ROI - Rationalizing Our Insecurities

The way organizations look at project initiatives, one would think that no move, no investment decision, ever proceeds without a clear return-on-investment calculation. Such a calculation is then followed by the obligatory sign-off by everyone who might have something to say about how funds are spent, all to ensure alignment with organizational strategy. Is this really what is going on?

My guess, my suspicion, is it has more to do with paranoia than alignment. It has more to do with fear than leadership. Leadership sets the direction, crystallizes the vision, and rallies the resources for achievement. Return-on-investment is a necessary step but it is not, no, it should never be, the sole determinant of a go/no-go decision. Six Sigma rightfully rose in prominence because it provided a means to measure that which was thought immeasurable. The DMAIC framework provided assurance that improvement would translate to the bottom line. But Six Sigma's DMAIC approach demanded the rigor of:
1. Clearly defining the goals in objective, no-nonsense, measurable terms and,
2. Establishing a valid, valid reliable, and meaningful measurement system.

That there are no shortcuts to precision is the beauty of Six Sigma. It is successful today because it objectively and precisely addresses the paranoia that is present in many of our organizations.

Return-on-investment can be as valid and reliable if such objectivity and precision is used to identify the realized value of the effort. But too often we fall short in:
1. Clearly defining the goals in objective, no-nonsense, measurable terms and,
2. Establishing a valid, acceptable, and meaningful measurement system.

Look familiar?

ROI is no worse than any other criteria that might enter into the decision criteria. Unfortunately, ROI is used as a crutch. It is one of the necessary steps in any project plan and is too often hurried. Without the rigor of objectivity and measurement purity we see in Six Sigma, ROI may become a "check-in-a-box" of the project plan. If it is based on solely on assumptions that were uncovered in benchmarking other institutions, it has no relevance to our culture, our constraints, our challenges, and the way we execute projects.

That's when leadership comes into the picture. One has to have the courage of conviction that Service Management is going to be "the way we do business from this point forward." Can you benchmark others to see what they have accomplished with Service Management? Yes! Can you assume that what worked for them will generate the same return-on-investment for your organization?

You can only make that assumption if you can measure it. If it's the right thing to do, leadership must step up to the task of making a case for it.