November 9, 2009The dark side of ROI and uninformed expectations
In 1972, when my political statistics professor opened up the world of measurement to me, I was on fire. I loved the idea that everything could be measured. My first job was developing measures of effectiveness for police departments. But I quickly discovered that there is a dark side to measurement. It’s easy for what you can measure to determine value rather than having value determine what you measure. It’s also easy to pretend you can measure everything. You can’t.
I’m following a great discussion in a speaker group about ROI (Return on Investment) with professional speakers. Can a speaker prove that his or her presentation positively affects the bottom line? One speaker noted that a meeting planner might ask a speaker to prove ROI, but a CFO would laugh you out of the building for suggesting that you could.
Here’s the dilemma for the speaker. When a client asks about ROI, does the speaker go along with the request, or clarify? The one speaker posted this:
“The meeting planners are asking for ROI/looking for it, because it is a term they hear from from
the C-Suite, understand it as being a ‘good thing’, and are disinclined to point out to their own brass that ‘this cannot be done here’. Instead they tell their vendors they want it, and the vendors, turning out to be
similarly disinclined, are scrambling to deliver.”
Of course, the broader SpeakStrong issue is: whether you are concerned with ROI or not, what do you do when you are asked to meet uninformed expectations? Do you fake it? Do you clarify?
Whatever your industry, I’m sure you are familiar with the tyranny of measurement. It could be Performance Reviews that are based on criteria that reflect what can be measured rather than what matters. It could be needing to prove revenue increases before your project has come to fruition.
Whatever it is, before you suck it up and pretend the impossible is possible and the inappropriate is the new holy grail, consider putting a new frame around the whole conversation. Something like,
- There are better ways of determining value in this situation than ROI. Here’s how I demonstrate value.
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I agree that proving ROI for a speech or even a training program can be tough, if not impossible. I like to use the concept of ROE (return on expectations) instead. What do the meeting planner, executives, and other stakeholders expect from the program? How will we know if I meet their expectations?
Wendy
Comment by Wendy Mack — November 9, 2009 @ 1:23 pm
Wendy is correct, a “return on expectations” is a powerful way to gauge the effectiveness of activities which do not directly involve a monetary transaction. In an ideal world each speech or training program is integral to the goals of a department and the goals of the department support the goals of the company. Ultimately the goals of the company affect the profitability. Eventually training effectiveness does have an effect on profit and ultimately ROI. Imagine if a fast food restaurant spent a large amount to ineffectively train its staff in customer service; profitability would suffer and the return on investment in training would be poor. So, ROE for the appropriate functions and ROI for the overall enterprise seems to be the correct view.
Comment by Larry — November 11, 2009 @ 5:28 pm