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July 24, 2006

ROI: Getting What's Coming To You?

One aspect of achieving real success from investment in operational resources is to utilize the proper collaboration of organizational roles to build a chain that really does deliver value and trigger opportunity for ROI.

An early segment of this chain is to convert assets to resources. Essentially, this means giving the assets an important job to do, and then ensuring that they are available when their turn comes up. Many organizations focus strongly on availability even if they don't realize that effort as the basic one of creating resources from assets. Typically it is motivated by the idea of controlling costs, and it isn't a huge leap to see effective allocation of assets as a cost control.

But getting past cost to ROI is another effort. As shown here, the effort involves generating capacity from the availability of the resources. In the mode of ActiveROI introduced through Renovance LLP a few years ago, the requirement is to recognize that cost can easily be sunk without the proper continuation of aligning for engagement with the requirements of environmental and customer demand. The picture here shows the division of responsibilities and attentions that drives the actual "return" on the investment. In this view, Managers take the availability (resource) supplied by Administrators and shape it to be used for certain purposes declared by Directors.

While these terms immediately invoke job titles, it is instead necessary to understand them as roles, with their distinctive responsibilities and perspectives, leveraged through collaboration. The point is to exercize the appropriate sensitivity at the designated points in the value chain.

The overall model of relationships is not only scalable to small or large efforts -- it is portable. On the one hand, the dynamic applies to producers taking internal assets on through to an offering for the customer. For example, a producer's offering could be a service. Meanwhile, on the other hand, customers are similarly spending assets to take services (products) as their initial resources, and using the same flow, then deriving their own ROI. In the flow, it becomes evident that Administrators of services create "service availability" that is actually the customer's resource, and the customer uses that resource and channels (manages) it through their desired mechanism to successfully address important objectives (directed priorities).

These same relationships are each also points of potential failure, so active attention to the relationships sustains the potential of the chain, and therefore the prospect of ROI.

Posted by Malcolm Ryder at July 24, 2006 7:01 PM

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