Does everything has to have a ROI?

Question

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.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.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.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!

mindcrime · Accepted Answer

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 How To Measure Anything[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.
[1]: https://www.amazon.com/How-Measure-Anything-Intangibles-Busi...
[2]: https://en.wikipedia.org/wiki/Calibrated_probability_assessm...
[3]: https://en.wikipedia.org/wiki/Monte_Carlo_method

_the_inflator · Answer

Here is a way to learn to describe processes and quantify the gains you created: https://www.ycombinator.com/library/8d-how-to-build-a-great-...
(Belongs to this https://www.ycombinator.com/library/20-deck )
Especially this exercise is extremely helpful: "Explain how the world currently works. Aim to show, not tell"

jbjbjbjb · Answer

I think you&rsquo;re talking about a risk reduction ROI. = Reduction in risk / cost of compliance - 1I saw this in a security context https://www.cisecurity.org/blog/the-one-equation-you-need-to...