We all face challenges in our businesses, especially in the current economic climate. With a new business, you face growth and profitability challenges. With an established business, sustainability is always challenging, putting pressure on controlling costs, driving additional revenue, keeping the customers happy, and keeping your employees on board. Inflation and staffing are the current challenges, and you face these just after overcoming the challenges of the pandemic. You will address these challenges with many projects, programs, and initiatives aimed at constantly improving your business. When you take this approach, the key is to ensure that all projects and initiatives add value.
Sometimes there is a misunderstanding of what value actually means. For that reason, it’s helpful to define value into five levels of outcomes. When you are managing a project and addressing a challenge by implementing a new initiative:
- The first outcome will be the project’s perceived value. This is the reaction to your project.
- Next, individuals and others involved will have to know something or be able to do something to make it successful. This is learning.
- Individuals must do something to make your project successful. This is application.
- And then there is impact, which is what you want to see. Impact is defined by a specific business measure, such as increased productivity, better quality of work, more customers, increased profits, fewer complaints, and fewer employee turnovers, etc. Impact is key.
- Finally, there is the question, “Is the project worth it?” That’s the ROI. For example, is the new system you purchased worth it? Is the project to retain employees worth it? Is your new marketing campaign worth it? ROI is the ultimate level of accountability and extremely important to maintaining a thriving business.
So many individuals implement projects in their organizations with no end goal in mind. They have no systematic way to achieve success at the impact and ROI levels. They rarely reach the end goal as they focus on activities instead of results. But what is needed is a process that starts with the end in mind with a very clear business consequence and has specific steps to achieve the needed success. In essence, you want people involved in projects to plan for, design for and deliver impact, not activities. And yes, sometimes you need to calculate the ROI.
Taking this approach and implementing this system will create a culture of accountability, changing how you address challenges, and drive the success of your projects. Ultimately, this will help you, your work, and your organization.
Patti and Jack Phillips are the respective chief executive officer and chairman of ROI Institute Inc., based in Birmingham, and authors of their latest book, Show the Value of What You Do: Measuring and Achieving Success in Any Endeavor (Berrett Koehler Publishers, September 2022). For more than 25 years, they have operated ROI Institute Inc., helping individuals and organizations evaluate the success of projects, programs, and initiatives including measuring the financial return on investment (ROI) both in Alabama and around the world.