PODCAST: What you’re missing when it comes to maximizing ROI

Written on Oct 29, 2020

By Jessica Salerno, OSCPA senior content manager

Reginald Lee

Sometimes well-intentioned efforts to improve profitability miss the mark, said one business analytics professor. 

“If we want to model improvements, what we do is say, ‘What can we change about the organization after we implement this project that allows us to spend differently or allows us to avoid things that we would have spent money on in the past?’” said Reginald Lee, a professor in the Williams College of Business at Xavier University. 

Lee joined the State of Business podcast this week to discuss project profitability and maximizing ROI, a topic he will discuss in more detail on at the upcoming Columbus Virtual Accounting Show on Nov. 6. 

He said it’s valuable to understand the difference between the more traditional approaches to looking at cost benefit analyses and a different approach that focuses specifically on cash. The pandemic this year has forced more organizations to consider this perspective. 

“Coming out of the pandemic, what I'm seeing is that the companies who are focused primarily on spending and understanding demand of their products and services, they can make better decisions in terms of when to bring people back,” he said. “And that will put them in a bit better position to generate cash than those who were just focusing on the profitability of a project.” 

Too often an organization might become distracted by a potential project’s profitability or ROI capabilities, Lee said. Identifying projects in terms of strategic importance and those that will generate cash will be the most beneficial when deciding what projects to work on. 

“Once people begin to understand these tools, these techniques, a lot of them just don't think about it any differently anymore,” he said. “It's like that social media statement, ‘You can't unsee it.’ Once you see the impact of cash and doing your analyses with cash, it's hard not to think about that anymore.”