A Shift in Business Means a Shift in Notions of ROI

There’s a problem here, and it's not (only) one of culture or technology -- it's one of profound impedance mismatch between old and new paradigms of business. That is to say it's like taking a Firewire connector and trying to plug it into a video cable. It doesn’t work, and finding an adaptor is pretty hard.

A Few Emergent Truths 

New (2.0? Social? Connected? Digital?) business is not an iteration or evolution of business so much as a shift from a dominant paradigm of paternalistic leadership and mechanistic work ideals to a view of vision, inquiry, mentorship, orchestration and collaborative, highly iterative work.

The end point is as poorly defined as its name, and the steps from here to there are murky. There are a few emergent truths. One is that one cannot simply throw out hierarchy wholesale, replace it with a network and expect it to work. It is not just a matter of will or even faith. If that were the case, we could just say -- ok, North America -- no more fossil fuels. And voila -- we’re all running on cold fusion and driving Teslas. (Exploring the path from A (command and control to) B (shifted) is my latest endeavor at work and extracurricular-ly).

The problem is less about the strengths and weaknesses of the now or the rainbows and unicorns of the then, but rather, how does a company take rational steps into the void? How do they keep going? How do they continue to serve the boards and shareholders that currently feed them while reaching for greater ... longevity, value, resilience, relevance ... that the next paradigm promises?

Some of you will notice the key word in that paragraph -- rational. We have for the last four centuries relied on data, logic and planning. Mechanistic, rational, reductionism. In other words, we understand things by deconstructing them into their smallest, measurable parts. This is good. This is reasonable. But it may not be entirely possible in the context of massive paradigm shifts. (We could enter into a big discussion of complex systems here, but we won’t.)

So -- what impact does this have on our ability to measure ROI of social enterprise?

Back to the ROI Question

The urge and urgency to measure ROI of social media is well intentioned to serve two goals. The first is to make a business case to help sway the unswayed by making a deliberate, rational (if frequently arguable and debatable) case that investing time and money in this will pay off more than investing it in something else. Like more Google ads or one more industry conference sponsorship or a new website or delivery drones.

The second driver of the ROI drive is learning. We hypothesize, we measure, we learn. If only it were so simple.

A couple of years ago I wrote an article that was widely praised for calling out the prevailing problems in measuring the ROI of social enterprise. They were, and for the most part remain, as follows:

  1. We do not know what to measure (What impact do we seek?)
  2. We do not know how to measure it (How do you measure “better”?)
  3. We don’t know when to measure it (How long does it take for better to happen?)

That said, we have seen a couple of bits of progress in the realm. The first speaks to the nature of the problem. Since we do not know how to reduce social business systems into measurable constituent parts, we have begun to measure the whole. We can’t explain the precise mechanism, but there is a growing body of evidence that employee engagement is strongly correlated (probably) with excellent leadership and enabling and encouraging social-collaborative work. Employee engagement is strongly correlated to corporate performance.

We’ve also begun measuring participation in social and collaborative technologies. This is an undeniably funky measure of whether they are “working,” but at least indicates the value to the group on a day-to-day basis. Many collaborative work environments are now being carefully measured in terms of how much they are used. The problem is, with a few exceptions (my own company, Jostle.me being one), usage patterns and adoption have been somewhat disappointing. These usage measurements -- frequency of login, number of posts, etc, often lead people to believe that social technologies fail. But if you read the oft-cited Gartner study more carefully, what you find is that social efforts without leadership and purpose fail.

The point here is this. There is a growing body of MEASURABLE evidence that companies where employees actively contribute more of their capabilities to the organization -- often through social leadership and collaborative and connective technologies -- have better financial outcomes, with consistent improvement in profitability over 20 percent.

There’s another point, too.

Charles Handy, an organizational scientist from the mid-twentieth century, ascribes this quote to Robert McNamara, the US secretary of defense during the build up of the Vietnam war:

"The first step is to measure whatever can be easily measured. This is OK as far as it goes. The second step is to disregard that which can't be easily measured or to give it an arbitrary quantitative value. This is artificial and misleading. The third step is to presume that what can't be measured easily really isn't important. This is blindness. The fourth step is to say that what can't be easily measured really doesn't exist. This is suicide."

The meaning is this: Our rationalist reductionist models have great value. But they also have limitations, which must be respected. Sometimes the question is more important than the answer. It is the question gives us direction and a reason to go forward.

The best is yet to come.

Title image by Chris Jenner / Shutterstock.com