by David Vance
August 29, 2006
The authors agree with much of the May 24 article “The ROI Basics” by Kellye Whitney. Further, we think Mr. (D. Verne) Morland (managing partner, ROI Learning Services) is generally correct in the desire for measurements that prove the value of learning initiatives.
However, we disagree that ROI will work in all or even many cases. Learning initiatives are often not funded or are seen as failures because standard finance/accounting procedures can not always accurately measure learning or knowledge capture and sharing. It is when we realize that many things can not be measured and are unknown and unknowable that we can more fairly evaluate learning investments.
Example of ROI Failure
To examine the problem of determining ROI, let’s look at a large complex process that has a total cycle time of two to three years. Let’s assume that the employee who has the knowledge might retire, so we have to capture the employee’s knowledge and share it (develop training and share learning) with other employees. This particular learning-knowledge sharing effort will not actually be needed for six or seven months. Before we can determine ROI, we have to answer the following:
Based on the questions above, it seems unlikely or impossible to accurately determine the specific ROI. It appears that we can’t know with any accuracy the ROI for our efforts because many of the costs of capturing and transferring the learning are often unknowable.
Learning Transfer Projects
To complete an ROI, it is necessary to look at the costs involved and determine how quickly the project will recoup the cost of implementation. The problem, of course, is that it is impossible to calculate an acceptable ROI if the project is full of unknowns and unknowables. We are being asked, “How much money will you save, if you knew what you don’t know?”
If the ROI philosophy is strictly adhered to, we incapacitate our company’s progress because we have unknowns. And, because we can not complete an ROI, we can’t go forward with our project and we create a catch-22 situation.
If learning-knowledge capture and transfer projects can’t get funded because of the ROI requirement, ask the following: What is the cost of staying ignorant versus the cost of fixing the ignorance?
Recommendation to ROI Users
Admit that there is a possibility that ROI does not work in all cases. Be willing to recommend going forward with learning projects, when the current systems are wasteful and the proposed learning initiative would improve the problem (even if we don’t know exactly how long the ROI will take).
Learning-knowledge projects are often not funded or seen as failures because the standard finance/accounting procedure (ROI) does not work. Business leaders have to take a broader look at how we define success for projects that focus on or involve learning-knowledge transfer. Only when we realize that some things are unknown and unknowable can we decide if we want to stay ignorant or fix ignorant.
Robert Downing is subject-matter expert in knowledge management, tacit knowledge capture and communities of practice support, collaboration and change management. Steve Jones is a senior organizational development facilitator and senior business process analyst for Northrop Grumman. They can be reached at rdowning@clomedia.com.