What Matters to Executives?
For eleven years, I worked in corporate America, for companies with 6000+ employees. My approach to finagling more funds for growing a usability practice with my companies started out like this: We can save you this much money and improve your customer relationships. I spent hours, poring over an Excel spreadsheet to see how the cost savings would add up and preparing to use my beautiful .XLS file to prove the value. But each time I presented my spreadsheets to managers and executives, it didn’t seem like they even cared.
Regardless of a company’s size, there are just a few things that really matter to executives:
- return on investment (ROI)—the percentage change in revenues or sales you’ve achieved by investing in something
- the opinions of shareholders and investment analysts
- regulatory compliance and the possibility of lawsuits
- competition and market share
- public opinion
There may be exceptions—companies that prioritize other things—and perhaps those exceptions would be the companies that have invested heavily in human factors, usability, and user experience for decades now. But, for the most part, these are the key factors that keep executives up at night and are recurring agenda themes for boardroom and management meetings. Why?
My aha! moment came during a digital business strategy class in business school. My professor, Peter Morici, was a no-nonsense, no-words-minced type. My assignment was to create a business plan and pitch it to some guest venture capitalists and company executives to get their reactions. Morici drilled us over and over on capturable market size and return on investment—two invaluable nuggets of wisdom that served as my primer for attracting executive attention. Executives always have requests for information about money and resources. Given the need for executives to demonstrate value to shareholders, they’ll always opt for the opportunity that shows the largest capturable market share and the best ROI.
ROI & Shareholder Value
For public companies, shareholder value is the driving force. How much value shareholders believe your company offers drives your share price—and, ultimately, market value. (To get your market value, you must multiply your share price by the number of shares outstanding and add in a few other things.) Some shareholders take a mathematical approach and look at factors such as return on investment, price-to-earnings ratio (P/E ratio), and cash flow, while other investors care more about intangibles such as reputation, brand, and their gut feeling about a company.
You can’t control their gut feelings, but, to a certain degree, you can control the financials that influence shareholder and analyst opinions. So most organizations vet all potential investments, selecting those that either are essential for compliance reasons—such as records management systems—or will provide a certain minimum return on investment, and avoiding those that are most likely to generate too little ROI.
Companies and their leaders have a bottom-line ROI in mind. It’s not usually stated, but from what I’ve learned, a 12% ROI is pretty common. Thus, for every $100 a company invests, it expects at least a $12 ROI. That’s return—they expect to make $112 to cover their costs and make a profit.
ROI and how much profit a company can make relate to a couple other things on executives’ minds—who the competition is and what they’re doing, which we’ll look at shortly.
Regulatory Compliance & Lawsuits
Sometimes the most powerful motivator for executives is fear of jail or fines. When faced with regulatory compliance, laws, and potential litigation, most organizations do what it takes to protect themselves. Though, in the United States, there are no enforceable and accepted regulations that require companies to comply with user experience principles, there are some related standards—and hints that companies are paying more attention to usability. Highlighting the changing legal scene and discussing how your UX plan and investment can help protect your company in the future can sometimes tip the scales in your favor.