Digital Business insights: What is the RoI of a seed?

Digital Business insights by John Sheridan >>

We are all familiar with seeds. But if we weren’t, and somebody was trying to tell us that there was great value and potential in a handful of small, dried up, wrinkled specks of dust, we would probably prove hard to convince.

Because what is a seed? Does it in any way demonstrate its true potential? 

No.

Because the seed carries inside itself the programming to turn brown dirt, and colourless air and water into something so different it is hard to believe the seed had any part in it. Acorn into oak. Apple pip into apple tree. Brown husk into supple green plant…with bright coloured flowers. 

We don’t think twice about this miracle. We have learned the relationship. We appreciate the transformation. We understand the time scale involved. 

And because we know what a seed is and does, we can make an estimate of its value.

We understand it. It will grow and produce a plant that will also create more seeds. Single, small objects, each with a potential to grow and produce more objects like them. 

But what about estimating value of the unfamiliar and the new? What is the potential of a network? What is the ROI of something without edges and boundaries?

How do you define the potential of something if you can’t describe where it starts and finishes, begins and ends… because it doesn’t? What is the potential of a digitally interconnected sector, region or country?

What is the RoI of that seed?

THINKING DISCONNECT

When we first started looking at adoption and use of technology 15 years ago, we noticed there was a gap between the technological ‘connecting’ and the associated ‘thinking’.

The digital ‘connecting’ was full steam ahead. The connected ‘thinking’ wasn’t.

We live in an increasingly joined up and connected world, but we still run our societies using disconnected strategies – across regions (geography), industries (sectors) and time (political timescale). We don’t always think of them as disconnected, but they are.

And the digital revolution powers on, ignoring departmentalism, nationalism and parochialism and continues to join and connect.

Ten years ago we surveyed adoption and use of technology across all industry sectors, not just at the sector level, but at the single business category level.

And nobody in government or industry association or ICT vendorland understood why.

We were told, “Why bother with that little sector…it is not important?” “Why include that sector they have no money? “ “Focus on business…not not-for-profit”. “Don’t look at small and micro businesses, there is no possible return on investment and how do you engage with them anyway…there are too many?”

I thought at the time…but it all joins up. And it has.

And we have to recognise this new and unique opportunity for what it is. A potential for enormous positive change. A seed without edges. A massive lever to improve the society we live in ways we have not seen before.

In a joined up world, we can now work with an individual organisation, fly up to 5,000 metres and look at the sector or zoom up to 50,000m and view the supply chain or the region and back again. We can see the gaps and leverage the opportunities.

But that requires connected thinking, and the insight to look beyond the ‘froth and bubble’ of social media and websites into the fully interconnected growing digital platform of new opportunity.

INCLUSIVE REVOLUTION

The revolution is all-inclusive not exclusive. That is what makes it so disruptive. The connectivity creates new options with no reference to existing historic relationships.

So the whole C-suite has to invest time for joined up thinking. It’s not the CIO’s job. Nor the CMO, the CFO or the CEO alone. It has to be an informed collaborative discussion.

And that means looking at how the digital revolution does disrupt, might disrupt and how it can offer new opportunity. It means collaboration with others.

It means generating ideas and trying them. Planting seeds and germinating them.

What is the RoI of a seed? There are two points of view. The brown shrivelled view (what it is) and the green, leafy view (what it might be).

We recently recorded an interview with Daniel James from Griffith University. He described how putting sensors of various kinds onto elite athletes allowed for the collection of data which then informed a wide range of decisions that had not been possible before.

Fantastic interview and you can watch it at… http://digitalqld.com.au/index.php/dq-magazine/item/daniel-james-from-griffith-university-putting-sensors-on-everything-that-moves

That is a good example of joined up thinking in action.

The production cost for the interview was $700. The interview will be used in a variety of different platforms, has a shelf life of a couple of years, will provide the material for a story in Business Acumen magazine and so on. The interview will hopefully get some people thinking, “Wow…what if?”

It could provoke thought across different unrelated sectors…in manufacturing, construction, defence, aged care and so on. It may cause somebody to think more about technology and its transformative potential in a different way.

So what is the RoI on that $700 investment?

Because, that is what I was asked yesterday. And I found the question intriguing.

I don’t know the answer to that question. In time it will become clear, but probably never for the person asking the question.

Let me just dig up the seed and see. There you go…still brown and shrivelled – no RoI there.

WHAT IS THE ROI?

With any seed, there is an element of vision, hope, expectation and trust in a process. Demand the RoI too soon and there isn’t any.

In a connected 21st century world where the implications of universal connection are impossible to map let alone evaluate, it is difficult for 19th century thinkers to keep up. They ask the wrong questions.

19th century thinkers probably weren’t even very good in the 19th century when the first commercially viable locomotive hit the rails. The top speed of the Blutcher was 4 mph…not very impressive, but ultimately it led to British Rail.

So what was the RoI of the Blutcher? And furthermore, Stephenson also understood that ultimately all rails will connect into a railway network.

What was the RoI of the railway network in the 19th century? Was it the value to the railway company of passenger and freight? Or was it what happened as a result of the railways connecting the isolated towns and villages across a country transforming commerce, jobs, and creating new industries like tourism?

Let’s take another example. The NBN. And the suggestion that a cost benefit analysis of the NBN should be done.

Sounded sensible. But the result was that a small, growing seed was pulled from the ground and was never put back again.

While overseas, many similar seeds went in the ground, were fertilised and watered and Australia has been left way behind in the process. 

Once again the past tries to evaluate the future and isn’t very good at it.

“What would you pay for a service I can’t describe and you can’t possibly imagine?”

It appears to the ‘old world’ that the ‘new world’ should follow the old rules, but it doesn’t.

The investment part can be calculated but the return part can’t be because it is compounded by what we will call ‘network effect’.

And that describes what happens when a connected and interconnected population of individuals (and even things) look at new possibilities from multiple and different perspectives and find it possible to communicate, collaborate and integrate those differing perspectives to deliver entirely new and positive outcomes.

So suddenly the DNA of one seed (an idea) is modified by the DNA of many other ideas and the resulting plant (outcome) produces not just apples, but lemons, bananas, pears, pineapples, coconuts…and so on.

That is why it is so hard to put value on many new digital businesses. The standard methods just don’t apply. And that is another very disruptive notion to the auditors that manage that capability in our society and still wield considerable influence. 

How do you do a cost benefit analysis of a revolution? You don’t.

The NBN was never going to be valuable for what it was – a fibre network connecting homes and businesses across Australia. It was always going to be invaluable because of the leverage such a platform would provide for what happens on and across the platform. And it was cheap at twice the price.

Opportunity lost in the fog of politics, which slowed us down when it should have sped us up.

AUSTRALIA IN REVERSE?

The conflict and debate between the past and the future is a problem for us here in Australia. Because, the digital revolution carries everything in one direction…forwards.

It is driven by the powerful currents of more connection, more collaboration and more integration. And every day the revolution becomes even more powerful.

It is impossible to resist. You can walk backwards on your ice floe, Mr Penguin, but the floe itself is travelling much faster in the opposite direction … forwards.

And look around you, because this is a universal revolution, and those penguins on all the other ice floes from every country on the planet are actually paddling with the currents not against them…forwards.

It is a competitive and collaborative and integrated world we live in.

But without joined up thinking it is impossible to leverage the benefits.

Somebody in one department recognises a possibility and somebody in another department doesn’t. And THEY have control of the purse strings.

So they ask what appears to be a sensible question. What is the return on our investment? The refuge of somebody who doesn’t understand.

Is this our departmental responsibility or somebody else’s? Or nobody’s?

And I have heard all these questions. The worse outcome is that nothing happens. It falls into the gaps. Too hard.

And in the gaps between silos and the old world and the new, who takes responsibility for building bridges?

“The marketing department has total control of the marketing and promotional budget…why are YOU doing this?” Or “this is an IT issue, the CIO holds the purse strings.”

That is the traditional approach of course, but what makes anybody think that marketing departments understand the digital revolution better than everybody else? Or CIOs?

All the evidence seems to suggest otherwise.

Years ago everybody thought the CIO was the digital guru and should be in control. But the power then shifted to marketing.

And they just try to squeeze every aspect of digital into web sites and social media – elements they are most familiar with. Into a quasi-advertising paradigm that is broken. 

ONLINE ADS BROKEN

In 2013, Adobe conducted a study showing only 8 percent of people even notice online advertising (and only a minute percentage then did anything about it).

Magazine and television and newspaper advertising don’t work either. There are regular discussions on Mumbrella bemoaning this fact. Not everyone agrees.

The new customer - “I don’t see advertising online, I automatically scroll away. I fast forward though TV ads. I channel shift. I ask my friends for advice. I ask Google. How do you deal with me?”

Yet marketing departments persist with what doesn’t work and nobody asks why. Well, a few people do, but mostly in private.

No one department has all the answers. Collectively the management team might have.

This is true not just in universities (large clunky overly bureaucratic organisations that they are) but also in government and corporates (also clunky and bureaucratic).

It is just another example of industrial revolution meeting digital revolution and not having the mechanisms or agility to deal with it.

Default mode is “Danger, danger, Will Robinson, beware of the new, the different and the strange – aliens.”

And the big organisational immune system swings into action and everything out of the ordinary is punished. And these guys are the ones who claim they can be innovative in response to the digital revolution.

Dream on.

Individuals in some organisations can be…lots of them are…but unless it is CEO led and driven eg GE, Google, Telstra…it won’t work.

We are told sad stories on a regular basis, by frustrated individuals (senior executives, professors, directors) who really do understand digital and have great ideas about how to do something useful with it and then run into middle 20th century marketing thinking and proceed no further.

Only CEOs and boards have the power to change this. Has to be collaborative and top down. With an element of grass roots and bottom up thrown in for good measure.

Because below that level – in the middle – there is too much pass the parcel, business as usual, what about my superannuation, we are the experts – not you, don’t rock the boat, and lack of control.

In a disconnected ‘old world’ RoI is easy to define. In a connected ‘new world’ it isn’t. What is the RoI of a seed?

It isn’t only about pure dollar value, it is about the other values and perceptions of value that are part of all new digital engagements – once again, Google Professor Porter on shared value.

And because of the shift in power from vendor to customer, the customer’s attitude and actions has to be taken into account in this new digital evaluation environment.

MORE GARDENING PLEASE

That is why the management of engagement in the digital revolution is more like gardening than architecture, because it has to deal with sentient and responsive beings (us) with confidence, knowledge and arrogance, not objects (nuts and bolts).

Architectural drawings can be translated definitively. Landscape architecture is a much fuzzier exercise. The picture on the seed packet is an approximation of what will grow. Water, fertilise and place in the sun.

What is the ROI of the digital revolution? Nobody has a clue. And the dollar value is so enormous it means nothing tangible. It is just big. Very big.

That alone is attractive enough for many and motivates some countries to get way ahead of the game.

And most ROIs will only arise during the journey, not visible at the start.

That is the trouble with cost-benefit. You can’t meaningfully ask about the future when it is not crystal clear.

In fact, most value in this revolution so far has come on the journey and was not envisaged at the start. Those who would do a fully documented, cost benefit analysis before we start would never have waved the starting flag.

Not so long ago groups of merchants sent their ships out beyond the see-able horizon in search of new enterprise – into the unknown – merchant venturers.

The digital revolution is taking us into completely new territory. New ventures. New merchants. We won’t know the return without first making the investment.

The ROI of a seed is tied to vision, optimism, time and trust. And we have to take some chances here. Digital opportunity is not a lay down Misère.

There is an old saying – failure to plan is planning to fail.

There is a new saying – plan to fail. Fail fast, get up and try again. We can’t be scared of failure. We can’t be worried about the RoI of $700.

What is the RoI of joining all the people and organisations in Australia? All those seeds…all those connections…all that potential?

We need to be among the first to find out.

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John Sheridan is CEO of Digital Business insights, an organisation based in Brisbane, Australia, which focuses on helping businesses and communities adapt to, and flourish in, the new digital world. He is the author of Connecting the Dots and getting more out of the digital revolution. Digital Business insights has been researching and analysing the digital revolution for more than 12 years and has surveyed more than 50,000 businesses, conducting in-depth case study analysis on more than 350 organisations and digital entrepreneurs.

http://www.db-insights.com/

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