Wednesday, December 15, 2004

A different take on ROI

ROI is abit of a controversial topic in the world of "user experience," with some people arguing -- as did a panelist at last week's BayDUX event focused on the future of digital product design -- how important it is to talk in terms of ROI to executives and senior management, and with others -- as did Jeff Herman of eBay in a short presentation at CHI 2004 -- explaining how to estimate ROI for user experience projects, but with others -- as has Dan Rosenberg, Oracle's VP of development for usability and interface design, in a recent issue of interactions magazine -- arguing that commonly recommended ROI analyses are of little value in the real world.

With collaboration being so important in the business of user experience, a different take on ROI is worthy of note.

Linda Dunkel, President & CEO of Interaction Associates, uses the letters ROI to mean Return On Involvement rather than Return on Investment. According to Linda, "involving key stakeholders in decisions produces significant benefits, both emotional and financial," and she references evidence of this:
"Dr. Victor Vroom of Yale University, an expert in the field of leadership and decision making, recently pointed us to some remarkable data that supports collaboration as a business necessity. In his book, Why Decisions Fail, Dr. Paul Nutt examined the implementation rates of nearly 400 management decisions — and found that over 50% of the decisions failed. The decisions were not implemented at all, were only partially implemented, or were adopted, but later overturned.

Nutt found that the most successful implementation tactic was asking for the participation of those who would be affected by the decision. That tactic had the lowest failure rate: 30%. But at 23% usage, it was the least used tactic!

John Kotter and James Heskett in their book, Corporate Culture and Performance, showed that firms which focused on stakeholders and developed involvement strategies increased revenues over an 11 year period by an average of 682%, versus low involvement cultures which turned in an average of only 166%. Net incomes improved by 756% vs. 1% in these same firms."
How much is "involvement" valued in your corporate culture? Are there people in your company who know how to achieve effective collaboration among the appropriate stakeholders?

  1. Dunkel, L. "Return on Involvement."
  2. Herman, J. A process for creating the business case for user experience projects. CHI 2004 Extended Abstracts, pp. 1413-1416.
  3. Knemeyer, D., with Allen, S., Day, N., Gabriel-Petit, P., Leftwich, J., Wroblewski, L., & Ramirez, F. The future of digital product design. BayDUX, December 12, 2004.
  4. Rosenberg, D. The myths of usability ROI. interactions, September-October 2004, pp. 22-29.