Hello, I was thinking about ROI in DT, and his importance for the owners of companies in order to take decisions.
The return on investment formula is:
In the above formula usually we known the Cost but "gains from investment" are unknown, for this reason I think is very dificult to us sell services.
Somebody know how to proceed when you are asked about ROI?
Hi Daniel. I'm not sure about your background, but I suspect you're very likely having the wrong conversation if you're talking about ROI.
ROI is important, but secondary (and a firm quantitative measure of ROI is always either speculative or retrospective).
Better questions relate to the heart of business: growth & customers. Specifically, you should consider how your offering helps what I think of as the big six:
1. Making money
2. Saving Money
3. Setting & Achieving Objectives
4. Hiring & Retaining Talent
5. Managing Risk
6. Delivering Value
Then in any of those areas, there are further questions to focus on (and what those are shifts from project to project, client to client). Things like
1. Timeframe (short vs. long)
2. Innovation vs. Optimization
3. Familiar vs. Unfamiliar territory / activity
4. Solving Problems vs. Exploring Opportunity
5. Struggle to survive (think GM) vs. winning new markets (think Tesla).
6. Communicating down vs. up / out vs. in
These are the kinds of conversations you need to be having with clients and prospects if you're going to be effective. And those conversations should be spent with you asking & listening 70-80% of the time, vs. trying to tell someone how awesome "design thinking" (or whatever) is...it's only until you really empathize with and understand the decision makers that you even know what you should advocate.
Until then, ROI is moot. More than that, ROI is a red herring that keeps the conversation away from what really matters (which is whatever it is that keeps the CEO awake at night).
After you build that empathy, then you can start to have ROI conversations, and when you do they should be around ranges based on concrete outcomes (E.g. if we conduct this field research with your customers, we expect to find 2-3 dozen new opportunities. If we are able to convert 1 of those to a new line of business, based on our average revenue from current LOB then ROI would be x. We may also find opportunities to optimize current LOB, reducing costs from 5-15% OR You are considering expanding into the N. American market from the UK, this can help mitigate the risk of that expansion in the following ways....etc.)
Bottom line: you need to develop business fluency (both conceptual and cultural) if you're going to become an effective advocate for design and design thinking.
The Art of Woo
How to Measure Anything (2nd Ed)
Ten Day MBA or similar business fundamentals
Seeing David in the Stone