Data or Your Gut? Understanding Your True ROI
When it comes to business there will probably never be an end to the discussion of return on investment talk. But it’s important to remember that while financial returns may be easier to document and demonstrate, there is a lot of "data" that's simply subjective, part of the institutional knowledge, or coming from the expert you've hired that you clearly expect to trust. When all these issues are floating around the world of statistics, here’s why going with your "gut" isn't wrong.
In the world of sustainability measuring your ROI cannot be based on stats alone. Sure, if you reduce your energy and water usage it’s great to watch your bill go down. However the bigger savings is the enormous — and less immediately clear — impact that these efforts are having on the environment. What’s more important? Saving $50 or reducing your carbon footprint? Hopefully it’s the second one.
Paul Marushka adds to the narrative by examining how a “prove it” mentality challenges the value that environmental health and safety bring to the workforce. Despite our obsession with being able to use data to prove the worth of an initiative, sometimes we simply know the intrinsic value in something. Even if there aren’t stats to back it up. Marushka uses the former CEO of Alcoa as an example of what significant results can be achieved without having data to support the efforts: After he challenged the company to become the world’s safest, Alcoa saw an increase in earnings of 600 percent with sales growing by 15 percent per year during a 5-year period. Seems pretty clear that you can prove to leadership the value of investing in environmental health and safety — even if you don’t have software to examine everything and back you up.
Because when it comes to sustainability you have to look past the simple dollar value of your business efforts. There may be other ways to measure ROI. Although these efforts may be less tangible immediately, as a business owner you should start trusting your instincts. In a piece for Inc., Peter Kozodoy brought up a unique concept: how trusting your instincts over hard data could help you make better business decisions. And science is supporting the notion that your intuition is there to help you.
In a report published in Psychological Science Joel Pearson, an associate professor of psychology at the University of New South Wales, and his research team found evidence that people can use their intuition to make better, faster, more accurate and more confident decisions. Considering how much we tend to cling to data in the business world, this may seen like an unreliable option, however Pearson’s study showed that surrounding ourselves with more positive, subliminal inputs not only helps us make better choices, but it helps us to trust those choices. Engaging in this concept of picking up on other’s subconscious messages could explain why some folks get "luckier" than others — they always have the uncanny ability to spot exceptional business ideas, or seem to find the best people to work with. Individuals who are more in tune with their intuition over what statistic might tell them may be coming out ahead.
As you continue forward in your sustainability efforts, remember that your decisions shouldn’t be based on stats alone. There are a little of elements to consider and numbers don’t always tell the full story.