Cost of inaction: Business growth’s silent killer
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The cost of inaction, or COI, is quite simply, the cost of doing nothing.
When a rabbit gets caught in a car’s headlights and does nothing, the cost of inaction is getting squished. If you go outside knowing it’ll probably rain but don’t carry an umbrella or a waterproof jacket, your cost of inaction is you get wet.
Compared to return on investment (ROI), COI gets a lot less hype in the hierarchy of metrics you should run your business by, and this is perhaps because ROI is so much easier to calculate and forecast, and fits more neatly into timescales. You take the net profit of an investment, and divide that by its cost (or the estimated profit and the estimated cost).
While it’s an inarguably useful calculation for comparing the profitability of apples-to-apples projects, and ROI projections are useful when considering new endeavours for businesses, when it comes to making smart decisions about a business’s future, it’s only one side of a coin given disproportionate weight.
What do we mean by the cost of inaction?
The other side of the coin is the previously mentioned cost of inaction – or the cost of doing nothing.
For a fanciful example, if you manufacture cars, and you opt to not develop flying cars as it looks an unlikely trend, but then all your competitors successfully develop flying car technology, and flying cars become the norm, the cost of inaction is enormous. It could be you going out of business, or at the very least facing severe losses and a huge R&D gap to close to regain your spot in the market.
That might sound silly, but consider businesses that went bust because they thought the internet looked like a fad. Consider the physical format retailers who didn’t take action against the rising tide of ecommerce. Consider Blockbuster for a real life example. They chose not to buy Netflix for $50m in the year 2000 (admittedly pre-streaming, but still doing things differently, and in a way that was more customer-centric), and now, in 2023, a lone franchise-owned Blockbuster store remains open in Bend, Oregon, and the home movies and TV market is dominated by streamers (chiefly Netflix).
In fact, there are so many high-profile cases in recent history of industry titans suffering for not considering COI, that it’s kind of crazy this metric hasn’t been taken more seriously. Perhaps there’s no more notorious example of this than with Kodak, who actually invented the digital camera all the way back in 1975, didn’t develop the technology, then got outpaced by competitors while they leaned too heavily into what had worked for them in the past. Ultimately, their COI was going bankrupt.
COI in day-to-day operations
It’s a neat concept, but will perhaps be dismissed by some as the benefit of hindsight. However, COI is baked into the very definition of marketing. Whether it’s B2B, B2C, or D2C, it’s fundamentally acquiring, satisfying, and retaining customers by understanding the market and effectively selling the product.
Understanding the market is a key component of this business function, which means market research. If you’ve got your finger on the pulse of your industry, you know your customer’s pain points, what your competitors are working on, as well as which parts of your market are growing and which parts are primed to be disrupted.
Part of marketing’s role in a broader corporate strategy is to communicate to the business at large insights which might not be apparent in raw sales figures. If you can read the writing on the wall, then you can make a very educated guess about what specific costs of inaction might be. Evaluating COI is ultimately a long-term aspect of marketing.
What gamification achieves versus traditional communications methods
Gamification is the other principal subject in this article. This is where game mechanics and principles are applied to real-world objectives to enhance user engagement and get better results.
It had its sceptics, but the theory’s held water. Think about it. Your typical weekend warrior will run until they can barely breathe, flood their muscles with lactic acid that burns, and strain key tendons to the point of chronic inflammation, and all for the honour of their squash club’s 4th team (and you better believe they can give you a shot-by-shot account of it that even the proudest mother would beg for an abbreviated version of) – and yet this no guts, not glory individual remains susceptible to death by Powerpoint and purgatory by Excel from Monday to Friday…
Why?
This is because one of these activities is fun, and one of these activities is boring. One of these activities we’re natively programmed to take to, and the other we have to work at and concentrate to adapt to.
Gamification has been with us since the dawn of humanity. From games to distract ancient peoples from hunger, to war games for teaching strategy, evolving from moving counters depicting knights and soldiers across battlefields, to hyper-realistic computer simulations of flying fighter jets on covert missions, all the way to the present day where gamification is becoming ubiquitous with how the modern, web-based world operates.
The COI of not using gamification across business functions
If you’ve never used gamification before, it’s not always the easiest thing to calculate the ROI of without any previous efforts in that area. While you have your high profile case studies you’ll be aware of like Mcdonald’s Monopoly and the M&M’s Eye Spy game, and the reported benefits they’ve reaped, it can seem like a leap to apply that to your own business or department. However, the cost of inaction could be dramatic.
Modern gamification as it’s understood today has gradually become more sophisticated and nuanced with the evolution of web-based technology, and more accessible. If you have an account on an intuitive gamification platform like Drimify, you can customise and publish a tried-and-tested game engine inside a morning’s work, and have an app ready to turn your audience into participants, and captivate them in your branded messaging.
This puts it in the hands of far more businesses than back in the early 2000s, when it would have been the reserve of big businesses with the budget to develop gamified content inhouse, or outsource the entire development of a bespoke interactive experience.
While this means it’s easily within your grasp, it’s also just as easily within the grasp of your competitors.
Marketing
This means that in marketing, your competitors could plausibly turn up the heat with gamified campaigns. It might not make a dent in your efforts across their first few campaigns, so maybe you dismiss it, but with each marketing game they release, they’re gathering data and learning more about their audience and what their participants respond to. (And remember, their participants are YOUR audience.)
If they integrate gamified campaigns into their loyalty programme, and within 6 months have their approach nailed down to the point of taking away business from you, the cost of inaction is that you’re losing business. You’ll be forced to play catch-up to get on terms.
Corporate training and HR
A business IS its people. If you sell software solutions to medium-sized businesses but your employees lack interpersonal skills. You’ll lose potential sales to competitors whose people have great interpersonal skills. If your employees have great interpersonal skills but don’t understand your product or the pain points of your customer-base, you’ll lose sales to competitors whose people know their product inside-out and have a working understanding of the customer-base’s day-to-day.
Even if your people have great interpersonal skills, live and breathe your product, and come from the very industries you’re selling to, you know the problem: people’s tenure with companies is finite. They take other positions, they move locations, they retire, and some of them might win the lottery or come into a surprise inheritance and never log-on again. You might luck into an amazing crop of studious, industrious employees who are going to self-start regardless of where they land, but this is catching lightning in a bottle – it can’t be banked on as being repeatable.
Having a robust onboarding and training process is how you keep a base-level of necessary skills and knowledge on your payroll. Say your competitors have utilised Drimify’s Dynamic Path™ – which allows you to create multi-step experiences utilising different apps and content. They’ve used a mix of Quizzes and video screens to create immersive training sequences for onboarding and upskilling,
When new hires join, they go through a tried and tested course that teaches them key concepts, values, and techniques, and utilises point-scoring mechanics to use competition as a motivator, and is able to create simulated exercises where they can apply new learnings in a consequence-free environment before even starting. It works as a WFH tool and an onsite tool as it can work on any modern web-enabled device.
It takes a few tries and tweaks before it’s fully optimised, but within a year, their onboarding and training is a well-oiled machine. Before being let loose on customers, your competitor’s rank and file have a solid and applied knowledge of the best sales techniques, they’re schooled on the product, and they’re schooled on the market.
Your cost of inaction would be that your competitors are so consistent in their service, that not only are they losing an absolute minimum of customers (minimising your opportunities), but also any customers you lose through staff that aren’t fully trained will almost certainly be snapped up by the well-oiled sales machine that is your competitor.
It’s a cost of inaction that could seem quite marginal initially, but over time, could make a huge dent in sales. It could also be incredibly difficult to attribute unless you’re researching your competitors and aware of weak links in your business..
Gamified decision-making to reduce to COI
Sometimes, inaction occurs because organisations are unable to make a decision. One high-ranking executive might have a vision of the future, but be unable to persuade their colleagues, nor the CEO, of its merits, resulting in continued status-quo.
The fact is, 2 managing partners can butt heads with competing radical ideas, but be so entrenched in their own vision that nothing happens; large companies that have enormous, slow moving management structures can adjust their sails too slowly to effectively preempt the sometimes rapidly shifting tides of an industry.
This is where gamification can be integrated into management structures to help break ties and ensure businesses keep moving forward. For example, let’s consider the 2 visionaries with 2 competing ideas of what a business’s next move should be. An impartial department could create a Dynamic Path™ that examines both possible directions with simulations and projections, and can be played through company-wide (or relevant-personnel-wide), so everyone with a stake can take the time to fully understand the options. The final app on the experience could be a Voting Gallery, with images of the proof of concepts (POC) if it’s a new line, and a description for everyone to make an informed vote on.
This is of course, just an example, but a gamified tie-breaker along these lines offers anonymity to voters, and a more thorough understanding of the options. There are all sorts of ways gamification could be incorporated to aid in decision making and help businesses keep their wheels moving and avoid the cost of inaction.
The self sharpening tool that benefits early adopters
The thing about gamification is, it works best when it’s applied repeatedly. Any games you create on the Drimify platform, whether it’s a Quiz as part of a corporate training course, or a Spin the Wheel to distribute promotional codes, generates extensive data to help you see how it performed. This makes calculating your ROI after a campaign very easy, and comparing a gamified project against its previous iteration, and the iteration before, very simple.
This makes the hardest part of integrating gamification into your business – like anything worth its salt – actually starting. The relationship between gamification and achieving goals can be compared to that between a snowball and its size. The longer you keep it rolling, the bigger it gets; the more you use gamification, the better you’ll get at engaging your target users and influencing their actions and behaviour – whether your players are customers, candidates, or employees.
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