Game Thinking is a process of learning, guided by feedback, of hobby- and habit-building. A process of getting players to care. Why does a human like something? Why does a human return to something? We design to elicit that caring, that emotional attachment. That’s really what game thinking is about. It begins by pushing you to look at what your users actually care about. “Game thinking: an approach to designing engaging products that synthesizes game design, lean/agile methods, design thinking, and systems thinking into a design system.”
Successful games all have something in common: the intrinsic joy of skill-building. The level of challenge increases to match your evolving skill, you’ve got a setup for flow—the ultimate goal of every game and product designer. Just as character transformation is the backbone of great drama, personal transformation is the backbone of great gameplay.
Progress metrics like points, badges, levels, leaderboards, and reputation systems are icing on this learning/mastery cake. These markers help you gauge where you stand, and how far you’ve come—but they’re meaningless as a stand-alone system without something to master. If you want to build a compelling product experience, forget points—think character transformation. The lack of anything to master is often why simple gamification fails. Points, badges, and leaderboards aren’t compelling unless you’re improving along some personally meaningful dimension.
Trying to drive long-term engagement with extrinsic rewards is a fool’s errand.
Extrinsic rewards are effective at getting people to complete simple, short-term tasks, but decrease effectiveness for creative tasks that require out-of-the-box thinking.
The best products don’t just fill a need. They help people get better at something they care about. Game thinking is a framework for building products that make your customers more powerful, knowledgeable, and connected. Like lean startup, game thinking is grounded in testing assumptions. And like design thinking, we start out in a problem space (an unmet need) and end in a solution space (how your product fills that need).
Successful innovations may end up reaching a mainstream audience—but they never start off that way. That’s the paradox of innovation: the “typical” people in your market are not the same ones you need to delight when bringing your idea to life.
What group of people will need and want our offering first? What characteristics and behaviors will they have in common? The best way to develop loyal customers is to fulfill their needs in a pleasurable way. Think about the customers you’re targeting and ask yourself: What relevant needs do they have right now that we could potentially address? How are they currently getting those needs met? Why is that unsatisfying?
We are developing… …for… …so they can…
Many entrepreneurs are eager to release a product quickly, so they can get feedback on their idea, but if you’re building something meaningful and substantial, a private alpha test with a handful of early hot-core customers can get you much further, much faster—and set you up for long-term success.
Superfans have the problem you want to solve, know they have the problem, are trying to solve the problem by seeking out solutions, and are dissatisfied with the options and want something better. Once you delight your superfans, you’re onto something that can grow. But if you’re missing this early, energetic human feedback loop, it’s almost impossible to “cross the chasm” into mainstream use. Superfans are pre-chasm early adopters. They don’t need social proof before trying something new, because their need or desire is so great. This is who you’re looking for: people who actively feel the pain of not having what you offer. A good rule of thumb is to go where potential superfans hang out to recruit them. Here are some channels to consider, along with guidelines for when to use them. Try to pursue several channels in parallel, in case one doesn’t work out or moves slowly.
Friend-of-friend social media sharing.
Recruiting ads on Craigslist, Facebook, or Google.
Interest groups. Do you belong to interest groups on LinkedIn, Facebook, or other online communities? Those groups can be a great place to find superfans. Be
Early adopters don’t need social proof or convincing to try something.
Walk us through your typical day. How does [relevant activity] fit into your day?
What solutions have you tried to solve this problem? How’d that work for you? We know that actions speak louder than words, and this question will separate true early adopters from the pack.
Are your solutions working? How would life be different if this worked better?
How could [relevant activity] be better or easier? What’s missing?
What transition, chore, event, or ritual could drive customers to return to your product?
What can my customers get better at that they care about? What skills do they develop when they engage with my product over time? What metric are they improving, and what makes that metric meaningful to them? What new powers, access, and privileges will open up as they progress?
How do you turn a newcomer into a regular? By building a compelling habit. This might involve reading updates, meeting new challenges, or deepening personal connections. Now it’s time to imagine what your core product habit could be.
would motivate my best customers to stick around?
To transform your customer data into actionable insights, start by scanning the data for patterns that are relevant to your product. In particular, look for:
Ideas or suggestions
“When I want to <motivation>, I want to <action>, so I can <expected outcome>.” Don’t fall into the common trap of thinking that your innovative offering will create brand-new habits. If you want to drive adoption and retention, it’s easier to piggyback on an existing habit than get someone to build an entirely new one, just for your product. During your research, pay special attention when your subjects talk about existing habits that are relevant to your offering. Daily habits are important, but so are weekly, monthly, and even seasonal or yearly ones. All can be potential hooks for driving long-term engagement.
Now think about situational triggers—the transitions, rituals, and events that structure your customer’s daily life and appear in your job stories. Note internal and situational triggers that are already in your early customers’ lives. What emotions or urges could drive customers to seek out your product?
We know from self-determination theory that people are motivated by meaningful progress. As you play a game, you gain skills and knowledge that prepare you to take on greater challenges. In storytelling terms, this is a classic hero’s journey. In product design terms, you’re taking your customers on a learning journey that will transform them in some way. Your customer is the hero of their own story—the story unfolding inside their head about who they’ll become by using your product. What’s the story about? How does it unfold? That’s the question your mastery path answers.
Mastery Is Better than Progress – Many non-game designers understand this and eagerly adopt points, badges, leaderboards, and ratings systems to track and reward progress. They soon learn what every game designer knows: Numbers alone don’t confer meaning. To create a compelling mastery system, your need context, challenge, and character transformation.
Empower Experts to Have Real Impact – Not everyone needs to experience this path, but those who want to go deep can have more impact with the more they learn. To choose the right elder game role for your community, ask yourself: What skills, knowledge and relationships are experts accumulating? What kind of roles are experts asking for? What are they eager to do? What does the community staff currently do that could be handled by experts? The most compelling reward for your investment is impact—not trinkets.
Write a mastery story about what the experts experience a few weeks in. What experience/powers/rewards/role can you offer them that leverages the skills, relationships, and knowledge they’ve built up using your system? When I [make the effort to master this system], I want [earned unlocks, powers, access, status, roles] so I can [stay engaged/have an impact/leverage my newfound skills, knowledge, and relationships].
The most successful product creators I know always kickoff a new project by building, iterating and tuning the core activity chain, or what I call the core learning loop. Once that’s working well, they’ll start to add more features and polish. If you want to emulate successful innovators, this is how you build engagement from the ground up. While an operant conditioning loop is focused on shaping behavior, a learning loop is focused on empowerment, helping your customer get better at something they care about. A learning loop has: A repeatable, pleasurable activity with internal triggers. Feedback that drives learning and skill-building. Progression and investment with reengagement triggers.
As you’re building your MVP, make sure to include feedback that tells your customers they’re on the right track. Slack, for example, offers light, charming visuals that confirm you’ve read all your messages—the core activity in the system. Activities and feedback work together to engage your customers and let them know they’re on the right track. Investment is what happens when you collect, earn, customize, win, or build something you don’t want to lose. Triggers are reminders to return to the system you’re invested in. Together, all these techniques pull your customers back and complete your core learning loop.
Anytime you create an avatar, refine your profile, check your stats, earn points, integrate your address book, post an update, or curate your friend list, you’re deepening your investment in that system, and making it harder to leave.
Stats worth checking: Self-improvement is a powerful force. It’s inherently motivating to see yourself getting better, stronger, faster, smarter, or more popular. That’s why so many systems tune their tracking algorithms to show visible progress, it gets people hooked and keeps them coming back. A simple example is Twitter’s follower count, which engages you in growing your audience, which makes it harder to walk away. Tell me a story:
Stories can take many forms, such as updating Instagram, posting to a forum, or leaving a comment on a blog.
Enhance my self-image: Anytime you customize your identity or environment, you’re investing a bit of yourself into the system.
When your customer chooses colors, selects a background image, or creates an avatar, they are increasing their investment in your system through personal expression. Help me connect with people:
Currency is for spending: Once customers are engaged with your system, giving them spendable currency is a powerful way to drive investment. This tactic is most effective if it’s layered onto other skill-building systems, instead of being used in isolation. Duolingo, for example, awards “lingots” for completing activities, which you can spend on customizing your profile.
Customer-centric triggers already exist in your customer’s experience. You learn about them through discovery research. Internal triggers are emotions, urges, or cravings your customer has, such as hunger, loneliness, excitement, anticipation, curiosity, boredom, etc. Situational triggers are transitions, rituals, and events that occur regularly, such as waking up, commuting to work, or sitting down for family dinner.
Product-centric triggers are designed into your product experience. The most effective ones tap into the customer’s existing emotions and habits. External triggers are environmental cues that remind you to do something, such as notifications, email, shoes by the door, or sticky notes on your laptop. Engaged triggers kick in once someone is engaged in your experience. If you have an internal urge supported with external feedback, that’s an engaged trigger. Checking your stats in a game or your unread messages in Slack are two good examples of triggers that kick in once you’re engaged in the system.
To identify existing triggers for your product, ask yourself: In which situations is my customer most likely to seek out my product? What’s happening right before—and after—those moments? What’s the context? How does my customer feel right before—and after—using my product? What pain or itch does my product alleviate? Which emotions are driving use?
As you’re bringing your product to life, ask yourself: What feedback would help my customers perform their core activity better? When we think of games, we often focus on visible progression systems like points, badges, levels and leaderboards. Yet feedback is more fundamental than progress. Feedback lets you know you’re on the right track and motivates you to stay engaged in what you’re doing.
What’s missing is a mechanism that ties these stats into meaningful unlocks and progressive skill-building. How would you answer these questions? When a customer uses your product for months, what are they getting better at? How will you show personal or social progress in a compelling, meaningful way? How is your customer’s Day 30 experience different or better than Day 1, or Day 7? Once someone learns the basics, which features, content or access can they unlock?
When you’re bringing your idea to life and building your MVP, you need to put aside your grand visions and focus in on just a few core activities.
Inspired by Bartle, I took my experience with designing social games and identified four actions, or verbs, that emerge in online environments: compete, collaborate, explore, and express.
Inspiration usually comes during work, rather than before it. Madeleine L’Engle, Author, A Wrinkle in Time
Take your cues from the habits and desires of your experts—the people who master your systems and long to go deeper. Your goal is to create systems that tap into the deep needs and motivations of your most passionate players.
What I got out of it
Some really detailed and helpful steps on how to bring game thinking to your product/service/design – character transformation, skill-building, help people get better at something they care about
“E-Myth \ ‘e-,’mith\ n 1: the entrepreneurial myth: the myth that most people who start small businesses are entrepreneurs 2: the fatal assumption that an individual who understands the technical work of a business can successfully run a business that does that technical work…Those mundane and tedious little things that, when done exactly right, with the right kind of attention and intention, form in their aggregate a distinctive essence, an evanescent quality that distinguishes every great business you’ve ever done business with from its more mediocre counterparts whose owners are satisfied to simply get through the day. Yes, the simple truth about the greatest businesspeople I have known is that they have a genuine fascination for the truly astonishing impact little things done exactly right can have on the world. It is to that fascination that this book is dedicated.”
Contrary to popular belief, my experience has shown me that the people who are exceptionally good in business aren’t so because of what they know but because of their insatiable need to know more. The problem with most failing businesses I’ve encountered is not that their owners don’t know enough about finance, marketing, management, and operations—they don’t, but those things are easy enough to learn—but that they spend their time and energy defending what they think they know. The greatest businesspeople I’ve met are determined to get it right no matter what the cost.
So if your business is to change—as it must continuously to thrive—you must change first. If you are unwilling to change, your business will never be capable of giving you what you want. The first change that needs to take place has to do with your idea of what a business really is and what it takes to make one work.
That myth, that misunderstanding, I call the E-Myth, the myth of the entrepreneur. And it finds its roots in this country in a romantic belief that small businesses are started by entrepreneurs, when, in fact, most are not. That Fatal Assumption is: if you understand the technical work of a business, you understand a business that does that technical work. And the reason it’s fatal is that it just isn’t true. In fact, it’s the root cause of most small business failures! The technical work of a business and a business that does that technical work are two totally different things! But the technician who starts a business fails to see this. To the technician suffering from an Entrepreneurial Seizure, a business is not a business but a place to go to work.
The Entrepreneur / Manager/ Technician
But it’s a three-way battle between The Entrepreneur, The Manager, and The Technician. The entrepreneurial personality turns the most trivial condition into an exceptional opportunity. The Entrepreneur is the visionary in us. The dreamer. The energy behind every human activity. The imagination that sparks the fire of the future. The catalyst for change. The managerial personality is pragmatic. Without The Manager there would be no planning, no order, no predictability. The Technician is the doer. “If you want it done right, do it yourself” is The Technician’s credo. The Technician loves to tinker. Things are to be taken apart and put back together again. Things aren’t supposed to be dreamed about, they’re supposed to be done. If The Entrepreneur lives in the future and The Manager lives in the past, The Technician lives in the present. Put another way, while The Entrepreneur dreams, The Manager frets, and The Technician ruminates.
It is self-evident that business, like people, are supposed to grow; and with growth, comes change. Unfortunately, most businesses are not run according to this principle. Instead most businesses are operated according to what the owner wants as opposed to what the business needs. And what The Technician who runs the company wants is not growth or change but exactly the opposite. He wants a place to go to work, free to do what he wants, when he wants, free from the constraints of work Unfortunately, what The Technician wants dooms his business before it even begins.
“If you want to work in a business, get a job in somebody else’s business! But don’t go to work in your own. Because while you’re working, while you’re answering the telephone, while you’re baking pies, while you’re cleaning the windows and the floors, while you’re doing it, doing it, doing it, there’s something much more important that isn’t getting done. And it’s the work you’re not doing, the strategic work, the entrepreneurial work, that will lead your business forward, that will give you the life you’ve not yet known…“Don’t you see? If your business depends on you, you don’t own a business—you have a job. And it’s the worst job in the world because you’re working for a lunatic! “And, besides, that’s not the purpose of going into business. “The purpose of going into business is to get free of a job so you can create jobs for other people.
The Technician’s boundary is determined by how much he can do himself. The Manager’s is defined by how many technicians he can supervise effectively or how many subordinate managers he can organize into a productive effort. The Entrepreneur’s boundary is a function of how many managers he can engage in pursuit of his vision.
You come face to face with the unavoidable truth: You don’t own a business—you own a job! What’s more, it’s the worst job in the world! You can’t close it when you want to, because if it’s closed you don’t get paid. You can’t leave it when you want to, because when you leave there’s nobody there to do the work. You can’t sell it when you want to, because who wants to buy a job? At that point you feel the despair and the cynicism almost every small business owner gets to feel.
“The true question is not how small a business should be but how big. How big can your business naturally become, with the operative word being naturally? “Because, whatever that size is, any limitation you place on its growth is unnatural, shaped not by the market or by your lack of capital (even though that may play a part) but by your own personal limitations. Your lack of skill, knowledge, and experience, and, most of all, passion, for growing a healthy, functionally dynamic, extraordinary business. “In short, businesses that ‘get small again’ die. They literally implode upon themselves. “Not right away, necessarily. But over time they die. Atrophy and die. They can’t do anything else. “And the result of that is enormous disappointment, lost investment, shattered lives, not only the owner’s but those of the employees, the families of both the owner and the employees, the customers, the suppliers, the lenders, all of those people whose lives have somehow been intertwined with the life of this small business, and now with its death.
“Simply put, your job is to prepare yourself and your business for growth. “To educate yourself sufficiently so that, as your business grows, the business’s foundation and structure can carry the additional weight. “And as awesome a responsibility as that may seem to you, you have no other choice—if your business is to thrive, that is. “It’s up to you to dictate your business’s rate of growth as best you can by understanding the key processes that need to be performed, the key objectives that need to be achieved, the key position you are aiming your business to hold in the marketplace.
A Mature company is founded on a broader perspective, an entrepreneurial perspective, a more intelligent point of view. About building a business that works not because of you but without you.
IBM is what it is today for three special reasons. The first reason is that, at the very beginning, I had a very clear picture of what the company would look like when it was finally done. You might say I had a model in my mind of what it would look like when the dream—my vision—was in place. The second reason was that once I had that picture, I then asked myself how a company which looked like that would have to act. I then created a picture of how IBM would act when it was finally done. The third reason IBM has been so successful was that once I had a picture of how IBM would look when the dream was in place and how such a company would have to act, I then realized that, unless we began to act that way from the very beginning, we would never get there. In other words, I realized that for IBM to become a great company it would have to act like a great company long before it ever became one. From the very outset, IBM was fashioned after the template of my vision. And each and every day we attempted to model the company after that template. At the end of each day, we asked ourselves how well we did, discovered the disparity between where we were and where we had committed ourselves to be, and, at the start of the following day, set out to make up for the difference.
The Entrepreneurial Perspective adopts a wider, more expansive scale. It views the business as a network of seamlessly integrated components, each contributing to some larger pattern that comes together in such a way as to produce a specifically planned result, a systematic way of doing business. Said another way, the Entrepreneurial Model has less to do with what’s done in a business and more to do with how it’s done. The commodity isn’t what’s important—the way it’s delivered is. Thus, the Entrepreneurial Model does not start with a picture of the business to be created but of the customer for whom the business is to be created. It understands that without a clear picture of that customer, no business can succeed. To The Entrepreneur, the business is the product.
The Business Format Francise
The Business Format Franchise not only lends its name to the smaller enterprise but it also provides the franchisee with an entire system of doing business. And in that difference lies the true significance of the Turn-Key Revolution and its phenomenal success. The true product of a business is the business itself.
Armed with that realization, he set about the task of creating a foolproof, predictable business. A systems-dependent business, not a people-dependent business. A business that could work without him. Unlike most small business owners before him—and since—Ray Kroc went to work on his business, not in it.
The system integrates all the elements required to make a business work. It transforms a business into a machine, or more accurately, because it is so alive, into an organism, driven by the integrity of its parts, all working in concert toward a realized objective. And, with its Prototype as its progenitor, it works like nothing else before
The system isn’t something you bring to the business. It’s something you derive from the process of building the business.
It is critical that you understand the point I’m about to make. For if you do, neither your business nor your life will ever be the same. The point is: your business is not your life. Your business and your life are two totally separate things. Once you recognize that the purpose of your life is not to serve your business, but that the primary purpose of your business is to serve your life, you can then go to work on your business, rather than in it, with a full understanding of why it is absolutely necessary for you to do so. This is where you can put the model of the Franchise Prototype to work for you. Where working on your business rather than in your business will become the central theme of your daily activity, the prime catalyst for everything you do from this moment forward.
Pretend that the business you own—or want to own—is the prototype, or will be the prototype, for 5,000 more just like it. That your business is going to serve as the model for 5,000 more just like it. Not almost like it, but just like it. Perfect replicates. Clones. In other words, pretend that you are going to franchise your business. (Note: I said pretend. I’m not saying that you should. That isn’t the point here—unless, of course, you want it to be.) Further, now that you know what the game is—the franchise game—understand that there are rules to follow if you are to win:
The model will provide consistent value to your customers, employees, suppliers, and lenders, beyond what they expect.
The model will be operated by people with the lowest possible level of skill.
The model will stand out as a place of impeccable order.
All work in the model will be documented in Operations Manuals.
The model will provide a uniformly predictable service to the customer.
The model will utilize a uniform color, dress, and facilities code.
How can I create a business whose results are systems-dependent rather than people-dependent? Systems-dependent rather than expert-dependent. It is literally impossible to produce a consistent result in a business that depends on extraordinary people. No business can do it for long. And no extraordinary business tries to! Because every extraordinary business knows that when you intentionally build your business around the skills of ordinary people, you will be forced to ask the difficult questions about how to produce a result without the extraordinary ones. You will be forced to find a system that leverages your ordinary people to the point where they can produce extraordinary results over and over again.
Your Business Development Program is the vehicle through which you can create your Franchise Prototype. The Program is composed of seven distinct steps: 1. Your Primary Aim 2. Your Strategic Objective 3. Your Organizational Strategy 4. Your Management Strategy 5. Your People Strategy 6. Your Marketing Strategy 7. Your Systems Strategy
I believe it’s true that the difference between great people and everyone else is that great people create their lives actively, while everyone else is created by their lives, passively waiting to see where life takes them next.
In that regard, your Primary Aim is the vision necessary to bring your business to life and your life to your business. It provides you with a purpose. It provides you with energy. Your Strategic Objective is a very clear statement of what your business has to ultimately do for you to achieve your Primary Aim. It is the vision of the finished product that is and will be your business. In this context, your business is a means rather than an end, a vehicle to enrich your life rather than one that drains the life you have.
The commercial is saying, “Buy Chanel and this fantasy can be yours.” What’s your product? What feeling will your customer walk away with? Peace of mind? Order? Power? Love? What is he really buying when he buys from you? The truth is, nobody’s interested in the commodity. People buy feelings. And as the world becomes more and more complex, and the commodities more varied, the feelings we want become more urgent, less rational, more unconscious. How your business anticipates those feelings and satisfies them is your product.
“If you want it done,” I tell them, “you’re going to have to create an environment in which ‘doing it’ is more important to your people than not doing it. Where ‘doing it’ well becomes a way of life for them.”
Your Marketing Strategy starts, ends, lives, and dies with your customer. So in the development of your Marketing Strategy, it is absolutely imperative that you forget about your dreams, forget about your visions, forget about your interests, forget about what you want—forget about everything but your customer! When it comes to marketing, what you want is unimportant. It’s what your customer wants that matters. And what your customer wants is probably significantly different from what you think he wants. The question then becomes: If my customer doesn’t know what he wants, how can I? The answer is, you can’t! Not unless you know more about him than he does about himself. Not unless you know his demographics and his psychographics. Demographics and psychographics are the two essential pillars supporting a successful marketing program. If you know who your customer is—demographics—you can then determine why he buys—psychographics…And so, while the VP/Marketing and the VP/Operations and the VP/Finance each have their own specific accountabilities, they share one common purpose—to make a promise their customer wants to hear, and to deliver on that promise better than anyone else on the block!
“To do what? “To deliver the promise no one else in your industry dares to make! “That’s what marketing is, Sarah. That’s what your business must be. Alive, growing, committed to keeping a promise no competitor would dare to make.
That your Primary Aim and your Strategic Objective and your Organizational Strategy and your Management Strategy and your People Strategy and your Marketing Strategy and your Systems Strategy—all of them are totally interdependent, rather than independent of one another. That the success of your Business Development Program totally depends on your appreciation of that integration. And that your Prototype is that integration. If you understand all of that, then this book has been worth our time.
What I got out of it
Sounded like a pretty cheesy book but I got way more out of this than I expected. The entrepreneur/manager/technician, work on your business rather than in your business, continuous learning, get free from your job so that you can create jobs for others, build a “franchise” – something that can be replicated over and over again without fail (a systems thinking approach that is effective even if you never open another office/shop/etc…)
To sum it up: The quality of a paper and the ease with which it is written depends more than anything on what you have done in writing before you even made a decision on the topic. But if that is true (and I wholeheartedly believe it is), and the key to successful writing lies in the preparation, it also means that the vast majority of self-help books and study guides can only help you to close the barn door correctly and according to official rules – not just a moment, but many months after the horse has already escaped…And if I were forced to boil it down to a single bullet point, it would be this: We need a reliable and simple external structure to think in that compensates for the limitations of our brains. See more at http://takesmartnotes.com
Environment and Structure
What does make a significant difference along the whole intelligence spectrum is something else: how much self-discipline or self-control one uses to approach the tasks at hand. Luckily, this is not the whole story. We know today that self-control and self-discipline have much more to do with our environment than with ourselves (cf. Thaler, 2015, ch. 2) – and the environment can be changed. Nobody needs willpower not to eat a chocolate bar when there isn’t one around. And nobody needs willpower to do something they wanted to do anyway. Every task that is interesting, meaningful and well-defined will be done, because there is no conflict between long- and short-term interests. Having a meaningful and well-defined task beats willpower every time. Not having willpower, but not having to use willpower indicates that you set yourself up for success. This is where the organisation of writing and note-taking comes into play.
Good structure allows you to do that, to move seamlessly from one task to another – without threatening the whole arrangement or losing sight of the bigger picture. Having a clear structure to work in is completely different from making plans about something. If you make a plan, you impose a structure on yourself; it makes you inflexible. To keep going according to plan, you have to push yourself and employ willpower. This is not only demotivating, but also unsuitable for an open-ended process like research, thinking or studying in general, where we have to adjust our next steps with every new insight, understanding or achievement – which we ideally have on a regular basis and not just as an exception. Even though planning is often at odds with the very idea of research and learning, it is the mantra of most study guides and self-help books on academic writing. How do you plan for insight, which, by definition, cannot be anticipated? It is a huge misunderstanding that the only alternative to planning is aimless messing around. The challenge is to structure one’s workflow in a way that insight and new ideas can become the driving forces that push us forward.
The best way to deal with complexity is to keep things as simple as possible and to follow a few basic principles. The simplicity of the structure allows complexity to build up where we want it: on the content level. There is quite extensive empirical and logical research on this phenomenon (for an overview: cf. Sull and Eisenhardt, 2015). Taking smart notes is as simple as it gets.
Luhmann was able to focus on the important things right in front of him, pick up quickly where he left off and stay in control of the process because the structure of his work allowed him to do this. If we work in an environment that is flexible enough to accommodate our work rhythm, we don’t need to struggle with resistance. Studies on highly successful people have proven again and again that success is not the result of strong willpower and the ability to overcome resistance, but rather the result of smart working environments that avoid resistance in the first place (cf. Neal et al. 2012; Painter et al. 2002; Hearn et al. 1998). Instead of struggling with adverse dynamics, highly productive people deflect resistance, very much like judo champions. This is not just about having the right mindset, it is also about having the right workflow. It is the way Luhmann and his slip-box worked together that allowed him to move freely and flexibly between different tasks and levels of thinking. It is about having the right tools and knowing how to use them – and very few understand that you need both.
Assemble notes and bring them into order, turn these notes into a draft, review it and you are done.
Writing notes accompanies the main work and, done right, it helps with it. Writing is, without dispute, the best facilitator for thinking, reading, learning, understanding and generating ideas we have. Notes build up while you think, read, understand and generate ideas, because you have to have a pen in your hand if you want to think, read, understand and generate ideas properly anyway. If you want to learn something for the long run, you have to write it down. If you want to really understand something, you have to translate it into your own words. Thinking takes place as much on paper as in your own head. “Notes on paper, or on a computer screen […] do not make contemporary physics or other kinds of intellectual endeavour easier, they make it possible,” neuroscientist Neil Levy concludes in the introduction to the Oxford Handbook of Neuroethics, summarizing decades of research. Neuroscientists, psychologists and other experts on thinking have very different ideas about how our brains work, but, as Levy writes: “no matter how internal processes are implemented, (you) need to understand the extent to which the mind is reliant upon external scaffolding.” (2011, 270)
Make permanent notes. Now turn to your slip-box. Go through the notes you made in step one or two (ideally once a day and before you forget what you meant) and think about how they relate to what is relevant for your own research, thinking or interests. This can soon be done by looking into the slip-box – it only contains what interests you anyway. The idea is not to collect, but to develop ideas, arguments and discussions. Does the new information contradict, correct, support or add to what you already have (in the slip-box or on your mind)? Can you combine ideas to generate something new? What questions are triggered by them? Write exactly one note for each idea and write as if you were writing for someone else: Use full sentences, disclose your sources, make references and try to be as precise, clear and brief as possible. Throw away the fleeting notes from step one and put the literature notes from step two into your reference system. You can forget about them now. All that matters is going into the slip-box.
We constantly encounter interesting ideas along the way and only a fraction of them are useful for the particular paper we started reading it for. Why let them go to waste? Make a note and add it to your slip-box. It improves it. Every idea adds to what can become a critical mass that turns a mere collection of ideas into an idea-generator. A typical work day will contain many, if not all, of these steps: You read and take notes. You build connections within the slip-box, which in itself will spark new ideas. You write them down and add them to the discussion. You write on your paper, notice a hole in the argument and have another look in the file system for the missing link. You follow up on a footnote, go back to research and might add a fitting quote to one of your papers in the making.
The whole workflow becomes complicated: There is the technique of underlining important sentences (sometimes in different colours or shapes), commenting in the margins of a text, writing excerpts, employing reading methods with acronyms like SQ3R or SQ4R, writing a journal, brainstorming a topic or following multi-step question sheets – and then there are, of course, the one thousand and twelve apps and programs that are supposed to help with learning and writing. Few of these techniques are particularly complicated in themselves, but they are usually used without any regard to the actual workflow, which then quickly becomes a mess. As nothing really fits together, working within this arrangement becomes extremely complicated indeed and difficult to get anything done. And if you stumble upon one idea and think that it might connect to another idea, what do you do when you employ all these different techniques? Go through all your books to find the right underlined sentence? Reread all your journals and excerpts? And what do you do then? Write an excerpt about it? Where do you save it and how does this help to make new connections? Every little step suddenly turns into its own project without bringing the whole much further forward. Adding another promising technique to it, then, would make things only worse.
That is why the slip-box is not introduced as another technique, but as a crucial element in an overarching workflow that is stripped of everything that could distract from what is important. Good tools do not add features and more options to what we already have, but help to reduce distractions from the main work, which here is thinking. The slip-box provides an external scaffold to think in and helps with those tasks our brains are not very good at, most of all objective storage of information. That is pretty much it. To have an undistracted brain to think with and a reliable collection of notes to think in is pretty much all we need. Everything else is just clutter.
We need four tools:
Something to write with and something to write on (pen and paper will do)
A reference management system (the best programs are free)
The slip-box (the best program is free)
An editor (whatever works best for you: very good ones are free)
More is unnecessary, less is impossible.
Some suggestions: Zotero, takesmartnotes.com, Zettelkasten, zettelkasten.danielluedecke.de
This book is based on another assumption: Studying does not prepare students for independent research. It is independent research.
We tend to think that big transformations have to start with an equally big idea. But more often than not, it is the simplicity of an idea that makes it so powerful (and often overlooked in the beginning).
The slip-box is the shipping container of the academic world. Instead of having different storage for different ideas, everything goes into the same slip-box and is standardised into the same format. Instead of focusing on the in-between steps and trying to make a science out of underlining systems, reading techniques or excerpt writing, everything is streamlined towards one thing only: insight that can be published. The biggest advantage compared to a top-down storage system organised by topics is that the slip-box becomes more and more valuable the more it grows, instead of getting messy and confusing. If you sort by topic, you are faced with the dilemma of either adding more and more notes to one topic, which makes them increasingly hard to find, or adding more and more topics and subtopics to it, which only shifts the mess to another level. The first system is designed to find things you deliberately search for, putting all the responsibility on your brain. The slip-box is designed to present you with ideas you have already forgotten, allowing your brain to focus on thinking instead of remembering.
Even though the slip-box, being organised bottom-up, does not face the trade-off problem between too many or too few topics, it too can lose its value when notes are added to it indiscriminately. It can only play out its strengths when we aim for a critical mass, which depends not only on the number of notes, but also their quality and the way they are handled. To achieve a critical mass, it is crucial to distinguish clearly between three types of notes:
Fleeting notes, which are only reminders of information, can be written in any kind of way and will end up in the trash within a day or two.
Permanent notes, which will never be thrown away and contain the necessary information in themselves in a permanently understandable way. They are always stored in the same way in the same place, either in the reference system or, written as if for print, in the slip-box.
Project notes, which are only relevant to one particular project. They are kept within a project-specific folder and can be discarded or archived after the project is finished. Only if the notes of these three categories are kept separated it will be possible to build a critical mass of ideas within the slip-box. One of the major reasons for not getting much writing or publishing done lies in the confusion of these categories.
Every question that emerges out of our slip-box will naturally and handily come with material to work with. If we look into our slip-box to see where clusters have built up, we not only see possible topics, but topics we have already worked on – even if we were not able to see it up front. The idea that nobody ever starts from scratch suddenly becomes very concrete. If we take it seriously and work accordingly, we literally never have to start from scratch again.
You may remember from school the difference between an exergonic and an endergonic reaction. In the first case, you constantly need to add energy to keep the process going. In the second case, the reaction, once triggered, continues by itself and even releases energy. The dynamics of work are not so different. Sometimes we feel like our work is draining our energy and we can only move forward if we put more and more energy into it. But sometimes it is the opposite. Once we get into the workflow, it is as if the work itself gains momentum, pulling us along and sometimes even energizing us. This is the kind of dynamic we are looking for. A good workflow can easily turn into a virtuous circle, where the positive experience motivates us to take on the next task with ease, which helps us to get better at what we are doing, which in return makes it more likely for us to enjoy the work, and so on. But if we feel constantly stuck in our work, we will become demotivated and much more likely to procrastinate, leaving us with fewer positive or even bad experiences like missed deadlines.
Feedback loops are not only crucial for the dynamics of motivation, but also the key element to any learning process. Nothing motivates us more than the experience of becoming better at what we do. And the only chance to improve in something is getting timely and concrete feedback. Seeking feedback, not avoiding it, is the first virtue of anyone who wants to learn, or in the more general terms of psychologist Carol Dweck, to grow.
Our brains work not that differently in terms of interconnectedness. Psychologists used to think of the brain as a limited storage space that slowly fills up and makes it more difficult to learn late in life. But we know today that the more connected information we already have, the easier it is to learn, because new information can dock to that information. Yes, our ability to learn isolated facts is indeed limited and probably decreases with age. But if facts are not kept isolated nor learned in an isolated fashion, but hang together in a network of ideas, or “latticework of mental models” (Munger, 1994), it becomes easier to make sense of new information.
Oshin Vartanian compared and analysed the daily workflows of Nobel Prize winners and other eminent scientists and concluded that it is not a relentless focus, but flexible focus that distinguishes them. “Specifically, the problem-solving behavior of eminent scientists can alternate between extraordinary levels of focus on specific concepts and playful exploration of ideas.
The moment we stop making plans is the moment we start to learn. It is a matter of practice to become good at generating insight and write good texts by choosing and moving flexibly between the most important and promising tasks, judged by nothing else than the circumstances of the given situation.
Things we understand are connected, either through rules, theories, narratives, pure logic, mental models or explanations. And deliberately building these kinds of meaningful connections is what the slip-box is all about.
Every step is accompanied by questions like: How does this fact fit into my idea of …? How can this phenomenon be explained by that theory? Are these two ideas contradictory or do they complement each other? Isn’t this argument similar to that one? Haven’t I heard this before? And above all: What does x mean for y? These questions not only increase our understanding, but facilitate learning as well. Once we make a meaningful connection to an idea or fact, it is difficult not to remember it when we think about what it is connected with.
It is safe to argue that a reliable and standardised working environment is less taxing on our attention, concentration and willpower, or, if you like, ego.
Breaks are much more than just opportunities to recover. They are crucial for learning. They allow the brain to process information, move it into long-term memory and prepare it for new information. If we don’t give ourselves a break in between work sessions, be it out of eagerness or fear of forgetting what we were doing, it can have a detrimental effect on our efforts. To have a walk even a nap supports learning and thinking.
If you understand what you read and translate it into the different context of your own thinking, materialised in the slip-box, you cannot help but transform the findings and thoughts of others into something that is new and your own. It works both ways: The series of notes in the slip-box develops into arguments, which are shaped by the theories, ideas and mental models you have in your head. And the theories, ideas and mental models in your head are also shaped by the things you read.
“I always have a slip of paper at hand, on which I note down the ideas of certain pages. On the backside I write down the bibliographic details. After finishing the book I go through my notes and think how these notes might be relevant for already written notes in the slip-box. It means that I always read with an eye towards possible connections in the slip-box.”
Without a clear purpose for the notes, taking them will feel more like a chore than an important step within a bigger project.
Here, everything is about building up a critical mass of useful notes in the slip-box, which gives us a clear idea of how to read and how to take literature notes.
While selectivity is the key to smart note-taking, it is equally important to be selective in a smart way. Unfortunately, our brains are not very smart in selecting information by default. While we should seek out dis-confirming arguments and facts that challenge our way of thinking, we are naturally drawn to everything that makes us feel good, which is everything that confirms what we already believe we know. The very moment we decide on a hypothesis, our brains automatically go into search mode, scanning our surroundings for supporting data, which is neither a good way to learn nor research. Worse, we are usually not even aware of this confirmation bias (or myside bias). The classic role model would be Charles Darwin. He forced himself to write down (and therefore elaborate on) the arguments that were the most critical of his theories. “I had […] during many years followed a golden rule, namely, that whenever a published fact, a new observation or thought came across me, which was opposed to my general results, to make a memorandum of it without fail and at once; for I had found by experience that such facts and thoughts were far more apt to escape from the memory than favorable ones. Owing to this habit, very few objections were raised against my views, which I had not at least noticed and attempted to answer.”
Writing brief accounts on the main ideas of a text instead of collecting quotes.
Putting notes into the slip-box, however, is like investing and reaping the rewards of compounded interest (which would in this example almost pay for the whole flat). And likewise, the sum of the slip-box content is worth much more than the sum of the notes. More notes mean more possible connections, more ideas, more synergy between different projects and therefore a much higher degree of productivity.
Add a note to the slip-box either behind the note you directly refer to or, if you do not follow up on a specific note, just behind the last note in the slip-box. Number it consecutively. The Zettelkasten numbers the notes automatically. “New note” will just add a note with a new number. If you click “New note sequence,” the new note will be registered at the same time as the note that follows the note currently active on the screen. But you can always add notes “behind” other notes anytime later. Each note can follow multiple other notes and therefore be part of different note sequences. 2. Add links to other notes or links on other notes to your new note. 3. Make sure it can be found from the index; add an entry in the index if necessary or refer to it from a note that is connected to the index. 4. Build a Latticework of Mental Models
Because the slip-box is not intended to be an encyclopaedia, but a tool to think with, we don’t need to worry about completeness.
Keywords should always be assigned with an eye towards the topics you are working on or interested in, never by looking at the note in isolation.
The beauty of this approach is that we co-evolve with our slip-boxes: we build the same connections in our heads while we deliberately develop them in our slip-box – and make it easier to remember the facts as they now have a latticework we can attach them to. If we practice learning not as a pure accumulation of knowledge, but as an attempt to build up a latticework of theories and mental models to which information can stick, we enter a virtuous circle where learning facilitates learning.
Learning, Thinking, & Retrieval
Without these tools and reference points, no professional reading or understanding would be possible. We would read every text in the same way: like a novel. But with the learned ability of spotting patterns, we can enter the circle of virtuosity: Reading becomes easier, we grasp the gist quicker, can read more in less time, and can more easily spot patterns and improve our understanding of them.
The ability to spot patterns, to question the frames used and detect the distinctions made by others, is the precondition to thinking critically and looking behind the assertions of a text or a talk. Being able to re-frame questions, assertions and information is even more important than having an extensive knowledge, because without this ability, we wouldn’t be able to put our knowledge to use.
Developing arguments and ideas bottom-up instead of top-down is the first and most important step to opening ourselves up for insight. We should be able to focus on the most insightful ideas we encounter and welcome the most surprising turns of events without jeopardizing our progress or, even better, because it brings our project forward.
It becomes easier to seek out dis-confirming data with practice and can become quite addictive. The experience of how one piece of information can change the whole perspective on a certain problem is exciting.
‘Have the courage to use your own understanding,’ is therefore the motto of the Enlightenment.” (Kant 1784)
Only the actual attempt to retrieve information will clearly show us if we have learned something or not.
When we try to answer a question before we know how to, we will later remember the answer better, even if our attempt failed (Arnold and McDermott 2013). If we put effort into the attempt of retrieving information, we are much more likely to remember it in the long run, even if we fail to retrieve it without help in the end (Roediger and Karpicke 2006). Even without any feedback, we will be better off if we try to remember something ourselves (Jang et al. 2012). The empirical data is pretty unambiguous, but these learning strategies do not necessarily feel right.
It is not surprising, therefore, that the best-researched and most successful learning method is elaboration. It is very similar to what we do when we take smart notes and combine them with others, which is the opposite of mere re-viewing (Stein et al. 1984) Elaboration means nothing other than really thinking about the meaning of what we read, how it could inform different questions and topics and how it could be combined with other knowledge.
One difference stood out as critical: The ability to think beyond the given frames of a text (Lonka 2003, 155f). Experienced academic readers usually read a text with questions in mind and try to relate it to other possible approaches, while inexperienced readers tend to adopt the question of a text and the frames of the argument and take it as a given. What good readers can do is spot the limitations of a particular approach and see what is not mentioned in the text.
Richard Feynman once had a visitor in his office, a historian who wanted to interview him. When he spotted Feynman’s notebooks, he said how delighted he was to see such “wonderful records of Feynman’s thinking.” “No, no!” Feynman protested. “They aren’t a record of my thinking process. They are my thinking process. I actually did the work on the paper.” “Well,” the historian said, “the work was done in your head, but the record of it is still here.” “No, it’s not a record, not really. It’s working. You have to work on paper, and this is the paper.”
If we instead focus on “retrieval strength,” we instantly start to think strategically about what kind of cues should trigger the retrieval of a memory.
What does help for true, useful learning is to connect a piece of information to as many meaningful contexts as possible, which is what we do when we connect our notes in the slip-box with other notes. Making these connections deliberately means building up a self-supporting network of interconnected ideas and facts that work reciprocally as cues for each other. Learned right, which means understanding, which means connecting in a meaningful way to previous knowledge, information almost cannot be forgotten anymore and will be reliably retrieved if triggered by the right cues. Moreover, this new learned knowledge can provide more possible connections for new information. If you focus your time and energy on understanding, you cannot help but learn.
Being experienced with a problem and intimately familiar with the tools and devices we work with, ideally to the point of virtuosity, is the precondition for discovering their inherent possibilities, writes Ludwik Fleck, a historian of science
Steven Johnson, who wrote an insightful book about how people in science and in general come up with genuine new ideas, calls it the “slow hunch.” As a precondition to make use of this intuition, he emphasises the importance of experimental spaces where ideas can freely mingle
Studies on creativity with engineers show that the ability to find not only creative, but functional and working solutions for technical problems is equal to the ability to make abstractions. The better an engineer is at abstracting from a specific problem, the better and more pragmatic his solutions will be – even for the very problem he abstracted from (Gassmann and Zeschky, 2008, 103). Abstraction is also the key to analyse and compare concepts, to make analogies and to combine ideas; this is especially true when it comes to interdisciplinary work (Goldstone and Wilensky 2008).
One of the most famous figures to illustrate this skill is the mathematician Abraham Wald (Mangel and Samaniego 1984). During World War II, he was asked to help the Royal Air Force find the areas on their planes that were most often hit by bullets so they could cover them with more armour. But instead of counting the bullet holes on the returned planes, he recommended armouring the spots where none of the planes had taken any hits. The RAF forgot to take into account what was not there to see: All the planes that didn’t make it back. The RAF fell for a common error in thinking called survivorship bias (Taleb 2005). The other planes didn’t make it back because they were hit where they should have had extra protection, like the fuel tank. The returning planes could only show what was less relevant.
IAnother key point: Try working on different manuscripts at the same time. While the slip-box is already helpful to get one project done, its real strength comes into play when we start working on multiple projects at the same time. The slip-box is in some way what the chemical industry calls “verbund.” This is a setup in which the inevitable by-product of one production line becomes the resource for another, which again produces by-products that can be used in other processes and so on, until a network of production lines becomes so efficiently intertwined that there is no chance of an isolated factory competing with it anymore. This is advantageous not only because we make progress on the next papers or books while we are still working on the current one, but also because it allows us to switch to other projects whenever we get stuck or bored. Remember: Luhmann’s answer to the question of how one person could be so productive was that he never forced himself to do anything and only did what came easily to him. “When I am stuck for one moment, I leave it and do something else.” When he was asked what else he did when he was stuck, his answer was: “Well, writing other books. I always work on different manuscripts at the same time.
There is one exception, though: we most certainly act according to our intention if we happen to intend to do exactly what we used to do before. It is really easy to predict the behaviour of people in the long run. In all likelihood, we will do in a month, a year or two years from now exactly what we have done before: eat as many chocolates as before, go to the gym as often as before, and get ourselves into the same kinds of arguments with our partners as before. To put it differently, good intentions don’t last very long, usually. We have the best chance to change our behaviour over the long term if we start with a realistic idea about the difficulties of behavioural change
Change is possible when the solution appears to be simple.
What I got out of it
Feel like somebody was explaining my system to me! This is a bit more rigorous, but much of how I take notes, recall info, fit them into my latticework, helps with ideation, recall, and creativity – exactly like this structure outlines!
How to use key principles behind learning, memory, and attention to create materials that enable your audience to both gain and retain the knowledge and skills you’re sharing.
Even “amazing” classes are useless if the learner doesn’t do something different afterward. For me, the goal of good learning design is for learners to emerge from the learning experience with new or improved capabilities that they can take back to the real world and that help them do the things they need or want to do.
If learning is a journey, what’s the gap between where they are and where they need to be? Sometimes that gap is knowledge, but just as often the gap can be skills, motivation, habit, or environment.
Having a skill is different from having knowledge. To determine if something is a skill gap rather than a knowledge gap, you need to ask just one question: Is it reasonable to think that someone can be proficient without practice? If the answer is no, then you know you are dealing with a skill, and your learners will need practice to develop proficiency.
To teach skills, that practice must be part of the learning journey you design.
The best learning experiences are designed with a clear destination in mind. Learn how to determine your destination with accuracy. Basically, you want your learners to have the right supplies for their journey: You also want your learners to know what to do with that information.
Identifying and Bridging Gaps
So when you are mapping out the route, you need to ask yourself what the journey looks like.
Knowledge • What information does the learner need to be successful? • When along the route will they need it? • What formats would best support that?
Skills • What will the learners need to practice to develop the needed proficiencies? • Where are their opportunities to practice?
Motivation • What is the learner’s attitude toward the change? • Are they going to be resistant to changing course?
Habits • Are any of the required behaviors habits? • Are there existing habits that will need to be unlearned?
Environment • What in the environment is preventing the learner from being successful? • What is needed to support them in being successful?
Communication • Are the goals being clearly communicated?
One of my all-time favorite clients was a group that did drug and alcohol prevention curriculums for middle-school kids. When they were initially explaining the curriculum to me, they talked about how a lot of earlier drug-prevention curriculums focused on information (“THIS is a crack pipe. Crack is BAD.”). Now does anyone think the main reason kids get involved with drugs is a lack of knowledge about drug paraphernalia, or because no one had ever bothered to mention that drugs are a bad idea? Instead, this group focused on practicing the heck out of handling awkward social situations involving drugs and alcohol. Kids did role-plays and skits, and brainstormed what to say in difficult situations. By ensuring that the curriculum addressed the real gaps (e.g., skills in handling challenging social situations), they were able to be much more effective. If you have a really clear sense of where the gaps are, what they are like, and how big they are, you will design much better learning solutions.
You want to consider the question of what your learners want from a few different angles. Think about why they are there, what they want to get out of the experience, what they don’t want, and what they like (which may be different from what they want).
Leveraging your learners as teachers. Intrinsically motivated learners are going to learn a lot on their own, and will learn even more if they share that knowledge.
“My job as a game designer is to make the player feel smart.” I think the same is true for learning designers. Your job is to make your learners feel smart, and, even more importantly, they should feel capable.
Don’t make every part of the learning experience required for everybody. Just don’t. Really.
Regardless of the learning venue (classroom, elearning, informational website), it’s best to have as interactive an experience as possible. Ideally, you would construct opportunities to see how your learners are interpreting and applying what they learn, so you can correct misconceptions, extend their understanding, and identify ways to reinforce the learning.
In determining the path for your learner, you want to do these things:
Identify what problem you are trying to solve.
Set a destination.
Determine the gaps between the starting point and the destination.
Decide how far you are going to be able to go.
So when you are creating learning objectives, ask yourself: • Is this something the learner would actually do in the real world? • Can I tell when they’ve done it?
The first way is to think about how sophisticated or complex you want your learner’s understanding to be. One scale for this is Bloom’s Taxonomy (this is the later version, revised by Anderson & Krathwohl in 2001): • Remember • Understand • Apply • Analyze • Evaluate • Create
The fast parts learn, propose, and absorb shocks; the slow parts remember, integrate, and constrain. The fast parts get all the attention. The slow parts have all the power. This raises the question, What is the pace layering of learners? What can change quickly, and what changes more slowly?
More (and better) associations will make it easier to retrieve the information. If you don’t have a good shelving system for this word, you can create a mnemonic for it. The more ways you have to find a piece of information, the easier it is to retrieve, so an item that goes on only one or two shelves is going to be harder to retrieve than an item that goes on many shelves.
One of the most difficult types of context to create for learning situations is emotional context. So how can you create learning activities that are a better match for the real-world application? • Ensure that the practice involves recall or application.
Ensure that the practice and assessment are high-context.
Use job aids to change something from a recall to a recognition task. Job aids change the task from “recall the steps” to “follow these steps,” reducing the need to rely on memory. If you do use job aids, give your learners a chance to practice with the job aid as part of the learning. If you want to eventually retrieve information from your memory, you need to practice retrieving it when you study (Karpicke 2011). Retrieval practice has been well studied and is one of the most effective study methods, found in one study to be more effective than traditional studying or mind-mapping. When you are teaching, you need to make sure that your learning activities allow your learners to practice in the same way that they will need to perform.
Memory & Feedback
Memory relies on encoding and retrieval, so learning designers need to think about how the material gets into long-term memory, and also about what the learner can do to retrieve it later.
People hold items in working memory only as long as they need them for some purpose. Once that purpose is satisfied, they frequently forget the items. Asking your learners to do something with the information causes them to retain it longer and increases the likelihood that that information will be encoded into long-term memory.
So how do you attract and engage the elephant? • Tell it stories. • Surprise it. • Show it shiny things. • Tell it all the other elephants are doing it. • Leverage the elephant’s habits.
Another way to leverage storytelling in learning design is to make people the heroes of their own story. A friend of mine who is a game designer says the purpose of game design is to make the player feel smart. Sebastian Deterding, a game researcher and academic, describes it this way: Games satisfy one of our three innate psychological needs—namely, the need to experience competence, our ability to control and affect our environment, and to get better at it.
Somewhat counterintuitively, a longer period in between practice sessions can lead to longer overall retention. A good rule of thumb is to time the practices to how often you’ll need to use the behavior.
The good news is that if you use the Context, Challenge, Activity, and Feedback model, or if you design a curriculum around structured goals, you have lots of built-in feedback points. You should look for opportunities to increase the frequency of feedback whenever possible.
Increasing the frequency of feedback is great, but if you do that, you also want to have various ways to provide feedback.
Figuring out when the check-ins need to occur can be enormously helpful. Part of designing your learning experience should be setting a schedule. • When are you going to follow up? • What will be evaluated? • What criteria will be used?
If the structure and setup of your learning situation don’t allow for coaching follow-up, there are other ways to reach out and follow up with learners: • Create a forum online and encourage learners to report back on their experiences. • Send periodic emails with examples, tips, and opportunities for learners to self-evaluate. • Have virtual critique sessions that allow learners to post work and get feedback from the community.
Change is a Process, Not an Event Any time you want learners to change their behavior, it’s a process and it needs to be reinforced.
Progress & Recognition
I think we have a similar responsibility when we design learning experiences, but I think our responsibility is to make the learner feel capable. So how can your learners feel more capable? • Show them the before and after. Your learner should be able to see how they will be different if they master the skills. What will they be able to do that they can’t do now? Will they be more capable? Will they be able to handle problems that they can’t right now? Will they have new tools to put in their professional toolbox? Show the learners what they can do and how they can get there.
Give them real achievements. Let them do meaningful things with the material while they are learning about it.
When researchers test people using expected and unexpected rewards, there is greater activation of anticipation and reward structures in the brain when the reward is unexpected (Berns 2001). Basically, people have a much stronger response to unexpected rewards than they do to ones they know are coming.
Video games also do this well—we will be going along, collecting gold coins, when suddenly, after the 35th gold coin, we get the SUPER PLATINUM HAMMER OF DEATH. When something like that happens, we immediately start looking for the pattern. What was I doing that caused that to happen? What can I do to make it happen again?
There are some specific ways to leverage social interaction to engage the elephant, including collaboration, competition, and social proof.
Another way to have your learner be more aware of their own learning is to give learners an inventory of the content, and have them rate their level of comfort with each topic. As they go, they can adjust their ratings, either as they get more comfortable or as they realize they don’t know as much as they thought they did. While these ratings don’t mean the learners have actual proficiency, it does involve them in tracking their own understanding and focuses them on eliminating gaps.
Passive experiences like lectures or page-turner elearning courses, where the information is just channeled to the learner, can also flow smoothly right by the learner. If the learner is actively engaging with or interested in the material, then a passive information-delivery system can still be an effective tool. But if your learner is even mildly disengaged, this same method probably won’t accomplish much. Creating opportunities to interact with the material can make a lesson even more engaging for your motivated learners.
Cathy Moore, an outstanding elearning designer (www.cathy-moore.com), has a checklist of items that she uses to evaluate whether a learning experience is action-oriented or more of an info dump.
Discussion topics can facilitate this (“discuss the consequences of sexual harassment complaints in the broader organization”), but you generally get better results if you give groups a more concrete purpose. They could: • Create something • Work together to teach something to the rest of the class • Argue different sides of a debate • Investigate and report back (e.g., find three good examples, or a bad example, and bring them back to the class)
I keep TAM in mind when I design anything that requires adopting a new technology, system, or practice (which is almost everything I do). Some of the questions I ask are: • Is the new behavior genuinely useful? • If it is useful, how will the learner know that? • Is the new behavior easy to use? • If it’s not easy to use, is there anything that can be done to help that?
So think about it—given your subject matter, who are the really influential people in your organization or in the eyes of your target audience? How can you make those opinions visible?
A habit is defined as “an acquired behavior pattern regularly followed until it has become almost involuntary.” (behavior = motivation + ability + trigger). So if you are trying to quit smoking, you need more than the goal (“I’m going to stop smoking”)—you need the implementation intention of how to actually do it. So you could say: If I get a craving, I will distract myself.
If a habit seems overwhelming, make it smaller. Both Chip and Dan Heath (in their excellent book Switch) and BJ Fogg, in his Tiny Habits program, discuss the importance of identifying the smallest productive behavior and focusing on that.
How can we make behaviors more visible and reinforce practice?
Have learners create implementation intentions. Give learners an opportunity, or even a template, that allows them to create their own implementation intentions (“If x happens, I will do y”).
Carve out time for specific habits. If you are trying to develop habits, it can be useful to spread them out over time and then reinforce that.
Help tie the habit to an existing behavior. Help learners identify an existing behavior they can chain the new habit to.
Environment & Community
Novices need onboarding. They need to be welcomed, given some goals to achieve, and introduced to the way the community functions. • Regular participants need fresh content, activities, and people to interact with. • Masters need exclusive activities and access to content and abilities that regular participants don’t have.
Improving the environment is about clearing out as much of the stuff that learners don’t really need to carry around in their heads, and instead letting them focus on the things that only they are able to do.
One of the things you need to consider when putting knowledge into the world is the proximity of the knowledge to the task. By this I mean, how far from the task does the learner have to go to get the knowledge?
Here are a few other types of job aids: • Decision trees If a process has very specific and predetermined decision points, then giving people a logical, step-by-step way to navigate those decisions can significantly improve learner performance.
This program has also started crowdsourcing by capturing and displaying other users’ questions and answers. Leveraging your learners’ knowledge through wikis or forums can be an invaluable source of information.
What’s everything else we could do (besides training) that will allow learners to succeed?
To do evaluation well, you should start by defining what you are trying to evaluate. Some of the things you might want to know include: • Does my learning design function well? • Are the learners actually learning the right things? • Can the learners actually do the right things? • Are the learners actually doing the right things when they go back to the real world? The best way you answer these questions = Watch actual learners use your design.
We can’t make anybody learn, but we can make much better learning environments for them and help each learner be the hero of their own learning journey.
What I got out of it
Some great principle and ideas in terms of how to structure learning to really engage the people who are trying to teach – getting human nature and the environment to work for you rather than against you
Reed Hastings recounts Netflix’s origin story as well as some of the cultural aspects that have made them the dominant media company of the past decade
If you want to build a culture of freedom and responsibility, the first step is to increase your talent density (hire great people, pay them top dollar, cull the mediocre), increase candor, and then remove unnecessary policies and rules (vacation, expense reports, dress codes, treat people as if they were responsible adults with good judgment…)
Removing mediocre performers has a surprisingly large impact on the culture, output, and happiness of everyone who remains, boosting already high performers even higher
Give feedback often start with employees giving the leader ship feedback get rid of jerks understand that you’re trying to leave people feeling optimistic and positive not be down because of your brutal honesty
Netflix’s travel and expense policy can be summarized in five words: act in Netflix’s interest
You are replacing rules and policies with leadership great people and common sense. For example the unlimited vacation policy must be followed up by the manager talking about what makes sense for the team so that you don’t hurt the company or your colleagues don’t take vacation in certain times we can only have one person out from our team at any given time etc.
For freedom and responsibility to really work there has to be repercussions that are known. For example at Netflix if you’re caught abusing the travel and expense policy you’re immediately fired no one strike you’re just out
Speed in every facet of decision making has tremendous second order effects
Big salaries, not big bonuses, are beat for innovation since people’s minds aren’t preoccupied with their target KPI or whatever metric their bonus is reliant upon. Bonuses and incentives are great for more mechanical and routine work but not so great for the creative. Pay top of salary estimates
Shining sunlight on mistakes, especially made by leaders, builds trust, encouraged others to take risks, and enhances velocity. if you have proven you’re confident and effective admitting your mistakes builds trust and likability whereas ineffective people shining a light on their mistakes only further a Rhodes peoples trust him
Don’t seek to please your boss but seek to do what is best for the company
Only a CEO who is not busy can truly do their job. You need to decentralize decision making as much as possible which enhances peoples accountability and excitement at work and allows the CEO freedom to think and beat the company
Adequate performance receives a generous severance package
The keeper test is important to build talent density. If someone on your team just told you they were leaving for another company would you fight for them? If not probably best to give them a generous severance package
Only say things about people that you’d be comfortable saying to their face
Lead with context, not control
Netflix’s north star is to be a company that is adaptable and flexible. They almost always pay more if that means getting additional flexibility
Pyramid and the tree – most organizations are structured like a pyramid but if innovation and creativity are your competitive advantage the structure like a tree is more effective. The boss is like the roots that helps keep the organization grounded and he is at the bottom setting the context rather than at the time controlling everything
What I got out of it
Freedom + Responsibility + Talent Density; candor, trust, shining spotlight on mistakes, do what’s best for the company and not for your boss, adaptability/flexibility > plans
Writings taken from Bezos’ annual shareholders letters with a bit of organization and context
In fact, when we lower prices, we go against the math that we can do, which always says that the smart move is to raise prices. We have significant data related to price elasticity. With fair accuracy, we can predict that a price reduction of a certain % will result in an increase in units sold of a certain percentage…Our judgment is that relentlessly returning efficiency improvements and scale economies to customers in the form of lower prices creates a virtuous cycle that leads over the long term to a much larger dollar amount of free cash flow, and thereby to a much more valuable Amazon.com. We’ve made similar judgments around Free Super Saver Shipping and Amazon Prime, both of which are expensive in the short term and – we believe – important and valuable in the long term
Our pricing objective is to earn customer trust, not to optimize short-term profit dollars. We take it as an article of faith that pricing in this manner is the best way to grow our aggregate profit dollars over the long term. We may make less per item, but by consistently earning trust we will sell many more items. therefore, we offer low prices across our entire product range. For the same reason, we continue to invest in our free shipping programs, including Amazon Prime. Customers are well informed and smart, and they evaluate the total cost, including delivery charges, when making their purchasing decisions. In the last 12 months, customers worldwide have saved more than $800m by taking advantage of our free shipping offers
Invention comes in many forms and at many scales. The most radical and transformative of inventions are often those that empowerothersto unleashtheircreativity – to pursuetheirdreams
Our heavy investments in Prime, AWS, Kindle, digital media, and customer experience in general strike some as too generous, shareholder indifferent, or even at odd with being a for-profit company. “Amazon, as far as I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers,” writes one outside observer. But I don’t think so. To me, trying to dole out improvements in a just-in-time fashion would be too clever by half. It would be risky in a world as fast-moving as the one we all live in. More fundamentally, I think long-term thinking squares the circle. Proactively delighting customers earns trust, which earns more business from those customers, even in the new business arenas. Take a long-term view, and the interest of customers and shareholders align.
A dreamy business offering has at least 4 characteristics. Customers love it, it can grow to very large size, it has strong returns on capital, and it’s durable in time – with the potential to endure for decades. When you find one of these, don’t just swipe right, get married
I’m talking about customer obsession rather than competitor obsession, eagerness to invent and pioneer, willingness to fail, the patience to think long term, and the taking of professional pride in operational excellence. Through that lens, AWS and Amazon retail are very similar indeed
In business, every once in a while, when you step up to the plate, you can score one thousand runs. This long-tailed distribution of returns is why it’s important to be bold. Big winners pay for so many experiments
Many characterized as AWS as a bold – and unusual – bet when we started. “What does this have to do with selling books?” We could have stuck to the knitting. I’m glad we didn’t. Or did we? Maybe the knitting has as much to do with our approach as the arena. AWS is customer obsessed, inventive and experimental, long-term oriented, and cares deeply about operational excellence
Most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably being too slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.
Recognize true misalignment issues early and escalate them immediately. Sometimes teams have different objectives and fundamentally different views. They are not aligned. no amount of discussion, no number of meetings will resolve that deep misalignment. Without escalation, the default dispute resolution mechanism for this scenario is exhaustion. Whoever has more stamina carries the decision. So, opt for “disagree and commit.”
…We show him this problem and he looks at it. He stares at it for a while and says, “Cosign.” I’m like, “What do you mean,” and Yosanta says, “That’s the answer.” And I’m like, “That’s the answer?” Yeah, let me show you.” He sits us down. He writes out 3 pages of detailed algebra. Everything crosses out, and the answer is cosign, and I say, “Listen, Yosanta, did you just do that in your head?” And he says, “No, that would be impossible. Three years ago I solved a very similar problem, and I was able to map this problem onto that problem, and then it was immediately obvious that the answer was cosign.” That was an important moment for me because it was the very moment when I realized I was never going to be a great theoretical physicist, and so I started doing some soul-searching. in most occupations, if you’re in the ninetieth percentile or above, you’re going to contribute. In theoretical physics, you’ve got to be like, one of the top fifty people in the world, or you’re really just not helping out much. It was very clear. I saw the writing on the wall and changed my major very quickly to electrical engineering and computer science.
The way you earn trust, the way you develop a reputation is by doing hard things well over and over. The reason, for example, that the US military, in all polls, has such high credibility and reputation is because, over and over again, decade after decade, it has done hard things well. It really is that simple. It’s also that complicated. It’s not easy to do hard things well, but that’s how you earn trust. And trust, of course, is an overloaded word. It means so many different things. It’s integrity, but it’s also competence. It’s doing what you said you were going to do – and delivering. And so we deliver billions of packages every year; we say we’re going to do that and then we actually do it. And it’s also taking controversial stances. People like it when you say, “NO, we’re not going to do it that way. I know you want us to do it that way, but we’re not going to.” And even if they disagree, they might say, “We kind of respect that, though. They know who they are.”
What I got out of it
Inspiring and motivating – a peek into an incredible thinker, his vision, his thought process
A short, beautiful book reminding us what is truly important
Owen and Rose spoke for no more than a few minutes, but a lot can happen in a few minutes. Life is funny that way.
The Danes have two words for play: spille for structured play, like soccer or board games, and lege for open-ended, imaginative play with no specific goal. Rose saw learning to play as a prerequisite for any balanced life. As an only child she appreciated how much joy she got from playing with the other children on her road
Life is paradox and contrast. More constructively, Owen also recalled his dad advising that if you wanted to get the best from people you should build on their strengths, rather than try to correct weakness. Weakness can be coached to average, but strength can be leveraged to the moon. People are highly motivated by achievement and recognition. Give them a reputation to live up to. When staff presented their work to Owen, he always had one question for them: Is this your best work? He asked nicely, and invariably they would come back with something far better. This created a virtuous cycle, and the partners at NT soon saw that practically everything that came out of Owen’s team was first-class. Everyone in his team was now working to protect and promote the reputation of the team.
The first default setting relates to conversation. Are you a listener or a talker? In our conversations,w e can default to a lecturing lens or a listening lens. The rooster can crow at 142 decibels, which is like being within 100 meters of a roaring jet engine. That’s almost deafening. So why doesn’t the rooster deafen itself? Because when it opens its beak, it shuts off its ear canals. Sound familiar? Too many of us are roosters. Or crocodiles – all mouth, no ears.
Stress is wrestling with reality
Tiny improvements forever
Rose had read numerous psychology books. She had studied the Stoics. But there is a deep chasm between understanding something intellectually and knowing it viscerally. That’s the gap between the label and experience. She wasn’t going to magically forge advantage from adversity simply by reading about how others had done it. No amount of reading, philosophizing, or indeed writing could have protected her from such an unexpected loss. Loss of friendship. Loss of love. Loss of even caring about loss.
What I got out of it
A beautiful story to remind us all to be here now and focus on the things that truly matter
Every aphorism here is about a Procrustean bed of sorts – we humans, facing limited knowledge, and things we do not observe, the unseen and the unknown, resolve the tension by squeezing life and the world into crisp commoditized ideas, reductive categories, specific vocabularies, and prepackaged narratives, which, on the occasion, has explosive consequences. Further,w e seem unaware of this backward fitting, much like tailors who take great pride in delivering the perfectly fitting suit – but do so by surgically altering the limbs of their customers. For instance, few realize that we are changing the brains of schoolchildren through medication in order to make them adjust to the curriculum, rather than the reverse. (My use of the metaphor of the Procrustes bed isn’t just about something in the wrong box; it’s mostly that inverse operation of changing the wrong variable, here the person rather than the bed. Note that every failure of what we call “wisdom” (couple with technical proficiency) can be reduced to Procrustean bed situation.)
Bed of Procrustes – fit person/model to the situation rather than the other way around.
Work destroys your soul by stealthily invading your brain during the hours not officially spent working; be selective about professions
Using, as an excuse, others’ failure of common sense is in itself a failure of common sense
Life is about execution rather than purpose
The ultimate freedom lies in not having to explain why you did something
You exist if and only if you are free to do things without a visible objective, with no justification and, above all, outside the dictatorship of someone else’s narrative
The source of the tragic in history is in mistaking someone else’s unconditional for conditional – and the reverse
What fools call “wasting time is most often the best investment
You want to avoid being disliked without being envied or admired
The fastest way to become rich is to socialize with the poor; the fastest way to become poor is to socialize with the rich
You will be civilized on the day you can spend a long period doing nothing, learning nothing, and improving nothing, without feeling the slightest amount of guilt
There are 2 types of people: those who try to win and those who try to win arguments. They are never the same
Social networks present information about what people like; more informative if, instead, they described what they don’t like
My only measure of success is how much time you have to kill
Only in recent history has “working hard” signaled pride rather than shame for lack of talent, finesse, and, mostly, sprezzatura
Life is about early detection of the reversal point beyond which your own belongings (say, a house, country house, car, or business) start owning you
In any subject, if you don’t feel that you don’t know enough, you don’t know enough
The more complex the system, the weaker the notion of Universal
Just as dyed hair makes older men less attractive, it is what you do to hide your weaknesses that makes them repugnant
Robustness is progress without impatience
Failure-resistant is achievable; failure-free is not
For a free person, the optimal – most opportunistic – route between two points should never be the shortest one
Knowledge is subtractive, not additive – what we subtract (reduction by what does not work, what not to do), not what we add (what to do). The best way to spot a charlatan: someone (like a consultant or stockbroker) who tells you what to do instead of what not to do)
They think that intelligence is about noticing things that are relevant (detecting patterns); in a complex world, intelligence consists in ignoring things that are irrelevant (avoiding false patterns).
They would take forecasting more seriously if it were pointed out to them that in Semitic languages the word for “forecast” and “prophecy” are the same
Economics is about making simple things more complicated, mathematics about making complicated things simpler
It is easier to macrobullshit than microbullshit
It is a sign of weakness to avoid showing signs of weakness
The only definition of an alpha male: if you try to be an alpha male, you will never be one
The weak shows his strength and hides his weaknesses; the magnificent exhibits his weaknesses like ornaments
Contra the prevailing belief, “success” isn’t being on top of a hierarchy, it is standing outside all hierarchies
It is very easy to be stoic, in failure
A verbal threat is the most authentic certificate of impotence
Wisdom that is hard to execute isn’t really wisdom
If something looks irrational – and has been so for a long time – odds are you have a wrong definition of rationality
Knowing stuff others don’t know is most effective when others don’t know you know stuff they don’t know
Humans need to complain just as they need to breathe. Never stop them; just manipulate them by controlling what they complain about and supply them with reasons to complain. They will complain but be thankful
Injuries done to us by others tend to be acute; the self-inflicted ones tend to be chronic
We often benefit from harm done to us by others, almost never from self-inflicted injuries
By setting oneself totally free of constraints, free of thoughts, free of this debilitating activity called work, free of efforts, elements hidden in the texture of reality start staring at you; then mysteries that you never thought existed emerge in front of your eyes.
What I got out of it
A lot of wisdom to meditate on and absorb – best read a couple lines per day to let these ideas sink in.
“By focusing on the software platform we hope to offer the reader a perspective on the business dynamics and strategies of industries, old and new, that have been powered by these invisible engines…All of us quickly recognized that software platform businesses have at least two sides. Software platforms consist of services that are often made available to developers through APIs. They are also made available to computer users, but those computer users typically avail themselves of API-based services by buying applications that in turn use APIs. It is only a slight exaggeration to say that all software platform makers all the time invest in getting both developers and users to use their platforms. The developers/users are like the men/women, cards/merchants, advertisers/eyeballs, and buyers/sellers that we mentioned above. In fact, software platforms sometimes appeal to more than two distinct groups—including hardware makers and content providers. The economics of two-sided platforms provides a number of insights into pricing, design, organization, and governance of platform-based businesses. We were interested in understanding how this new economic learning could help shed light on the strategies followed by software platforms. On the flip side, we were interested in understanding how a diverse set of industries based on software platforms could be probed to provide insights for students of this new economics. This book is the result. It blends economics, history, and business analysis. It is intended for anyone who wants to better understand the business strategies that have been followed in industries based on software platforms. We focus on pricing, product design, and integration into downstream or upstream suppliers.”
Most successful software platforms have exploited positive feedbacks (or network effects) between applications and users: more applications attract more users, and more users attract more applications. Nurturing both sides of the market helped Microsoft garner thousands of applications and hundreds of millions of users for its Windows platform.
The modular approach has numerous advantages. If a new program (or other complex system) can be specified as N modules, N teams can work in parallel. Moreover, individual modules can subsequently be improved without touching other parts of the overall program, and they can be used in other programs.
Operating systems provide services to applications through Application Programming Interfaces (APIs). These services range from rudimentary hardware services, such as moving a cursor on a monitor, to sophisticated software services, such as drawing and rotating three-dimensional objects. The APIs serve as interfaces between these services and applications…It is easy to see why application developers find the ability to access system services through APIs appealing. Rather than every application developer writing hundreds of lines of code to allocate memory to an object, to take the example above, the operating system developer writes 116 lines of code and makes the system services this code provides available to all application developers through the API.
Software platforms make services available through APIs. Developers benefit from these because they avoid having to write some of their own code. Users benefit from a greater variety of and lower prices for applications. The economics of multisided platforms provides a set of tools for understanding the past, present, and future of software platforms.
Multisided businesses can generate profits for themselves and benefits for their customers if they can figure out ways to increase and then capture indirect network externalities. There are three major ways in which they do this. First, they serve as matchmakers. Second, they build audiences. Advertising-supported media do mainly that: they use content to attract eyeballs and then sell access to those eyeballs to advertisers. Third, they reduce costs by providing shared facilities for the customers on each side. That’s the shopping mall case with which we began.
Businesses in multisided markets often subsidize one side of the market to get the other side on board—sometimes explicitly by charging low or negative prices. A dating club may charge men a higher price just because they have more inelastic demand and because it is easy to identify that group of consumers. But businesses in multisided markets have an additional reason to price discriminate: by charging one group a lower price the business can charge another group a higher price; and unless prices are low enough to attract sufficient numbers of the former group, the business cannot obtain any sales at all. In contrast, economic analyses of multisided platforms, along with the industry case studies discussed in the following chapters, show that successful multisided platform businesses must pay careful attention to all relevant groups, and typically must worry more about balance among them than about building share with one of them. Getting the balance right seems to be more important than building shares. Platform markets do not tip quickly because as a practical matter, it takes time to get things right. And the first entrant often does not win in the end: many other firms may come in and successfully tweak the pricing structure, product design, or business model. The businesses that participate in such industries have to figure out ways to get both sides on board. One way to do this is to obtain a critical mass of users on one side of the market by giving them the service for free or even paying them to take it. Especially at the entry phase of firms in multisided markets, it is not uncommon to see precisely this strategy. Another way to solve the problem of getting the two sides on board simultaneously is to invest to lower the costs of consumers on one side of the market. As we saw earlier, for instance, Microsoft invests in the creation of software tools that make it easier for application developers to write application software for Microsoft operating systems and provides other assistance that makes developers’ jobs easier. In some cases, firms may initially take over one side of the business in order to get the market going.
The copyleft provision means that if people choose to distribute software that is based in part on other software covered by the GPL, they must distribute their new software under the GPL. GPL software thereby propagates itself.
Bundling features into the software platform is often efficient for the platform producer and for end users, as it is for most information goods, because it lowers distribution costs and expands demand.
Multisided platforms must consider marginal costs and price sensitivity in pricing, like single-sided businesses, but they must also consider which side values the other side more. Software platforms generally charge low prices on one side in order to attract customers who can then be made available to the other side. Getting the balance right among all sides is more important than building market share.
Per-copy charges also helped Microsoft capitalize on its investment in programming languages in the face of great uncertainty as to which computer makers would succeed. A flat fee would have earned less from the top sellers and would have discouraged other makers from even trying. Microsoft retained this basic pricing model when it went into the operating system business.
In retrospect, having multiple operating systems run on a hardware platform is a poor strategy. The idea, of course, was to ensure that the hardware, not the operating system, became the standard that defined the platform and determined its evolution. Indeed, IBM followed an important economic principle for traditional industries: all firms would like everyone else in the supply chain to be competitive. IBM didn’t seem to recognize that this was far from a traditional industry. If IBM’s strategy had worked, and if several operating systems had been installed on substantial numbers of IBM PCs, what would have happened? Most likely, having multiple operating systems would have made the hardware platform less popular than having a single operating system. Applications are generally written for software platforms, not the underlying hardware. The more fragmented the installed base of operating systems, the less attractive it is to write an application for any one of them.
Four key strategies helped Microsoft obtain the leading position in personal computers: (1) offering lower prices to users than its competitors; (2) intensely promoting API-based software services to developers; (3) promoting the development of peripherals, sometimes through direct subsidies, in order to increase the value of the Windows platform to developers and users; and (4) continually developing software services that provide value to developers directly and to end users indirectly.
Technically, this is a two-part tariff, consisting of an access fee (the price of the razor) plus a usage fee (the price of the blade). Here the blade can be thought of as having two related roles. It meters the use of the durable good, and it sorts customers into those who are willing to pay more and those who are willing to pay less. These metering devices tend to increase profits and help companies better recover their fixed costs of investment. Because it is particularly attractive to make money on the blades, it is especially attractive to reduce the price of the razor, perhaps to below cost, or perhaps even to zero in extreme cases. For video game console makers this razorblade strategy made a lot of sense. Getting the console into the hands of many people increased the demand for the games it could play. Moreover, it made buying a console less risky for households, who had no good way of knowing how valuable the console would be until they saw the games produced for it. The game-console company, which was in the best position to forecast the quality of those games, took the risk: it lost money if consumers didn’t buy many games, and it made money if they did. The people who ultimately bought a lot of games were those who valued the console the most, so making profits mainly or even entirely on games enabled the console makers to earn the most from those willing to pay the most for their system.
When consumers value product differentiation and platforms can offer innovative and unique features, multiple platforms can coexist despite indirect network effects that make bigger better.
The console video gaming industry operates a radically different business model from other software platform industries. Game manufacturers tightly integrate hardware and software systems; they offer consoles to consumers at less than manufacturing cost, and they earn profits by developing games and charging third-party game developers for access to their platforms.
Palm, on the other hand, regrouped. It surveyed Zoomer buyers to find out what they liked and didn’t like, what they used and didn’t use: What these people said opened the company’s eyes. More than 90% of Zoomer owners also owned a PC. More than half of them bought Zoomer because of software (offered as an add-on) that transferred data to and from a PC. These were business users, not retail consumers. And they didn’t want to replace their PCs—they wanted to complement them. People weren’t asking for a PDA that was smart enough to compete with a computer. They wanted a PDA that was simple enough to compete with paper.
When you’re playing Bobby Fischer—and you want to win—don’t play chess. Make sure whatever game you’re playing—be it network delivery of media vs. stand-alone PC, whatever you’re in—that you’re not playing a game someone else has mastered when you have an option to play another game. —Rob Glaser, Founder of RealNetworks, May 20011
Interestingly, many are made by Microsoft, which integrated into mouse production in 1983 mainly to be sure that the sort of mouse specified by its nascent Windows system would be available in the marketplace. Microsoft developed and patented a mouse that could connect to a PC through an existing serial port rather than to a special card installed within the computer. This innovation reduced the cost of the mouse and thus of mouse-using computers running Windows. Apple as a vertically integrated hardware and software platform maker has always produced its own mice.
What is the cure? From A’s point of view, one cure is to have many competing producers of good b. Competition will then hold the price of b close to cost (including a reasonable return on capital) regardless of A’s pricing, so that A both effectively determines the system price (via the price of a) and captures all the economic profit. Generally, it is more attractive to rely on others to supply a complement (instead of buying it or making it), all else equal, if there are many producers of that complement who compete intensely. Hence the common strategic advice, “Commoditize the complements.”
In a famous 1951 paper, Nobel Laureate George Stigler argued that this proposition implies that “vertical disintegration is the typical development in growing industries, vertical integration in declining industries.”
Interestingly, we are aware of no examples of software platforms that initially integrated into the applications/games/content that subsequently exited that business entirely. On the other hand, almost all such platforms have adopted a two-sided strategy and made significant investments in attracting third-party suppliers. Partial integration is the norm. The only exceptions are those successful software platform vendors that launched without integration; they have remained out of the applications business. The tendency of computer-based industries to disintegrate over time is even clearer—with interesting exceptions—when we consider integration with the supply of basic hardware and peripherals. The Microsoft strategy of having the hardware complement its operating system produced by a competitive, technologically dynamic industry has served to make its operating systems more valuable and to speed their market penetration. Microsoft is not above using integration on occasion to stimulate important markets for complements, as its entry into mouse production, discussed earlier, illustrates.
In a rephrasing of Mr. Katz’s words, Michael Dell told Microsoft upon refusing the Xbox deal offered to him: When Sony cuts the prices on their PlayStations, their stock price goes up. Every time I cut prices, my stock price goes down. If you don’t understand why that happens, you don’t understand the console business. I understand why this is strategic to Microsoft. I don’t understand why this is strategic to Dell.
“Oh, ‘tanstaafl.’ Means ‘There ain’t no such thing as a free lunch.’ And isn’t,” I added, pointing to a FREE LUNCH sign across room, “or these drinks would cost half as much. Was reminding her that anything free costs twice as much in the long run or turns out worthless.” —Robert Heinlein
In practice, it generally does matter which side pays, because two key assumptions made in the textbook discussion don’t apply. First, there are often significant transactions costs that prevent the customers on the two sides of most markets from just “sorting it out” themselves. Take the payment card example. Although most card systems prohibit merchant surcharging because it degrades the value of their product to cardholders, several countries have barred card systems from imposing such a no-surcharge rule. In those countries, however, most merchants don’t surcharge. One reason is that it is costly to impose small charges on customers. Those merchants that do surcharge often charge more than they are charged by the card system—an indication that they are using the fact that a customer wants to use her card as a basis for groupwise price discrimination.
When balance matters in a mature two-sided business, the pricing problem is much more complex than in a single-sided business. Marginal cost and price responsiveness on both sides matter for both prices, and so does the pattern of indirect network effects. In general, if side A cares more about side B than B cares about A, then, all else equal, A will contribute more total revenue. Thus, newspapers make their money from selling advertising, not from selling papers. The textbook pricing formula for a single-sided market gives the optimal markup over marginal cost as 1 over a measure of price responsiveness (the price elasticity of demand), so low price responsiveness implies high markups. The corresponding formula for a two-sided business involves marginal costs on both sides, price responsiveness on both sides, and measures of the strength of indirect network effects in both directions. In particular, balance may require charging a price below marginal cost to a group with low price responsiveness, something a singlesided business would never do, if it is critical to attract members of that group in order to get members of the other group on board.
The idea is initially to subsidize one side (or, more generally, to do whatever it takes) in order to get it on board even though the other side is not yet on board, and to use the presence of the subsidized side to attract the other side.6 This differs from the single-sided penetration pricing strategy discussed above because the key here is to generate indirect network effects, to use the subsidized side as a magnet to attract the other side. After entry has been successfully effected and both sides are on board, of course, the rationale for the initial subsidy vanishes, and one would expect to see a corresponding shift in pricing policy. One of the regularities we discuss below, however, is that pricing structures—the relative amounts paid by the various sides—appear fairly robust over time; there are not many examples of pricing low to one side at first and then raising prices significantly later.
A fundamental decision facing all multisided platform businesses is choice of a price structure: How much should the platform vendor charge each side relative to the others? Since transactions involving some sides may have significant associated variable costs (the production and distribution costs of video game consoles, for instance), the most illuminating way to analyze observed price structures is to look at the contributions of each side to gross margin or variable profits: revenue minus side-specific variable cost. Should a two-sided platform derive most of its gross margin from one side of the market, and if so, which side, or should it choose a more balanced structure, with both sides making significant contributions to gross margin?
Like all multisided platforms, the pricing structures of the software platforms we have encountered in this book reflect the need to get all unintegrated sides on board: end users, application/game/content developers, and manufacturers of hardware and peripheral equipment. The structures we have examined have three remarkable features. First, all of them are extremely skewed: almost all earn a disproportionate share of their variable profits on only one side of the market, either end users or developers. Second, for all but video games, the platform earns the bulk of its net revenues from end users. The third remarkable feature, which we consider in the next section, is that these structures have been stable over time.
Components selling occurs when the firm offers A and B separately (cars and bicycle racks). • Pure bundling occurs when the firm only offers A and B together as a single bundled product, AB (men’s laced shoes). • Mixed bundling occurs when the firm offers the bundle AB and either or both of its components, A and B (such as the Sunday New York Times and the New York Times Book Review).
It is common to bundle together products that are complements, such as automobiles and tires, but firms may find that it pays to bundle products that aren’t complements. We already saw an example of this above. Bundling persuaded two consumers to buy a product even though each wanted only a single component. This saved the manufacturer costs. The idea that bundling of noncomplements can be used to enhance profits goes back to a classic paper by Nobel Prize winning economist George Stigler. Stigler tried to explain why movie distributors at one time required theaters to take bundles of pictures. Bundling can be used in a different way to facilitate price discrimination, which we discussed in the preceding chapter. That is, if different groups of consumers place different values on groups of components, bundles can be designed so that those with stronger demand pay more. The idea is possible to design bundles of components that cause consumers to sort themselves by the bundles they choose into groups with different willingness to pay. (Marketers call this “segmentation.”) In the case of autos, some will want the car with the sports package, while others will want only the basic package. The seller can then charge a premium to groups that have a particularly high demand for a particular package and offer an especially aggressive price to consumers that are very sensitive to price but are also willing to take the no-frills deal. For this to work, there must be a predictable correlation between combinations of components and demand (for example, price-sensitive consumers generally have a low demand for frills). A number of studies have found, for example, that automobile companies have much higher markups on luxury models than on base models. Bundling drives innovation and creates industries.
The ability to select bundles of features to sell helps firms segment their customers, control costs, and enhance profits. Bundled products offer consumers convenience, lower costs, and products tailored to their needs and wants.
Bundling decisions by multisided platforms, such as software platforms, are more complex since they must take into account the effect on all customer groups. Multisided businesses must consider both the additional customers they get on one side as a result of including a new feature and the additional customers they will get on the other side from having those additional customers. They may also include features that harm one side directly but benefit the platform overall by getting more customers on board on another side.
Bundling makes sense for businesses whenever the cost of adding additional features is lower than the additional sales generated thereby—even if most purchasers do not value or use all the features in a product bundle.
Creative destruction has been a hallmark of economic progress for millennia, but it has proceeded at a glacial pace for most of history. The Industrial Revolution sped this process up. Even so, it took decades for change to filter through the economy following innovations such as the spinning jenny, steam engine, and electric generator. The information technology revolution has quickened the pace of industrial change greatly. The plummeting costs of computer processing and storage make it possible to create products and industries that were not only infeasible but also unimaginable a few years earlier. Software platforms further accelerate the process of creative destruction, mainly because code is digital and malleable. Think how easy it is to add a new feature to a software platform and distribute that change electronically over the Internet to potentially billions of computing devices around the world.
One is familiar: developers. TiVo is evangelizing its software platform by providing tools and offering prizes for the best applications in several categories, including games, music, and photos.
History teaches us that it takes decades for technological changes to work their way through the economy, destroying, creating, and transforming industries. The third industrial revolution got off to a quick start. We suspect that it will continue through at least the first few decades of the twenty-first century and that our invisible engines will ultimately touch most aspects of our business and personal lives.
What I got out of it
Some of the examples are a bit outdated but the principles are just as valuable as ever – how to think about multisided markets, pricing, positioning, and so much more
Frank Slootman talks about his time and leadership style
Being cash positive, we really didn’t need the money for operations, but a strong balance sheet reassures enterprise customers so they buy gear from a small supplier.
This fear-based behavior can scarcely be overstated. Large enterprises consistently prioritize their buying decisions to minimize the risk of embarrassment backlash. Huge premiums are paid in the misguided name of “playing it safe.” Dominant suppliers carefully cultivate and nurture this incumbent bias.
From the perspective of an operations guy, there is a lot of riff-raff in venture capital: posers, herd mentality, technology infatuation, too much education, not enough experience to appreciate what grit and focus it takes to grow a business out of nothing. To have a fighting chance, you want to be with the best firms, and the best partners in those firms. Odds are already exceedingly low for venture success.
In hindsight, it helped explain how some of our breakthroughs came about: they ended up betting on Moore’s law, the microprocessor subsystem, and avoiding the entrenched bottlenecks in the storage subsystem
The famed Austrian economist Joseph Schumpeter is usually associated with this term, but the basic idea goes back all the way to the works of Karl Marx. The notion (which has experienced a recent resurgence via Clayton Christensen’s writings on disruptive innovation) is that in order to create something, you have to destroy something else in the process. So, creative destruction is an axiom of business: you are not going to grow much without exacting a proportional decrease in business somewhere else. You better know whose livelihood you’re going to mess with.
A challenged product sector is obviously a much better starting point than attacking a category that is favorably regarded. When picking a fight, don’t seek out the most formidable opponent.
Many technologies are conceived without a clear, precise notion of the intended use. There is plenty of hoping and praying going on that some new technology will magically find a suitable problem to solve. Often, we think we know, vaguely, in the abstract—but the truth is we have no clarity on how our technology stacks up in that use-case, relative to alternatives. Start with the application or use case, not the technology. Don’t make it an after-thought. Ass-backwards, it is awfully hard to successfully recover from a technology-led venture that cannot locate its target.
It is remarkable how little our strategy changed from dollar zero to a billion in sales. The most important thing we did throughout the journey: resist the ever-present temptation to muck with the strategy.
Making yourself “scarce” is something to ponder.
You simply cannot invest intelligently in revenue generation if you do not understand how to ramp effectiveness and make the underlying economics work. It should be obvious that a sales force that loses money will only accelerate cash burn—in the absence of deep pockets, not a game to be played for very long.
If you have aspirations to go public, you cannot do so without a predictable model that you control. It is also a way to weaken competitors. At Data Domain we hired away the best of the best from our competitors—not only did we gather strength, we weakened them at the same time. Ulysses S. Grant once said that victory is breaking the enemy’s will to fight. Our version of victory was a great salesperson quitting the competition and joining our band of brothers. Breaking their will to fight (prompting “surrender”) was one thing, but getting them to defect outright and rally to our cause—this was crushing for incumbent morale.
Your power is in your own sales function and product—keep that in mind. The channel is a powerful, entrenched fixture in the industry, and one that demands respect. If you don’t bring the channel in, they will bring in your competition.
Yet, there comes a time when the venture must pivot from conserving resources to applying them rapidly, as fast as you know how to do effectively—when that cross-over time comes is not always obvious. The irony is that most ventures seem to spend too much early on, and not enough later on when they could grow faster and pay for it. The question becomes “can you grow faster?” And, if not, why not? That should be a good board meeting discussion. The turning point comes when your sales activity is solidly paying for itself, and is clearly becoming more profitable with increasing volume. Now you have a virtual money machine and you want to start opening the floodgates.
Accounting is the bastardization of economics. It can be puzzling to see early stage ventures focusing on P&L profitability, as that mentality can choke off growth in a hurry. You should not care much about profits early on. Instead, you care about maximizing growth while maintaining sufficient cash balances to sustain it.
I have seen startups managing for profitability prematurely—a huge mistake. They simply do not appreciate the dynamics of an early stage, high growth operation versus a large, steady-state company. Big company thinking: check it at the door.
Trust your team—nothing else scales.
After suffering through a few instances of this mismatch at Data Domain, we adjusted our search algorithm and began looking for candidates who did not have the resume yet but did have the potential and desire for a career break to get to the next level. We called them “athletes”: candidates with the right aptitude and behavior profile but without the prerequisite experience. Put differently, we started looking for people who we thought had their best work still in front of them, rather than behind them.
Speed is the essence of a startup: we have to be able to take mistakes in stride, and self-correct in the normal course of business.
Newly hired salespeople were stunned that they could pose a question online, and responses started piling up within minutes.
CEOs can’t manage from behind the desk—you need to be the first guy or gal over the barricades, gloves off. You need to know from experience what it’s like getting your nose bloodied; otherwise, your troops can’t relate to you and you can’t relate to them.
I staked out the Greater Boston Area and made more sales calls in the Northeast than anywhere else. Why? It was the home of our principal competitor at the time, EMC. We wanted to show our people we could beat them in their own backyard.
If you don’t naturally swarm to the action, you need to learn that attitude.
People can instantly finger a phony. Let them know who you really are, warts and all—show your humanity, your passions, your likes and dislikes. What do you feel strongly about? Can they still remember what you said a week later? Are you leaving a room with more energy than when you entered it? Not sure? Then you didn’t. For most of us, it is work to become an authentic leader. By authentic I mean being who you really are versus acting out some burnished version of you.
Software development actually suffers from diseconomies of scale: the more engineers, the slower it goes.
Don’t be a pleaser, and don’t be an appeaser. Do what you think is right. Do anything less, and you only have yourself to blame.
He had this style about him leaving no doubt that while he would share his point of view, he was not making recommendations or prescriptions: you, the CEO, were the judge. It actually made it easier to seek him out, as he didn’t demand you follow his point of view. He impressed on me that the role of the board was to hire and fire the CEO, and that he would not hesitate to pull either trigger!
I found this advice priceless. You might as well spend all your time on winning—nothing else matters. Of course, a good board wants you to do exactly that. It obviously doesn’t mean you should blindly bat away all opinions coming at you, but just try them on for size and merit, and go from there. Keeping good council is strength; caving in on perceived pressure is weakness.
Our drive for a set of values in the organization came about gradually, as more people came into the company. We started writing them down and describing them: Respect Excellence Customer Integrity Performance Execution The first letter of each of the six values spells the word R-E-C-I-P-E.
Becoming a value-led organization doesn’t happen automatically. We imported somebody else’s culture with every person we hired, and therefore had to undo a bunch of stuff. We called it “re-programming.” People learn culture based on what behavior they observe around them, good, bad, or somewhere in between. The magic begins when you start displaying what you mean by them in practice, when the consequences are real. One aspect of compliance was that we told new hires upfront that while we might be somewhat patient and forgiving on performance, we would not be on conduct. Conduct is a choice, not a skill set. If someone made the wrong choices in the face of all the guidance received, it could and would be a dismissible offense.
I’d go as far as to say that company culture is the only enduring, sustainable form of differentiation. These days, we don’t have a monopoly for very long on talent, technology, capital, or any other asset; the one thing that is unique to us is how we choose to come together as a group of people, day in and day out.
They don’t “work for you”—we all work for the company. As a manager, you are there to help them succeed.
Strong references (who voluntarily become your “promoters”) are priceless marketing collateral.
Early on, when employee candidates asked us what our culture was like, we invariably said “blue collar.” Not a lot of flash—if it doesn’t directly aid our cause, we don’t spend money on it. Extravagance was frowned upon, and becoming self-congratulatory was avoided; these things weaken the focus and muscle of the company. Setting the tone comes from the top. Humble and hungry is what we wanted to be.
Somebody once asked me how he or she would know whether they were a driver, and I answered, “you better find out before we do.” In other words, be more demanding of yourself. Are you increasing the company’s speed or not?
No strategy is better than its execution. When you get better at execution, the strategic issues will crystallize more as well. Like art being 99% perspiration (versus inspiration), business is 99% execution (versus strategy). A company can go a long way with an average strategy and superior execution, but they will not go far without great execution, no matter how brilliant the strategy.
Startup CEOs are more like plow horses than racehorses. A racehorse gets pampered all week, to be taken out of the barn for a few minutes to race on Saturday afternoon; startup CEOs live 12+ hours a day behind the plow. It doesn’t feel so glamorous when you get home at 11 at night and you need to get up at 5 am to catch a flight out of town.
What I got out of it
Love Slootman’s no non-sense mentality and learned a lot from his explanation of his time at Data Domain