The current structure and way of managing
our companies is basically the same as when the first companies started in the
beginning of the 1900’s.
Ford and mining companies are really good
examples. The focus was on delivering the products as fast and as cheap as
possible. People were just a tool to make this possible. A manager was someone
who had done that particular job himself before, so he knew all the details.
The employees were not supposed to come up with their own ideas, as that was
the role of management. And when they encountered a problem, they asked the
manager for help. As he knew the details he was able to support them.
The most important investment was the
investment in machines. Hence, the metric of ROI (return on investment) became
a driving factor in decision-making. The measurement of ROI spread into the
Corporate environment like a contagious disease. Nothing can and will be done
if there is no ROI projection available. Whether it is a project or a new IT
system, or a new service or a change in the business model. They all ‘need’ a
ROI projection. A lot of time is spend (‘wasted’) on creating business cases to
support these new initiatives. Semi-scientifically people come up with
favorable ROI projections, because if they are not, their project won’t be
sponsored. In a lot of cases this creates a fake reality, because the numbers
are made more favorable than reality permits. Sometimes it is even impossible
to come up with adequate numbers, but if you don’t provide numbers, your idea
This way of organizing, managing and
measuring a companies performance has become the norm. Even in today’s
radically changed circumstances.
In Western countries more than 80% of GDP
is related to services, so the services economy is dominant. So, it is no
longer the machines which produce the results, but it is all about people who
are the service and deliver the service themselves. The emotional value, which
you deliver through your services, is becoming just as important as the
economic value. A service company is nothing without its people. What remains
is a building with a sign above the entrance with your name and that is it.
Nothing comes out of this building without the people. So, we need a new
definition of ROI, which is more in line with the actual state of the business.
It would be good to add the following
definitions of ROI:
Return On Involvement
Return On Ideas
Return On Intelligence
Return On Integrity
These new definitions are more suited for
service-environments were people are the dominant factor, and no longer
However this new perspective on ROI
requires a new way of thinking, a change of habits. This is not easy.
In The Age of the Unthinkable, Joshua
Cooper Ramo says it as follows: “Unfortunately, whether they are running
corporations or foreign ministries or central banks, some of the best minds of
our era are still in thrall to an older way of seeing and thinking”.
Only when you have the real will and
urgency to change your thinking, you are capable of doing it. The fortunate
thing about the current crises is that more and more leaders are feeling stuck.
They don’t know how to handle all these challenges. This could be the ideal
time to help them with new perspectives and a new way of thinking. New times
require new metrics.
Would you like to focus on the old ROI or
(also) on the new ROI?
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