Enterprise 2.0 and ROI : beyond numbers it’s about meaningful arbitrations

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The debate on the ROI of Enterprise 2.0 is far from its end even if I often have the impression that avoiding the question is a common easy answer. Either the “we don’t care” or the ‘it’s different, you can’t understand” answers don’t satisfy me.

When an enterprise is asked to invest energy, time, money, it’s legitimate to want to know what it will get in return. More precisely :

– if their will be any return

The answer is obvious : yes

– if this return will be a vague “better something”, nebulous and unseizable or if it will be measurable in a way or another, in a un unit that would not be too eccentric (money for instance…)

Here, my answer would be double. There are things that have a direct impact on opeations and thant can be measured and quantified. For instance the lenght of the innovation or sales cycle, the time saved by avoiding micro-coordination…

There are things that are not measurable by themselves but impact things that are. This is clearly demonstrated by Strategy Maps.The idea is to implement the mechanisms that will ensure that what’s invested to improve intangible will actually impact value creation. In brief, make sure that everything is conherent with the investments and that the way work is done is aligned with that in order investments are made profitable (it’s seldom said but businesses usually don’t suffer from a lack of talent or innovation…only a lack of coherence that impacts the whole value creation process, preventing processes to harness talents and innovation potential).

3°) If this return can be foreseeable in a mechanical and linear way.

Here, the answer is : no. In the other hand, between the exact prediction and the “we can’t predict so let’s five give up” I think there’s a long work to be done by searchers and specialists to be done. Without this work that will help to implement relevant measurement and predicition means, the risk is high to see managers piloting businesses with indicators that have nothing to do with the current reality, the way operations are done and the matter that is processed.

That said, there’s another side of the issue that should also be tackled. Basically, being sure that the investment will bring some benefits should be enough to start a project, regardless of the quantifiable predictability of the benefit. The latter matter when the point is not to choose between doing and not doing but arbitrate the choice between two possible investments. In this case it’s obvious that the chosen one will be the one with the highest return so both possibilities have to be comparable what implies being predictable.

Investments in enterprise 2.0 are not substitutable because they do not compete with anything aiming at achieving the same results using the same means (improve the way a service / product is delivered improving the way human and knowledge capital are used…). This is  not like choosing between two machine tools, computers or software.

So arbitration takes place between “enterprise 2.0” and “something else”

If “something else” is, for instance, a marketing budget, it tells a lot about how the enterprise understands the way it should interact with its clients and its ecosystem.

If “anything else” is an investment fund, that means that the company chosed to make money on the financial markets instead of on customer satisfaction. This is an unconscious change of business that is sometimes disguised, which limits have been demonstrated in a recent past. That’s often the evidence of a lack of continuity in management and corporate culture that makes that, at a given moment, executives overlook the orginal mission statement of the company to focus on its consequences.

Notice that it does not only apply to enterprise 2.0…

Beyond the ROI question we can often see an arbitration issue that tells us many things about how a given enterprise understands its market, the economic and social context and decides to tackle them by taking shortcuts and desert its primary mission.

So it’s not surprising that companies that undertake radical changes often have visionnary top executives and / or a culture focused on service, clients and the human side of business. And it’s also obvious that the others need to work on a sensibilization program at the highest level if they don’t want  their aversion for the unknown to make them build their financial performance on risky fundations because they have the illusion of mastering it.