McKinsey's Technology Enabled Business Trends - New KPI Strategy?

By John Brunswick posted 08-05-2010 11:09


There is promising news in the ROI justification department for collaborative technologies.  In Clouds, big data, and smart assets: Ten tech-enabled business trends to watch McKinsey revisits some technology trends they indentified a few years ago, citing case studies and metrics from a survey that will be publicly available in September. These trends are closely bound to what Enterprise 2.0 technologies are designed to facilitate.  A series of the examples in the McKinsey article pointed at increased innovation capabilities - which are inherently tricky to measure.  We know instinctively that supporting collaboration provides value, but how do we measure it in a meaningful way?  Do we need new KPIs to help us get the most from collaborative technology?

Over a recent dinner I was discussing this article with my friend, leading innovation expert Stephen Shapiro.  He was able to share some powerful insights around how to measure innovation in collaborative activities.  Stephen's article Measures: Will You Get What You Want? provides three types of measures that can be used to gauge the effectiveness of challenge-based innovation.  Building on his measures, I have adjusted the terminology to reflect general enterprise collaboration - as it relates to Enterprise 2.0 technologies.  Each value measure in the list is of increasing significance to delivering hard ROI.

  1. Process Measures - These measure the activity associated with collaborative activities (think of this as a contribution measure - e.g., 500 registered users, 1000 discussion forum posts, 250 replies, etc).  Leveraging community rating functionality on top of this, we can also measure the quality of this activity, similar to's "Was this review helpful to you?" functionality. This next measure further addresses the effectiveness of the activities.
  2. Solve-Rate Measures - These subjectively measure how effective resolution to issues has been  (e.g., 72% of questions posted in a forum were solved, 28% of questions have gone unanswered, 10% of customer issues were closed through self-service materials before calling help desk staff, etc).  ExpertsExchange and other examples cited in Enterprise Social Graph - Automate Personalized Knowledge Base Creation explicitly make use of this measure to create powerful knowledge bases.
  3. Value Measures – These measure the actual value accrued (e.g., increased revenues by $5M (via community network supporting a product), reduced costs by $1.5M (via help desk utilization reduction), etc). Additionally, over time, the assets created through collaborative processes provide a foundation that allows enterprises to be able to search and locate expertise within their organizations.

Using these three measures, metrics can be obtained at any point within a collaborative project lifecycle.  Stephen points also out that rarely does a single collaborative activity provide ROI - it is a combination of activities that lead to sizable return - a breakthrough or innovation.  Additionally, some ROI around collaboration can be complicated by the time-to-value for particular collaborative activities.  Pharmaceutical companies may not see returns on collaborative efforts for many years, so it is important to be aware that ROI indicators can lag substantially.

The McKinsey article highlights examples of social networking, online communities and enterprise knowledge sharing activities that the three value measures can apply to.  In the September report, which provides further detail, the value measures will provide further insight into where companies were arriving at value by capitlizing on the various technology enabled business trends.

Now that we understand more about what KPIs can be used to gain visibility into the effectiveness of collaborative activities, start looking at your collaborative efforts today through the lens of the above measures to gauge the value and adjust collaborative strategies and incentives to more tightly align with your business goals.

#measure #ROI #Collaboration #enterprise2.0 #value