Three Lessons from Gaming, S.K. Chakravarthy

At first glance, the investment and wealth management business and gaming seem to be almost as far apart as two industries can be. One could argue that investing and wealth management are absolutely vital to long-term well-being, and not just financial well-being, either.

There is a lot of science to wealth management and investing. Lastly, wealth management is a lot older and more well-established than certainly the digital gaming business.

Yet, the gaming industry has powerful credentials to its credit too: after all, nobody precisely needs to play video games for survival. Although games have been around forever, it’s only recently that the field has spawned study and research. And can such a comparatively young industry have learned enough to teach anybody anything?

It’s precisely these factors, and most importantly, the superfluity of the industry’s product, that have generated the most compelling learnings from which the investments and wealth-management business can gain and benefit enormously.

Three critical lessons from the gaming industry:

#1 : Human Centered Design

Every gaming business faces two constant and unremitting challenges to its survival, breakeven and ultimate success:

There is nothing that compels anybody to play: No future is going to be compromised, nor any real income lost, if somebody chooses to not play a game. What this implies is that every game must justify its existence and value to the player virtually every step of the user’s experience with the product.
There is always another game competing for the user’s attention: Given that a game is typically employed as a distraction from boredom or disagreeable tasks, it’s always likely that another, more engaging game comes along to steal the user’s attention away

So what does a game do?

Every successful game becomes a master user of human behavior-based design. There are virtually volumes written on this (an example is “Actionable Gamification: Beyond Points, Leaderboards and badges”, by Yukai-Chou). The core learning behind these books is this:

Human behavior is highly predictable and responds very reliably and involuntarily to certain positive and negative triggers. Intelligent use of these triggers and quirks leads to high predictability in user behavior.

If you have any doubts, try playing your favorite video game or ask a gamer to explain.

There are three elements that make games so engaging and addictive:

They use cleverly designed psychologically powerful incentives to drive the actions they want, that habituate the user to return to the game and to keep playing
They remove every barrier to forward progress that has even the smallest chance of the user abandoning the game
The design the environment very carefully to suggest and support the target actions while removing or leaving out any element that doesn’t directly contribute to the player’s progress through the game

This is a crucial lesson that DIY-based investment and wealth-based businesses can leverage to great effect. In particular, even the most perfunctory visit to any brokerage or investment site is enough to show how daunting the whole experience can be to an inexperienced or diffident potential investor.

In my experience, the newer fin-tech players appear to have gained an advantage in this respect. For example, any of the robo-advisor platforms such as Betterment or Wealthfront, have carefully crafted user interfaces but there is enormous upside still left – more on this in future posts.

#2: Multiple “lives” (a.k.a. opportunities to practice)

Any game offers the novice player a chance to make plenty of mistakes upfront without penalizing them too much. At the same time, there aren’t too many of these because a limit on these trials, in the form of lives or ammunition, is always hovering at the edge of the player’s line of sight.

Why does this matter? For anything that’s new, the discomfort and anxiety of engagement is very significant, and the fear of doing something “wrong” can be a significant deterrent to participating at all. These multiple lives in effect give the player the margin of safety to make it real enough to play, but not hugely punishing if mistakes are made.

There is some interesting research work that indicates that as users get to “play” in a simulated financial life over multiple “lives”, their decision making and saving and spending activities improve dramatically, leaving them financially better and better off as the number of their tries increases.

Incorporating this principle in a thoughtful and meaningful way into product design and user experience is bound to make the process vastly more fun as well as more beneficial.

#3: A structured journey

One of the most heavily-used enticements to keep gamers engaged in a specific game is the potential for them to get better and progress through increasing levels of performance and challenges towards very clearly defined goals.

Whenever they re-enter the game, they are reminded clearly exactly where they left off, and exactly what they need to do to progress.

The power of this sense of purpose and meaning is immense, and has not been used anywhere near its full potency in investing and wealth-building offerings. The most used example is to show a progress indicator towards a vague, long-term goal such as “retirement readiness”.

But imagine if the focus were shifted away from outcomes, most of which the individual cannot control, and into activities that are completely under their control, such as automating investing “streaks”, or a structured journey to do something even as simple as creating a personal investment policy. The increase in engagement and participation is likely to make the effort well worth it.

Doing so will also give the user a reason to reengage often, in small bite-sized pieces, and associate the whole activity of savings, investment and wealth management into one that evokes pleasant and achievement oriented emotions, rather than the typical feelings of dread, anxiety and lack of competence.

To leverage the learnings of an industry operating in a harsh, unforgiving environment, players in the wealth and investment businesses can start with questions in three areas:

1. How does the process of using the product or service interact with real human motivations, reactions and emotions today? What drivers and inbuilt human tendencies can be leveraged to streamline them?

2. What scaffolding and supports can be built into the offering to ease anxiety and increase the number of trials a user can engage in, without significant cost to either party?

3. How can the larger service or offering be broken down into smaller bite-sized journeys that keep the user motivated and engaged to participate and to keep coming back?

Small investments in these three dimensions have the potential to create disproportionate payoffs to the innovative mover.

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