Andrew McAfee on measuring social media (and ROI)

 

   The other section of his book that I think McAfee has written very well is the one on measurement.

I haven’t always been a fan of his approach on measurement which, like his general conceptualisation of Enterprise 2.0, seems to me to focus too much on activities (use of web 2.0 tools) and business benefits with very little focus on the intermediary stage of outcomes (social capital) which I consider to be the most important aspect of this field.  See for example this quote from one of his blog posts:

“Why not measure instead what we’re really interested in –  innovativeness, productivity, service levels, etc.?  For one thing, they can be hard to measure… So I advocate measuring and evaluating people based on their contributions to E2.0, and have some faith that E2.0 helps with innovation, productivity, service, etc..”

 

However I do like the way that, in the book, McAfee suggests organisations should measure progress, not ROI:

“It’s possible to quantify many things about an Enterprise 2.0 initiative: the number of blog posts and comments; the number of wiki edits, editors and new pages; the population of tags created; the volume of trades and traders in prediction markets; the number of members in a technology-facilitated social network and the volume of updates they share with one another; the popularity of all these ESSPs as measured by the number of times they’re viewed; and so on.

It’s also both possible and smart to collect case studies; anecdotes, and examples over the course of the effort to demonstrate the values of ESSPs.

I do not, however, advocate that decision makers should ask for quantitative ROI analyses, either before approving an Enterprise 2.0 effort or to assess its progress.”

 

To support this view, McAfee includes a quote from Kaplan and Norton that I also include in my own book (p145) to explain the same point:

“Improvements in intangible assets affect financial outcomes through chains of cause-and-effect relationships.”

 

These relationships mean that valuing benefits is always going to incur “estimates, at worst pure speculation”, particularly in separating impacts from “contemporaneous individual-and organisation-level changes”.

McAfee recommends that instead, Enterprise 2.0 advocates put together a business case that has three main elements:

Stages in my value chain	McAfee elements
Input	“Cost and time lines: The cost portion of the cost-benefit analysis.”
Activity	“Technology footprint: A technology’s footprint is its geographic, divisional, and / or functional reach.”
Outcome Impact	“Benefits expected: When describing benefits, it’s often useful to include short case studies or examples of the results of other ESSP deployments.”

 

McAfee concludes:

“A discussion of whether it’s worthwhile to pursue Enterprise 2.0 should revolve around whether these benefits are worth the cost, not whether the ROI figure for the project clears some hurdle rate.  I have never spoken with a leader or participant in a health Enterprise 2.0 initiative who wishes that she had calculated an ROI figure, whereas I have spoken with many people who have described their ROI exercises as unproductive uses of time and effort.”

 

I agree 100% with the conclusion, although I retain my concerns about not splitting out Outcomes and Business Impacts to make these benefits clearer still.

 

Photo credit: At.morey.tota

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Reith Lectures 2009: A New Politics of the Common Good

 

   Sandel’s last Reith lecture (also see my post on his first lecture) has dealt with how the government can mimick the market:

“It’s the idea that government should try to replicate the outcomes that competitive markets would produce if all goods and resources were properly priced.”

 

Sandel descrbed how trying to price goods that can’t be priced – accurately or morally – often results in dysfunctional outcomes::

“Consider environmental policy. If air and water are “free” - that is unpriced - then companies and consumers will produce too much pollution. So government’s job is to set regulations to correct for this market failure - through cap and trade, for example, or a carbon tax.

To do this, the policymakers have to ask how much pollution is too much. And to answer this question, they have to figure out what value to place on clean air, clean water, and the resulting health benefits. Here’s where “market-mimicking governance” comes into play. In order to make these calculations, regulators often use “cost-benefit analysis”: they place a monetary value on the benefits of clean air and water, compare them with the costs, and set regulations accordingly.”

It sounds perfectly sensible. What’s wrong with comparing the costs and benefits of government regulation? Nothing - if by comparing costs and benefits you simply mean assessing the advantages and disadvantages of a given policy.

But cost-benefit analysis aspires to scientific rigour. It tries to assign a monetary value to costs and benefits. It tries to mimic the market. And here’s where it goes wrong. Many of the benefits of public policy involve values that can’t be captured in monetary terms - most notably, the value of human life…

Monetising all costs and benefits makes for a spurious science that shifts decision-making from democratic politics to technocrats.”

 

As with Sandel’s first lecture, I’d make the point that these concerns apply within organisations too. There is always going to be a desire to value things like social capital – firstly, because they are so important, and secondly, as a result of the human need to manage and control (for example, as a result of the oft quoted but in my view, erroneous belief that ‘you can only manage what you can measure’).

But I don’t think this is appropriate. And I think Sandel has nicely expressed why.

 

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Photo credit: AntonyB

 

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Scott McArthur: HR 2.0 – the end of the business delusion (Update from Bucharest HR 2.0 conference)

 

 

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Knowledge 2.0

Sorry I've been a bit quiet here, there will be lots more soon.

Anyway, I've just picked up David Gurteen's Knowledge Newsletter for January and viewed David's latest Knowledge 2.0 presentation, IBM Knowledge Management goes Social presentation on slideshare. It's a great slideset, well, worth a look.

And I absolutely love Sibylle's comments on metrics in Knowledge 2.0:

"Most of us agree KM is about the SOCIAL so if we want a picture of what is happening in our SOCIAL environment we have to use SOCIAL tools, ie/ interviews, stories, theme analysis, anthropoligical observations - all tools researchers in the humanities like history and sociology have been using for years. Let's not take the easy way and give in to the bean counters in organisations with their need for meaningless number but rather educate them on how these techniques will give us understanding of what is really going on. Its only when we have an understanding of things like relationships, human networks, people' own perceptions of what knowledge they need/have etc, as well as the lack or flow of knowledge in their groups that we can create a path of action to improve that which we are trying to improve. Otherwise you'll just have one more KM metric presentation that bores the pants off everyone and contributes nothing to our intended path."

See my HCM blog for much more on this.