One of the most difficult aspects of technology as a tool is deciding how much to invest, when to invest, and then being at peace that you will get a return on the investment. This applies to us individually, and to all organizations. I have been wrestling with both the last few weeks and that inspires me to write this content for you. I have a client that is growing quickly, been in business many years, has the profits to upgrade their digital plumbing, and the need to take a big step forward. We are talking a possible investment of one to two million dollars possibly – maybe more. At the same time, I am thinking it is time for me to buy a new laptop and maybe upgrade some of the technology I use. In both cases, I am going through the process of thinking about all of the reasons improvements make sense and trying to come to a decision on the right amount to spend. Ergo, the following thoughts…

Technology is just a tool as I always say, and to be sure, it is becoming a more and more influential tool at our disposal. In some cases, the excellent application of technology to a traditional business process is causing the organization taking the risk to reap a reward that is dramatic. At the same time, I have seen technology dollars spent on the wrong things, or vastly overspent to get little yield. The point here is that too many people worry about WHAT technology to build instead of HOW MUCH it might cost. I look at every technology purchase –personally or organizationally – in terms of when the return on investment is going to be. I love to spend a low amount of money to get a really fast and large return. That is a no-brainer. But how do we make decisions when we are talking about large amounts of money and a return that has some unknowns, risk, and length of time drama involved? I suspect that in the future, the real art of implementing technology will be less and less in trying to figure out what to buy, but how much to pay and when to implement it. There is a continuum that I will call the Risk/ROI continuum that we will all have to decide on our strategy as to where we line up.

Let me explain… At one end of the spectrum is a technology that has a clear ROI. We absolutely know that if we invest a dollar, we will get two dollars back quickly. At the other end of the spectrum is a buying decision where there is risk either because the technology is new and unproven, or there is a question as to whether the organization can really leverage the technology. I have seen both negatives in my career. Companies that invest in a new technology that ends up not playing out, or technology that is solid but the organization just simply will not use it in a way that will provide benefits. As a leader, we have to make Solomon decisions along this curve and the impacts of these decisions are having more and more impact on the organization. In truth, a good or bad decision along this Risk/ROI continuum can make the difference between life and death for some orgs. So back to my two personal examples…

As a consultant, I have clients that depend on me to help them make decisions on millions of dollars in technology investments that will either help their companies soar, or will be a serious drain on cash flow. I sometimes think about how much responsibility this puts on my ability to help them make the Solomon call. I actually do not find myself sweating these decisions because it is normally have a pretty clear idea if the purchase will be of value. What cannot control is how well the organization will use the new tool. Things get tougher with more leading edge technologies like social media. In this case, the ROI is much harder to depend on, or measure. I have to just be visionary and faithful in having people invest resources in this new field. What I do that many leaders are afraid to do is to just make a decision, then fight hard to make sure the investment pays off. I try to look at tech buying decisions from the viewpoint of an architect trying to build valuable plumbing that will have value in the long term. Leaders just have to have courage and vision and make their calls.

At the personal level, I have to make a decision on my new laptop. Should I fill it with RAM? Get a huge hard drive? Maybe even the fastest processor they have? This would be the difference between a $2000, or a $3000 Mac. Will the extra $1000 really make a difference in my life? I really don’t know. So I will sit here and sweat that decision while being easily able to make million dollar decisions for clients. Uh, maybe that has something to do with it being my money and not someone else’s. I would like to think it is just a tougher intellectual decision because the difference cost will really not help my career – I think.

Scott Klososky
Scott@klososky.com