The 3 R’s in Business: ROI, ROR, and ROA.

Remember that old school chant of Reading ‘Riting, and ‘Rithmetic? Well folks, we’ve grown up, and the 3 R’s we need to focus on today are ROI, ROR, and ROA. These are the 3 R’s that good Business Plans are made of.

Like many business owners, these are the weeks of the year that I tend to focus a good portion of my attentions on the soundness of my Business Plan, for the income tax man cometh. When you make the transition to self-employment, you quickly learn to look at dollars in the new light of realized personal profit versus saved-and-stashed paycheck. However over the years I’ve also learned that balancing bank ledgers are only one measurement, and I can’t neglect the others. I now look for a return from all my efforts, and there are three different kinds of return I look for:

ROIReturn on Investments
RORReturn on Relationships
ROAReturn on Attention

Let’s look at these one at a time.

ROI: Return on Investments
In the business model I have for SLC there is little to no overhead, yet ROI is still a big part of the picture. For Return on Investment is about more than just dollars invested — it’s about dollars and “sense.” Where is my business sense directed, and how much time do I spend working on my business versus in it?

In a presentation I did recently, the question of “paying dues” came up in the Q&A that followed, and its a concept I no longer have any patience for. The most pricey investment I make is with my time, and just logging it in anything that’s not meaningful, fulfilling, or somehow rewarding just isn’t good enough — not for me, or for anyone who works with me.

Time, effort, energy and focus are tangible concepts for me, and all are investments from which I expect a quantifiable return.

ROR: Return on Relationships
For all their intricacies and complexities, I look at both managing and leading through a very narrow lens when it comes to business. For me, pure and simple, both management and leadership are about working with people. To work with people well, you need to excel at cultivating good relationships. Please don’t think of relationships as the warm and fuzzies of the work world — the quality of your personal and professional relationships matters, and it matters big time.

In Soar With Your Strengths, Clifton and Nelson wrote,

“The fabric of our lives is constructed person by person. As our relationships increase, we benefit geometrically: Our lives become richer, and we expand our strengths through others.”

Relationships in the workplace are vitally important to the health of that workplace: the stronger your relationships the more self-assured you will be, and self-assurance drives performance. Strong relationships with others are built on commitments, and commitments honored builds trust. The more trust you engender, the more attention you will keep, which brings us to the next R.

ROA: Return on Attention
If I had to single out the one business “discipline” I’ve scrambled to learn more about in recent years, it would be marketing — and I still study it, and play with it daily. What I’ve learned about marketing can be reduced to this: Attention is an extremely valuable and very scarce commodity. When someone gives it to you, you better be able to deliver and make it worth their while, so that they in turn will want to make their own Investments and Relationships work with you. So in my business model I take a look at ROA from both directions, as receiver and as giver:

As Giver: Who and what is getting my attention, and should they have it? What are they doing to keep it? What kind of return do I expect to get from them?

As Receiver: Who is giving me their attention, and how am I continually earning that right? What is the “attention expectation” of all those who are the stakeholders in my business, e.g. there is a difference between the attention expectation of my customers and guests, and that of my ‘Ohana in Business.

Attention is also something that comes in varying degrees: the larger the degree of attention you are given, the larger the return you can expect. For instance, when you knock on the boss’s door and say, “Have you got a minute?” does he or she stop what they are doing and give you their full attention, or do they just momentarily lift their eyes, then continue with what they may be doing, and off-handedly say, “go ahead, I’m listening.” Either way, you know what degree of attention they are willing to give to you.

ROI, ROR, and ROA. Three places in which I look for solid, quantifiable returns in my business plan.

How about you? Have you reinvented your Business Plan in a way that I can learn more from?

Let’s talk story.

Related posts:
Get into a new habit: Working wide awake.
More on your Relationship ROI.

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Comments

  1. says

    Rosa,
    Fantastic post. It is this type of reading in the morning that makes me more sharp for my day.
    Thank you for the perspective and challenge.
    Todd

  2. says

    Carnival of the Capitalists Arrives

    Welcome to the March 14, 2005 edition of Carnival of the Capitalists, the Internet’s most intriguing weekly round-up of free-market articles. We have some superb entries this week, and all are well worth reading. Affiliate Recruiting Blog – Franklin Ba…

  3. says

    As usual, I learned something new today. I had glanced over this post when you originally wrote it, but meant to come back to it, some other time. Meant to’s are like “round to its” they never happen. So glad you submitted it to the Carnival. Now, I can digest appropriately and move forward confidently.

  4. says

    Carnival of the Capitalists Arrives

    Welcome to the March 14, 2005 edition of Carnival of the Capitalists, the Internet’s most intriguing weekly round-up of free-market articles. We have some superb entries this week, and all are well worth reading. Affiliate Recruiting Blog – Franklin Ba…

  5. says

    The 3 New R’s: Restlessness, Revolution, and Reinvention

    One of my most popular articles for Talking Story ever, was one written in March of 2005 called The 3 R’s in Business, ROI, ROR, and ROA. Today, that’s old news. Still valid, but old”• it’s stuff you should have

  6. says

    An ‘Imi ola Form for Business: POP ² Management

    In case you haven’t noticed yet, I love using acronyms. They are a coach’s best friend, because acronyms are the stuff of mantras. They keep people focused, provide teams with decision-making filters, and create the Language of Intention in organizatio…

  7. says

    It’s your Kuleana to pay attention! My ROA coach is none other than Katie Couric.

    I could not have planned this better if I tried. Yesterday I posted here at MWAC about the responsibility that managers have for leadership, and translating that can-be-intimidating-but-doesn’t-have-to-be phrase into making things clear. Well, sometime…

  8. Bob says

    I would agree that, presently, it is relationships and politics that are key to corporate success and survival.
    But care must be taken when this idea is taken too far and you end up with a large group of politicians running the company.
    As the domestic and global financial crisis continues to unfold, it may well be that those companies with leadership that is too heavily based on salesmanship, corporate cheer leading, and politics will fail to “make the cut” or weather the storm if you will.
    For example, consider the sub-prime mortgage mess, we are still embroiled in. It’s probably safe to say that there were too many corporate “yes men” and not enough people asking the tough questions, stepping on toes, and insisting on execution of due-diligence procedures that were designed to avoid such catastrophic results.
    Innovative, hard working, and goal driven performers may be poised to make a come back. And these people may be tiring of corporate cheerleaders and politicians stepping in to grab the rewards and glory.
    When negative connotations no longer attach to age old cliches such as “It’s not what you know but who you know that counts” but rather are reinterpreted and presenting as the benefits of “personal networking”, surely a price will be paid somewhere down the road.