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29 Jun 09

Productivity in a Networked Era – Assessing ROII (Return on Investment in Interaction)

Today’s networked era requires a new way to make investment decisions that incorporates intangible assets and more accurately depicts how value is created.

The industrial age has run out of steam. Look at General Motors. Look at Chrysler. We are witnessing the death throes of management models that have outlived their usefulness.

The network era now replacing the industrial age holds great promise. Networked organizations are reaping rewards for connecting people, know-how and ideas at an ever-faster pace. Value creation has migrated from what we can see (physical assets) to intangibles (ideas). Look at Google and Cisco.

blog.wirearchy.com/...n-on-investment-in-interaction - Preview

networks socialnetworks ROI organization productivity ROII interactions judgment

ROI is an accounting and financial management concept businesses use to decide where to make investments and to assess the success of investment decisions after the fact. ROI reduces both return — R, what you expect back — and investment — I, what you expect to put in to numbers — making it possible to compare one investment opportunity to another. The numbers tie back to categories on the balance sheet and income statement, (i.e. tangible assets and hard-dollar returns).
Measuring intangibles involves making judgment calls, so managers often exclude intangibles from their ROI calculations. Several purported authorities on calculating ROI suggest taking intangibles into account by putting them on a list but refusing to estimate their value. This leads you to comparing numbers to words, apples to oranges.
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- Executives manage immeasurable things all the time. The more powerful the executive, the more likely he or she is involved in effectiveness — doing the right things rather than doing things right. Intuition, judgment and gut feelings guide these more important decisions. Qualitative assessment often can make up for a concrete numeric result.