ROI And The Value Of Time

MIT Sloan Management ReviewThere’s few organizations willing to forgo an ROI calculation and instead back a hunch. So huge kudos to GE, whose investment in CoLab, its social media platform, did exactly that, as GE’s Ron Utterbeck explained in the latest MIT Sloan Review :

“We haven’t tried to come up with an ROI. Haven’t wasted a moment’s notice even thinking about it.”

But the GE team is absolutely on the ball, tracking every aspect of CoLab’s uptake across GE – recognizing that adoption is where its true value lies:

“It’s not a system that people have to go to, but people still come back every single day. They come back because it makes their job easier, because they’re getting value out of it. Going and spending money on ROI would be, honestly, in my opinion, just a waste of money because your true value of this is people are coming back”.

Most organisations of course don’t have this kind of self-confidence and insist on seeing the ROI.  And that’s where the difficulties start for projects – like social media – which deliver more effective collaboration.

I’ve been involved in ROI exercises with several clients where time savings have underpinned the business case.   We often use only the most conservative of assumptions, and constrain the benefits to what can be properly quantified.  But even these savings are often perceived to be flimsy.  Faced with justifying it to the COO, stakeholders readily fall back to apologising that ‘it’s just time savings..’

Which is curious because, as any economist will tell you, the value of time underpins most transport infrastructure investment.  It’s time savings for users that have driven the development of roads and railways in many countries for at least the last thirty years. [I happen to know because I started life as a transport economist, calculating time savings for Asian highways, African railways and the Channel tunnel].

Maybe it’s because the time savings are measured in seconds and minutes rather than days and weeks.  Saving a day is obviously valuable. But when it’s the summation of five minute savings, people fall to wondering whether it won’t be wasted.

Whatever – we need to recognize that time matters, and that we should value it appropriately (as individuals, of course, we do it every day: paying for express lanes and priority, or for toll charges to use a shorter route, for instance).  Otherwise we are choking off initiatives with potentially very substantial ROI.  Even better, we need more GE-like chutzpah.

Related Posts

29 Oct 2012    IT Project Failure: How Did We End Up Here?

28 Aug 2012    The ROI On Process Visualization

© Text Michael Gammage 2012

The ROI On Process Visualisation

Two more client examples on the power of process visualization.  But first, some astounding data on the potential ROI of making collaboration more productive.

The Collaborative Organization

The MITSloan Management Review just re-published the winning essay of the 2012 Richard Beckhard Memorial Prize on The Collaborative Organization. It summarises a six-year research study covering all major industries. And it includes some astonishing data on the everyday collaboration inefficiencies that we’ve come to think of as normal. Two examples:

“We were struck by the sheer volume of the collaborative demands on people’s time: Many individuals spent 25 to 35 hours per week preparing for and engaging in collaborations with others.”

“If the collaborative efficiency of only 20 of the less efficient project managers and organizational leaders improved from below-average to average, it would save the roughly 400 individuals who interacted regularly with them up to 1,500 hours per week.”

Clearly, there is a huge latent ROI in making collaboration more productive. So how do you achieve it?

Well, creating a simple common language, and a single source of truth, must surely be a critical enabler.  And the only serious candidate as the universal language for collaboration must be end-to-end process. But it has to be presented in way that is visual, intuitive and engaging.

This week’s two client examples powerfully illustrate this:

In the first case, a wholesale distribution business, the client adopted Nimbus to remedy a failing ERP implementation.  Visualization of the end-to-end processes revealed more than a thousand specific business requirements. Even more dramatically, it exposed the fact that inventory management had been overlooked – the Supply Chain team thought the CRM team was handling it, and the CRM team thought the Procurement team had it in scope.

In the other case, a business services provider, the client adopted Nimbus to breathe life into its Operating Framework, transforming it from a sleepy and neglected 200-page Word document into process content that is of equal rigor but visual, engaging and helpful. That visualization is creating a collaborative framework that can drive standardization, performance improvement and assured compliance across its European operations.

In today’s complex and real-time world, there are enormous benefits in making collaboration more productive. And effective process visualization has to be central to achieving it.

Related Posts

20 Jun 2012    Process: The Emerging Global Business Language

28 Nov 2011    Cracking Complexity in Novartis

© Text Michael Gammage 2012