It’s ironic that we spend so much time talking about the ROI of emergent collaboration isn’t it? Sometimes I think we talk about it just for the sake of debate and argument. ROI has almost become a philosophical discussion to be had in a dimly lit den with cigars and brandy just prior to debating the origins of the universe. Now while this type of conversation might be fun and stimulating, it ultimately gets us nowhere.
The fact is the ROI is not a primary driver for organizations interested in emergent collaboration. In a report Chess Media Group is releasing soon we will actually share what we found to be the top business drivers based on our survey of 234 people who are involved with emergent collaboration at their organizations (and ROI was not one of them). I have interviewed dozens of companies and am releasing a few more case studies in the coming weeks. Not a single company I have interviewed has EVER told me that their primary motivations for deploying these tools had anything to do with money. In fact I would love it if someone could point me to an example or let me talk with someone who actually said that the reason they deployed an emergent collaboration solution was because of money (surely there must be some right?).
Emergent collaboration extends far beyond ROI and in fact I would argue that even if organizations did find this unicorn-like mythical creature that it would still not due justice to showing the overall value to the organization.
As someone who started off with a keen interest in finance I always related the term ROI to stocks. How much did I buy the stock for? How much did I sell it for? How much did I make as a result. That’s ROI. ROI comes from the formula:
(gains from investment – cost of investment) / cost of investment
Now the interesting thing here is that you really only notice gains when you sell or get rid of an asset. Only then can you know what the return on that asset actually is. It’s a bit like purchasing anything else that enables you to do something. Take a house for example, something that enables you to have a good quality of life with a roof over your head, something that enables you to live and do whatever it is that you do. What’s the ROI while you are actually living in that house? You don’t know what the ROI is until you actually sell the house. Emergent collaboration is not an asset that is sold, it doesn’t expire, and it’s not something that you get rid of. Emergent collaboration is not a stock, it’s an enabler. It’s a way to unlock capabilities, potentials, opportunities, and new ways of “doing things.”
It’s very easy for skeptics to keep pointing out that organizations should not invest in something unless there is a clear ROI and that’s fine, we saw the exact same thing with “social media,” and now look at where we are today, virtually every company is trying to be “social.” I’m not trying to sell you on anything, in fact I think that if you have to be “sold” on emergent collaboration then you shouldn’t be investing in it to begin with. Perhaps you think I’m crazy (which very well might be true) but I fundamentally believe that if you need to be convinced that enabling collaboration and serendipity within your organization is a good and valuable thing then there are other problems that need to be worked out (how is another question altogether, and a good one!)
Quite frankly smart organizations realize the value of connecting employees and allowing them to collaborate with one another, this is actually the number one business driver of emergent collaboration…by far.
very interesting psot! thansk a lot for sharing!
Jacob,
Whilst you’re probably right that improved collaboration is the main driver for companies to hire tools that help them do that… [pause.. re-read that first sentence.. see how obvious that is?] .. they do this because there is another return they expect from the improved collaboration..
Like you say it at end of your post: “smart organizations realize the value of ….”
I hope your research shows the what that value is behind the obvious.. and then doesn’t treat it as a fact, but an hypothesis to be tested..
Let me know when it’s out 🙂
Wim Rampen
Hi Wim,
Completely agree, but there’s a difference between value and ROI. ROI (when I think about it) comes down to just dollars and cents. Value in my opinion encompasses a lot more such as being able to solve a business problem, achieving and objective, connecting employees, etc. Sometimes these things can be correlated to financial returns and sometimes organizations are able to extract ROI for key activities. However, overall value in my opinion is far greater than ROI.
Hi Jacob,
Value really is something that can only be defined by it’s beneficiary.. You are the only one to decide on what you value and how you value it.. Like I do for myself..
The things people and organizations want as a return on their investment cannot be disregarded as only financial.. Some merely want to grow in number of Customers or market share, some want the same, but under the condition of being more profitable, others want to cut costs or improve their cash-flow, increase Customer Lifetime Value etc etc.. Non-profits usually do not value financial returns a lot, albeit that they also are interested to make more effective use of the limited resources they have..
All this doesn’t mean that “value” can be used as a “vague” concept, like “overall value”.. We need to be specific about what kind of value it is one can get as a return from investment, if one is to invest (time, money, resources etc) in new stuff. I suggest you have a look into the concept of Total Customer Engagement Value, presented in his paper “undervalued or overvalued Customers” by V. Kumar (a Google search should work fine), to understand what cutting edge thinkers think about with regard to what is of “value to the firm”..
I also suggest you link/correlate the outcomes of your research to any of the types of value described by Kumar, because if we are ever serious about getting this thing moving (and proven) as good business practice, we need to establish a clear understanding of what it’s value is to the firm..
Let me know what you think.
Wim
Hi Wim,
Definitely agree with you that value is defined by the organization/employees/etc. I’m not sure if/where you disagree with me. It sounds like we’re saying the same thing here. The purpose of the post was to state that value is more than just dollar and cents.
I remember reading that article a while back but when I tried to search for it I came to several pages which required registration of some sort. The focus of all of this though is not on customer engagement and collaboration but on using emergent collaboration inside the firewall of an organization to connect employees together, thus there are not transactions taking place between customers and company.
Do you have a link to Kumar’s paper? Is it something you think that is relevant to collaboration in the enterprise as well?
Ha.. If you agree that ROI is not just about return of financial value, then we fully agree.. 😉
You can find a link to the Kumar paper in my latest post from this weekend:
http://wimrampen.com/2011/08/12/observations-why-social-crm-isn%E2%80%99t/ It’s behind the link “Customer Engagement value”
Enjoy reading!
Wim
”
Money is Not the Top Business Driver for Emergent Collaboration”
Correct – creating shared value is.
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