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Rough and Tumble with ROI

Updated 25 Apr 2009:  Jim McGee has a brilliant post on bridging analytic and management cultures. Is it that ROI is a catchphrase from the oral management culture which is fundamentally in conflict with ideas which are from the literate culture of the organization?

Prolog

In the Soul of Success series, i am still not happy with what we have on how-to-set goals and also how to spot opportunities. What we have seems very high level. If any of you have any ideas, please comment on those posts.

ROI

Being a part of the management staff of a large organization, the term ROI comes across my desk at a remarkably high frequency. I absolutely see the need for ROI and i think it is an important tool to make decisions about various initiatives.

However, i think  looking at the ROI may not always help.   I can clearly see that calculating ROI does not make sense in some situations, but i have not figured out what are those situations?

Some of the strange behaviors i have observed around ROI, make me think that, there is some problem with ROI calculations, we haven’t quite nailed yet.

My observations:

1. Some people brandish ROI as a Devil’s Advocate to kill promising ideas.

2. Interestingly, we never seem to know what is the ROI for all the existing practices in the organization, but when we want to introduce something new, people ask for ROI? why does this happen? Is this due to resistance to change?

3. Many a time, the person coming up with the idea, does not exactly know about ROI. The person just has a vague hunch. Under such circumstances, would we be better off trying the idea out?  If yes, how do we decide which ones to try? If we expended effort around every idea, won’t we  end up with wasteful expenditures , especially if the idea doesn’t work?

4. There are also some vehement proponents of ROI who say you must not do anything without ROI which seems to be an extreme position. Can that be correct?  For my part,  I am always sceptical of extreme positions.

5. Many a times, benefits received from initiatives are intangible, which makes it hard to put a $ number required for calculating ROI. Does this mean that intangible benefits don’t matter?

6. In my experience, i have tried initiatives without regard to ROI and found later that the ROI has been tremendous. Had we relied upon ROI calculations, we never would have embarked on those initiatives?

As you can see, at this time, i have too many questions and very few answers.

Recently, some one argued with me vociferously that an Enterprise 2.0 implementation should reduce mail traffic and that is an ROI. My experience, shows that mail traffic actually increases significantly because of all the mail alerts the social systems generates. This is because all of us live in our Mail client and hence these notifications are needed to pull us back into the E2.0 systems.

Amazon.com Example

Disclaimer – Amazon is a great company that has done lots of innovative things. I have been a Amazon.com customer and i love that company. This example i write below is not reflective of Amazon as a company. It is just to illustrate my point about ROI.

In March 2006, Robert Scoble made a presentation to Amazon employees about blogging and the discussion abruptly ended with the ROI question popped by Amazon. The discussion later spilled over into the blogosphere, with yours truly joining the discussion with a post.

Even now, the ROI question for blogging has not been nailed. So in March 2006, nobody had any real answers. Although i didn’t agree with Amazon’s position (reflected in my post), lot of people agreed with Amazon’s position.

Now, why is this important, you ask?

What i found over the years is that Amazon never really leveraged the blogging platform to the extent it could have. In my view, it missed a great opportunity because blogging is very closely linked to the business of books (both are forms of writing, right?).

Some of the missed opportunities:

1. Today every book author worth their name, has a blog website, tries their best to promote their blog alongside their book, but are rarely successful with their blogs. It goes without saying, that they have to buy a domain name, design a website, market it etc. and many of it at considerable expense. Why couldn’t Amazon have developed a platform to allow each author to have a microsite for each book where the author can blog and actively promote it.. (I know Amazon has a program of this kind, but it is a shadow of what it could be).  Authors may even be willing to pay a fee for such a service because they have to do all of this themselves today.

2. Millions of bloggers (including yours truly) write reviews of books on their blogs and the reference link they use is the Amazon.com entry for that book. It would be very easy for Amazon.com to pull those reviews into the book’s microsite.  These reviews would give the would-be buyers of the book a valuable input.

These are just 2 opportunities that i could get off the top of my head. In my view, Amazon didn’t pursue blogging with the vigor it typically pursues opportunities because they thought blogging had no ROI.

Epilog

What do you all think? What are your views on ROI?

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The Soul of Success Part 4 – Role of Luck

Prolog

Happy new year to all that celebrate it today (Tamils, Malayalis, Assamese, Punjabis..). As always, thanks for the insightful comments on part 3  (here is part1, part2). Kumaran’s comment on Penicillin and Potato Chips , Nimmy’s comment on the invention of electric car being appreciated when fuel shortages occur, Ganesh’s comment about startups reinventing themselves  really got me into thinking about the role of luck.  In fact, Malcolm Gladwell’s dedicates most of his book Outliers to the concept of being in the right place at the right time, which is luck wearing fancy clothes. 

Extreme Luck

First, i wanted to look at Luck in the extreme. Someone who won a jackpot in the lottery is the best example i could think of. There is almost zero effort (if you don’t count driving to the lottery store) and marginal expense (cost of a few lottery tickets).  I am sure you will all agree that there is simply no explanation other than luck when someone wins a lottery ticket.  I am sure you will all agree that this luck doesn’t come to most people. 

Opportunity

Opportunity is a word that often goes with Luck.  There seems to be 4 kinds of opportunities:

1. When you are chasing a particular goal, you find opportunities that fit your goal, you execute and meet your goal. 

2. When you are chasing a particular goal, something else more promising happens, that forces you to look at the something else and make it your goal. Most serendipitous discoveries of the type Kumaran pointed out. 

3.  When you are chasing a particular goal,  after a lot of trying, you find out that the endevor is a failure and reinvent yourself.  This is the type that Ganesh pointed out. 

4. When you are chasing a goal, you make some mistakes, but you find out that due to mistakes that other people made, your mistakes didn’t affect you and you are able to chase your goal and succeed.  To quote an example from my life –  in my early days of being a leader, i didn’t know how to flex my style to work with my team mates. Some people who i found very difficult to work with due to style differences quit the company and that turned out to be my advantage because they were not around to spread negativity to the rest of my team. 

Are there other kinds of opportunities you can think of? 

Right Place at the Right Time

If you look at the list of opportunities again, it would be clear that none of those opportunities will be present if one is not at the right place at the right time. For example, if Alexander Fleming weren’t studying bacteria, he would not have observed the mold killing the bacteria.  Since we don’t control for the most part directly, where we are born, what exposure we get to have in our childhood and youth, being in the right place at the right time is critically important.  Malcom Gladwell, is right about that part.    I also firmly believe, from my experience, that being in the right place at the right time matters a lot. However, Gladwell missed one critical ingredient.

Luck Revisited

If you look at the opportunities list again, it would be clear that all these opportunities occur in most people’s lives. But then many of them don’t take advantage of it. Take the same Alexander Fleming example. I am sure there were several scientists who were studying bacteria during Fleming’s time but only he was able to discover penicillin.   Why is it that Fleming succeeded when the others didn’t even when presented with the same opportunity? 

In the same way, instead of asking whether we should recalibrate our goals, ask whether you have spotted a big possibly insurmountable reason to recalibrate, you may find the answer. 

Prof Richard Wiseman  , a psychologist from the UK,  has done extensive work on Luck.  Please make sure to  read this brilliant article titled “The Luck Factor” that covers his key research findings.  His interesting research proved this – that people who are seen as lucky are simply better at spotting opportunities. 

The Goal

From Wiseman’s research, it is clear that spotting opportunities is a mindset thing. How can we get that mindset?  In my view, it is focus. If we focus ourselves on the right set of goals, and our mind is in a prepared state to spot opportunities, that occur in all of our lives, we can succeed. 

I will give a trivial example of what focus can do. When was in the USA, we bought our first car – a Saturn. We bought a green car because my wife likes green. The salesman trying to do his bit said to us – you know what “green” is a rare colour in Saturn, very few people buy that color.  Once i started driving the car, i started focusing on green color Saturns and i found to my dismay that almost one in three Saturns were green in color.  Is this because, all of a sudden people started buying green Saturns? Absolutely not, it is simply due to the fact that until then, i had not noticed the color of  Saturns.  

Epilog

In sum, being in the right place at right time matters, but with a mindset that is focused on your goals, you can spot opportunities and be successful. Remember where we started – have the right goals – don’t chase money or fame as goals. 

As always please chime away with your views.

Notes & References:

1. Charlie Munger’s speech – f***ing brilliant speech that is one of the most insightful i have ever read about success. 

2. Steve Jobs’ brilliant speech at Stanford

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Imagining India

Updated 20 Apr 2009: NR Narayana Murthy has published a book as well. He talks about giving access to inexpensive English education and computers to everyone. Exactly Sir. 

Updated 10 Apr 2009: Imagining India links to this review on their site. Thanks Imagining India.

Managed to read the recent book Imagining India by Nandan Nilekani – one of India’s top entrepreneurs.  Judging from the title of the book, i had imagined that the book would be some kind of a glorified story of Infosys. What can i say, i was completely wrong.

Nilekani has produced a 485 page magnum opus covering the key ideas that have shaped independent India in the spheres of politics, science, education, food, poverty, power, water, economics..  Interspersed in this sweeping discourse are some futuristic but practical ideas, that could take India to the next level [If only our politicians read this].

Within just the first 100 pages, Nilekani’s in depth research as well as the sheer breadth of the topics shines through. I could not help admiring the amount of work that must have gone in to write this book. Even those, that have been following post-1947 India closely, will benefit from reading this book, thanks to the extensive research done by Nilekani.

Nilekani’s  ability to put ideas in perspective is worth appreciating. For example, in the chapter titled “The Phoenix Tongue”, he explains how English became the key language in Southern India, thanks to Tamilnadu’s vociferous opposition to Hindi imposition and the embracing of the English language by the South Indians.  [I am also of the view, that if not for the anti-Hindi agitations, the whole of India would have abandoned English completely foreclosing the rise of the Indian IT/BPO industries which are now the engines of the Indian economy. By the same token, the Hindi belt states, by abandoning English, could not participate in the IT/BPO industries and prosper.  I hope the Hindi/Tamil and other local language chauvinists take note of Nilekani’s points].

On a related note, he points out in the chapter titled “The Awakened Country”,   that the Green Revolution, the White Revolution and the IT Revolution, have all passed by the BIMARU states (Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh) [my view – Thanks to ignoring English].

He rails against the subsidy economy – giving subsidies for power, food, oil etc. Given his IT background, he advocates a smart card based system where the Government can give the benefits directly to the deserving citizens instead of subsidies which are indirect and almost never reach the intended recipients in full. Brilliant idea. [During my stint in America, i admired their use of Food Stamps, using which poor citizens could shop in regular grocery stores like everyone else. Why couldn’t we do that in India – where Public Distribution System stores distribute rice, wheat, sugar, cooking oil etc at an enormous cost to the taxpayers with corrupt employees siphoning off the goods into the black market leaving the recipients with rotten stuff. The entire cost of maintaining the PDS can be given away as direct benefits].

His criticism/appreciation of both the UPA and the NDA governments is quite balanced. The telecom policy introduced by NDA govt which gave rise to India’s mobile revolution gets the praise it deserves and so does Manmohan Singh’s, P. Chidambaram’s (UPA) economic policies.

Overall, i found myself nodding my head for many of his well-researched view points on eGovernance, Power issues, Green issues, Education issues, Water issues etc. Nilekani analyzes the mistakes India has made and at the same time presents potential solutions which are quite practical instead of some pie-in-the sky idealist dreams.

I totally loved Nilekani’s statement that is at the very end:

This is why I believe that the only way to push changes through and safeguard our economic future is to create a safety net of ideas. It is imperative to ensure that our ideas transcend political agendas and are endorsed and demanded by a large number of people. if we can do this, we will insure our future against instability, slow growth and inequality.

My prediction is that Nandan Nilekani is entering politics. I hope for India’s sake he does enter politics. He certainly gets my vote.

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Future of news paper?

“Seattle Post-Intelligencer Will Shut Down Paper, Go Online Only”

“Detroit newspapers to end daily home delivery”

More and more I am seeing articles predicting the demise of news paper as we know it. With internet and devices such as Kindle, Sony reader what is the future of news paper business? Newspapers such as NYT, Washington Post have spoilt their readers by offering the www version for free. They probably cannot start charging now, and even if they did, how would that be? Would someone who is used to getting it for free be willing to pay, and if so how much? And how many papers would a customer be willing to subscribe? I do no think online ads are sufficient to keep funding these papers.

Even if the news paper print version becomes a stripped down version of what it is now, how will they survive and what will the business model be? Will it be pay-as-you-go and micro transactions – perhaps 5 cents for each article purchased? What is an optimum value for an article? How much would you be willing to pay?

What are the other value-adds that a paper would have to provide to entice customers? Would newspapers under a conglomerate combine to offer subscription – such as all of Murdoch’s publications for $20.00 a month? SF chronicle has reduced its staff of reporters and even some of the ones retained do not have a space in the print version. They maintain a blog and to add additional value, they have taken to twitter like real-time blogging during sporting events.

I understand the article is U.S/Euro centric in that this is more of an issue where internet access is easily available to a majority of the population. Just like cell phones, would there be a leap-frogging of this business model in countries like India and China? Do you anticipate these readers becoming cheap enough for it to become affordable in emerging countries? Or will readers on cell phones become sophisticated enough? Perhaps, news papers will tie-up with carriers to make data available via such devices?

Please do provide your thoughts on this topic.  Also, if have you tried devices such as Kindle, Sony reader etc., do share your experience.

I did try and read a chapter via the kindle app in my iPhone. I was pleasantly surprised at how easy it was to upload a book/chapter from the amazon website into my iPhone. Even the reading experience was good – no obtrusive buttons or icons; just shows the black text against clear white background. Do not know if I will ever get a kindle, but will certainly use the iPhone to read a few things here and there.

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The Soul of Success Part 3

Prolog

Please read the first 2 parts (part1, part2), please read the comments as well for a lot of wisdom has been collected.  While we may have reached some level of clarity on goals themselves,  we seem to have ways to go around recalibrating goals? Is recalibrating a cop out?

The Role of Failure in Success

We have all heard the maxim  “aim for the stars and shoot the sky”. It has got a lot of truth in it.  While it may seem like a cop-out, i think it is worth keeping in the success playbook.

What is seldom discussed is, what happens when we end up shooting just the sky instead of the stars that we aimed for?

When we chase difficult goals, failure is inevitable.  What i observed in my experience is that when we fail massively or when massive failure looms large, we should do some deep soul searching. Maybe our methods are erroneous. We can try a different route and see if we can still hit the stars.

If  after that revamped attempt we fail yet again, is it reasonable to recalibrate the goal?  Or should we try again and again untill we succeed? 

Rosabeth Moss Kanter in her insightful book Confidence, talks about a doom loop setting in, if you fail more than once in a row.  

What do you all think?

“Confidence”  maybe a book worth reading to understand how to set the cycle of success going and how to prevent losing streaks and why Confidence is so important in success.

Po Branson’s Take

Po Branson talked to over 900 people from various walks of life to understand the real meaning of success. Fast Company carried some of Po Branson’s key findings in a brilliant article.  Don’t miss reading the article.

Po found 3 important lessons:

1. Timeframe –   persist over a long period of time. 

2. Backup plans – do not lead to different destinations, such as “If I don’t get into business school, I’ll be a schoolteacher.” His backup plans lead to the same destination, and if he has to arrive late by a back road, that’s fine.

3. Don’t get burnt out  – never let yourself get burnt out.

I am sure the book would have a lot more wisdom packed into it. If any of you have read it, please comment.  BTW, Po Branson may be familiar to some of you, since we covered his take on  Praising Talent Vs. Praising Effort.

Epilog

I would like to contemplate the role of luck next. What do you all think about luck? Is it a significant factor?