Leroy Jenkins, Ph.D.

Nearly 11 million people play World of Warcraft, a massively-multiplayer online role-playing game.  Players begin their journeys killing bears and other woodland creatures, building up their gold supply while constantly looking for better equipment, and completing quests to gain extra items and gold.  Soon, the law of diminishing returns takes over, as the bear and quests yield too few experience points and gold to notably progress the avatar, forcing the player to move on to the next area.  The cycle continues.  Kill things.  Do quests.  Level up.  Buy equipment.  Next area.  Kill things.  Do quests.  Level up.  Buy equipment. However, for one to break out of the cycle, he or she can utilize the online auction house–provided he or she knows how the economy works. Everything I Know About Business I Learned from World of Warcraft, an article by Josh Kaufman, describes 11 business concepts that a player can learn from World of Warcraft, I will touch on a few I find most important.

The Law of Supply and Demand:

Kaufman describes how some items, like linen cloth, are easily obtained through quests and low-level creatures, while other items, like Netherweave cloth, are very rare, and hard to find.  This explains why some items are cheap and some are extremely expensive.  Note the supply and demand graph.  The red curve (the demand curve) intersects with the blue curve (the supply curve), and the point where they intersect dictates the price.  In this example, the initial demand curve (D1) is shifted to the right (D2), as more consumers are looking for a specific product, driving the price up, although the supply hasn’t changed.  Likewise, one could see how the supply affects price, regardless of demand.  Imagine moving the supply curve to the left, indicating a very low supply.  Now, the intersection point is much higher, dictating a much higher price.  Indeed, this is why Netherweave cloth is so expensive in-game, as the in-game economy utilizes the law of supply and demand. Arbitrage:  Using this new concept of supply and demand, one can watch the auction house for a particular item’s market price to fall.  For example, maybe there’s a specific weapon that regularly sells for 5 gold.  Today, it dropped down to 3 gold.  If you buy the weapon now, wait, and sell it for 5 gold, you’re making free money.  Well, kinda free, which brings me to my next point.

Opportunity Cost: They say “there’s no such thing as a free lunch,” when referring to opportunity cost.  If you are invited a company dinner, where your boss pays for your meal, you might think, “I can’t pass this up!  Free food!  I hope there’s booze there.”  Hoewever, it’s not technically free.  The meal comes at an opportunity cost.  Your boss could have used his money and time for something else, like investing into the company.  Likewise, in the comic above, the man could have been going to work instead of walking his dog, effectively losing out on money.  Similarly, in World of Warcraft, there is an opportunity cost when benefitting from the law of supply and demand and arbitrage.  One could spend all day watching the auction house to see a lower-than-market-value item pop up, only to make 1 gold in profit.  This person might have been better off doing quests and killing creatures.  For making 1 gold at the auction house, the opportunity cost was potential experience points (or even leveling up, which takes a long time depending on your level) or even gold!

Marketing:  Marketing is prevalent in everyday life.  In fact, people get paid to incessantly  spam your inbox.  Companies place ads on television, radio, and billboards.  WoW players also use marketing as an effective tool.  Sometimes, the trade window gets cluttered up with people, telling you to “buy gold from [this] website.”  Other times, players will advertise their chosen skill set, “opening lockboxes in [this area],” or “enchanting weapons [over here]!”  Lastly, a player may market their class in an attempt to join a guild or raid:  ”High level tank here!  Godly equipment!” or “Best healer around!”  Marketing is an important tool to promote business and improve oneself, in WoW and real life.

Through the online auction house, it’s clear that World of Warcraft reflects some aspects of macroeconomics and business.  In fact, Stephen Gillett, CIO of Starbucks and youngest of any Fortune 500 company at that time, cites World of Warcraft for his success.  But his success stemmed from leading a guild, a large, organized group with the same interests:  ”You have to be able to influence and persuade people–not order them to do things. Ordering people in most of these guilds doesn’t get you far.”  Certainly, guilds require focus and communication, but, another team-based activity, raids, must require more.

By studying raids, in which players cooperatively take on groups of extremely strong creatures, one can see how WoW teaches players communication skills and teamwork.  Leeroy Jenkins, an iconic YouTube video featuring a WoW raid, demonstrates the level of precision, planning, and cooperation required for raiding.  Below is the video, note some excessive language.

As you can see, the players sit around the raiding area, as one describes who should do what and exactly when.  It’s certainly a leadership role.  But, mid-speech, “Leeroy Jenkins” charges in with his iconic war-cry, getting the attention of all the high-level enemies in the area.  Subsequently, every player charges in, attempting to save the mission, but they all die.  The video really demonstrates that each player must execute perfectly, or else the mission fails.  Teamwork is important.  Team members must know each other well, and the team leader must know the tendencies of each player.  ”Well, this person usually tries to break off from the group and do his or her own thing, so I’ll make sure to tell him to stay with the group.  And this person didn’t heal fast enough last time and a player died so I’ll make sure he or she knows to do that this time.”  While it may seem simple, keeping track of all the intricacies proves to be difficult.

The leadership role taken by guild and raid leaders reflects skills seen in management positions, like the case of CIO Gillett.  One has to know their employees well.  What are their strengths?  What are their weaknesses?  What can be done to improve this person’s weaknesses?  Will my employees work well together?  One has to carefully evaluate each employee, or else “Leeroy Jenkins” might happen.

via Presentation.