Comments on: Ignoring the ROI of Openness

By: Philipp Mueller

Philipp Mueller — Tue, 17 Aug 2010 12:58:00 +0000

Dear Lorena, great point – would love to see a full-blown guest blog from you on the issue. Thank you for the super-interesting paper. One thing I wonder about when looking at value web/network thinking is in how far it is still built on Coase’ian/Olson’ian assumptions (on transaction costs, free riding, collective action dilemmas). That’s where I would love to read your thinking on my entry on Coase, Horkheimer/Adorno, Olson and Schelling: http://www.philippmueller.de/c-h-a-o-s-and-the-open-value-chain/

By: Lorena Jaume

Lorena Jaume — Tue, 17 Aug 2010 12:30:00 +0000

Dear Philipp, I love your examples. They clearly depict why ROI doesn’t encompass all dimensions of value -and I’d stick to that position, since the semantics of value within ROI force one to think within the logics and dynamics of monetarized value. Whereas, as you already point, the logics and dynamics of succesful 2.0 projects are either concentrated on knowledge or demonitarized benefits. Hence I propose to we use value network analysis as a tool. This method is being used by global players, e.g. Cisco, and it does not only demonetarize value, but is also able to provide a multi-layered perspective of value and costs both on the side of the producer and consumer. As far as I know, this approach with e-government is at the beginnig (I only know of a paper of 2 scholars on 2009 -I’ve just sent you the paper by email)

By: Sofia Elizondo

Sofia Elizondo — Sun, 15 Aug 2010 22:43:00 +0000

Very thought provoking.
What a huge and beautiful challenge: “figure out how to generate revenue streams that do not disturb the value chain.” I think this contrasts with a) generating revenue streams by obstructing the value chain (US farm subsidies or copyright) and b) generating revenue streams by not disturbing the old value chain (protected local/ national manufacturing for local consumption).
Your examples are brilliant. I would even add Netflix’s video streaming as an instance of a company embracing the new value chain first, and figuring out how to monetize it later!
However, I disagree with ignoring the ROI-issue. You are right, ROI does not measure public value, but only myopic individual return (let’s call it, I-ROI, individual return on investment). But we still need a metric for individual return if we are interested in generating revenue! Instead of ignoring it, I suggest we couple I-ROI with the public impact of investment or P-IOI. (A new challenge here: how to measure P-IOI? You already make several suggestions above. Perhaps we can expand in a new post…)
If P-IOI is negative, no amount of I-ROI will make the equation positive for society. If P-IOI is positive, then a balance must be found for the right I-ROI. Perhaps government 2.0 should seek to maximize P-IOI, whereas enterprises 2.0 need to strike a different balance.
Interestingly, as an aside, the “social enterprise” sector (e.g. microfinance) is facing similar debates between maximizing social contribution and maximizing capital return…

By: L’opendata dans tous ses états – Juillet III «

L’opendata dans tous ses états – Juillet III « — Mon, 26 Jul 2010 21:21:21 +0000

[...] Ignoring the ROI of Openness [...]

By: AlexSchleber

AlexSchleber — Sat, 24 Jul 2010 07:08:29 +0000

Nice blog you got there, Sir! :) Great to meet you at Munich party.

By: Philipp Mueller

Philipp Mueller — Thu, 22 Jul 2010 13:45:46 +0000

Dear Thomas, thank you for drilling down and clarifying the argument! I love your idea of thinking in "benefit dimensions" and believe we can build a framework on it. Some ideas from the retweets:

@semantrack "Governments should not evaluate in terms of ROI but in rate of de-monetarization"
@jonathan_rubin Mueller: Can't use ROI to evaluate success of #socmed, because the value is for the consumer, not producer

anyone else jumping into the debate?

By: tlangkabel

tlangkabel — Thu, 22 Jul 2010 13:19:03 +0000

Good points, Philipp. And good arguments, why OpenXXX / Web2.0 is best served in government business. There is a broad consensus that the administration has not to view on turnover or margin while defining and offering its services.
Already years ago, the administration has experienced difficulties to prove the “efficiency” of the first “classic” E-Government (1.0) services. This “efficiency” can not be detected within a horizon only looking at the borders of the current administration, because the real benefit
regularly lays beyond this horizon, namely at side of citizen and company premises. (and, by the way, the corresponding “effectiveness” can as well not be detected, due to the still missing metrics, indicators and instruments to quantify and measure them).
As long as we do not include returns on quality or ROIs with an economy scope in the efficiency analysis for government offerings, all short-sighted ROI calculations with the scope of only organizational returns will fall short.
So, the trouble of hard to quantify returns and short falling ROI calculations for “new” Government 2.0 offerings isn't something really new for administrations. Well, in addition to take more qualitative benefits (eg through improved service levels) or economic
quantifiable benefits into account and into the ROI equations, there is an additional benefit dimensions, especially for Government 2.0: the democracy-strengthening returns.

I believe there be should at least some few empirical studies, whether and to what extent this benefit dimension is verifiable and tangible and can therefore be made interesting for politicians.
Because ROI of Government 2.0 primarily pays not within administration but in politics, future events, awareness-rising activities and all “missionary work” for Government2.0
should primarily target this group, which – at least in theory – is the contracting and sponsoring body for the administration and all of it's modernization efforts.