When you're weighing up an investment, it's easy to focus only on the ROI - your return on investment. But that's only half the picture. You also need to consider COI - the cost of inaction (doing nothing). Calculate both ROI and COI to make more balanced decisions, spot hidden risks, and avoid the cost of standing still.

https://swiy.co/go-more-than-roi

Are you doing enough to calculate the value of an investment?

A client recently told me she’s been nominated the “AI champion” for her organisation – medium-sized company in the construction industry. Her general manager has asked her to write a report – which is broadly her AI strategy plan for the business. He specifically said, “Make sure your report includes our potential return on investment (ROI) from using AI.”

All of this is good – she’s been seen as an enthusiastic AI user, been asked to contribute to the AI strategy, and will presumably be involved in further discussion.

But I also said to her, “When you write your report, include ROI, but also include the other half of the value calculation: COI.”

COI is the cost of inaction – in other words, the cost of doing nothing.

We often talk about ROI: If we invest X, what sort of return Y can we expect?

But, to make a well-informed decision, we must also consider COI: If we DON’T invest in this, what will it cost us?

In this example, we’re talking about AI – but it applies everywhere, and for every decision.

For example, if you’re driving on a highway and see traffic banking up ahead, you might quickly assess whether it’s worth taking a side road, which is usually longer and slower, but might be less congested right now. And if you can see billowing clouds ahead and you guess the highway is taking you directly into the path of a bushfire, you will definitely switch to the side road because the COI is so high the ROI becomes irrelevant.

In many decisions – both in business and in life – we have to think about both ROI and COI.

ROI answers the question, “What are the benefits of this change?”, and COI answers the question, “What is the cost of not changing?” You must ask both; otherwise you make the decision with only half the information.

We tend to give too much value to ROI, and not enough to COI. That was OK when the world wasn’t changing so quickly, because we didn’t need to change that much. But in a world that’s changing faster and faster, the cost of doing nothing is often much higher than the cost of change.

Make sure you include both ROI and COI whenever you’re assessing the value of an investment.

So, yes, my client will include both ROI and COI in her AI strategy report.

If you’d like some help with this process, download my worksheet to identify six different areas that could affect COI, and use this when making your next important decision.

Download the worksheet:

https://swiy.co/go-more-than-roi

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