Conducting some research I’ve stumbled across an interesting quote (& this blog is but a jotter of my thoughts) that I suspect might be an old chestnut by now. It’s new to me though so here goes. & it comes from Bob Kaplan inventor of the Balanced Scorecard and relates to measuring the ROI of social media. Kaplan’s quote on the ROI of social media is succinct and cuts so quick to the point as to leave little behind:
“you can’t do it.”
I found the quote on Traackr.com who explain that “Measuring Social Media ROI is a pipe dream”
Trying to calculate the ROI of social media is the same as trying to calculate the ROI of email or the road you drive to work on. The costs can be approximated but the benefits can’t. Their reach is too broad and too many other factors are at play to even to list them all, let alone attempt to measure profits.
Now this I find interesting and and in equal measure implausible – I don’t believe it.
Now I don’t have much ammo to refute it and I’ve even less expertise. This simply ‘aint my area. And yet it keeps on coming up – there must be a way of making the Social Media Balanced Scorecard.
So where to start? Well where I started to think about this was in 3 broad areas
1) Impact improvement on existing process: time to create, to sell, cost of production etc etc etc
2) Innovation – doing what was not done before, idea Wikis and the like. Making new stuff happen.
3) Business Transformation – when 1 & 2 fuse in completely unexpected ways.
But where to strap the numbers to? Well on this, I first started to think about Balanced Scorecards – hence finding the quote from Kaplan. This is an interesting area and all I have to go on at present is an old report from Forrester from 2004: The Balanced Scorecard For IT: Value Metrics. Forrester supply a suggested list of scores:
They’re keen to stress though that,
When it comes to IT value metrics, there is no silver bullet, no single metric that provides the appropriate answer. However, with strong alignment between business strategy and IT strategy, it is possible to start making the necessary links between IT investments and their business value. We suggest using a number of diverse, financially oriented metrics to capture the breadth of IT value delivered.
This provides for me food for thought though. Can we correlate this to enterprise social media, to enterprise 2.0? Or more pointedly: is your social media strategy aligned to your business strategy and if so in how much and in what form? And where next with Forrester’s other factors, can they correlate to scoring against the success of enterprise 2.0?
Update, 31st December 2010 – I’ve developed this idea on the making the Social Media Balanced Scorecard to that of creating the social business scorecard, please see my post: The Social Business Scorecard IV, or ROI made easy