I'm one of the founders of a startup operating in the HR bubble and while so far none of our clients asked, one of our advisors - SV senior position, relatively big startup - suggested we figure out a way to calculate the ROI for using our solutions.<p>I feel that we're not particularly fit to be evaluated in this particular way, because we're more likely a hygiene solution: if you don't do what we help you do, things will stink.<p>Beside this, we're doing behavioural qualification so we don't address orgs that don't have a clear and present need for our solution.<p>But, I don't want to be right, I want to be smart (or at least less stupid) and I can imagine a scenario where this ROI issue could come up, and I wonder how can I navigate it. Thanks in advance!
The one way I know of to quantify something like "what's the value of preventing something bad from happening" is to use the kind of techniques described in Douglas Hubbard's <i>How To Measure Anything</i>[1]. Teach some experts within the customer company how to do calibrated probability assessment[2], then build a model, and run a Monte Carlo simulation[3] over that model. That gives you a way to at least loosely quantify things. It's not perfect, but for what you're doing it probably doesn't need to be.<p>[1]: <a href="https://www.amazon.com/How-Measure-Anything-Intangibles-Business-ebook/dp/B00INUYS2U" rel="nofollow">https://www.amazon.com/How-Measure-Anything-Intangibles-Busi...</a><p>[2]: <a href="https://en.wikipedia.org/wiki/Calibrated_probability_assessment" rel="nofollow">https://en.wikipedia.org/wiki/Calibrated_probability_assessm...</a><p>[3]: <a href="https://en.wikipedia.org/wiki/Monte_Carlo_method" rel="nofollow">https://en.wikipedia.org/wiki/Monte_Carlo_method</a>
Here is a way to learn to describe processes and quantify the gains you created: <a href="https://www.ycombinator.com/library/8d-how-to-build-a-great-series-a-pitch-and-deck" rel="nofollow">https://www.ycombinator.com/library/8d-how-to-build-a-great-...</a><p>(Belongs to this <a href="https://www.ycombinator.com/library/20-deck" rel="nofollow">https://www.ycombinator.com/library/20-deck</a> )<p>Especially this exercise is extremely helpful: "Explain how the world currently works. Aim to show, not tell"
I think you’re talking about a risk reduction ROI.
= Reduction in risk / cost of compliance - 1<p>I saw this in a security context <a href="https://www.cisecurity.org/blog/the-one-equation-you-need-to-calculate-risk-reduction-roi/" rel="nofollow">https://www.cisecurity.org/blog/the-one-equation-you-need-to...</a>