For the last 100 years the assembly line has been the dominant model for organizing business operations. But now high rates of change and the unpredictable nature of our real-time global economy calls for something more flexible and responsive. Games offer field-tested methods and models for people to organize and focus their actions and continuously learn and succeed in fast-paced and unpredictable environments. See pragmatic examples of how to use game mechanics to improve business operations from sales to supply chain management. Get ideas you can use in your own company. It's not a game, it's the future of work!

1. Enterprise Games:
Business in the Real-Time Economy
Michael Hugos
CENTER FOR SYSTEMS INNOVATION
[c4si]
© 2013, Michael Hugos
Center for Systems Innovation [c4si]
1
www.SCMGlobe.com
www.MichaelHugos.com

2. The Real-Time Economy
© 2013, Michael Hugos
Center for Systems Innovation [c4si]
2
www.SCMGlobe.com
www.MichaelHugos.com

3. Business Now Happens on Global Networks
Courtesy NASA Earth Observatory http://earthobservatory.nasa.gov/
Real-Time Economy is powered by computers and global networks (cloud computing)
Race Against the Machine - http://ebusiness.mit.edu/research/Briefs/Brynjolfsson_McAfee_Race_Against_the_Machine.pdf
© 2013, Michael Hugos
Center for Systems Innovation [c4si]
3
www.SCMGlobe.com
www.MichaelHugos.com

4. Companies Connect with Global Networks
Smart Mobile Devices
APIs
Orchestration
Cloud
Computing
Big Data
Data Center
Layer
Social Media
APIs (application program interfaces) make connections easier and more secure
© 2013, Michael Hugos
Center for Systems Innovation [c4si]
4
www.SCMGlobe.com
www.MichaelHugos.com

5. Evolving Balance between Two Needs
•
Agility
Efficiency
• Efficiency requires predictability and stability – often absent in real-time economy
• Agility can differentiate products and avoid “race to the bottom” price wars
• Consider example of evolving mobile phone… Efficiency vs. Agility
• Is it a really a phone any more, or an evolving ecosystem of agile apps?
• Efficiency alone will kill your company!
© 2013, Michael Hugos
Center for Systems Innovation [c4si]
5
www.SCMGlobe.com
www.MichaelHugos.com

6. New Way to Organize Work
“One time purchase transactions are replaced by ongoing
commercial relationships between parties over time.”
Jeremy Rifkin, Wharton School, The Empathic Civilization
http://www.thersa.org/__data/assets/pdf_file/0019/282160/J-Rifkin-RSA-presentation-text-150310.pdf
This means:
Know your customers! Know what they want!
Now consider this:
Games are as powerful for organizing
knowledge work as
assembly lines are for organizing
manufacturing work
© 2013, Michael Hugos
Center for Systems Innovation [c4si]
6
www.SCMGlobe.com
www.MichaelHugos.com

7. Games and Business have Common Traits
“Games have four traits”
GAMES are
engagement engines
that attract players
RULES
FEEDBACK
SYSTEMS
GOALS
COMPANIES are
engagement engines
ENTHUSIASTIC
PARTICIPATION
Social Media,
Smart Mobile
Devices, Big Data
that attract customers,
employees and partners
© 2013, Michael Hugos
Center for Systems Innovation [c4si]
Jane McGonigal, Reality is Broken
http://rtietz.com/fronteiras/aula_12/mc_go
nigal.pdf
7
www.SCMGlobe.com
www.MichaelHugos.com

8. Feedback Drives Games and Business
THREE GAME
MECHANICS
CREATE POWERFUL
FEEDBACK
Real-Time Visibility
1.
OBSERVE
( TECHNOLOGY )
2.
3.
Authority to Act
ACT
Stake in the Outcome
WIN
( PROCESS )
( PEOPLE )
Use game mechanics to OBSERVE – ACT – WIN in unpredictable environments (Agility).
Companies NEED game mechanics to succeed in the real-time economy.
© 2013, Michael Hugos
Center for Systems Innovation [c4si]
8
www.SCMGlobe.com
www.MichaelHugos.com

9. Combine Strengths of People and Computers
• Game mechanics provide field-tested models to effectively combine people and computers
• Let computers do routine tasks – EFFECIENCY
• Empower people to be creative – AGILITY
• “Combine the swelling numbers of mid-skilled workers with ever-cheaper
technology to create value.” Erik Brynjolfsson and Andrew McAfee, Race Against the Machine
Freestyle Chess Example
 Amateur players using simple
computers to explore options
 Beat chess grandmasters and
other players with more
powerful computers
 “Human strategic guidance
combined with the tactical
acuity of a computer was
overwhelming.” Gary Kasparov
• Continually improve skills & technology based on experience – EVOLVE
© 2013, Michael Hugos
Center for Systems Innovation [c4si]
9
www.SCMGlobe.com
www.MichaelHugos.com

10. The Great Game of
Business
© 2013, Michael Hugos
Center for Systems Innovation [c4si]
10
www.SCMGlobe.com
www.MichaelHugos.com

11. Supply Chains and Game Mechanics
•
Every company is part of one or more supply chains - supply chains
span multiple companies from manufacturers to distributors and
retailers and customers
•
Every company in a supply chain has its own interests, yet all must
cooperate to reach common goals in order to succeed
•
Much like a category of online games known as “Massively Multiplayer
Online Role Playing Games” or MMOs for short
•
Can techniques from MMO games be applied to improve operation of
supply chains?
•
YES – following case study is example from my own experience
•
As chief information officer of a national distribution company I
employed game mechanics to improve a large retail supply chain
•
Created applications to provide real-time visibility of supply chain
operations; companies already had authority to act and a stake in the
outcome – resulting feedback enabled higher levels of performance
© 2013, Michael Hugos
Center for Systems Innovation [c4si]
11
www.SCMGlobe.com
www.MichaelHugos.com

12. Improving Supply Chain Operations
40 Manufacturers and
26 Distribution Centers
1.
Real-Time Visibility
OBSERVE
( TECHNOLOGY )
DC
4,500 Stores and
Daily Deliveries
STORE
STORE
DC
STORE
DC
STORE
2.
3.
Authority to Act
ACT
Stake in the Outcome
WIN
( PROCESS )
How to improve
performance in 90 days?
( PEOPLE )
Hint: Combine strengths of people and computers
© 2013, Michael Hugos
Center for Systems Innovation [c4si]
12
www.SCMGlobe.com
www.MichaelHugos.com

13. Apply Game Mechanics for Better Feedback
Supplier
Game Mechanics:
• Real-Time Visibility
• Authority to Act
• Stake in the Outcome
Electronic
Invoice
Distributor
Electronic
ASN
Every day all parties transmit
simple data sets to update
common database showing
relevant performance levels
People collaborate on
conference calls, look at
common database, make
decisions
Cut excess inventory
by 60% and $400,000 in
first 90 days!
“Tao of Supply Chains”
Electronic
PO
KPI Score Card
%
Plan vs
Actual
A
B
C
D
E
Wk 1
Wk 2
Wk 3
Wk 4
Order Fill Rate
Supplier On Time Delivery Rate
80%
Plan vs
Actual
70%
Wk 1
Wk 2
Wk 3
Sales Forecasts
http://www.cio.com.au/article/17941/tao_supply
_chains/
© 2013, Michael Hugos
Center for Systems Innovation [c4si]
Customer
13
90%
Wk 4
60%
Perfect Order Rate
100%
www.SCMGlobe.com
www.MichaelHugos.com

14. Think Big – Start Small – Deliver Quickly!
“New creation often happens on borders of combining sectors and industries.”
President Park Geun-hye, South Korea
“Do what you can, with what you have, where you are.”
President Teddy Roosevelt, United States
AGILE DEVELOPMENT
• Use cloud, apps, smart devices
• Pay-as-you-go, Learn-as-you-go
Cloud,
• Agility means simple
things done well, not
complex things done fast
APIs
• 30 – 60 – 90 day cycles
• Try many things, follow success,
abandon failure
SaaS
Apps
Agile development platform for real-time economy
© 2013, Michael Hugos
Center for Systems Innovation [c4si]
14
www.SCMGlobe.com
www.MichaelHugos.com

15. Massively Multiplayer Online Games
• Thousands of players to work
together on complex projects
• 3D virtual worlds and Heads-updisplays (HUDs) show real-time big
data – agile response to change
Courtesy of EVE Online (www.eveonline.com)
Could we apply same techniques 3D worlds and HUDs - to operation
of global supply chains…???
© 2013, Michael Hugos
Center for Systems Innovation [c4si]
15
www.SCMGlobe.com
www.MichaelHugos.com

16. Massively Multiplayer Online Businesses
• Google Earth and Google Maps
provide 3D virtual worlds
• HUD app displays real-time data
from supply chain operations
• Combines people and computers
Courtesy of SCM Globe (www.scmglobe.com)
Enable new forms of communication
and collaboration – create new jobs,
new companies, new products
© 2013, Michael Hugos
Center for Systems Innovation [c4si]
16
www.SCMGlobe.com
www.MichaelHugos.com

17. Example of Real-Time Economy Startup
-- Entrepreneur renting capacity at bottling plant to make herbal tea energy drink
-- Hiring local drivers to deliver products and expand routes
-- Using SCM Globe to monitor and manage supply chain with game mechanics
-- Engage customers with social media and gaming app running on smart devices
-- Agile Business: Try many things, follow success, abandon failure
© 2013, Michael Hugos
Center for Systems Innovation [c4si]
17
www.SCMGlobe.com
www.MichaelHugos.com

18. Learn More…
Presentation excerpted from my book:
“Read this book, it’s not a game it’s the future of work!”
Mark P. McDonald, Group VP, Gartner
“Throughout his crisp and lively narrative, Hugos makes
skillful use of several reader-friendly devices… that
graphically illustrate key concepts and relationships as well
as checklists and clusters of bullet points that will facilitate,
indeed expedite frequent review later.”
Robert Morris, Amazon VINE VOICE Top 100 Reviewer
Using game mechanics to redesign and reinvigorate
business operations for the real-time economy
www.MichaelHugos.com
Center for Systems Innovation [c4si]
Enterprise Games: Using Game Mechanics to Build a Better Business, 2013
ebook and paperback – http://www.amazon.com/Enterprise-Games-Mechanics-Better-Business-ebook/dp/B00E1SIWZM/
© 2013, Michael Hugos
Center for Systems Innovation [c4si]
18
www.SCMGlobe.com
www.MichaelHugos.com