Yu-kai Chou is an Author and International Keynote Speaker on Gamification and Behavioral Design. He is the Original Creator of the Octalysis Framework for Behavioral Design , and the author of Actionable Gamification: Beyond Points, Badges, and Leaderboards. He is currently President of The Octalysis Group, and has been a regular speaker/lecturer on gamification and motivation worldwide, including at organizations like Google, Tesla, Stanford University, LEGO, TEDx, SxSW, Gamified India, Huawei, the Innovation Center in Denmark, Kingdom of Bahrain government, and many more.

Yu-kai Chou Gamification ExpertYu-kai was one of the earliest pioneers in Gamification, starting his work in the industry in 2003. In 2015, Yu-kai was rated #1 among the “Gamification Gurus Power 100” by RISE, and was also awarded “Gamification Guru of the Year Award” for both 2014 and 2015 by the World Gamification Congress based in Europe.  He has helped a variety of companies, from seed stage startups to Fortune 500 companies such as LEGO, Accenture, eBay, Huawei, Fidelity, AIG Japan, Verizon, HP, Ericsson, Cisco, Wells Fargo, and more. His work has been featured in Forbes, The Wall Street Journal, Business Insider,The World Journal, PBS, NBC, and many more.

 

In today’s interview with Yu-kai Chou you will learn:

  • Exactly what gamification is and why you should apply it to your business.
  • How human focused design is utilized in gamification and why this is important.
  • How to have a successfully use gamification by tapping into the eight core human drives.
  • Which core drives may be more successful for your company.
  • Tips to implement gamification in your business.

 

KELLY: Hi everyone, my name is Kelly Rogan and I’m the VP of Business Development at Social and Loyal. We have a special guest with us today!

 

YU-KAI CHOU: Hello I’m Yu-kai Chou and I’m one of the leading pioneers and keynote speakers on the field of gamification.

 

KELLY: We are very happy to have him here with us. We’ll run through the basics to help our audience get an idea of what gamification is, then we’ll move towards how can you use this to your advantage, why is this important and why do you need to know about it. So, Yu-kai how did you get started in gamification, can you tell us a little bit about your background?

 

YU-KAI CHOU: I started working in gamification in 2013, and it made me one of the early pioneers of the industry. Back then I was a very heavy gamer, I spent thousands of hours becoming a strong high level player inside the game, but then at one point I reached an epiphany – I spend so much time and effort and energy and creativity into a game, making my characters powerful, but in real life I didn’t get anywhere. So, I thought wouldn’t it be better if I spent those hours learning a new language or playing the violin. I would actually be on a high level in real life, not just in the game. I became obsessed with two topics, one was how do you make games more productive – the more hours you spend on the game, the better your life is, and two, how do you make life more fun. Because a lot of things you know you must do in life but they’re kind of mundane. You only do them when you have to, so that led me down a 14-year journey now, and established a lot of foundations in the industry now known as gamification.

 

KELLY: And so, for the viewers that haven’t heard of gamification, can you provide in your own words the definition of gamification?

 

YU-KAI CHOU: Gamification combines a lot of the fun and exciting elements that are found in games, into things that are in non-game context scenarios. Things that are kind of boring but very important, and so basically making productive activities fun.

 

KELLY: We’re going to apply this in the context of companies, so why is this context so important for companies, especially now in 2017? Why does every company need to know what this is and how to use it?

 

Gamification is really about what we call human focused design, as opposed to function focused design

 

YU-KAI CHOU: Gamification is really about what we call human focused design, as opposed to function focused design. Most systems are function focused, and assumes that people will perform the desired behaviour, and then optimise for efficiency for usability. Whereas human focused design remembers that people have feelings, have insecurities, there are reasons why they do and do not want to do something. And it optimises for that. So, if you look at why this is so important today it’s because behaviour motivation is at its most critical point.

 

Before, you looked at technology, methodology, hardware, software, and whatever, but people aren’t necessarily happier. They are not necessarily feeling that they’re closer to others. In fact, most company employees are reported to be unengaged. So, disengaged means that they actually sabotage productivity, because they want to do less work, and unengaged just means that they’re not working hard. This is very important, especially as we’re having a new generation that are used to having fun and playing games. Also, social appreciation in everything they do. Whether it’s in the workplace, whether it is in consumer products, whether it’s in healthcare with productivity, all these things are what drives and motivates the brain. You’re going to fall behind every single competitor out there who understands this.

 

KELLY: In 2017, every single company has a social media account. People are even more distracted by it and things move so quickly. What is the key to tapping into your target audience as a company with millennials? Do you think that gamification is the key? And then how is a company able to implement that, but then if you’re a small business, how do you execute these ideas?

 

YU-KAI CHOU: This is a big problem in the gamification world, where, when I started it was a bit of a lonely passion, no one understood it or believed in it, but at one point there was a start of a lot of opportunities, companies, organizations and even governments that recognized us. This was powerful, because many people want to do gamification and then started to say let’s just put some points and badge system and then it is fun and exciting. This in fact doesn’t work very well, and in all my workshops, oftentimes I’ll say think of one game that you enjoy playing and think about what made that game so enjoyable. No one ever says oh I like the game so much because there’s the points and badges. They talk about oh there’s an element of strategy, I’m playing with my friends of my family, I’m always anxious about what’s going to happen next. So the key is making sure that the right type of game design is implemented to it, not just points and badges and if you look at a game it has all these elements to it. But most games are still boring. But just because you have some game elements that are in a boring game, in your product, in your workforce training program, doesn’t mean that they’re suddenly going to be engaged. That’s why over my years I’ve tried to redevelop the framework, and it breaks down motivation into eight core drives of motivation.

The unique thing about these eight core drives is that everything you ever do is based on one or more of the eight. This means that if there is none of these eight core drives involved, then there is zero motivation. And then out of these eight core drives there are different types of nature, what we call white hat versus black hat core drives. White hat core drives make people feel powerful, in control, but there’s no sense of urgency; therefore, you procrastinate. Black hat core drive makes people feel urgent, upset, and addicted, but over the long run it leaves a bad taste in their mouths if that’s the only motivator. This is because they feel like they’re not in control of their own behaviour. Then there’s what we call extrinsic and intrinsic core drives. Extrinsic core drives are basically the incentives you give for a reason, reward, or goal, but you don’t necessarily enjoy that activity. So either you hit your milestone, you hit your goal, or you get used to your reward.

Whereas the intrinsic core drive are things that you enjoy doing so much that you’re even willing to pay money just to experience it, even if you lost all your progress the next day. You would still play that basketball game with a friend, go hang out, or go shopping with somebody even if you didn’t buy anything. So that’s what it’s about, not just creating the game environment but understanding the right type of behaviour you want to create, in terms of the long term, short term, etc.

 

KELLY: I’ve read before that you’ve mentioned that they all need to appear. But do you think there are any you would highlight that may be more important for a specific target audience, or is it basically that every company, if they want to implement gamification they need to do every single drive?

 

YU-KAI CHOU: So technically you don’t need all eight of them, you only need very strong core drives to drive motivation. But now the thing with that each of them have trade-offs. Not one is the most important. It’s about what your goal is, so for instance in your marketing, when you’re driving your brand, you want white hat. White hat again makes you feel good, powerful, like you are part of the brand. The only problem with that is that there’s no urgency, so they have the intention of buying your product but they take forever.

Now black hat is good for sales and conversion, because it’s about urgency, quickly signing up here, raising money, getting people to give you their email on a website. So black hats are for example ‘oh there’s only two seats left’, or putting on a timer so it makes people feel like they have to rush into that. And then once you set them up on-board they should feel white hat, ‘oh you just made the smartest choice ever’, and this is where you also bring what we call epic meaning and calling. You give them a narrative about how what they just did makes an impact to the world – hey, what I’m doing is helping me become part of something bigger than myself; therefore, they are a lot more involved.

Some even do what we call self-sacrificial behaviour, they say I don’t care about self-gain, I just want the whole system to be better. And then eventually going into what we call the scuffling phase, and all these core drives coming into play, and we get in, which is how to retain your veterans, keep people coming for months or years, usually white hat, again because white hat makes people feel good in the long run, whereas black hat is for more transactional events. So it all depends on this and is why design is so interesting, because you’re really balancing the trade-offs between the core drives.

 

KELLY: Have you seen any examples of say campaigns or technology where they have good intentions to use gamification, but where it actually blows up in their face or it just doesn’t work out? Or are there specific circumstances where gamification is just not the answer for your business or employees or whatever it might be?

 

YU-KAI CHOU: So there’s a few kind of traps that companies should try to avoid. One is what we call the over-justification effect and this is a result of always doing intrinsic motivation design. Most companies like intrinsic motivation design, which is like puting a reward on something, give them some gadget by itself, because it’s easier than design, it’s easier to just put a reward on something as opposed to making the activities fun and exciting. The problem with that is that sometimes intrinsic motivation can kill extrinsic motivation. Let’s say I love to draw, and I always draw for free. One of the best ways for you to get me to stop drawing is to first pay me to do it, then I’ll get excited right, ‘yay I get paid for my passion!’ and then pay me less and less and less, $50, $20, $10, 50c. At one point, I’m going to refuse to draw, because I’m not stupid, I’m not going to draw for 20c, even though before I met you, I drew for free. So you have transitioned my extrinsic joy for drawing into my intrinsic motivation of making money. So when the money’s not enough, I lose interest altogether.

There’s a relatively well-known study from a childcare centre in Israel, and they wanted to stop the parents from being late to pick up their children. So what they did is they put a small fine like a $5 on the parent’s every time they were late. And most traditional economists will tell you yeah, if you put a fine on a behaviour, you will see less of this behaviour. However, what turned out is that a lot more parents became late, because before they were intrinsically motivated to be on time, not be in front of the teacher, wanting to be a good parent, but now you present your transactional amount, so now they’re thinking ‘well my meetings are pretty important, so I think $5 is worth it.’ And now they also think they’ve bought the right to be late, so they’re not even apologetic about it anymore. So the child care centre realised, this is not working out, so they removed the fine.  But the parents were still late, because now it’s the same transactional thinking but now it’s free and even better.

So it’s called the over-justification effect. Intrinsic motivation is justification right, I’m doing it for the money, I’m doing it because I get healthcare, I watch Game of Thrones to understand medieval human psychology, it’s justification. But when you think I am doing it because of this, so I’m doing it just because of the reward then it over justifies and you don’t even remember why you enjoyed it in the first place. So that’s one trap to fall in to.

Regarding your second question, are there times when gamification just shouldn’t be used?  I would say that as long as you’re applying the right type of gamification and human focus design using the eight core drives, then its usable in way more things that people can recognise, as long as they can define a desired behaviour. We can improve that through gamification, it doesn’t matter what generation, what culture, what activity, we can increase that behaviour and motivation.

Now there are two limitations to it. One is we can’t make machines smarter, if the company says oh our queries aren’t loading, our images aren’t coming out, then we can’t help you. We can’t create a Google search engine through gamification. We can motivate people to try, which links to the second part, we can’t get the people to do what they don’t know how to do. So I cannot get a person to fly a plane across the Pacific Ocean, because the person doesn’t know how to fly a plane. I can however motivate this person to learn how to fly a plane. So it has to be based on motivation, if they don’t have the ability to do it we can’t help you there. But if you don’t have these two limitations, from my own experience from health care to government to education to product design, all these things we can gamify and see really strong results.

 

KELLY: Focusing on loyalty, what are some specific examples maybe you’ve seen with companies where they are actually able to increase loyalty without it being too much over-justification? So are there any ways you’ve seen this done in practice or any ideas that you’ve come across of ways to actually increase loyalty whilst maintaining gamification and not making it all about the company, but making it a really good experience for the customer as well?

 

Gamification’s goal is to create business value

 

YU-KAI CHOU: Gamification’s goal is to create business value. Fun is almost like a means to the end, sometimes even a by-product, because if users are having fun, they will help drive your business value, they’ll help your company become more profitable, because they enjoy doing the desired behaviour that is usually defined as the beginning of a project.

So when you look at loyalty, usually a lot of companies focus a lot more on the extrinsic motivation. Those are useful to have to some extent because we talk about the justification, I’m spending more time because I get loyalty points for it, I already have so many points I don’t want to lose those points, especially if you have status, if you have status in a system then you oftentimes don’t want to switch and become a total noob again.

So those are very important components but I always want people to think more about those white hat intrinsic core drives because those are the much more longer lasting types of core drives, which again is the premise of loyalty. So one of the things is, core drive one, epic meaning and calling. We talked about people feel like they’re part of something bigger than themselves. And when you look at some of the most successful brands and customers and loyalty of these brands, they just have an overarching theme. If you look at Apple computers, Apple – their two most successful commercials, like 1984. And what’s unique about that is none of them talk about products, they don’t talk about more RAM, the colour screen, more storage space, they just say ‘Hey! 1984, we liberate human beings from Big Brother. So if you want to be a part of the movement, you got to own a Macintosh.’ People are like oh you know, that’s amazing, I want to be the crazy one to change the world. Even with Nike’s tagline ‘Just do it’ if you believe in this concept of no excuse, no procrastination, just be active, then you’re a Nike person, so you always buy Nike. The key is when you buy into that epic meaning and calling, this loyalty what I talked if you’re willing to even have self-sacrificial behaviour, you’re completely disregarding the price or a product.

Now another aspect is influenced by social influence and relatedness. A strong community massively increases loyalty. If you feel like this is a group of people who understands you, cares about you and, obviously epic meaning and calling helps, if everyone’s able to get behind one epic meaning and calling message it’s easier to build a community, but either way if they’re in a community they’re mingling with others, there’s a forum, they’re chatting, to the point where people are even helping each other out, then there’s a tremendous amount of loyalty.

Finally, there’s the sense of empowerment of creativity and feedback. So creatively playing the games the company offers. When I say game it means, let’s say they do have a points system, a redemption system. Now a lot of these systems are little more lenient, so you do something 10 times, you do it again and again. So everyone plays the game the same way. But when you have empowerment of creativity and feedback, you strategize on something, you try to optimise your model, you become completely engaged.

KELLY: Can you think of some specific examples of loyalty programs that you would say are the best you’ve seen? What kind of industries do you think have the most room for improvement?

 

YU-KAI CHOU: I feel like most of them aren’t specific, they’re very preliminary, they’re very basic. But for instance I think what people talk about a lot is the Starbucks loyalty program. And they use their phone a lot, get the gold star status, and from a monetary standpoint, it’s probably not necessarily worth it. But they’re playing the game and they get their coffees fast and I think that that’s a pretty good example of loyalty done better.

Another example let’s say a restaurant, instead of saying if you come 10 times you can get a free beer, what about if you come 10 times, you get to treat three friends to a free beer. So now the reward is not just a couple of bucks, the reward is you come in, you look good, and say hey I’m the VIP in this place, so now this guy looks good, and they’re like impressed, wow maybe I want to be a VIP too, this place is so cool. And even though the restaurant is now giving out three beers instead of one, it’s a great deal because now three people are customers who probably have never been here before are here, and they might even be jumping into the loyalty program. So overall, that’s a win-win-win situation. And the key is again, don’t think about the monetary value of things, think about the social, the greater part of it, the social influence part of it. I think you’ll be a lot more successful in the loyalty programs you design.
KELLY: Last question for you! There are many short-term loyalty programs out there, do you think that you can do enough of these short-term giveaways to actually create a full platform or do you think that it is better for a company to just go ahead and get a platform where they can tap into all those different drives that you’ve mentioned?

 

YU-KAI CHOU: I always recommend starting off with something more robust, having a full game loop and it all makes sense, because there’s danger where the over justification effect which is – oh we’ll start off give them some points but it doesn’t mean anything or go anywhere, you can’t redeem it for anything, it’s not social, that potentially it’s just not exciting and people already feel bad about this point system. So, that’s potentially longer term less engagement because of that. I think that intrinsic core drives, those are fine so you can often add a bit more social appreciation in the system, allow people to appreciate more gifts, allow more meaningful choices, more unpredictability and curiosity, so like Easter eggs, surprises, that you don’t expect, those are usually fine. Those usually don’t effect the experience, but if you are doing the intrinsic motivation design, I usually reckon having a bit more robust at the beginning.

 

KELLY: I think the work that you do and the studies you’ve done are incredible. And your book, Actionable Gamification: Beyond Points, Badges, and Leaderboards is a must read! Can you tell people where to get it and where to find more information? And if you had to provide one piece of advice, what would that be?

YU-KAI CHOU: So the book is called ‘Actionable Gamification – Beyond Points, Badges and Leader boards’. The link above will take you to the Amazon page for the book and there’s the soft cover, the audio book and the Kindle versions there. It just got published across China, South Korea and Taiwan, I think Germany might come soon.

As for the final tip, I think one thing that you want to understand in the business is you always want to understand what is the first major win state. So, the first major win state is when the user first says ‘Wow! This is so awesome!’. First of all, you want to find if there are any major win states in general but you also want to see how many minutes that it takes users to get to the first major win state. People sign up, they’re just curious, they’re trying to take action, they get points, but if they don’t have that wow this is amazing moment, they just don’t come back later. And you have to be very realistic about what that moment is.

For a service like Pandora, the music service, the first major win state is not when you enter your first song, because you can do that anywhere else too. It’s not even when you hear your first song. The first major win state is maybe 3 to 5 months later, where you realise oh wow! All the songs that I’ve heard I’ve really enjoyed! There’s even a few songs that I’ve never heard before in the past and also really like. So that’s when you realise oh Pandora’s really cool! That finally gives you your reason to come back, and this is the best moment to say hey, give us a good rating, tell you friends about us. A lot of companies front load all of that stuff at the beginning, and they just push out that major win state and from my experience the chance of success becomes much lower.

So, identify where that major win state is and move it to the beginning. Even before they put their name and their email, have them experience that first major win state and then they’ll be much more open to do everything else.

 

KELLY: Thank you so much for your time and valuable insights Yu-kai!

 

You can learn more about Yu-kai Chou on his website! 

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