I recently have come across an number of management articles on different internet sites 
where people are advocating ROI. I like ROI . . . it’s like a phonetic spelling of "Roy", the measurement next door and the boy next door. Sometimes that can be a good thing or a bad thing. The measure (or neighbor) that is misunderstood and sometimes annoying. I digress.
I have seen ROI used to measure projects, departments, units, sales, people, contracts, etc. The worse use is looking at a part of the company and asking for an ROI. A call center is easy to talk about here because most everyone believes this is a part that can be easily outsourced or shared (bad assumption), so let’s pluck this piece off and show an ROI. This is command and control thinking at work . . . separate the pieces and optimize them.
With call centers, a lot of their demand (calls) is not created by them. I have submitted in other blogs and posts that between 25% and 75% of their demands are failure demands (chase calls, problems, etc.). Sometimes they are created by the call center, but more often then not they are created by other parts of the system. Meaning they don’t create their own demand, so why is that even important? Because scientific management theory is all about optimizing parts. But optimization of each part does NOT make the system better, it suboptimizes at the expense of the whole system. You can’t
have a 120-piece orchestra with 120 prima donnas (well you can, but no one would want to hear it). Systems thinking understand this is all foolishness and what matters is the system.
OK, reality check time. The call center is part of the system, you know the organization. So are the sales department, operations, finance, HR, etc. I love the one about HR being a profit center needing to show ROI. But I have seen such stupidity and that’s why it gets outsourced a lot, it’s seen as an expense and not a valuable part of the system.
The problem is not just the stupidity, but the waste that goes along with it. We have department chargebacks, competitions, finger-pointing, turf battles, revenue allocations . . . it’s all just waste. There is no value in all this activity except to hire more bean counters. The only ROI that really matters is the company ROI, meaning at the end of the day did the organization provide a product or service that had value from a customer perspective. If they did provide a value product/service that customers wanted with little waste . . . ROI will find himself right next door where he lives and maybe just not be quite as annoying.
Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public). His organization helps executives find a better way to make the work work. Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected]. Reach him on Twitter at www.twitter.com/TriBabbitt.
where people are advocating ROI. I like ROI . . . it’s like a phonetic spelling of "Roy", the measurement next door and the boy next door. Sometimes that can be a good thing or a bad thing. The measure (or neighbor) that is misunderstood and sometimes annoying. I digress.I have seen ROI used to measure projects, departments, units, sales, people, contracts, etc. The worse use is looking at a part of the company and asking for an ROI. A call center is easy to talk about here because most everyone believes this is a part that can be easily outsourced or shared (bad assumption), so let’s pluck this piece off and show an ROI. This is command and control thinking at work . . . separate the pieces and optimize them.
With call centers, a lot of their demand (calls) is not created by them. I have submitted in other blogs and posts that between 25% and 75% of their demands are failure demands (chase calls, problems, etc.). Sometimes they are created by the call center, but more often then not they are created by other parts of the system. Meaning they don’t create their own demand, so why is that even important? Because scientific management theory is all about optimizing parts. But optimization of each part does NOT make the system better, it suboptimizes at the expense of the whole system. You can’t
have a 120-piece orchestra with 120 prima donnas (well you can, but no one would want to hear it). Systems thinking understand this is all foolishness and what matters is the system.OK, reality check time. The call center is part of the system, you know the organization. So are the sales department, operations, finance, HR, etc. I love the one about HR being a profit center needing to show ROI. But I have seen such stupidity and that’s why it gets outsourced a lot, it’s seen as an expense and not a valuable part of the system.
The problem is not just the stupidity, but the waste that goes along with it. We have department chargebacks, competitions, finger-pointing, turf battles, revenue allocations . . . it’s all just waste. There is no value in all this activity except to hire more bean counters. The only ROI that really matters is the company ROI, meaning at the end of the day did the organization provide a product or service that had value from a customer perspective. If they did provide a value product/service that customers wanted with little waste . . . ROI will find himself right next door where he lives and maybe just not be quite as annoying.
Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public). His organization helps executives find a better way to make the work work. Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected]. Reach him on Twitter at www.twitter.com/TriBabbitt.
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