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Why This Successful Company Completely Changed Its Offerings -- and How It Made It Work Generally everything was going well at Pocket Gems. That's when they decided to shift their strategy so they could work on something entirely new.

By Ben Liu

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In 2012, Pocket Gems was thriving as a leading mobile game developer. We had found early success as the creator of the casual simulation category with Tap Zoo and Tap Pet Hotel, and had continued to grow over the years with titles like Animal Voyage: Island Adventure and Tap Paradise Cove. The company was doing well financially, our players were happy and our team liked the games we were making -- generally everything was going well. That's when we decided to shift our strategy so we could work on something entirely new.

That year, we went back to our startup roots to try and be a category creator for two new areas: mobile storytelling and synchronous games in 3D worlds. This was a hard choice as Pocket Gems was a leading developer of 2012 (Tap Pet Hotel had recently been a top grossing game in 85 countries), but it led to two of the most successful products in our history: Episode and War Dragons. While the result has been great, it wasn't an easy path. Transitions are difficult and there are almost no cases in our industry of a company successfully changing to an entirely new category of products.

Related: Richard Branson: There Needs to Be 'Perpetual Revolution' Within Your Business

Looking back on this experience, it is now clear that most efforts like this fail because they don't generate deep-rooted change that includes all levels of the internal team AND external constituents like customers and investors. A few steps to our success in creating deep-rooted change included broad creative ownership, baking in financial runway and flexibility, and finding complementary talent.

Why change?

There were some important reasons to consider a transition. We saw warning signs with our player community. Some of our players told us that they were starting to play other games with new types of gameplay mechanics and were losing interest in our games. This was also reflected in the data where we saw metrics that had historically always risen, like average revenue per daily active user, start to plateau. There was also major creative energy internally to try and make something new again. As a pioneering team, we're inspired to push the boundaries of what's possible on mobile, so the idea of taking on a new category was appealing to us.

While the new direction resonated with the leadership of the company, we knew we had to get buy-in from the whole team before we moved forward. I believe the reason why change almost always fails is because it's too shallow, so we made it the No. 1 priority to sell the new vision to the team. I imagined we were a new company trying to recruit everyone again for the first time, getting input and helping others see how they would fit in the company's new direction. We knew this would take time, so we started as soon as we had a vision that we believed in. Our goal was to have people asking "What took so long?" when the transition eventually happened.

Related: Is a Pivot Imminent? These 5 Signs Say 'Yes.'

Broad creative ownership

Games is a creative business, so for the change to be deep-rooted, we had to allow the creative leadership of Pocket Gems to take ownership of the new direction. Our company is set up in an unusual way where everyone is a creative owner, so this was even more challenging. Creativity and candor go hand in hand, so we knew transitions like this could only work if we were able to have frank conversations. It also worked well to give team members time to find creative inspiration and to join the new direction only when they felt ready.

During this phase, radical transparency was also crucial. At Pocket Gems, we've built dashboards where anyone in the company can find any metric about any product, from revenue to churn. The plateauing stats of our casual games were available for anyone to see and helped provide support for the decision to shift strategy.

Even with transparency and a "new company mindset," this phase was very difficult. Selling a transition to our team while we were still successful raised lot of questions that we didn't always have great answers for. Also, since we had such early success, preparing for lean years was something entirely foreign to us as a company. A few people chose to part ways with the company when we began the change. Some had joined Pocket Gems because we were really good at making casual games and this new direction wasn't what they wanted. We understood this and made sure we parted on good terms.

Related: Here's Why You Need to Stop Worrying About the Worst-Case Scenario

Financial funway and flexibility

Once we had sold the vision internally, we knew that making these new products would take significantly longer development cycles than we were accustomed to. That meant we needed to prepare for several years where we couldn't rely on revenue streams from our new projects. To maintain our business through the transition years, we had to bake in financial runway and flexibility. One way we did this was by going back to our roots as a bootstrapped startup.

For our entire existence, especially the early days, we have worked steadily towards being able to fund future projects with existing projects. Through good times and bad, we have never, ever lost focus on that as a primary goal. To enable this early on, we only had team members who could do more than one job. For example Harlan Crystal, our CTO and co-founder, would often spend weekends answering player troubleshooting tickets. Even today, we are essentially a collection of small product development teams composed of members who can each do more than one function.

In addition, we've gotten really good at running live games and listening to our customers. This allows us to do right by our players and to support the company financially while we work on creating new things. We also make it a point to build our games with many game systems and features that can be fun for a very long time purely with content updates.

This bootstrapped mindset has allowed us to shift strategy without ever having layoffs, which we believe would damage our culture irreparably. Even though we have a lot more capital today, following successful product launches and a Series B investment from Tencent, we are still guided by the same conservative mentality. For example, we still fund all of our future projects with profits from our existing projects. Because of this philosophy and the hard work of all our teams, Pocket Gems has become an oasis of stability and security in a very unstable and tumultuous industry. That's something I'm incredibly proud of.

Related: Sometimes, After a Successful Run, It's Time to Switch Gears. Learn How to Pivot.

Complementary talent

Once we had a shared vision and the means to achieve it, we realized quickly that we would need complementary talent to actually make it happen. In 2012, Pocket Gems was set up to make great casual games, but we were unprepared for mobile storytelling and 3D player-versus-player games. For example, our art team at the time was composed entirely of skilled 2D artists, and in order to achieve our new vision, we needed artists with as many as six different specialties including 3D modeling. We had similar challenges in game design and with Episode's internal story team. In order to close this gap, we had to find entrepreneurial spirits and sell them on the potential of mobile, which was hard to do without an actual product yet.

Finally, keeping morale high through a shift in strategy is very important because there can be long stretches of time between product launches. It takes extraordinary faith, dedication, and hard work to get through periods like this. We made it by always putting one foot in front of the other, and it eventually led to something good. It helped a lot that we all had this unwavering belief in our product vision and team. Finally, we always tried to find things that we personally liked and that our most committed players were into and we just kept building on them.

Because of how we handled our transition and enabled deep-rooted change, 2016 was the best year ever in the history of the Pocket Gems. We are also working on some new projects that we're very excited to launch later this year. We believe the best is yet to come.

Ben Liu

CEO of Pocket Gems

Ben Liu is the CEO of Pocket Gems, a mobile games and interactive entertainment company backed by Sequoia Capital and Tencent. Prior to Pocket Gems, Liu led Playdom’s largest studio (prior to and following acquisition by The Walt Disney Company),and also served as the first iPhone product manager at Electronic Arts.

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