Jimi Hendrix’s ‘Voodoo Chile’ is an incredible 5 mins 12 seconds of Jimi torturing all kinds of ungodly yet awesome noises from his guitar. At various point it sounds like his instrument is harmonizing with him in squeals of agony. A rock classic.
Except it’s not. That’s ‘Voodoo Chile (Slight Return)’. ‘Voodoo Chile’ itself is a ponderous, overwrought blues epic from earlier in the Electric Ladyland album that goes on for nearly 3 times as long (length being inversely proportional to rockness here). Definitely two things not be confused. And lets not even get started on the Rogue Traders’ Voodoo Child where, true to their name, they attempt to pass off a bootlegged sample of Elvis Costello and the Attractions ‘Pump It Up’ as their own gear from out of the back of a van in Sunshine West. Hendrix once asked: “Is this love, baby, or is it just confusion?” It’s just confusion, Jimi. Definitely just confusion.
And speaking of confusion, lets talk about Return on Investment. This post was provoked by a customer experience dude complaining on LinkedIn about being asked for RoI for CX by Finance or IT.
So lets talk about RoI and the confusion that surrounds it.
First off:
Return on Investment = (Current value of investment - cost of investment) / Cost of investment
Or:
Return on Investment = Asset Turnover x Profit Margin
The first is the formula used to calculate RoI for an investment, typically a project within an organization. The second is the original formulation of RoI based on the income statement and balance sheet of a business by Donaldson Brown at DuPont in 1914. Brown was annoying precocious - commencing a degree in the newly invented discipline of electrical engineering at the age of 13. Given that Jimi Hendrix didn’t start playing guitar until 15, that makes him a slacker in comparison. Truly Donaldson Brown was the Jimi Hendrix of Management Accounting. Or perhaps Jimi Hendrix was the Donaldson Brown of Rock.
Regardless of which formula you use, most managers couldn’t give it to you with a gun to their head. If you were to give them a dollar figure, they would probably nod sagely while you silently laugh at them, thinking “HA! RoI is not a $ figure, it is a ratio!!! I pita da fool…”
Of course, none of this matters. This is not the kind of post that will start talking about how you align RoI with Rate of Return (RoR) or Net Present Value (NPV). Because none of this is what people mean when they ask you for an RoI - especially if they represent an established, powerful business function and you represent a new, relatively low status one.
What they really mean is: “I have no idea what you do and, more importantly, I don’t know how the f- your thing will benefit me, so please tell me in terms that I can understand”. Saying that out loud is kinda socially unacceptable so people ask for RoI instead. When they really mean WTFDYD. And can they provide an RoI for what they do? Probably not. But they’ve hung around and everyone seems to need them (even if we don’t like them) and we seem stuck with them now. The “RoI” is that if we fire all of them, some bad s—t might happen, so we don’t do that.
So unless you are talking to a Finance person who actually knows that they are talking about, do not attempt to use a mathematically correct RoI calculation. Instead, explain to them how your thing (e.g. CX, data science, sustainability) helps their thing (e.g. Finance, Sales, IT) using the metrics that they themselves are measured by. N.B. No one gives a flying one about your metrics.
If all of this seems like a version of frat boys hazing junior pledges for admittance to their group then it absolutely is. So shape up, run round the block naked, and down your Malibu and Mayo RoI shot.
We should end this disquisition with “The Table”. What I constantly see on LinkedIn and in professional publications is advice on how to “get a seat” at “the table”. Who’s at this table? Well it’s the boardroom table so presumably a lot of old white dudes who miss getting drunk at lunchtime and ogling secretaries. And a woman (who is not a secretary and does not care to be mistaken for one thank you). And someone not white (or at least from a different school to the other board members). Anyway, “the table” is where important things happen. Budgets get doled out. Strategic priorities are set. Reports are misunderstood.
So who else is at the table? Well, not you otherwise you wouldn’t be reading articles about how to get a seat at the table. Marketing would like their seat at the table. Finance has a seat at the table but would like a bigger one. IT would like a seat at the table. HR would like a seat at the table. Exactly what sort of table are we talking about here?
All this table jockeying is exhausting. And like all lengthy, costly journeys to mythically awesome places: ultimately disappointing and potentially fatal.
Should you seek a seat at the table? If everyone (not just you) thinks what you do is existentially important for the business then yes. Sure. Give it a go.
Will RoI help you do that? Being able to explain what you do and the value that you add to multiple audiences will. That may or may not involve RoI.
What can Jimi teach us about all of this? Well, nothing much. I just used him to get a dad joke into the title of this post.
Except that Hendrix did not need to prove his value with spreadsheets. He communicated in a language his audience understood - the language of ROCK!
So either be the finest guitarist of your generation. Or learn what pivot tables and V-LOOKUPs are. I think the lesson here is clear.
I love many and all things about this blog. Thank you for the needless rock & roll segway into needless semantics, leading to the paradox of the table seating. I say needless, your insight & angle is super interesting. Please keep writing things like this :)