I’ve written several times before about ROII (Return On Investment in Interaction) or ROHI (Return On Human Interaction) as metrics that will need to come into being as social software takes up more space and time in the enterprise setting .. whether we like measurement or not, and whether or not we believe it is obvious that humans build and use knowledge purposefully by interacting with each other..
It seems like the time to spell it out may be getting closer … in a ZDNet article (ROI is so Business 1.0: Not) Dennis Howlett outlines some of the issues, citing Luis Suarez and Jay Cross. Dennis concentrates on the issues from a CFO and CTO perspective, but notes that this perspective may be narrow, as incumbents will more often than not understand only value based on tangible assets, cash flows and working capital.
Nevertheless, it seems clear to me that the measures Jay Cross is suggesting are derived from or support the organizational performance issues on which organizations spend many consulting dollars. It may be useful to think that organizations as they are structured today only really understand siloed responsibility for work design issues – issues that in an increasingly networked era fundamentally need to be viewed from a cross-disciplinary and cross-silo perspective.
So, are today’s Enterprise 1.0 organizations hamstrung because of established and understood buying channels, or "second-order" silo-based responsibility, i.e. it’s line manager "X" and the HR department and a few OD consultants that are still going about "enhancing organizational effectiveness" more often than not without looking at basic work process design (that, after all, has been left to the reengineers and ERP change management specialists) ?
I still wonder when the field of eOD will start to take wing.
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"If social computing is supposed to revolutionalise the way we share our knowledge, connect with others, collaborate, communicate and innovate, then I think it is about time we move into the 21st century, progress further in that Knowledge economy and try to figure out how to get the most value out of it, because figuring out its ROI, in my opinion, is going to be a waste of time, energy and resources."
[ Snip … ]
In his discussion, Luis references Jay Cross who talks about social computing from the learning perspective. He suggests three broad measures:
Sales force readiness. You think you have a problem keeping sales people up to speed? Consider Cisco. On average, Cisco acquires a new company every month. If systems engineers tried to learn via traditional methods, they would have no time left for customers. Instead of training, Cisco “Google-ized” product knowledge, sales presentations, and competitive information, making it available on demand throughout the company. Sales people learn by using that information, not by being trained.
Benefits: better-informed sales force, more competence on sales calls, more cross-selling, better presentations, easier to bring partners up to speed, avoid cost of product training.
Eliminate bureaucracy. Knowledge workers waste a third of their time looking for information and identifying the right people to talk with. They often spend more time recreating information hidden in someone else’s file cabinet than creating original material. I just heard about a company where the workers think doing their email is the work; that’s how they spend almost all of their time. Expert locators, bottom-up knowledge management, instant messaging, organization-wide wikis, and organizational network analysis all attack this plaque in the organizational arteries.Benefits: speed flow of information, cut time wasted searching for answers, streamline organizational process, cut email by half, cease re-inventing the wheel, increase worker throughput 20% to 30%.
Conversation. Conversation is easily the most important learning technology ever invented. Conversations carry news, create meaning, foster cooperation, and spark innovation. Encouraging open, honest conversation through work space design, setting ground rules for conversing productively, and baking conversation into the corporate culture spread intellectual capital, improve cooperation, and strengthen personal relationships.Benefits: faster cycle time, improved problem-solving, more time on mission, higher morale, lower turnover…
While I can argue with the detail (who says knowledge workers ‘waste a third of their time?’) the basic premises are eminently reasonable as value indicators that could form part of an ROI equation. Unfortunately, Jay then goes on to alienate the very people the social computing crowd should be wooing:Hold your breath a moment, for some of you will choke on this one: ROI and accounting are inappropriate measures of performance. ROI is a relic of the industrial era, when assets were tangible and repetition was the path to success in the factory. Today, the intangible assets you cannot see are far more valuable than those you can.
It doesn’t matter that ROI may appear to be a relic. As a partially reconstructed ex-CFO I have some sympathy with Jay’s view, but he seriously misunderstands the ability of CFOs to understand value beyond tangible assets.
His declaration is something that MBA students have known for as many years as Paul Strassmann has been talking about Google although I sense the world has moved on from Strassmann’s view that CFOs and CIOs are disconnected by different mindsets. CFOs routinely spend time with those on Wall Street analysts who are arbiters of intangible corporate value. Jonathan D. Becher who authors Managing By Walking Around (an HP mantra) points the way of the future where he suggests:
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I personally am not so sure about Dennis’ assertion that CFO and CIO ability to understand is seriously misunderstood. There are (again, just an opinion) a number of semi-conscious issues that many senior organizational people will have about the landscape of tools, applications and dynamics associated with Enterprise 2.0. That seems obvious to me, if we but cast an eye back to the thousands of discussions and examples about the resistance to the use and growth of social software.
A similar kind of thing is playing itself out in the field of journalism, is it not ? The upstarts who are holding lighters to the toes of the established institutions, structures and mindsets are being denigrated as not understanding the seriousness, the quality issues, the responsibilities …
And so shall it go.
I promise to pay more attention to the serious side of what ROII metrics … quantifiable, observable, tangible metrics … might look like some day reasonably soon. Just after I get a bunch of other things done.
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Tags: Business 1.0, Business 2.0, Enterprise 1.0, Enterprise 2.0, De
nnis Howlett, Luis Suarez, Jay Cross, ROI, ROII, ROHI
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