When organizations deploy collaborative technologies and strategies to connect and engage their people and information they see all sorts of benefits. These include improved access to people and information, reduced travel costs, opportunity identification, issue resolution, employee engagement, improved employee retention, reduction in content duplication, and a host of other things. So, theoretically there should be a lot of money that is being either made or saved as a result right? Yet how come we don’t see these numbers reflected on financial statements? Is there a “collaboration revenue generated” or “money saved as a result of collaboration” section? Of course not. So then what is happening to the value that collaborative technologies and strategies are generating?
There are two possibilities. The first is that collaboration is just a giant scam forcing organizations to purchase technology and invest in strategies that really don’t do anything. The second is that we have a hard time translating intangible assets to tangible dollars.
At the end of the day the collaborative technologies and strategies that organizations are investing in are focusing on intangible assets, which are information, connection, accessibility, and engagement. There are plenty of research reports from analyst firms which adamantly state that organizations are making or saving a lot of money, but how many organizations are actually showing this in their financial statements?
Dealing with intangible assets isn’t new, companies have had to this for many years around intellectual property such as patents. However, the big difference now is that we are dealing with massive amounts of intangible assets across our organizations. Trying to value one good idea or piece of feedback is hard enough, try doing it with thousands on a regular basis.
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.”
So even though an organization knows that the time it takes to solve a customer issue is reduced, that employees are spending less time dealing with email, that it’s easier to access people and information, or that the rate of innovation is increasing; they still are having a very difficult time translating this into dollars and sense that show up on a financial statement.
Consider this comment that Marc Strohlein left on my blog a while ago:
“The concern over ROI is a passing phase as we move from hierarchical command control organization structures to network organizations. The concerns and risks associated with emergent social technologies have little to do with the technologies–they have much more to do with management and culture. My first IT job, back in the early 1980′s, was reviewing applications from employees who wanted PCs and had to submit a business case with an ROI estimate. That concern passed and “this too shall pass.”
Imagine having to make a “business case with an ROI estimate” to get a computer. Going forward organizations are going to continue to realize that what is generated as a result of collaborative technologies and strategies isn’t ROI based it’s value based. It’s a way to allow the organization to continually implement its strategy. There isn’t a single business leader that I have spoken to or worked with who doesn’t realize the value created by connecting people and information anytime, anywhere, and on any device.
So where is the money going? It usually gets absorbed by the organization and becomes “a part of the sauce.”
Curious to hear your take on this, leave a comment with your thoughts below.