short term. Consequently, it gives the practitioners the illusion that whatever gamification strategy that they came up with is "working," so they simply continue what appears to be a successful strategy without knowing it’s long term detrimental effects. This is the trap that we need to be careful of.

I think it is great to start with Deci & Ryan and Dan Pink. However, as you said, it is also important to understand how loyalty program and addictive gambling behavior can be valuable too. So I think it is worth to examine the other theories that I mentioned in my reply to Kathy’s comment above. In the case of loyalty and gambling, Skinner’s behaviorism actually offers a pretty intuitive understanding for those behaviors.

The For the Win Project is definitely eye opening. Bring together the experts from related discipline to gamification is surely a great way to examine this subject more rigorously. I also learn tremendously from the other participants, as you can see from the 3 blog articles resulted from the symposium. I definitely look forward to future engagement, and good luck with the gamification course that you and Tony are teaching now.

Thanks again for the comment. And I hope my blog can continue to provide value to the gamification community, both academic and practitioners.  :-)

[#14]

Thanks again Mike.

Totally agree that we should be considering many theories, though SDT is the one with the most to say about the extrinsic motivation continuum.

Glad you brought up "Flow"; it was required reading when I first began working for Virgin Sound & Vision (at the time, a division of Virgin Games doing multimedia kid's games) and every game designer and developer I knew at the time considered it one of the most important tools for crafting user experiences.

As for Skinner, well, it was operant conditioning that led me into SDT, as a horse trainer. Some trainers in the positive reinforcement camp have recognized some limitations, or worse, when extrinsic rewards are given for things the animal *should* find intrinsically rewarding. It was this problem that led me to Dan Pink. But that is for another time

Kevin, quite right, very nuanced. And that does make it difficult to give easy prescriptions for "engagement". Just glad you two are out there willing to help people understand that this discussion matters.

Cheers!

[#15]

Hello Kathy,

Thanks you for coming back to continue the conversation. 

I would love to hear your intellectual journey. It is sometimes very important to go through all the older theories and really see where they are insufficient so we get a full understanding of their limitation. So I'm always interested to hear how people arrive at their current understanding. There is usually something more interesting in the journey itself than the destination.

Feel free to check out some of my earlier posts on the psychology of gamification. 

Also, it seems that you can get a free preview of a snippet of my talk at the Gamification Summit on "Flow" here.

Thanks agian and see you next time.

[#16]

A lot of food for thought here.

[#17]

Hello Joe,

Thank you for the comment.

Glad to hear that this post get you thinking.

Next post with some examples will be published soon. Stay tuned...

See you next time.