Manage Your Project Portfolio

Don’t Use ROI to Rank

Many managers and organizations want to calculate ROI to decide how to rank or whether to fund projects. In my experience, ROI is almost always a lie or, at the least, fun with numbers. Many organizations attempt to calculate ROI as the total return for a product divided by the money invested into developing that product.

That’s because for product companies who sell to a mass market—one where you cannot identify each customer—you can’t predict sales over the product’s lifetime. Much of the time, you can’t even predict the sales for a given year. If you can’t predict sales, you can’t calculate your ROI, the producer’s ROI. The consumer’s ROI is a different question. See ​Qualitative Questions That Help You Determine Waste ...