The best sign that someone’s qualified to run an Internet startup may not be an MBA degree, but level 70 guild leader status, according to the latest issue of Harvard Business Review.

“Leadership’s Online Labs” by Byron Reeves, Thomas W. Malone, and Tony O’Driscoll is based on the authors’ research into the leadership and management skills required by fantasy/sci-fi MMORPGs like World of Warcraft and Eve Online. In those multiplayer games, the hardest-to-achieve goals (such as killing the demi-god dragon, wiping out a competing space corporation, and so on) often require dozens or even hundreds of players working together in concert, so the skills required to lead a successful mission, the authors argue, are very much like those needed to run a profitable business.

The theory is hardly new; venture capitalist and hardcore WoW player Joi Ito has been talking about this for years. But the HBR team bolsters it with extensive interviews and observations to turn out an article that could help revolutionize business management in the digital age.

So what are some of the main managerial lessons they learned from the worlds of orcs, elves and battle cruisers? Below are the three that stand out most to me — call them the habits of highly effective half-elf managers:

Embrace Failure As a Rung on the Success Ladder

“In one incident that we recorded from EverQuest,” Reeves, Malone and O’Driscoll report, “seven guild members prepared for a brand-new quest that required them to get their team across a large lake protected by a gruesome and hostile creature.” They did this despite knowing they were likely to drown, which they very nearly did. But when the team failed to make it across, it was simply viewed as a learning experience, and after re-orientating themselves, they went right back to try it again. (The classic corporate response would be to simply cut the failed program’s funding, as opposed to re-launching with a new strategy.)

Rotate Individual Managers to Individual Goals

The authors were also surprised that guild leaders often became followers, letting temporary leaders come forward to direct specific sub-goals:

Put another way, leadership in games is a task, not an identity—a state that a player enters and exits rather than a personal trait that emerges and thereafter defines the individual.

It’s easy to see how that principle would apply to real-world business; of course, it would require a managerial culture in which personal pride is attached not to a job title, but to getting the job done. This could be why MMO guild leaders rarely seem to be managers in real life. Indeed, Joi Ito once told me that while his We Know World of Warcraft guild includes top Silicon Valley execs, when it comes to WoW, they’re not always good leaders. One of its best commanders, he said, was an EMT worker.

To Get Better Management, Change the Game

The authors went in expecting to learn managerial wisdom from MMO’s top guild leaders, interviewing them as though they were virtual Jack Welches. But the players suggested a different approach: “If you want better leadership,” they said, “why not change the game instead of trying to change the leaders?”

Quite literally. Online games are highly structured, and successful gameplay is determined by the amount of virtual treasure players have in their possession and the amount of game information of which they’re aware (player stats, enemy capabilities, etc.). The authors suggest a number of ways business data can be given a game-like structure, which would then shape how the company runs. For example, what if your CEO assigned value, in virtual currency, to your company’s internal email?

Attaching a large amount of the scarce currency to a particular message would draw attention to it or even serve as a feedback mechanism: You send me an e-mail you value at 100 units, and I respond with one valued at 200, giving you a credit of 100 units to validate the usefulness of the information you sent. One experiment showed that the currency, as a marker of information importance, in fact influenced how quickly colleagues opened and read different messages in their inboxes.

With online gaming so mainstream (World of Warcraft now has 10 million subscribers), many people in the tech business world have already learned these lessons. The Harvard authors note an IBM survey of its managers who were also gamers, and the results are striking:

Three-quarters of the respondents said that environmental factors within multiplayer games could be applied to enhance leadership effectiveness in a global enterprise. Nearly half said that game playing had already improved their real-world leadership capabilities, particularly for managing teams whose members didn’t fall under their formal authority.

At the same time, the business leaders also worried that implementing what they learned in games would require drastic changes to the companies’ existing corporate culture. Which is why I think we’ll see these invaluable ideas put into practice not by established firms, but by startups eager to level up into world-conquering profitability.

Image credit: harvardbusinessonline.hbsp.harvard.edu. Hat tip: Virtual Worlds Review.