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.