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Business Design School 003 — The Core Business Loop

Published 9 months ago • 11 min read

The Core Business Loop

Design the Heartbeat of your Business

Welcome back to Business Design School, a twice-monthly newsletter for the creative-business-curious. I call it a school because we’ll learn to master the art of business design together. We’ll explore creative entrepreneurship and leadership, how to design things like culture and operations, and consider ways to accelerate business success and impact by design.

In this issue: Designing your core business loop by thinking like a video game designer.

But first: Ever wonder what it takes to design the cover of a book? I produced an 8-episode limited podcast series, in partnership with PRINT Magazine, chronicling the design process for the cover of Adventures in Disruption. Proportion Design did an amazing job with the cover, and you can hear their whole process — listen on Apple Podcasts or Spotify — and see the visuals at printmag.com.


The Core Business Loop

Design the Heartbeat of your Business

Our character, Link, is in a life-size, 3D environmental puzzle designed to look like an ancient temple. It’s like a giant escape room, and I’m stuck. I’m on a platform overlooking a vast bottomless pit that’s way too broad to jump across, but there’s a single metal rail spanning the massive gap, leading down to a magical shrine where a magical being will give us a magical orb of light. Strewn around the platform are giant slabs of stone. My three-year-old son has it figured out, and he’s psyched. “Daddy! Build a square pipe with a space to fit it on the rail, put it on, hold onto the pipe, and we will slide down.” He shows me the pipe cross-section by holding his hands together in two L-shapes; his fingers touch the top, but there’s space between his thumbs at the bottom. Genius. I use our character’s ability to fuse parts to make Enzo’s “pipe,” I fit it over the rail, and just like he said, we slide down on it and get the prize. We celebrate with an enthusiastic high-five, and I say, “Okay, where to next?”

My kids and I are playing a new video game, The Legend of Zelda: Tears of the Kingdom, and we’re loving it — when we play, we flow. This flow state helped crystalize an idea in my mind — video games aren’t static, packaged experiences like a book or a movie; these games generate interactive, adaptive experiences. Video game design is time-based, interactive art. Another form of time-based, interactive art: business design. What can we learn from video games to design our businesses and get customers into a flow state?

The Core Gameplay Loop

Games designers generate the conditions for flow via a fundamental design concept called the core gameplay loop. This loop is a repetitive cycle of actions and rewards to engage players and maintain their interest. You can think of it like the heartbeat of a game, providing a rhythmic and satisfying experience for the player.

Video game designer Daniel Cook describes the loop this way:

  1. The player starts with a mental model of the situation that prompts them to…
  2. Apply an action to the game system
  3. And in return receives feedback that…
  4. Updates their mental model and starts the loop all over again (or kicks off a new loop — even simple games usually have multiple, nested loops that generate the conditions for the experience and keep you engaged.)

The core game loop is the element of the experience that one does most often. Think Super Mario and jumping. The player will mash the jump button hundreds, if not thousands, of times while playing that game.

The core gameplay loop of Tetris is a simple yet addictive cycle that forms the foundation of the game’s experience. This classic puzzle video game was created by Alexey Pajitnov in 1984 and revolves around arranging falling tetrominoes (geometric shapes composed of four squares) to create complete rows of squares across the play container. The core gameplay loop goes something like this:

  1. We start with our mental model, an empty play container, and a tetromino (randomly selected from seven possible shapes) slowly descending from the top of the screen.
  2. The player’s action is to adjust the position (left and right) and rotate the piece to fit perfectly within the container’s available space. The object of the game is to complete solid rows of squares across the bottom of the play container, leaving no empty space) The core gameplay actions require just three buttons: left, right, and the rotate button.
  3. The tetromino lands in the play container — that’s the visual feedback from the action
  4. Now, we have a new mental model as the next tetromino begins to descend from above, and the loop goes around again.

This loop is nested in at least three other loops that, experienced together, keep us playing.

Core Loop +1: You complete a row across the bottom of the play container. When you do, it’s a magic time; the feedback is auditory, the row vanishes, and points get awarded.

Core Loop +2: Complete enough rows, and you proceed to the next level. The colors change, the music intensifies, and the speed at which the tetrominoes fall from the top of the screen speeds up. Exciting!

Core Loop +3: As you proceed through levels, the music and speed intensify, and eventually — it happens to all of us — you will fail at filling in the nooks and crannies of the play container, the blocks will stack up and touch the top of the screen, and it’s game over. Sad. But look, what’s that? There’s a button to try again! Let the games begin. More like: let the loops continue.

Art Imitates Life

In the early 1980s, a young Japanese game designer named Shigeru Miyamoto was captivated by memories of his childhood explorations. As a kid, he wandered through the countryside and ventured into caves near his hometown of Sonobe, outside Kyoto, Japan. Exploring this natural world with no constraints other than his imagination, he experienced the thrill of uncovering hidden treasures and adventuring into the unknown.

Miyamoto yearned to recreate the sense of wonder and discovery that fueled his youth. He began crafting a game that would transport players to a realm of uncharted possibilities, where the spirit of exploration would take center stage. In 1986, Miyamoto’s vision came to life with the release of the first Legend of Zelda game for the Nintendo Entertainment System. The game defied conventional gaming norms of the time by embracing an open-world design that shattered the linear constraints that had previously defined video game experiences. Players were no longer confined to following a predetermined path — playing through linear levels and uncovering a set storyline — instead, they were invited to step into the tunic of Link, the game’s protagonist, and embark on a hero’s journey that was uniquely their own.

Players roamed freely through this interconnected world, discovering hidden secrets, battling monsters, and navigating treacherous terrains. The game’s world was alive with opportunities for exploration, including a network of dungeons that challenged players with cunning puzzles and fearsome foes. As players delved deeper into these subterranean mazes, they unearthed the tools necessary for overcoming obstacles and the sense of satisfaction that accompanies hard-won triumphs. The game’s design championed resourcefulness and creativity. Miyamoto once described the game as “A miniature garden that you can put into a drawer and revisit anytime you like.” The story was no longer merely a backdrop — it was an experience woven into the game’s very fabric, evolving with each decision players made and challenge conquered.

My brother Steve and I got lost in that miniature garden as kids, and 40 years later, I’m playing the 29th Zelda title in the franchise with my own children. The franchise has sold 160 million copies and grossed over $3.4 billion. Its legacy endures as a testament to the power of inspiration, adventure, and the innovative design elements that capture our imagination and keep us playing.

The Legend of Zelda: Tears of the Kingdom is a complex game with multiple self-reinforcing loops — but the core gameplay loop is exploration. The objective is to explore the open world and discover as much as possible — just like Miyamoto’s childhood adventures. Supporting and expanding this exploration gameplay loop are four additional loops:

  • Collecting things you find along the way.
  • Fighting monsters you encounter.
  • Talking to townspeople and fellow travelers.
  • Building devices to aid you in your journey.

The game system builds on itself. As you explore more, you come across more things to collect, monsters to fight, townspeople to talk to, and parts for devices. On the flip side, the more you collect, battle, chat, and build, the more you can explore.

The Science

The science behind why the core gameplay loop works was pioneered by the American psychologist and behaviorist B.F. Skinner, who taught and researched out of Harvard University in the 1950s and 60s. His experiments involved placing animals in controlled environments, known as operant conditioning chambers or “Skinner Boxes,” to study how rewards and punishments shape behavior. Side note: he also used his research to design a pigeon-guided missile system for the US Navy during World War II (seriously).

In the Skinner Box, animals like rats or pigeons learned to perform specific actions (such as pressing levers) to receive rewards, usually in the form of food pellets. This reinforcement mechanism demonstrated that consistent rewards for desired behaviors led to increased repetition of those behaviors. When rewards were given intermittently, the animals exhibited even stronger and more persistent behavior, a phenomenon known as the “variable ratio schedule.” This is why slot machines are so addictive for some folks.

We’re back to the three-part loop: the anticipation of receiving some reward, the action that must be completed to receive the reward, and the act of obtaining the reward — sound familiar? The loop triggers the pleasure centers of our brain incredibly well. It’s believed that the anticipation phase is where the pleasure hormone dopamine is generated in the brain, and then it’s released upon obtaining the reward. Hence, the variable ratio schedule’s impact — if rewards are intermittent based on the action, as you’re taking that action repeatedly, say hitting a button, dopamine is building up. When you get the reward, it hits, and you feel great.

Just as animals repeatedly perform actions for rewards in the Skinner Box, playing The Legend of Zelda — exploring the virtual world — builds up dopamine, and the intermittent rewards in the game, whether it’s unlocking a quest or reaching a new area, trigger the brain’s reward pathways, encouraging us to continue playing. Note: ethical considerations should guide the implementation of these principles, ensuring players’ well-being and avoiding the potential adverse effects of excessive engagement that can lead to addiction.

The Core Business Loop

The core business loop is the heartbeat of your business — a repetitive cycle of actions and rewards to engage your customers. It's the primary way your customers engage with you and the key action they take to get value.

Looking at Design Museum Everywhere, our core business loop was gathering people together. We brought our community together every month at events and exhibitions — and that core loop was reinforced and supported by three others: socializing, learning, and participation (which could be as simple as asking a question at an event or as complex as joining our Council). The more someone gathered with us, the more they would connect with our community, learn about design, and participate in generating our programming. Also, the more someone socialized, learned, and participated, the more they would gather with us. Ultimately, our business objective was to have this gathering loop kick off a monetization loop, converting our gatherers into paying supporters.

To put it in the core loop structure, a person might:

  1. Have a need (their mental model) to join a community of like-minded folks and be enlightened by local design thought leaders (dopamine is building)
  2. So they take an action to attend an event
  3. They get feedback in the form of new connections, new knowledge, and new opportunities to participate in the community (dopamine released!)
  4. This loop continues until we successfully convert them into a payment customer in the tangential monetization loop

Seeing these loops allows us to design them. For example, how might we make it more enjoyable for folks to connect at events and build relationships? Creative Mornings does this with their super fun name tags: they have space for your name and a fun question everyone must answer and write on their tag — folks start chatting with each other about the answers. Connection ensues.

It gets really interesting when we talk about products. The product itself is the core business loop, supported by all the product's features. Like Miyamoto, I play in the woods, only now I call it trail running. When I decided to get into trail running, I started using some old running shoes, but it only took one soggy mud puddle to realize I needed a better solution. I had a mental model, a need for water-proof trail runners (dopamine is building); I took action and purchased a pair of Salomon trail running shoes and put them on for my next trail run (dopamine released!). Let’s call that the buying loop.

That loop kicks off the core loop: using the product. Every time I use those shoes, I get little bursts of dopamine. They have a fantastic lacing system; all you do is pull on one tab, and they’re perfectly snug. When I’m running through the woods and see a puddle up ahead (dopamine builds), I have no worries; I run through it (action), and my feet remain perfectly dry (feedback and dopamine for days!). A great product kicks off another loop; let’s call it the re-buying/recommending loop, which leads to more sales. I’ll definitely be buying another pair of these shoes when the time comes.

How to Identify & Design Loops

How do you design and optimize the core business loops of your organization?

  1. Your customers have a need. Determine the fundamental way your customers engage with you to meet that need. That’s your core business loop. It could be visiting your cupcake shop because they’re hungry for something sweet. If you’re a coach, it could be your weekly Zoom call with your client. Draw a circle, label the loop, and determine the mental model (usually a need), your customer’s action, and the feedback they receive.
  2. Reflect and ask yourself if any loops reinforce and support your core business loop. If you own a cupcake shop, social media marketing could be a loop to garner attention; if you’re a coach, perhaps the thought leadership content you post on your blog elevates your coaching and expands your core loop. Draw any reinforcing loops inside your core loop.
  3. How do you take things to the next level? Does your core business loop kick off another loop or loops? Maybe your cupcake shop has a cupcake of the month membership program, or your executive coaching business needs a recommendation loop to drive new clients to the core of your business. Draw those next-level loops around and link them to your core loop.
  4. Now that you see it all, you can design it. Design the customer touch points and your business processes to keep these loops turning and optimize them for growth. An excellent place to start is where the loops connect and overlap — you can design the transitions to ease your customers from loop to loop in a continuous value-creating/capturing cycle.

By the way: If you haven’t seen the Tetris movie, I highly recommend it!

I’d love to hear from you — what does your core business loop look like? Snap a pic and reply to this email.

If you enjoyed this issue of Business Design School, please share the love on LinkedIn or forward this email to folks you think might enjoy it as well.

Have a great week! Talk soon!

— Sam

Sam Aquillano is a business designer and writer. In 2009 he founded Design Museum Everywhere, an online, nomadic museum with the mission to bring the transformative power of design everywhere. His upcoming book, Adventures in Disruption: How to Start, Survive, and Succeed as a Creative Entrepreneur, chronicles his team’s startup journey and is available for pre-order, launching in October 2023. He's now a Design Director leading business design at Edward Jones. Sam has earned numerous awards for his work, including the Red Dot Design Award, Graphic Design USA’s Responsible Designers to Watch, and Fatherly named him one of the Coolest Dads in America.

samaquillano.com

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Business Design School

Sam Aquillano

A twice-monthly newsletter for the creative-business-curious. I call it a school because we’ll learn to master the art of business design together. We’ll explore creative entrepreneurship and leadership, how to design things like culture and operations, and consider ways to accelerate business success and impact by design.Sam Aquillano is a business designer and writer. In 2009 he founded Design Museum Everywhere, an online, nomadic museum with the mission to bring the transformative power of design everywhere. His new book, Adventures in Disruption: How to Start, Survive, and Succeed as a Creative Entrepreneur, chronicles his team’s startup journey and is available on Amazon, Bookshop, Barnes & Noble, Apple Books and more. samaquillano.com

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