Happy ROO Year!

 

                                            

By Kaz Muddell and Iggy Pintado

Source image: reprinted with permission of The Big Issue Australia.

Recently, we saw an article that intrigued us. Despite all the best intentions, most people that make new year resolutions to get healthier, fitter and lose excess weight at the beginning of January, will inevitably fall off their respective programs before the end of the month. Wow.

The assumption is that these people spend their well-earned cash ‘investing’ in gym memberships, personal trainers, nutritionists, diet regimes and group exercise classes. In making this investment in their promised better health, they don’t plan to be receiving any direct financial return on their money.

Recently, the term Return On Outcome (ROO) has come into social thinking. It proposes that a return on outcome is a qualifiable, subjective measure of an investment based on the outcome realised, and not a quantitative, objective measure of investment based on a monetary return.

Assuming that most people aren’t expecting a quantifiable return on their health investments, we asked ourselves, what criteria do people use to outlay their cash for the promise of better health. And why do most of them give up within a month so easily?

Since 2006, Kaz Muddell has been helping people of all ages and fitness levels improve their quality of life. Her Mind Body Motion business offers personal and virtual training and group classes. This is her practical perspective.

When a client signs up with her for personal training or to attend a group class, they don’t expect a financial return on their investment, although they do expect to “get their money’s worth”. By investing their funds, they expect to lose weight, improve their fitness, go down a dress size and so on. Their goals are not financially quantifiable, but they can envisage a return on outcome.

Short term results are possible, but not sustainable. Becoming healthy is not an overnight process. It takes dedication and an investment of time and their best return on their desired outcomes will be through long-term adoption of disciplined and habitual practices.

Exercise isn’t just about what you look like or how fit you are. Exercise is also about quality of life in the forms of improved mobility, building strength to reduce injury in the future, endurance, and improved mental wellbeing. 

Kaz works with people of all ages, and many are over 60. The outcome for these people is to be able to participate in the hobbies they enjoy, many of which are physical such as gardening, walking, playing with their grandchildren, or snow skiing. The desired outcome is to have the strength and mobility to enjoy these activities, and have a lower risk of injury whilst doing so.

The return on outcome can also vary depending on whether the person chooses to attend a gym or to work with a personal trainer. This can often be the catalyst as to whether they keep going, even if they don’t achieve their goals in the short term. 

Surrounding yourself with like-minded people creates a social atmosphere as well as providing some level of accountability. Regardless of what option you choose, it’s always more motivating to work with others and have someone challenge you, hold you accountable to your commitment, and it’s more enjoyable.

The original premise of return on outcome was to challenge the notion that everything has a return on investment (ROI). This is a clear example of how some personal investments do not have a direct ROI. Instead, people realise a return on outcome based on more qualifiable outcomes.

Therefore, it’s proposed that commencing this year, considering the return on outcome (ROO) on both personal and business decisions should be more duly considered.

 So, for now, have a Happy ROO Year!

What is Return on Outcome?

by Iggy Pintado

Last December, I wrote an article with Dr. Chris Baumann that was published in CMO magazine, called Introduction to Return On Outcome.

In the article, I related a story about a conversation with a Chief Finance Officer where I requested some funds for a program I wanted to run. He not only explained that I needed to show a return on investment (ROI) on the requested funds but that Everything has an ROI. Hmm..

After a career in marketing, I got used to the rejection of requested expense budgets unless a ‘quantifiable”, monetary return could be clearly articulated.

However, I challenge the specific words: Everything has an ROI.

Businesses can use ROI criteria to justify an expense investment. I question if it is the ONLY criteria for determining if a program that assists the business is approved or not. Are there other more qualifiable criteria that deliver business returns that cannot be quantified but justifiably benefits a business generally or specifically?

Should ROI be the only criteria for determining if an idea produces a desirable outcome?

The proposition is to consider a return on outcome perspective. Simply put, a return on outcome (ROO) is a qualifiable, subjective measure of an investment based on the outcome realised, and not a quantitative, objective measure of investment based on a monetary return.

 
Personally, I don’t use ROI in many personal decisions. For example, in determining whether to donate some of my hard-earned salary to a cause. There is no quantifiable return to a charitable donation. Instinctively, the outcome achieved is in feeling good about contributing to a worthy cause. The return is in the outcome realised, not in an objective return on funds invested.

 
In business, the return on investment of hosting a corporate client at their favourite football game cannot be directly quantified, but there are qualifiable returns in an improved, sustainable relationship between a satisfied client and the sales teams that may lead to the purchase of the company’s products and services over time. 

Similarly, it’s hard to quantify sending a single staff member to an expensive operational improvement course. However, once the individual returns from the course and shares their learnings with their colleagues, the potential improved team productivity and morale boost benefits of developing the individual and fellow staff members is realised.

Return on outcome (ROO) is a qualifiable, subjective measure of an investment based on the outcome realised.

So, does everything have an ROI? In the ensuing series of posts on this Return On Outcome blog, I’ll be collaborating with practioners primarily to get their regular and practical experience on return on outcome. 

Please join me here and contribute with any comments and insights.