John Cutler Highlights the Neglected ‘Return’ in ROI Discussions

In a recent LinkedIn post, John Cutler discusses a common imbalance in how businesses approach Return on Investment (ROI), arguing that organizations often overemphasize the ‘investment’ side while neglecting the crucial ‘return’ aspect. Cutler points out that this focus on investment, while seemingly practical, leads to a less effective strategic approach.

Cutler observes that the difficulty in measuring returns often leads to an avoidance of this critical component of ROI analysis. He states:

“Well, that kind of makes sense, because return is hard to measure, and often takes a leap of faith, and requires embracing uncertainty. And all that is hard. So we don’t do it, and make up for it by obsessing about the investment side of the equation.”

The Overemphasis on Investment

According to Cutler, the tendency to focus heavily on the ‘investment’ side of ROI—which includes aspects like points, hours, and the mechanics of project rollups—is a consequence of the inherent difficulty in quantifying returns. This focus provides a sense of control and measurability that is often lacking when trying to define and track actual business outcomes.

He suggests that this preoccupation with the input side of the equation can lead to unproductive debates and a misallocation of energy. Cutler implies that teams spend excessive time on the minutiae of how work is done, rather than on what that work achieves.

Shifting Focus to Outcomes

Cutler proposes a significant shift in organizational focus, urging teams to dedicate more attention to understanding and measuring outcomes. He posits that a greater emphasis on the ‘return’ side could lead to more meaningful discussions and ultimately, better business results.

As John Cutler asks:

“Imagine what could happen if teams spent as much time trying to understand outcomes as they do bickering over points, and hours, and how the perfect rollup is supposed to happen.”

Cutler argues that by prioritizing the understanding of outcomes, businesses can achieve a more balanced and effective approach to strategic planning and project execution. He believes that this shift in perspective can help to “smooth out the conversation a bit,” fostering a more productive dialogue centered on impact and value rather than just effort and cost.

In essence, John Cutler’s insights from his LinkedIn post serve as a call to action for businesses to re-evaluate their ROI frameworks. By dedicating more effort to understanding and measuring the ‘return’—the actual impacts and outcomes—organizations can move beyond the complexities of investment measurement and drive more meaningful business success.