The Return on Investment (ROI) with respect to the use of social computing is a hot topic these days, as more and more organizations and business sectors are realizing social media and social computing are here to stay.  Indeed, I just finished co-authoring (with Jay Cross) an article for CLO Magazine laying the groundwork for a new approach to making decisions about investing in social computing capability and dynamics in business environments.  I’ll share an abbreviated version here in the next several days.

A number of other practitioners and theorists who pay attention to networks and their dynamics (such as FASTForward’s Jevon Macdonald and Joe McKendrick, Dion Hinchcliffe, Valdis Krebs, Matthew Hodgson, Patti Anklam, Jessica Lipnack, and others) have covered the same or similar ground.  It is becoming more apparent that the returns from network activities are found in intangibles that do not fit well into the industrial era concept of Return on Investment (an accounting concept used to make investment decisions in stable, time-defined, typically single-purpose use cases).  New assumptions and methods for assessing what to do are needed.

So, I’d like to use the reporting in a ZDNet article that caught my eye titled “A Real ROI From Twitter ?  The Start of Social Medical Networks“  to discuss several of the key issues about whether or not to use social computing to achieve purposeful goals and objectives..

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There may not be a big enough return on tweeting yet to report it to your CFO. But it won’t be long before there’s a clear, return on tweeting to report it to your doctor.

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At the Autism One Conference in Chicago, a Web-based program for collecting data on individual cases of the brain development disorder will be unveiled. It’s called ChARMTracker and is designed, at the start, to help ease the burdens of each parent trying to keep track of the drugs, nutritional supplements, physical therapies and dietary tacks being taken to treat their sons or daughters. They will also use it to keep track of any observations about their behaviors that might seem pertinent and how their children are performing academically, as a result of the constantly changing constellation of combinations that are being applied to the still-mystic condition.

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Horn has, for instance, collected 60 two-inch thick binders of observations, medical and supplement records about Sophie, over the last 11 years. Those records would be available to Sophie’s doctors and health care aides, in an instant, if ChARMtracker had been around from the start. They would also be part of a growing mound of evidence on how drugs, supplements, therapies and diet affected autistic individuals, as they grew and evolved.

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Pramila has founded another company, MedicalMine Inc., which will take what she has developed and try to extend the approach to other chronic physical conditions and forms of disease management.

If all goes well, parents and patients will not just be collecting and sharing data through sites like this on the Web. They’ll be communicating with doctors and providing real-time evidence of results, through tweets and other instant messaging technologies. In some cases, sensors will provide constant streams of data that will be put into the record and analyzed, for individuals and the group, as a whole.

These social medical networks could wind up being “the most fundamental IT app” that a family or its friends need, when desperately seeking answers about afflictions suffered by anyone they care about.

For that, every data element – and every tweet – will count.

And, over the long haul, produce a calculable return.

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So, to begin measuring increases in effectiveness and value in a networked social computing environment, please consider the concept of Return on Investment in Interaction (ROII), which we have derived from the principles of Metcalfe’s Law of Networks (as have many of the others cited above).  Why, you may ask, do the above excerpts portend being able to identify and / or assess Return on Investment in Interaction ?

Identifying and Measuring ROII (Return on Investment in Interaction)

The focus in purposeful networked environments is to do what’s important and involve those who know what’s important, why it’s important and what they know (or know how to find out) about a problem or issue.

Let’s define some core assumptions about ROII :

• Continuous flows of information are the raw material of value creation and overall performance,
• Information flows are carried by links, alerts, RSS feeds, search engines, aggregation and filtering of content, etc.
• All leading social / collaboration platforms now feature social networking, search and computing capabilities,
• These platforms’ architectures facilitate purposeful cross-silo communications and exchange.

Social networking pioneer Valdis Krebs has outlined four generic metrics that are becoming widely accepted as leading to observable, tangible, measurable outputs:

• Increase in size of network  
• Increase in internal network connectivity 
• Increase in connection to valuable 3^rd parties   
• Increase in number of projects formed from all three factors above 

It’s important, we think, to note here that we are not proposing a definitive answer but rather the need to debate and clarify the issue(s). However, an attentive read of the ZDNet article referenced above clearly aligns with Krebs’ four principles:

1. Increase in size of network:  As The CHARMTracker database grows and the volume of families’ data it holds increases, it’s utility to doctors, other health care professionals and the families themselves increases.  And, as the article points out, if and when the data begins to be (appropriately) used by those networked around the health issues, the value of the interaction will increase in an (likely) exponential fashion.

2. Increase in internal network connectivity:  Again, as suggested by the paragraphs excerpted from the ZDNet article, as more and more participants are networked into the CHARMTracker information and begin to use the dynamics of social networks to seek for and circulate pertinent and useful information, each time a piece of information is useful to someone there’s a tangible return on the intangible capacity offered by the flows of information and knowledge.

3. Increase in connection to valuable 3rd parties:  As more information fills the CHARMTracker database, and more doctors, health care professional and families use it, the apparent value will become clear to others with expertise or value to provide to the social medical network that will have grown up around autism issues.  Expect to see both volunteer and for-profit services to be added to the growing ecosystem of knowledge and attention.  

This expected outcome reminds me of the core argument of Shoshan Zuboff’s book “The Support Economy – Why Corporation Are Failing Individuals and the Next Episode of Capitalism”, wherein she argues that the complexity surrounding many issues in today’s society are such that all sorts of people (consumers, families, professionals, and so on) will need “support” that can be designed, built and delivered via the digital interlinked infrastructure we know as the Web.

4. Increase in number of projects formed from all three factors above:  It’s pretty easy to imagine that as the CHARMTRacker database and its use(s) take root, there will be other clever and useful projects that grow out of the experience and the learning it affords.  Doc Searls, of Cluetrain Manifesto and VRM (Vendor Relations Management) fame once sagely noted that one of the critical outcomes of operating in purposeful social networks was the “scaffolding” (building in layer upon layer) of useful knowledge. 

That’s how circulating pertinent information and sharing useful knowledge works .. we don’t go backwards, we build on what’s useful and what works.  That’s how Return On Investment in Interaction will work and will deliver value to organization and groups who decide to use social networks, linked information and data, and social computing dynamics to accelerate their effectiveness towards achieving their purpose.

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