I want to dispel a myth that I keep hearing and that myth is about the ROI of emergent collaboration technologies. We keep hearing about the challenges with measuring and showing ROI and how that is a sticking point for executives and decision makers at companies. The problem with this is that there will never be an ROI from an emergent collaboration technology precisely because technology is just that…technology. We are talking about tools that enable us to collaborate and do “things.” The ROI or the value comes from the activity and from the actual collaboration, not from the technologies themselves.
You can take data and make it look like almost anything you want. In fact you can paint either a negative or a positive picture with the exact same set of data so just because you have numbers attached to something doesn’t always mean that those numbers tell the best story.
Which leads me to my next point, measuring the value of intangible assets such as effective collaboration, knowledge, and information.
How do you measure the ROI of intangible assets? I’m sure there are a lot of responses and ideas on this topic, in fact books have been written on this very subject. My response to this?
“It’s in the sauce”
What do I mean by that? Intangible assets such as effective collaboration and knowledge are one part of several ingredients that make up the “sauce” of whatever it is we are making. For example let’s say we are looking to work on a global project together to develop a new revenue model for product X. To do this we need to find the right subject matter experts to work with (among many other things). We use our emergent collaboration platform, find the best people to connect with, build the product, and finally develop a working revenue model. Now that the product has been developed and is generating revenue how to we attribute a certain portion of that revenue to our ability to find the right people to work with on that project? Would that project not have come to fruition if we hadn’t used those tools? Probably not. The ability to find the subject matter experts for this project was a part of “the sauce” that was used to complete the project, it was an ingredient.
Sure, we can look at time saved and potential new revenue opportunities and while these are useful to help show ROI they show only a very small part of the value of emergent collaboration. This is an ingredient that will be found in almost anything and everything that the company does.
In the book Strategy Maps: Converting Intangible Assets into Tangible Outcomes,” Bob Kaplan and David Norton note:
“None of these intangible assets has value that can be measured separately or independently. The value of these intangible assets derives from their ability to help the organization implement its strategy… Intangible assets such as knowledge and technology seldom have a direct impact on financial outcomes such as increased revenues, lowered costs, and higher profits. Improvements in intangible assets affect financial outcomes through chains of cause-and-effect relationships.”
Andrew McAfee, author of “Enterprise 2.0″ uses the analogy of trying to credit one player on a sports team for winning a game, it doesn’t work like that.
I have a lot more to say on this topic but it will be included in by book on emergent collaboration which is due out next summer.
In the meantime what do you think about the ROI or value of emergent collaboration?
(Cross-posted @ Social Business Advisor: Social CRM and Enterprise 2.0)