Over the last few weeks I have been discussing, overheard and read about Enterprise 2.0 Return On Investment (ROI). I’m familiar with this term having used it in the past to justify and overcome financial objections when investing in IT technology. ROI is a cost saving measure with the argument being: you invest in this product or service now; you will pay off the initial investment by this date; and then you are left with a reduced operational cost.
Firms invest in IT to reduce costs through increased efficiency or invest to increase revenues by gaining long term competitive advantage. In the 1990’s investing in an email infrastructure was justified on early mover competitive advantage and today email has become so commoditised it is seen as a cost of doing business. Businesses and some suppliers are attempting to put an ROI on Enterprise2.0 tools but history shows ROI does not work with collaborative tools.
Our current management approach to business teamwork projects is woefully ineffective as highlighted by the research in Susan Scrupski excellent blog post. Enterprise2.0 has the potential to bring valuable business benefits through increased team collaboration, however cost saving ROI IT projects are often seen as a more attractive option because of the short term measurable gains.
A typical project to innovate a process or product can be challenging to measure and has a high possibility of failing, let alone delivering an ROI. The result is firms choose not to innovate because of the risk of failure. Sucessful innovation projects often come from the people on the ground who understand customer problems and needs. Enterprise 2.0 can bring competitive advantage through the firms often most expensive and unique asset, their people.
But how far do we go? Pampering staff seems to be a trend in software development firms such as Google with their free cafe, games rooms and other generous benefits. Compelling benefits are also being used by small firm such as Carsonifeid in the UK offering a Macbook/iphone and 4 day working week for new employees and 37 Signals also on a 4 day week will even pay for your hobbies.
People are not machines that produce at a constant fixed rate and ROI does not work with them or the tools they use. Making a knowledge worker work at a continual high rate or long hours does not increase the employers return. The focus needs to be on quality and not quantity output. The time management guru Tim Ferriss refers to attention currency and the innate human ability to only have so many quality attention hours. Googles benefits are not just trying to attract the best quality staff, they are also providing an environment where the people have the energy and time to create together.
Knowing the numbers is key to any organization, however if the focus shifts to working overly by the numbers we can lose sight of our people and unhappy staff effect future profits. Because of the perceived long term and unclear returns many firms are unwilling or unable to take a more quality approach on teamwork. This is the challenge in justifying an Enterprise 2.0 management approach and the associated technologies.