The story broke this week about how a 26-year-old IBM employee (Max Black, instant legend), in 24 hours, reversed an expense reporting policy which prohibited the use of Uber.

Yep! 400,000 employees worldwide, a relative newbie, 24 hours, corporate policy reversed!

Here’s what happened:

The 4-year IBM’er works in NYC and routinely uses, and expenses, Uber. Suddenly, a policy comes down preventing this practice. So he wrote a petition with his rationale, including criticism of the policy.

“hypocritical … IBM is in the business of preaching mobility transformation to its clients, but we are effectively outlawing for our employees one of the best examples of mobile innovation out there.” 

IBM Connections Image

IBM Connections Image (click for source)

 

He then posted the petition to the internal Enterprise Social Network – IBM Connections, a platform which IBM sells. The petition immediately went viral within IBM, including lots of affirming comments. (I’m sure Mobile was a big part of the velocity of this propagation.)

Of course, being a data-driven company going way back, HR has a gee-wiz tool that tracks conversations inside the ESN. The Uber Petition caught the attention of the HR SVP. After some research, the very next day, she posted a memo, also via the ESN, reversing the policy.

Case closed.

OK. So this story is useful on so many levels. For this blog, I really want to focus on the question I so often hear from CEO’s and Senior Leadership:

“Mike, this is all well and good. But what’s the ROI of Social Media? Before I invest any time and money,  we need to know how this is going to help us either drive revenue or cut costs.”

Let’s dig into the ROI. Promise me one thing. If you agree with these points, SHARE THIS ARTICLE so I’m not wasting my time. That’s MY ROI!!!

Points of Analysis in the Context of Social Tech, Digital Biz:

1. ROI from the use of the tool

Let’s say it took 30 minutes to write the Uber Petition, and 5 minutes per person to read and vote. Let’s say 10,000 people read and voted. That’s 50,030 minutes. Let’s say the average salary is $40/hr. And let’s say the average billing rate is $200/hr. So at $240/hr, divided by 60 minutes, that’s $4/minute. So the Petition cost the company about $200,000. Fair enough?

Now we know that Uber is all about saving time, improving comfort, and a fixed price including the tip. Dial it up on the app when you need it right now, accept the price, car arrives within minutes, take the ride in a much nicer car, get to the destination, jump out, done. No waiting at the curb with your arm out, no hassles at the drop getting a receipt, no scanning the receipt. Let’s say Uber doesn’t actually cut the fare itself, although I tested this in Minneapolis recently. The total cost differential from the airport to the Edina hotel was $54 cab versus $38 Uber. Let’s say Uber only saves time. Let’s say 1% of IBM’ers use Uber on a regular basis and it saves them at least 5 minutes, let’s say per week. So that’s 4000 people, 20,000 minutes, or $80,000 per WEEK using the same math.

2. ROI from the speed of change

So for every WEEK that goes by, the anti-Uber policy would be costing the company, let’s say $80,000. Let me ask you: If there was no internal social network and this whole thing was done over traditional email, how much time would that have taken end-to-end? Longer or shorter? And how many people would have been called into meetings, even quick extra agenda items inside other meetings? You know the drill and what it takes for a corporate policy to get reversed. Let’s just say a month goes by and another 20,000 collective minutes. That’s $300k right there. And we all know that without clear consensus on something like this, the policy might not have been reversed, right? More costs.

And if the policy didn’t get reversed, what are the costs?

  1. Productivity costs associated with morale.
  2. Performance costs due to frontline people thinking that the company is ‘hypocritical’. Negative thoughts inhibit best efforts.
  3. Lost sales due to competitors finding out that the company “doesn’t eat its own dog food” and promoting that in head-to-head competitions.
  4. Cost of turnover due to a downward spiral stemming from a simple policy like this. Hey, it’s always the little things that make an employee vulnerable, right?

Just taking in these 4 points alone, are the costs more or less than the $200k spent on the Uber Petition, plus whatever it cost to get the system in place, which are really sunk operational costs?

And this is just one little, tiny, VERY small use of the Enterprise Social Network.

So back to the question, “Mike, what’s the ROI of all this?”

What’s the ROI of positive morale? What’s the ROI of time savings? What’s the ROI of retention? What’s the ROI of competitive win-rates?

Before moving on, a few more reasons why this story is SO instructive. Be careful not to gloss over these. In the DigitalBiz era, these are all big deals.

3. How the company uses monitoring and data

#BigData – it’s not a buzz word. It’s a real thing. How do YOU monitor the sentiment of a distributed workforce across email? So you send out a survey maybe to the managers, maybe even all-company. Or you can provide a highly usable, viral, effective Enterprise Social Network that facilitates gathering realtime data. And that data gets to the right people at the right time.

4. Responsiveness and humility by senior staff

Culture trumps strategy, right? I LOVE the way the HR SVP made the decisive call, admitted a wrong previous decision, and moved on. Case Closed. No issues. No second guessing. The facts are clear. Done.

5. Clear thinking and courage by junior staff

Wow. Again awesome culture. A junior staffer has an idea that’s in the best interest of the company and throws it out there. No fear. That’s culture, baby. Don’t great ideas often come from within – IF the culture supports ideation and has a system to handle innovation? Ask yourself: How creative is your company? Where are ideas coming from? Marketing ideas? Cost cutting ideas? Product innovations? New recruits? New markets? How often? From what levels?

6. Transparency of the company

I love it that this story went public! No worries, right? No one’s perfect, right? Do you think less or more of IBM after reading this? I think more. They use their own software. It works. The listen. They change. They’re savvy.

7. And there’s at least one more HUGE piece of ROI

I’ve purposely not mentioned it. My hope is to leave room for readers to think through this vignette and discover something for themselves, too.

Again, if you agree, please do something with this right now. That will be MY ROI. As I was fond of saying in the early days of blogging, “Lurking is LAME!”

The ROI of Social Tech is so high.

OH, and btw, this is just the ROI of INTERNAL Social Tech. Want to know more about the ROI of EXTERNAL Social Tech? It’s there if you do it right and know how to trace the dollars. Just like anything else, it’s not easy, though…

Cheers…

Mike

PS. My Millennial daughter, home for the summer from Cambodia, proof-read this blog. Her comment: “This is a story that UBER should use, dad!” :-)