Loss & Avoidance Design: Ultimate Loss vs Executable Loss

Loss Avoidance

Loss & Avoidance Design: Ultimate Loss vs Executable Loss

(Below is a snippet of Gamification Book: Actionable Gamification – Beyond Points, Badges, and Leaderboards. If you like this blog post, you will LOVE the book.)

Core Drive 8: Loss & Avoidance can be a tricky Core Drive to manage. If done improperly it can demoralize the user and lead to churn.

One important thing to keep in mind is that Loss & Avoidance is motivational in a proportional manner. The way users respond to Loss & Avoidance is generally proportional to how much they have already invested into the experience.

If users have played a game or used a product for ten hours, they will feel a more substantial loss than if they had invested only ten minutes. Starting over after losing is definitely more impactful on a player that’s invested a few days into the game and is on level 37, as opposed to a player who just started and is on level 2.

The key strategy here is that the experience designer should dangle the threat of a large setback (the Ultimate Loss), but should only implement (if at all) small marginal setbacks (the Executable Loss) to emotionally train the user in taking the Ultimate Loss more seriously. The Executable Loss reinforces the avoidance.

As a general rule from my own experience, the Executable Loss should never be greater than 30% of what the user has already invested in time and/or resources, and ideally never more than 15%. Generally a small loss of 2-5% is enough to motivate users to take the activities seriously. If the users lose over 30% of what they have originally invested, the odds of them feeling demoralized and quitting become extremely high.

Loss & Avoidance Design in Employee Motivation

Since it benefits no one if the user actually suffers heavy losses, it’s best to utilize the “ultimate loss” as a form of expectation management, with the system creating “grace systems” that the users appreciate but do not abuse.

For instance, in the workplace the manager may make it clear that performances below a certain level will result in being let go. So everyone becomes motivated, in a sure but limited sense, to avoid the dreadful loss. This Core Drive 8 manager may even exercise small loss-events ranging from pep talks, moving people off important assignments, to publicly scolding them (hint: generally a terrible idea). All to make sure the employees emotionally acknowledge this sense of loss, and are motivated to work harder.

However, when an employee has failed the performance goal and fully expects to be let go, the manager may execute another option. Knowing full well that turnover and retraining new talent is the least preferable outcome, the manager can tell the employee that the organization appreciates his effort and hard work, and that they will give him another chance to hit the target.

As you can see, the Ultimate Loss here is not actually implemented, but instead wielded as a black hat motivational tool. After this, the employee may appreciate the second chance and become more motivated to do the work. This then becomes an example of Core Drive 8: Loss & Avoidance setting up for Core Drive 5: Social Influence & Relatedness, where the employee potentially starts to work harder because of a new sense of gratefulness towards the manager.

Happiness is Determined by Expectations

Expectations have everything to do with happiness and motivation. A hungry teenager in a poor country will have an extremely difficult time understanding why a perfectionist student in a developed country would be depressed for three weeks simply because she received a “B” in school. On the other hand, a student who expects to fail the class celebrates for a week when they obtain a B.

Similarly, a billionaire who lost a lot of money and became a millionaire might end up committing suicide, while the average person who end up with a million dollars would become ecstatic. From my own observations, our happiness is almost exclusively determined by our expectations matched against our circumstances. Based on that, the easiest way to become happy may be to adjust our expectations and appreciate what we do have, instead of becoming upset because of the things we don’t. Even many marriages fail because of unrealistic expectations for each other, leading to built up bitterness over the years that plagues the soul.

When it comes to interactions with people, it’s always easier to start off stern and then become lenient, rather than being nice and then executing harsh punishment later. The dynamic between Core Drive 8 and Core Drive 5 often determines the relationship between landlord/tenants, teacher/students, employer/employees, and government/citizens.

Of course, if the employee starts to take the second (or third, fourth etc.) chance for granted, then it is crucial to maintain the credibility of the Loss & Avoidance system and let the employee go. If the ones breaking the rules aren’t facing any real consequences, it demoralizes the experiences of those that are performing their parts, and overall motivation plummets.

With that said, one thing to always remember is that this same slacking employee may shine like a star if the manager actually implemented more White Hat motivation. Motivational designs such as providing more autonomy, feedback, and meaning, as opposed to pure punishment systems. However, since the scope of this chapter is to explore the nature and effects of utilizing Core Drive 8: Loss & Avoidance, we focus mainly on the uses and effects of that Core Drive.

3 thoughts on “Loss & Avoidance Design: Ultimate Loss vs Executable Loss”

  1. As a football (or “soccer”) referee, sometimes I use this approach & allow a player another chance rather than red-carding immediately (if the offense is not egregious). This is usually with a “talking to” & warning. An escalation could be verbal warning, yellow car, red card.
    Of course, this is a simplistic description. Refs are always in different contexts & have to assess what is appropriate.

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