In an interview with SF Weekly an ex-employee recalled former Zynga CEO Mark Pincus saying, “I don’t f%$%&* want innovation.” Pincus goes on to say, “you’re not smarter than your competitor. Just copy what they do and do it until you get their numbers.”
Let this be a lesson for any small business owner who sides with such an arrogant, short-sighted philosophy. Turn your back on innovation and you will be sure to send your company over the cliff to its death just as Pincus did with Zynga.
Zynga, a social game provider that at its height was worth upwards of $1-billion in revenue over a four-year period experienced one of the quickest crashes that I could remember seeing from a company.
In one trading day the company’s stock dropped 40 per cent after an earnings report, they lost a key partnership with Facebook that accounted for 80 per cent of their revenue, and users of some of their most popular games such as Farmville dropped dramatically because of a lack of innovation that kept it fresh for user.
With all of this in mind, I would place Zynga deep on the business lifecycle into the decline stage. This is a terrible place for any company to be as they could be mere quarters away from shutting their doors. At this point, Zynga is running out of runway as the further down the curve they go, the fewer options and less time they have to innovate.
The San Francisco-based company would be a lot deeper in decline if it weren’t for the promise of six to 10 new games in the coming year that could very well regenerate the company’s business lifecycle. But if the next games Zynga releases aren’t a hit with the marketplace, Zynga will be all but dead.
Zynga continues to experience major setbacks such as delayed game launches and the shutting down of its Chinese operations, which weakens their long-term outlook as China’s online gaming market is expected to surpass the U.S. market in the coming years.
To compound those issues, Zynga’s current CEO Don Mattrick, isn’t focusing on core innovation, which is all about making current games better. Instead he’s focusing most of the effort on building the next big thing in social gaming – which is considered a leap innovation.
They have a number of successful franchises that are making money and they should continue to build on those franchises to drive greater value and benefit for the consumer. While leap innovations are important, they should not be the only focus. Core innovations that make current products and services more valuable ensures that you keep your products fresh and in demand by the marketplace.
Trying to develop the next big thing every quarter is a symptom of shiny penny syndrome and will cause more harm than good.
An innovation engineered for Zynga
Let’s assume that the Zynga executive team wants to come up with an idea for a meaningfully unique game that is based on original content to reinvigorate growth.
To achieve that objective, we’re going to focus on Words with Friends, a game developed by Zynga that mimics the game Scrabble, and use an innovation engineering tool that leads teams to focus on doing one thing great.
Too often, we bite off too much. We try to create something that’s all things to all people and ends up being nothing to anyone. The truth is, if you claim complete victory in one area people will believe you can perform in other areas as well. This tool is a shortcut to locating and exploiting your advantages. It will give you new ways to define your strengths and help you focus energy on the ones that make you great. It will chart a clear point of difference between you and everyone else.
We’ll start by listing features and benefits that make up Words with Friends like tiles, board and spelling. Now we’ll take one of those elements to the extreme, spelling in this case, and ask ourselves: what if we really focused and came up with a way to help kids age three to six spell five times better than kids who didn’t play this game?
Using that as stimulus for a new add-on, the game will be called Words with Friends Pet Farm Edition. The customers for this game areparents who want their kids to learn how to spell quickly on their own. The problem these customers is having is that because of a lack of time they can’t teach their kids about spelling on a consistent basis. Words with Friends Pet Farm Edition teaches kids to spell five times faster by making spelling fun.
To make good on that promise the game will combine classic Words with Friends and a lesser form of Farmville. Kids will be given a board and letters just like in a regular game, but the spin on the game is that whatever they spell they could get as an item on their farm. For example, if they spell cat, dog and fit, they will get a cat and a dog to add to their farm. Since fit is not something you would find on a farm it is an acceptable word, but not an item and as such, they receive nothing for that word.
What keeps kids coming back is the need to continue building, growing and adding to their farm by exploring new words to uncover all those hidden items! Any time the child wants something new or has to replace something, like a cat or dog that ran away, they would have to spell that again on their Words with Friends board. Once all tiles are used up they can open a new board to continue spelling new items while building their farm.
By combining elements of two successful games and exploring a much younger market, Zynga can begin pulling users back in. The key, however, is to continue innovating within this game to keep it fresh and exciting for users!
The takeaway for small businesses
There are three significant takeaways for small businesses:
- First, by focusing too much on creating the next big innovation (leap innovations) as opposed to focusing on making smaller improvements to an existing product or service (core innovations) it stretches you too thin and keeps you from developing great product or services that keeps the marketplace engaged.Second, by turning your back on innovation in favour of another approach is a significant mistake that will surely cripple a business in time. Build a culture of innovation and building it into the DNA of the company is critical in these ultra-competitive times. Without a culture of innovation, a business will slowly die until the marketplace either moves past it or competitors crush it.And finally, using tools for driving stimulus, focus, and new ideas is critical to the development of new innovations.As for Zynga, Don Mattrick has a unique opportunity to give the people and stakeholders hope by focusing on innovation within the company. Ultimately, Zynga has two choices: innovate or die. I’m optimistic that they’ll choose the former.
Ryan Caligiuri is an associate and innovation engineering practitioner with inVision Edge – an innovation and growth company. inVision Edge is also the leader of the Canadian Innovation Engineering Network.