How can so many companies in the “Game Industry” have gone so long without ‘innovation”? Christensen says that the problem is innovation is destroyed by financial analysis.
That’s not to say that Christensen thinks radical or disruptive innovation is impossible within an existing large corporation. It’s just that, as he put it, “the common methods of financial analysis systematically bias managers against innovation.” And these methods essentially overlook the fact that the status quo does not remain constant. Failure to innovate will see its inexorable decay.
Instead, Christensen advised, executives need to think about reframing an issue. They should think about building a business around “jobs to be done.” This approach applies to every industry, be that healthcare, education, technology, b2b and so on.
It has been said that game companies cannot innovate because costs are too high, that it is ‘too risky’. Yet, when we have this ‘blessed’ “digital distribution” on all three consoles, we still find no real innovation. Quirkiness, maybe, but not innovation in terms of performing a job the customers want done.
Perhaps the problem that is draining the soul of gaming is not the costs so much as is financial analysis being in the driver seat. Due to the increased costs, financial analysis has been framing everything about game development. Patterns are hard to break. So even the ‘WiiWare’ and iPhone games are made under the unnerving eye of ‘financial analysis’.
It is amazing how many game developers, in interviews, talk more about ‘business models’ than they do imagination. All their talk about ‘business models’ is just ‘financial analysis’. They never talk about customers when they chatter about ‘business models’. So the result ends up nothing more than ‘milking’.
Every gamer, even the hardcore, feels the ‘milking’. It is like something of SquareEnix’s WiiWare games where you get to ‘privilege’ to purchase and download ‘content’ that can consist of an outfit or a decoration or something. Even though it is on WiiWare, limited in megabyte size, the ‘financial analysis’ has made a bias against innovation. In their eyes, the ‘milking’ is “fantastic” and they believe the milking is what consists of a ‘good product’ in their eyes. The customers see it differently.
In the early days of gamers making games in garages, the reason why the games were so innovative wasn’t because they were young or because it was the 80s. These guys could not think in the frame of ‘financial analysis’. For heaven’s sake, they didn’t even wear suits much less shave their beards! They had other people do the business work but the point is that the financial analysis didn’t frame the project.
Consider an author writing a book. If the author’s mind is caught up in ‘financial analysis’ in terms of his “target audience” and the amount of “revenue expect”, he is going to create a crummy, soulless, work that is adequate but lacks that spark. It will appeal to current readers, but it will not obtain new readers.
Many, recognizing that innovation is being smothered by the project being framed entirely from a ‘financial analysis’ point of view, go entirely against that. They blow up the budget and make something that appeals to themselves. This is also wrong because you can’t exactly make products for yourself. So when a ‘game company’ tries to do ‘innovation’, which is giving game developers keys to the financial car and letting them drive around wherever, they end up going for a joyride (to amuse themselves) and end up crashing the financial car. The publisher goes, “Never again! ‘Financial analysis’ must frame everything for now on!” And the games end up becoming boring, stale, and predictable once again.
As Christensen said above, much of innovation should be framed in a ‘jobs-to-be-done’. When Miyamoto came up for Wii Fit, while it is true it was based on himself having fun with scales, Miyamoto thinks in a more universal way. He didn’t make Wii Fit because it pleased him but because he thought it was universal enough to please everyone. It is not unlike Nintendogs in that ‘petting puppies is universal’ around the world. Who doesn’t like dogs? Now, if someone decided to be ‘innovative’ by making ‘NintenIguanas’, they are clearly making the game for themselves because there is no evidence that a large group of people like iguanas as pets. Back in “Finding Nintendo’s Sword”, I said that Peter Moore and EA were on track to getting the Wii. I was wrong about ‘All-Play’, but I could see that the mission behind ‘All-Play’ was to isolate the ‘jobs-to-be-done’ for the Wii consumers. It took a while to figure it out, but EA’s golf and EA Fitness games eventually sold very well on the Wii rivaling Nintendo’s games on the best seller’s list.
I think there is an inherent bias against innovation when game developers begin talking more about ‘revenue’ and ‘business models’ than about ‘customers’ and ‘imagination’. Game developers in the past did NOT talk that way.
When Nolan Bushnell turned his $250 investment into millions of dollars, or when Yamauchi turned his toy company into a goliath video-game company, ‘financial analysis’ wasn’t what framed their decisions.
Listen to the way how Yamauchi talks. His thoughts are clearly revolving around customers/non-customers and isn’t framed by ‘financial analysis’.
Yamauchi reiterated his longstanding belief that the videogame industry is moving in the wrong direction, but added that it’s approaching a critical point. “I have been saying this for some time, but customers are not interested in grand games with higher-quality graphics and sound and epic stories,” he said. “Cutting-edge technologies and multiple functions do not necessarily lead to more fun. The excessively hardware-oriented way of thinking is totally wrong, but manufacturers are just throwing money at developing higher-performance hardware.”
Yamauchi told the paper that in a move to oppose the “bigger is better” mentality he thought up the idea of the Nintendo DS, a dual-screened portable device set to be shown at E3 2004 in May.
The former NCL president dismissed the quick arrival of a next-generation console. “Nintendo has no plans to release a so-called ‘next-generation’ videogame console at the next year’s Electronic Entertainment Expo in Las Vegas. We will rather make a new proposal that uses the GameCube at its core,” he said. “Only people who do not know the videogame business would advocate the release of next-generation machines when people are not interested in cutting-edge technologies.” Yamauchi added that Nintendo’s leadership shares his view of the business.
The executive said that Nintendo will “give [its] all” to promote the Nintendo DS. He conceded that the device may not immediately overwhelm audiences, but that he hopes it will help ring in a new era, which may revitalize the games industry. “If we are unsuccessful with the Nintendo DS, we may not go bankrupt, but we will be crushed. The next two years will be a really crucial time for Nintendo.”
What was the reaction of those trapped in the ‘financial analysis’ such as our friends, the merry analysts? They laughed at DS as being the next ‘Virtual Boy’. SOURCE. Then they looked at the Wii and thought it would sell like 9 million copies total worldwide with PlayStation 3, of course, coming in the lead.
Cutting costs will not automatically lead to innovation. Only cutting the bias against innovation, this prison of framing everything in a financial analysis that removes customers from the equation, can innovation spring forward.
