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Group Decision-Making

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ROI by Frank J. Rich

 

 

 

 

 

 

By Frank J. Rich

 

Making decisions within a group can often be challenging. When things go well, they can go very well. However, when things go wrong, groups can end up mired in conflict. Some group members may fight for recognition and position, others may be over-critical or disruptive, while still others may sit quietly and not contribute anything to the overall effort. Because of this, groups can often spin out of control and make poor decisions, suggesting that decisions by individuals working on their own is a better approach.
When this happens, it’s easy to see why some throw up their hands in frustration and give up. But when a group works in effective ways, it really works. Groups that function effectively together can outperform individuals and make much better decisions.
But how do you make your group effective? How do you get all members to contribute and inspire one another to great ideas and solutions? One way is to “prepare” the group for success. This is a “tried and true” method, and is applied across the board in most decision-making. Good preparation makes good practice, and good results.
•    Set an agenda that requires interaction. Ask group members to speak of their experience with the meeting topic and how it might contribute to an understanding of the issues and the expected outcomes. Alerting them to the interactive exercise ahead will stir their creative juices.
•    Assemble those who would carry the initiative forward — that is, those who have both the skills and the inclination to contribute to the venture going forward. You’ll begin to see the workings of the team you’ve assembled and form a view of the cohesiveness of the group and any missing links.
•    Ask group members to recommend the talents of those in the room for assignment. Each ought to be given the opportunity to elucidate the special talents of group members. This prepares people for the selfless dedication to the other’s success that best informs teamwork.
The Stepladder Technique
The Stepladder Technique is another useful method for encouraging individual participation in “group decision-making.” This simple tool manages how members enter the decision-making group. It encourages all members to contribute on an individual level before being influenced by others. It results in a wider variety of ideas, prevents people from “hiding” within the group, and it helps people avoid being “stepped on” or overpowered by stronger, louder group members.
How to Use the Tool
The Stepladder Technique has five basic steps:
Step 1: Before getting together as a group, present the task or problem to all members. Give everyone sufficient time to think about what needs to be done and to form their own opinions on how to best accomplish the task or solve the problem.
Step 2: Form a core group of two members. Have them discuss the problem.
Step 3: Add a third group member to the core group. The third member presents ideas to the first two members BEFORE hearing the ideas that have already been discussed. After all three members have laid out their solutions and ideas, they discuss their options together.
Step 4: Repeat the same process by adding a fourth member, and so on, to the group. Allow time for discussion after each additional member has presented his or her ideas.
Step 5: Reach a final decision only after all members have been brought in and presented their ideas.
The Stepladder Technique is similar to the Delphi Method, another tool that’s often used in groups to prevent Groupthink* and to encourage participation. While both tools have the same objective, they differ in a few key ways:
•    In the Delphi Method, an objective facilitator or leader manages the group. In the Stepladder Technique, all members are equal.
•    The Delphi Method keeps members anonymous. The facilitator manages the flow of information, and members may have no idea who else is in the group. The Stepladder Technique involves face-to-face meetings, so everyone knows who the other members are.
•    The Delphi Method is a lengthy process, while the Stepladder Technique is much quicker.
•    The Delphi Method is often used for major decisions that need input from a large number of people. The Stepladder Technique works best with smaller groups that make a wide range of decisions.
Some groups can begin to lose their effectiveness and ability to make quality decisions if they have too many members. Keep your group small — four to six team members — to maximize effectiveness.
The Stepladder Technique is a step-by-step approach to help ensure that all members of a group participate and are heard. The technique allows shy, quiet people to present their ideas before other group members can influence them, and it allows everyone to hear many different viewpoints before reaching a final decision. All of this helps the group make better decisions. The techniques help curb worker ferment and eliminate fainéant members who fear engagement.
*Groupthink is a phenomenon that occurs when the desire for group consensus overrides people’s commonsense desire to present alternatives, critique a position, or express an unpopular opinion. This is what happens in the legislatures of most nations, where the unique view of parties divides people in the decision-making process into membership of a common view.

 

Frank Rich is founder and CEO of Encore Príst International, an organizational development company that helps individuals
and organizations reach their full potential through the practice of effective business fundamentals. You may reach him at
fjrepi@gmail.com, or by phone at 866/858-4EPI.

October 7, 2019 |

Crazy…?

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ROI by Frank J. Rich

 

 

 

 

 

 

 

By Frank J. Rich

 

The opportunity in most things is hidden treasure. We seldom see what’s in plain view until another has made great use of it. Think Play-Dough, smelly insulation in its original guise, and Silly Putty, the accidental combining of Boric Acid and Castor Oil. Though many come to mind, few were apparent at first glance. Why would any build a new mobile phone in the midst of a dozen competitors having trouble growing a 20 percent share of market? Clearly, all could do the math, (100/12 = 8.3%). That notwithstanding, while others were building mobile phones, Apple Computer designed and delivered a new use model for the ubiquitous “hip cricket.” The rest is history, as they say.
So, what was Amazon management thinking in buying Whole Foods. While many are scratching their heads over the acquisition of the landmark quality organics-bred and “brick n’ mortar” food chain, the reasons are both apparent and jointly held. It’s Amazon’s data strategy that is at the root of the offer, and one that may transform retail as we know it. Oddly, there’s nothing new or strange about the idea that getting to know one’s customer leads to greater sales and a secure “retention revenue model.” From the use of POS systems in the 70’s, retailers understood the potential in “data collection and use” as they began to track inventory to grow operational efficiencies and move a little closer to the needs of customers. Fast forward to “the consumer” and Big Data looms as the way to spike retail sales by the very principles that have existed since the first exchange of goods and services in kind.
In tomorrow’s (Amazon’s) model, every transaction is recorded, every buyer is known, every inventory change recorded, and every possible next order can be suggested based on what visitors buy and browse.”  It is the secure belief that all data must be collected, analyzed and used; a very different model than the practice of most retailers today. It may also be the re-invention of retail’s future. A majority of major retail brands list data mining and analysis as the largest of their investments. Not coincidentally, they share another view: the belief that their industry is at risk of falling prey to creative destruction, that which transformed the media advertising industry since 1995.
The “signature idea” is to enhance the customer experience by warming to their needs and presenting the choices that encourage the freedom to uniquely qualify all in the process. Individuals are made of their choices, unique and fulfilling. Retail has always succeeded when sensitive to this fundamental insight. The net: if you don’t have a Big Data strategy that includes multichannel marketing you will fall victim to the destructive innovation that is building steam in the marketplace. Its root motivation is a shift in consumer spending away from products, and toward experiences. Of course! A good customer experience is the holy grail of retail. What each retailer does to enhance this vital relationship will determine whether they sink or float atop the wave of destructive innovation that is rising in the marketplace.
Successful retailers find ways to expand relationships with their customers, which are fueled by exceptional “customer service, creative loyalty programs, and unique, authentic in-store and online experiences.” Finally, retailers will need to leverage technology to maximize their multichannel efforts and to better understand customers and the consumer at large. Millennials, for example wield purchasing power in excess of $200 billion annually. As always, our youth distinguishes themselves by model approaches and attitudes that form their unique profile. Those that have resisted multichannel operations are on a short rope. A narrow focus on a particular channel will fail in the long run for most, since only a multichannel approach will succeed in time. All retailers must move to it to maintain market share.
A recent Retail Sales Marketing survey suggests that “… retailers successfully leveraging multichannel marketing realized a 36 percent increase in sales in a12 months period and are expected a 27 percent increase in the following 12 months. More importantly, survey respondents indicated they’ve seen a 40 percent increase in new customers in those months.” Those that fail to embrace multichannel marketing will continue to lose market share.
Finally, a strong workforce, one that’s trained and conversant in products and brand, particularly for local retailers, is fundamental to overall customer service.  Rising labor costs, scarcity, and employee retention are key to building a skilled workforce dedicated to its brand and core philosophy; a critical cog in the wheel of retail success. Consumers want access to products on their terms and will develop lasting relationships with those who meet these expectations. The workforce must rise to the demand for knowledgeable, helpful, convenient, and goal-directed assistance.

 

Frank Rich is founder and CEO of Encore Príst International, an organizational development company that helps individuals
and organizations reach their full potential through the practice of effective business fundamentals. You may reach him at
fjrepi@gmail.com, or by phone at 866/858-4EPI.

October 7, 2019 |

Adult Supervison

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ROI by Frank J. Rich

 

 

 

 

 

 

By Frank J. Rich

 

Efforts to inform organizations of “authentic leadership” play variously well across the marketplace. Some, schooled in the principles and practices of leadership, are enamored of the process of learning more about it and warm to the opportunity. Others “show up” because they’re told to do so, or believe it’ll be bad for them if they don’t. It’s a common scene, whether on the speaking circuit or inside the bowels of an organization — some follow their beliefs, others their noses.
The principle in this discussion (I’m trusting that some of you are “believers”) is “oversight”— that elusive but necessary part of all endeavor that underlies the system of accountability necessary to achievement. “Accountability” may be defined as responsible to someone for something. Its meaning forms other words and ideas, depending on your “experience and understanding”— that vital repository behaviorists call the unconscious mind. But, whatever your sense of the word, a system of accountability must be in place before we can begin the process of achievement — before we can apply the principle of oversight.
Each of us is subject to authority — a decision (or pattern) that confirms the desire or habit that reveals it. If we believe in what we’re doing — building companies, citizens, or communities — we can readily identify the hierarchy around us. A belief in something, or someone, requires trust, that niggling urge in us that measures our cautionary response. We will cross through that amber light or we won’t, depending on the measure of trust in our ability to make it through unscathed. We will follow the mission and vision of the organization we have “chosen” to join, again, by the measure of trust we place in them or ourselves. This last decision has an interesting sidebar that also measures the character of our approach — either outside/inside or inside/outside. You can muddle over that or write to further the discussion.
One more ingredient in this recipe for achievement is agreement. We must have it before we can form expectations of an organization or another, indeed, ourselves. Without it we are asking of others more than we have the right to. So, there you have it. We must believe to achieve. We must trust to believe. We must form agreement to define the thing/person we will trust. And we must have that agreement in place before we can be held accountable, before we can exercise oversight of the things that define achievement.
I admit to borrowing the title of this column from a Sarah Palin speech to Alaska legislators after her installation as Governor. She told them: “All of you here need some adult supervision.”
In simple terms that’s what accountability is — the oversight given authority by the agreement between people and organizations and people and people, to achieve some common end. But in the march to achievement most efforts break down. Why? The question has been impetus to hundreds of books and articles by the studied in fields as different as psychology and nutrition. Simply, we all need supervision — or, as is said in publishing: “every writer needs an editor.”
Unfortunately, we are uncomfortable accepting it, and generally won’t from those we don’t trust. And, we are too often petulant in the belief that guidance means we are not doing our jobs. It often goes like this:
Don, how are you doing with the things we agreed are necessary to growing an understanding of the business in order to satisfy the goals of your department? You know, understanding what the market is doing, how the customer behaves under circumstances, and the technology that informs efficiency.
Don typically replies: Are you saying that I’m not doing my job?
Self-esteem aside, we are so often managing a fragile psyche that we fail to adhere to the principles above that most could recite with ease. Oversight is not only necessary, but is also an opportunity to form the bonds of trust that effective communications provide. The more you talk with others, the better you are at relating to them on a variety of levels. Coupled with a full-disclosure approach, we are better able to assuage hurt feelings, confront issues of conflict, learn the styles and personal goals of others, as well as the cultural underpinnings of unique organizations. Oversight is involvement, not “micro managing.” It is the very essence of relationship in an execution culture.
I’ve heard candidates Obama and Clinton scold Congress for poor decision-making, each making the point that our government is constitutionally bound to operate “for,” “by,” and “of” the people — oversight! They were right in suggesting that the organization they work in has a dysfunctional nature, and that the people of the U.S. are the landlords of this nation — indeed, the overseers of its “doings.”
The principles are clear; perhaps, even next steps. But your part in oversight is needed. Which will you do — accept or provide it? Little else works!

 

Frank Rich is founder and CEO of Encore Príst International, an organizational development company that helps individuals
and organizations reach their full potential through the practice of effective business fundamentals. You may reach him at
fjrepi@gmail.com, or by phone at 866/858-4EPI.

October 7, 2019 |

Pluck

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ROI by Frank J. Rich

 

 

 

 

 

 

By Frank J. Rich

It is better to set our aim too high and miss it than to set it too low and hit it, or so said Michelangelo. If organizations are the model of “results in the making,” the propitiation of good plans and execution, it is likely that audacious goals set the mood in them. In fact, it is seldom that anything but “bold moves” will affect the marketplace. Yet, few have the “pluck” to attempt them.
“Pluck” is variously defined as courage or resolution in the face of difficulties. We see it in the decisive and steely resolve of “authentic leaders” everywhere, and in all those who lead successful “any-things.” They include those who raise good families, who go to work each day with a purpose beyond oneself in mind, and who consider that to “affect others for the good” delivers the best results.
In this political season what would Aristotle say to those on the podium about how to persuade? He would say that, aside from “tortures, depositions, and the like,” there are only three ways: “logos, pathos, and ethos.” In simple terms that means, logic, emotion, and character. Put it all together, and you get a reasonable argument, passionately made, by a person you trust. Add “pluck” and you have a compelling package of persuasion.
But what does this have to do with the ROI in building successful organizations? Everything!
In the weeks before the 2008 general election we were introduced to Sarah Palin, a relative unknown, until she was drafted as the vice presidential running mate of John McCain. She made a good impression on America with a clear mind, cleverness, and plain-speaking honesty. She came across as being a “regular person”— a devoted family member, the mother of a special needs child, a passionate believer in country and the hope in its people. She also had “pluck,” that innate confidence in herself that spells a self-assurance and belief system of persuasive value. And, it appears she was successful at affecting others by it. The polls show that America responded in kind.
Sarah Palin is not alone in possessing this all-important ingredient of authentic leaders, revealed in quiet moments by their work and louder by the powerful phrase of action it communicates. Gandhi had it; so too, George Washington and Harry Truman. Hillary Clinton is among those with “pluck,”as was Julia Child and Vince Lombardi. They all had it; they all exerted a persuasive energy that compelled others to greatness on some plane.
John Adams had “pluck.” Known for his acerbic wit and incisive style, he would regularly corral his brethren by steely summary statements of purpose and insight. Among them was the assertion that “the Constitution of the United States is meant for a moral and religious people, and would not work for any other kind.” That’s “pluck,” and not coincidentally, borne out in America’s experience.
The work of organizations — non-profit and commercial alike — requires the best of all to achieve their goals. It requires that we take risks, having the courage to do so with confidence, courage born of self-assurance and belief in the purpose and ideals of our organizations. It requires “pluck.”
Unlike Plato, Aristotle’s mentor, who believed in logos as the only legitimate way to win friends and influence people, Aristotle was willing to look beyond “strictly rational appeals.” Pathos allowed that emotional appeals persuade as well. Thus he wrote: “Style makes a matter more persuasive.” Finally, he wrote: “Character contains almost the strongest proof of all.” Simply, it matters “who” is trying to persuade us. If the person trying to influence us shows “common sense, virtue, and goodwill,” we are more likely to trust in him.
We have learned that “peoples,” those joined with a common goal, have a conservative ethic. While they generally allow the differences in others — a kind of inner security that encourages uniqueness — they hold to a personal ideal that respects integrity, consistent behavior, and decency. They are not anarchists, despite the freedom to speak out about anything of concern. Nor are they pleased to see their own cobbled by drug abuse, unwed pregnancies, or the egregious use of power that corrupts organizations. Ultimately, they forgive most things — a conservative nature.
In forming a “better union” with others it is necessary to exhibit the character that Aristotle extols above. At times it takes courage to do so; it takes “pluck.” If we are to win the battle, in organizations, in government, in life, we do well to form these character traits. We do well to find the heart in matters, as spoken by Theodore Roosevelt, a man of considerable pluck.

Courage, hard work, self-mastery, and intelligent effort are all essential to successful life. Character, in the long run, is the decisive factor in the life of an individual and of nations alike.

 

Frank Rich is founder and CEO of Encore Príst International, an organizational development company that helps individuals
and organizations reach their full potential through the practice of effective business fundamentals. You may reach him at
fjrepi@gmail.com, or by phone at 866/858-4EPI.

October 7, 2019 |

The Most Powerful Tool

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ROI by Frank J. Rich

 

 

 

 

 

 

By Frank J. Rich
Agreement may be the most powerful device known to mankind. Most everything we know is formed of it—treaties between governments, laws within them and contracts of all kinds, marriages, and the terms of life. Even the oddest of partnerships is formed by agreement, such as a nut and bolt, a bottle and cap, a horse and carriage, etc. We’re getting carried away; you see the point.
The logic in agreement reveals “disagreement” at its root. We come together over differences, or no effort could be measured by the process of agreement, or by agreement itself. Most distinct and disparate positions and things must find agreement to coexist. Metal has no natural affinity for plastic, yet they can be bolted together or fused to form a better result for both—one providing unique strength, and the other light weight and color adaptability. The plastic and metal combinations on an automobile are examples, each contributing uniquely to deliver a better result—lighter, more durable, and fuel efficient.
For the most part, agreement produces a better result. It is the purpose in diplomacy, preventing or stalling a bellicose alternative, at least until livable terms can be worked out. Agreement reveals another important element; that is, the desire for harmony. It is, unfortunately, not always accompanied by the will for it, thus leading to strained relationships. Simply, agreement is the forming of relationships… between people and things. It is not only necessary to a world in constant change, but also vital to it.
A more useful way to see agreement is as: 1) establishing joint vision, 2) the end product of an effective conflict-resolution process, or 3) and, as the foundation for success of any new team, partnership or relationship.  This is true whether it is with your business partner, colleagues, work teams, joint ventures, or your company and its employees or customers.
Collaboration, the coordinated activities of people working together, is the foundation of any accomplishment.  Successful collaboration is like dancing; often we have different ideas about the steps in the dance. These differences can lead to greater synergy or to breakdown.  Because agreements define how we coordinate, excellent results depend on clear agreements. The art of crafting effective agreements is the lever that increases the potential for desired outcomes.
There’s an important distinction between agreements for “results” and the familiar “agreements for protection,” which are negotiated from an adversarial perspective. The latter shifts the focus from what you want to create to what can go wrong.  They foster an adversarial climate in new relationships, when you desire collaboration and joint vision.  Protective agreements have diminishing value in our complex transactional milieu. When agreements focus on results our attitude turns decidedly positive. We are no longer looking at what can go wrong, instead, focusing on what are the right results.
The effort at forming agreement is toward building a partnership for performance. This is simply the outcome we hope for, plan for, and the mechanism by which we achieve a win-win-win for employee, employer, and customer. Agreements are necessary to any accountability system—we cannot reasonably expect of another what we have not agreed to. They are also key foundational elements to the measurement of agreed upon goals against performance. They are the glue to high-functioning organizations. And, they encourage a learning attitude, a trust-based environment, creativity, and a “we culture.”
Learning the Art of Agreement
In forming agreements, we must know where we’re headed; what we hope to accomplish by them. This is the intent in agreement, or why it is formed. The process of agreement might take any number of approaches, but all must include the following, beginning with intent or setting goals.
The next step is to define the area(s) of responsibility and the attendant duties in them—the roles of all stakeholders. This is necessary to forming the vital commitment to results that must be made by both parties.
Measurement metrics are next—the things that make agreement less ambiguous and more real.
Ask:
•  What areas of responsibility do I want to influence?
•   How will I know the job is being done?
•   What will good performance look like on each goal?
Judge the competence of the stakeholder(s) and their commitment. The first helps match the appropriate leadership style to their needs; the latter is the all-important measure of willingness.
Match the leadership style to the needs of the stakeholders whose performance you wish to partner with. A self-reliant achiever, for instance, requires a different leadership style than the disillusioned learner. Poor matching can risk the loss of commitment in stakeholders.
Be certain to put time stamps on expected outcomes; open-ended commitments have little emotional content, resulting in a casual approach that produces a similar outcome.
Agreement is necessary for those whose performance and alignment is productive and secure, as well as for those tangential to the organization. Encouragement is “condition blind,” but it is important to register both the commitment and willingness to improve performance. Without these, no partnership is formed as the parties are unequally yoked, pulling in diverse paths.
The opportunity in agreement is the “like heartedness” that produces extraordinary results. It’s a multiplication effect, and the thing that empowers teams.

 

Frank Rich is founder and CEO of Encore Príst International, an organizational development company that helps individuals
and organizations reach their full potential through the practice of effective business fundamentals. You may reach him at
fjrepi@gmail.com, or by phone at 866/858-4EPI.

October 7, 2019 |

The Puzzle Is a Picture

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ROI by Frank J. Rich

 

 

 

 

 

 

By Frank J. Rich

 

Most of us find the path to solutions by methods unique to us. It’s that quality that defines us as individuals, and we revel in the view that there is no other quite like us. At the root of such methods are the dynamics of life, the things that influence our decision making, those we consider on our way to finding a solution. But when specifically tasked with a problem to solve, we usually turn to sequential logic or thinking. This method is a step-by-step linear thinking over time, while the holistic approach, where all knowledge is interconnected in space, is called spatial or visual thinking.
The sequential system relies heavily on what has happened before, and involves analysis, progression from simple to complex, organization of information, and linear deductive reasoning. Hearing and language and an awareness of time are also influences. In contrast, spatial thinking involves synthesis, an intuitive grasp of complex systems, (often missing the steps) simultaneous processing of concepts, inductive reasoning (from the whole to the parts), use of imagination and generation of ideas by combining existing facts in new ways (creative thinking). It is influenced by “visualization and images” and an awareness of space.
The fifth “mindset” in John Naisbitt’s book, Mind Sets! suggests that we “see the future as a picture puzzle.” According to Mr. Naisbitt, to see the big picture better informs a view of the future. As it happens, it works as well for other things. Let me explain.
I was once given a puzzle (along with a number of others) to ponder while a magician tidied up after his performance. It looked simple enough and quickly brought us all to a preoccupation with finding the solution to it. It was a piece of paper with a small hole at one end. In the center of the paper’s length was a narrow strip that had been cut and lifted away from the paper, though still connected at both ends. Through it was a string, which also threaded the small hole. And at the two ends of the string were tied round balls—too large to fit through the hole.
As I considered the puzzle, I looked first at how simply it was put together, then abandoned any notion of an easy solution in favor of some arcane knot tying that would surely solve the problem. “Just how did I do this as a child?” I thought. I worked earnestly at discovering the genius that held so many in stupefying rapture—each working hard at his own “step-by-step” process of elimination. In frustration, one among us pulled hard on the string end with the balls tied to it, and discovered the solution, not a moment before tearing the strip from its mooring. Amazed at the solution, we all saw the “picture” that had eluded us before.
We have all heard the expression, “You can’t see the forest for the trees.” It’s common enough to take its meaning easily. That is, that our narrow focus on the trees often sacrifices the larger view of the forest. In wrestling with the magician’s puzzle, we had prepped ourselves for the work of sequential thinking—eliminating one “trick” answer to the puzzle after another as though our logical minds would come upon the solution in time. It didn’t! Later, I heard most say that they knew the balls (which would not fit through the small hole) needed to be somehow relieved of the connected strip in the center of the paper. A simple tug on the balls would have pulled the strip through the hole, where the string and balls could easily slip free.
To explore, suggests Mr. Naisbitt, “we have to make connections between things that seemingly don’t fit, are obviously related, and sometimes seem to contradict common sense or formulas.” “Who has ever solved a picture puzzle by first putting the pieces in a straight line?” he adds. In this case, making connections is more intuitive than precise calculations. His point: “breakthroughs break old mindsets,” because discoveries are revealed in things that are already there. Birds fly; why not man? The atom was well known, but atomic physics was not before Einstein and others (Fraunhofer, Bohr, etc.) modeled it. Indeed, the world has always been round, but only a few could visualize it before 1492.
Whatever it is that we do, one thing is common to all. We must know something about the future to ensure the hope in continuing what we do. We must know what employees will do and will refuse to do, how customers will behave under various circumstances, how the competition will affect our own efforts in the marketplace, and not least the scalability and obsolescence of our capital equipment. Not perfectly, but with the surety of early explorers who knew that stepping out in faith would teach us more than torch us.
The pieces, merged together, seem always to form a picture that balances the “material wonders of technology with the spiritual demands of our human nature.” It seems a fitting conclusion in a world preoccupied with short-term results.

 

Frank Rich is founder and CEO of Encore Príst International, an organizational development company that helps individuals
and organizations reach their full potential through the practice of effective business fundamentals. You may reach him at
fjrepi@gmail.com, or by phone at 866/858-4EPI.

October 7, 2019 |

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ROI by Frank J. Rich

 

 

 

 

 

 

By Frank J. Rich

The pneumonic—ROI—is generally understood for its universal application to investment analysis. Return On Investment is so common a term that most know it without thinking, or by association with idiomatic synonyms such as: the bottom line, the net return, the results, etc. A few, however, have written to ask what it means, thus; this brief discussion of what it means to me.

ROI has a traditional character; it measures the value of an investment, usually in a comparative analysis. That is, it is most often used to compare the value of one investment to another. The simple methodology reveals a number that aids a binary decision—shall I choose investment A or investment B?

 

The formula in its typical application is as follows:

ROI = (Gain from Investment – Cost of Investment
                               Cost of Investment

 

Despite its obvious use in judging the worthiness of comparative investments, my interest in a focus on the term means to take a detour to another aspect of the term in the organizational vernacular. Perhaps, more than any other communication in the meeting rooms and hallways of organizations worldwide is the groaning over the lack of “necessary” resources to accomplish stated goals. In reviewing the usual rhetoric we find two fundamental forms of this complaint:

  • We’re not able to achieve the goal because “those in ______”, or the “technology in place” are not capable of getting the job done.
  • I need “__________, but it’s not in the budget.”

At the root of achievement is the desire to accomplish something in spite of the circumstances. We have all seen athletes, who when stripped of key players rise to a level of play that compensates for the loss of them. It is amazing to see how many goals a hockey team scores when down a man because of penalties. How is it possible for four players to outplay five? The first emotion when a team goes down a man is: “Oh no, we’re in trouble now, at least for the next four to five minutes.” Yet, those that do score under these circumstances, and regularly, do so for one underlying reason—they have recalculated the gain and not the loss.

Similarly, we hear from basketball players when confronted with a tough opponent, that individuals must “step up” their game if the team is to win the game. The postgame interviews usually hear the same statements: “Our guys just stepped up and gave us the boost we needed.” It is no less the model of achievement necessary to all organizations. Why then, do we continue to hear the grumblings listed above?

In our efforts to secure the market advantage we hope for, indeed, we have planned for, organizations suffer from a fundamental flaw; they do not consider the power in the ROI. Not only do people refuse to “step up,” they consider that doing so is at greater risk to them than the alternative—hiding. Consequently, a significant percentage of workers are hiding their talent and skill from others for fear of failure on some level. It is easier, and more common, to complain over the lack of resources.

Let’s consider a revolutionary statement: “The resources you seek are not only available to you, but free for the asking.” Do you believe it? I can guess that most do not; after all, it’s not in the budget, right? But an even greater force than the dreaded budget is the “will to win.” Organizations are formed to win, or succeed at achieving their goals. Why would they conspire against themselves by not applying the resources necessary to that end? The simple answer is that they wouldn’t, not if the path to achieving them is clear. Is the fog clearing a bit now?

In truth, no organization but those absent good sense would deny the resources necessary to achievement. If they are short the necessary capital one could conclude that this is a battle for another day. Or, alternatively, think creatively about how to get it. Perhaps, it requires more of all stakeholders, a partnership of sorts not unlike a hockey team that rises to meet the challenge of diminished resources.

The opportunity in the revolutionary statement above is the simple truth in it. All that you desire is available to you; it is hidden in plain sight. All that is required is that you present the ROI. If the gain from the investment in resources is greater than the cost, and not in violation of minimum revenue standards (most pharmaceutical companies will not pursue products of less than 500 million in revenues), then the door to those resources usually swings wide.

Imagine for a moment that you were to petition your technology manufacturing company to build a new cell phone, even though the company had no experience in the field. One can only imagine the guffaws that return to you. But after you tell them that the functionality and user friendliness of the new phone would far outstrip any on the market, that it will outperform all others in internet access speed and resolution, that it’s design would enable quick and easy use of it, that it would benefit from more applications from third party vendors than any other, and that its cool design would make it a fashion must. And finally, you outlined an ROI that demonstrated the new phone would outsell all others 10:1.

I wonder, just how did Apple decide to build the iPhone? They calculated the gain, I suspect.

July 1, 2019 |
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