Gamification. We all know immediately upon reading the word that there’s something inside that hasn’t been figured out. It’s too broadly applied and holds very little real meaning.

The word itself seems to say, “look what this disruptive technology of the internet has done to us” – the second half of the word seems to offend the first half. The “you got marketing in my once-loved-behavior!” notion of the naysayers results in that icky feeling you get when you see how sausage is made. With the wonder and imagination that games represent for so many, the word falsely infers that one can simply go and pay someone to “gamify” something – and somehow that’s supposed to be a good thing? There’s conflict in gamification. We seek to understand it. Bring on the badges!

Yes. The business world sees the Farmville invites and Foursquare badges a-flyin’, and figures that gamifying their world means imitating the tactics readily surveyed by just being on Facebook. -5, friends. There’s more to it.

Rules for the Attention Economy

Here’s the truth. Game mechanics are the simple rules for the attention economy. If brands want consumer love and attention, they need to be prepared to live and die by the principles of game. Brands are quickly understanding that while traditional advertising (on any platform) sets or raises expectations, it is an increasing digital or interactive responsibility to pay off, prove, or deliver on those expectations or promises. In the world of a brand – this exchange is proving to not just affect perception, but other, very tangible results like churn, incremental purchase, and new sales from word of mouth. Yes, the increasingly digital world is where this gamification is a viking.

So, what is it about some brand-led games that make them so much more successful than others? What separates a Nike + from some pedestrian rewards-points offer? What was so magical about the McDonald’s Monopoly game? When it works, the game mechanics or brand narration can almost become invisible. When you are motivated to act, and the individual mechanics just become part of the game. When we’re doing it right, these principles are usually what you’re not seeing:

1. Loss Aversion: Prospect Theory, Risk, and Reward

Most people tend to prefer to avoid loss before they seek gains; it’s easier to motivate a person via pain avoidance than it is to motivate via pleasure-seeking. Zynga’s Farmville does this in several ways – first by creating a context of a starter farm and some fixed amount of currency.

Players must use the currency to plant and harvest crops, earning more in return. If you don’t visit the farm or care for your crops, then they wither and die. It’s not the value of the Zynga currency that motivates – it’s the potential loss of the crops (and thus, progress) that motivates. Similarly, brand participation in Foursquare rewards is tepid, at best. There’s no real value to being a mayor – but, once a mayor, maintaining that mayorship over co-workers, friends and complete strangers alike drives that obsessive check-in and mayoral maintenance behavior that joyously clutters our feeds today.

A creative farmscape from shelly30. Every last detail thematically arranged, right down to the row of red, green and white soldiers standing guard in front of the house with the candy cane fence. Featured at games.com.

Since these decision theories are only descriptive of human behavior, it’s not a formula for creating game-like behaviors – but, it does provide important rules for game-makers around how people feel about evaluating risk, potential reward, utility, and “anteing up” in a relationship. These principles are especially powerful when combined with other elements of game, like status, reputation, and feedback – all leading to trigger a motivation to act or interact.

2. A Pervasive Economy: Status, Reputation, Competition

Assessing our own value by comparing ourselves to others sometimes seems like more of a social woe than a valid and encouraged part of game design – but, without getting into the origins of competition and reptilian-brain urges, let’s just say that making achievements social encourages people to continually out-do, one-up, and stay motivated to reach clear goals – another necessary element of good gamification.

Call of Duty: Elite, the player community product for Activision’s blockbuster shooter franchise. It mixes your game data with your social graph, and helps you play together, better.

The first part of this principle starts with understanding the concept of status, reputation, and competition. Connecting players socially drives sustained engagement. A recent PSFK report highlighted a few products that use out-and-out peer pressure to motivate: a solar charger that tweets an individual’s level of “greenness,” Reebok’s Promise Keeper app that broadcasts runners’ intentions to exercise – and GPS – to hold them accountable, and a Japanese alarm clock app that embarrasses users via Twitter when they hit the snooze button.

Okite, an app recently featured in PSFK’s “Future of Gaming” report – a Twitter-connected alarm clock that sends out “a random, and usually embarrassing phrase to [the user’s] timeline.” 

The Visible Economy

This draws into sharp focus the second part of this particular principle: a visible economy. Personally-relevant leaderboards, social competition, and status comparisons are a great way of communicating to people that there’s an economy at work; and points must be readily redeemable. Badges need to carry some shared symbolic value.

Developing an economy means clearly demonstrating the value exchanges and currencies – and ensuring that the playing population is large enough to assure players that they have a chance to exchange value – whether that value is monetary, or comprised entirely of smack-talk. It’s not to say that all game economies are driven solely by inter-frenemy competitions. They’re not. As the game master, there’s a responsibility to make sure that players have someone or something to exchange value with – whether that’s a population of non-player-characters and an exchange rate with their particular currency, reputation within a faction, or a player-and-game-controlled economy where items are valued by their rarity. (Yes, World of Warcraft probably holds enough examples to write a book). The game must produce currency that’s readily redeemable in the world (or virtual world) around the player. Otherwise, there’s no economy. No economy? No motivation.

3. Discovery: Surprise and Delight

While prospect theory focuses on how people make decisions based on what is known to them – weighing risk and reward, this element of game says more about progressive disclosure and story-based striptease. It’s a classic condition of storytelling: the narrator knows more than the listener, and that interplay of disclosure is a tension that keeps game players coming back again and again. In fact, on that point, this is a great opportunity to combine discovery another well-known game mechanic: periodic events. Players may return to redeem period-based regeneration or awards – and this provides a great opportunity to progressively disclose an unfolding plot, new areas of play, and additional features.

Story unfolds interactive games in Sesame Street’s “Monster at the End of This Book…” iPad app. The timeless children’s classic adventure with Grover now requires light game interactions to turn each page.

4. Hope: Feedback, Trigger, and Certainty

This principle is more tactical, more of a list of ingredients with a theme. People need to know what’s expected of them. Where’s the bar? What was the effect of my last action. It’s as much about real-time asynchronicity and providing clear feedback to players as it is about developing a communication mechanic that’s sustainable.

Game-like communications means establishing pace and certainty in an otherwise surprising dialogue. Seeing points accumulate as actions are taken establishes a clear and instant reward system. Programming communications on a certain period provides an opportunity to trigger motivation – even if we’re just providing a mundane update to the player. The player’s interplay and dialogue should probably always be a symphony of serial story, utility communications, and a connection back into the player community around her. This provides constant setting, clear feedback to the player and, thus, hope that the challenge is both valuable and reachable.

For instance, while the harrowing music that swelled when Zelda was reduced to 1 of 5 hearts clearly was designed to raise the pulse, the health system in that game helped communicate a sense of hope along with that excitement. There was hope in recovery, even if additional damage was taken enroute just heightened the urgency to go find some more hearts before continuing headlong into the unknown hedge around the corner. This kind of feedback is what makes humans better in games than they are in real life. Jane McGonigal mentions in her TED talk, “Gaming Can Make A Better World.” This kind of constant feedback plays a big part in enhancing human performance and capability.

The Legend of Zelda was all the epic story and adventure of Dungeon’s and Dragons, but interlaced with light puzzles and interactive action. As the game progressed, life (hearts) capacity grew, but so did severity of damage – along with difficulty of quests. By the way, here’s Zelda : )

5. Epicness: Story, Connection, Truth, and Meaning

To continue on the path set forth by Ms. McGonigal, the principles of game and decision theory share a sizable overlap with positive psychology – the study of happiness. When we are engaged in play, our learning centers are activated, our performance is enhanced, and we have fun.

Why do we play? Because we have hope that we can overcome the challenge. In fact, maybe that’s the allure of a game world vs. solving problems in the real world: we know that the problems were designed by man, and can be solved. We connect to the stories of game as far as they conform to the arcs and structures that parallel the human experience so vividly – a structure well-documented in Joseph Campbell’s Hero’s Journey construct.

Joseph Campbell’s Hero’s Journey – or the 17 stages of the Monomyth: A story pattern observed in human narrative , in various cultures and across centuries of recorded storytelling and myth. Campbell described the pattern in his book, “The Hero with a Thousand Faces.” This graphic was posted on the popular blog by Eric Fernandez (@royalsocietyap), “The Royal Society of Account Planning”.

The rules of game, here, are clear. Players must see themselves in the challenge. Lighting up competitive centers in the brain requires the game to communicate meaning and status: provide feedback, present triggers, progressively disclose the plot, and illustrate the economy. In all of this, there must be a meaning – story must be at the core. Casual or hardcore, there must be some human truth and drama, played out interactively. Heavy, epic stories of adventure create meaning beyond impulse, while light and casual interactions can use simple rhythm and humor to tease out a response from the player.

People evaluate communication via storytelling models like The Hero’s Journey, perhaps searching for a truth between the story and their own lives and experience. This is the next frontier, it would seem: To connect the ever-growing world of game-players to real-world challenges – not just the challenges in alternative realities. Both the PSFK “Future of Gaming” report and Jane McMonigal’s body of work point to a future where people use game constructs to solve real world problems like hunger, poverty, obesity – taking a smiley-face approach to a bunch of very frowny-face challenges. Will it work? Probably – but, scale depends on whether those real-world challenges conform to the mechanics of fun.

Why do we play? Perhaps Italo Calvino said it best: “The search for lightness is a reaction to the weight of living.”

One thing is for sure. We are wired to compete and play. Maslow provided a popular model for understanding motivators behind many of our behaviors – and truth is, there’s still competition at every level of that model.  Our innate drive to self-preserve and thrive makes competition and play something that we’re all programmed to do, whether we realize it or not.

What’s Nike +? Competitive, Physical Self-Actualization. Right?

Facebook? Not just community…competitive happiness, competitive comedy, domestic one-upsmanship, and competitive travel photo documentary adventure.

So, how many “likes” do your last vacation photos have? Are you winning at Facebook?