If we restrict ourselves to measuring investments by ROI alone, we run the risk of weakening our capacity to survive, much less thrive, in an age of strategic uncertainty. Big Bets are like early stage investments, you have to work out what percentage of your investment portfolio you want to expose to those risks and returns; that percentage could be zero, but you then give away the right to receive hockey-stick returns. Big Bets are measured like early-stage VC portfolios. Options are just options, the price you pay for a place at the table, and you decide which tables you need to sit at. Options need option pricing and suffer time decay. No-Regrets Moves, in contrast, are all about ROI. You have to do something, now all you’re working out is the best something. Build Or Buy. Which Build. Or Which Buy. And there’s probably no better tool than ROI to work this out.In a long and very interesting post he concludes:
There is a destination. One that values human capital and relationships and institutional knowledge. And we will get there. So I will continue to track the conversations on the blogosphere looking for signposts that will make it easier to get to the destination.
Well, I am glad he has had his pop at current accounting practice. When all value is a metaphor, you are left with the elements and knowledge. If all knowledge is freely available through the Internet the balance sheet rests with those who can use knowledge to convert elements using knowledge.
Throughout mankind's history (as for every other sentient being) this depends on relationships.
Why are we so slow in looking as relationships and its social value?
That is why I the Relationship Value Model is helpful.