Measuring Value for ROI
Your investment in this training has cost both time and money.
When doing x10 thinking we are focused on creating real x10 value. Value that was not there before the x10 intervention but is now. Three ways to measure this x10 value are:
• DOLLARIZATION: The translation of the benefits of x10 thinking into the financial impact in dollars that these strategies may have is what we mean by dollarization. For example, multiplying a specific KPI by ten may be dollarized at $150,000 pa or $450,000 over the next 3 years. Or, a B2B product or an applied research service may decrease maintenance or security costs by 3%. This can be translated into dollars per annum over one, two or three years. Dollarization is a strategic financial skill that can be learned and practised.
• VALUATION: In this context, valuation is an extension of dollarization. After dollarizing, what has been the impact on the valuation of the asset? What is the added x10 value for house improvements or for a business’s future cash flows? In a new venture or start-up situation, what is the potential for success, growth, and, eventually, profits? The degree of difficulty in calculating a valuation can vary but the extra effort gives you an edge which is worth it.
• RETURN: What is the gain from an investment of time, energy or capital? The gain is called the return. There is a continual virtuous cycle between INVESTMENT > RETURN > INVESTMENT. The better the return from a previous investment the better will be the next round of investment. For example, if an investment of $1 million produces a return of $200,000 then (in a 50/50 split) $100,000 can be returned to investors as a dividend, and an extra $100,000 can be re-invested into the growth of the asset eg new plant, equipment, jobs.
This return may also apply to investments of time and energy. If one hour is invested in doing a GBB for a client, the gain from this time and effort can be dollarised. Then it may make sense to do further GBBs for other clients. What will be the return for your business if you do ten GBBs? ‘Doing a GBB’ is the focused effort you make to map out how the return might be up to ten times the investment … or ROI x10.
Lesson 29 DFQ: MEASURE/PROJECTION: Measuring the future is called a projection. Projections are educated guesses and notoriously wrong. Nonetheless, when individuals and CEOs consider an investment they make a deliberate attempt to look to the future return on their investment (ROI).
Looking ahead over the next 36 months what do you feel may be the valuable benefits to you from your investment in this AI x10 training?
In what way might you dollarise this projected ROI?
Would you say your projection is conservative or ambitious?
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I have an ambitious target!
I want to succeed the old firm of staff for fresh eyes, new ideas and a more grateful, energetic and giving group of employees.
The benefit of using these tools I have learnt is clear: perspective, strategy and clarity.
Perspective: offering insights from different angles so that bias or sporadic / impulsive decision are not jumped at.
Strategy: this toolkit can aid my strategic planning and give me a pathway that is well-paced and offer checkpoints to reflect and grow from.
Clarity: clear line of direction. Clear scripts to implement. Clear motives. Clear assurances.
Very well said, Timmy!
”Looking ahead over the next 36 months what do you feel may be the valuable benefits to you from your investment in this AI x10 training”: Response: Adapting to the new business environment is crucial for people like myself. I am one of the leaders of an Audit and Accountancy Firm, therefore I am involved in both client management, staff management, client servicing as well as consulting. Remaining up- to date both in productivity terms as well as in qualitative and quantitative decision making is therefore, paramount. AI X10 training, I feel, will equip me to achieve my goals and expand possibilities for the future, including expansion of client base, establishment of a better brand (personally and for my Firm) and promoting better and more efficient decision making.
In what way might you dollarize this projected ROI? More / higher quality work done due to productivity gains => follow- up recommendations by existing clients to prospective ones, leading to expanded client base = > Increase in fee generation => higher investment in human capital within the Firm, which loops back to step 1. I would say the ROI could be quite high. Assigning a value to that though, is challenging at this stage.
Would you say your projection is conservative or ambitious? I struggle to assign a monetisation estimate at this stage, however in principle, I believe there will be a very positive ROI well above 20%-30%, if things evolve as envisaged. My ultimate personal aspiration is to enter retirement age and still be able to be productive, and I anticipate that, actions like following up such tremendous courses (like the present X10 Diploma) will help me meet my goals.