If you are a traditional CFO, or someone with a “bean-counting” responsibility, you will certainly agree that like any other initiative in an enterprise, IT projects should be able to demonstrate a valid return-on-investment (ROI). In my experience, sometimes this presents an almost impossible situation, because it could be quite difficult to provide such a measure if the project in question is seeking to drive innovation or is otherwise transformational in nature. By definition, when we look at something that is likely to result in an innovative process or outcome, we are looking at a possible future state that is uncharted. Determining a ROI for that future point in time when such an outcome might become reality is often going to be subject to many assumptions.
In the context of innovation this can become quite tricky and a strict “accountant” mindset looking for a conservative approach will not serve the purpose of moving this along. If a degree of latitude is not afforded to the ROI on such an effort, it will not make the grade. What needs to be understood is that in order to succeed with innovation, an organization needs to have the tolerance for it, and hence a broader outlook when it comes to the use of metrics.
More importantly, the senior leadership in an enterprise needs to foster a climate of reasonableness – one where metrics are required but they don’t become so important that they derail a strategy of innovation-driven competitive advantage. ROI and other measures should be required to qualify projects, but the nature of innovation should be recognized and it should be held to a different standard, for it is such a project that will help yield competitive advantage via revenue growth or through the attainment of competitive differentiation. Focusing on ROI (and similar measures) alone, may cause an enterprise to miss opportunities to gain an edge either in enhancing its own capabilities or in winning sustainable competitive advantage. Such a project is better qualified with a flexible attitude, where progress of the project itself is closely monitored and any deviation from the numbers are qualitatively judged in the context of the larger objective.
Visionary leadership is demonstrated when an initiative is recognized for its immense transformational potential and given the go-ahead, even if the ROI or other similar measures are not considered adequate to support it in the traditional sense.
Have you had an innovation-focused initiative approved or rejected purely based on the numbers?