Saturday, May 24, 2008

There is a term that I am familiar with, in business - ROI or "return on investment". Basically, this is a measurement of the amount of investment, or money, you've put into a business venture and the return you've received after all is said and done. For example, if you've purchased 100 shares of some stock for $10 per share and receive $1M from it, your ROI would be ($1M-$1000)/$1000 which equals an ROI of $999 per share. There are other factors that may increase/decrease that ROI. For example, if you're starting a business, you'd have to factor in the time you've spent developing that business as well as other factors.

How does this all apply to relationships?

I believe there is an ROI when it comes to any relationship whether it be a business partnership, friendship, or loving relationship. I believe in applying those factors effectively. We all already do it. We just don't apply this level of scrutiny to it nor do we really have a specific term for it. For example, we all have friends. For some friends that request help, you'd turn the earth inside out while for others you'd pretty much ignore them. That's an application of the ROI without folks even really recognizing it. In other words, we place value on relationships and depending on how we feel about that person, we adjust our level of social investment.

A funnier application of this ROI, for example, is when a guy takes a lady out for dinner and expects not just regular sex which is bad enough, but, in some cases, oral, anal, and maybe even a tossed salad if they're into that AND then some, which I will refrain from describing. I am sure many women know exactly what I am talking about here. And, I am sure many selfish men know exactly what I am talking about as well. People like that invest the minimum and expect beyond the maximum ROI.

This is why I believe a deeper scrutiny of our relationships is warranted. I believe that the ROI should, at all times, be equal between two parties. This is the concept of a marriage being 50/50. When that ROI begins to shift into the negative or positive, either individual ought to make an effort to balance it out. It's a simple issue of fairness. Why should one benefit over another in any relationship? Simply put they shouldn't.

For the record, this is definitely different in business. In business, we want a positive ROI at all times, not a balance. In a balance, we don't make any money.

Anyway, problems arise because we sometimes don't scrutinize our relationships at all and realize, often too late, that your so-called friends have taken advantage of you. And, in many cases, we don't realize that WE take advantage of our friends as well. It definitely works both ways. This is where arguments begin to take place. Once a person feels taken advantage of, or their ROI has become too low, and they seek a resolution or a balancing of the ROI.

A quantitative example would be lending your friend $500. Over time, that friend has built up a good ROI with you. You trust that friend. So it's no problem to "overinvest" in their happiness, in the short term. You've received the same level of investment from that person so you have no reason to believe that person won't reciprocate.

Now, what happens when that investment isn't reciprocated. The person who's benefitted has taken advantage of the person who's currently, and unfairly, posting a negative ROI. No one wants to lose, be in the position of a loser, or experience loss in any way, shape, or form. At this point, it's the duty of both parties to come to some sort of compromise as to how to balance the relationship's ROI.

A quantitative example is easy to understand. How about a qualitative one? Let's take for example, a friend who simply asks for too many favors or one who is only seen when they need you to do something but is never available when you need them. And, we should also take into consideration those individuals who overinvest on their own accord.

For example, I find that if I like someone, I won't have a problem overinvesting and accepting a low ROI in the short term because I expect a high ROI in the longterm. In business, this is simply called sticking it out. When you first invest in a business, a new business, you can't expect a high ROI immediately. You have to stick it out. Also, in rough economic times, stock prices will drop. But, in good time, prices will go up. So, the balance in general is achieved. This is akin to a friend going through a bad patch in their life and it may require extra investment in the short term but will balance out in the long term.

However, the same general rules apply. Both parties should seek to balance the ROI. However, the tables turn a bit. Can one blame the other party for not wanting to reciprocate the level of investment? Absolutely not! It's called being uninterested. At the same time, one should expect to reciprocate that level of investment. So, how does one seek to balance the ROI without requiring further investment or investing any further themselves?

This is where scrutiny of the situation is the most important. From the point of view of the individual who's been asked for too much, that person should not have a problem denying further investment. In other words, we shouldn't have a problem saying NO especially if we are not comfortable reciprocating that level of investment. This is a way to not only balance the ROI but also review the situation at hand and truly decide whether it is worth it or not to continue a relationship with that person.

An individual who is overinvesting should be willing to acknowledge that they are investing in a situation that will ultimately fail regardless of the level of the investment. Throwing more money at a business is not going to magically make that business successful nor increase your ROI. Sometimes, that business is simply a bad idea from the start. It's time to cut your losses. Learn from the mistakes you've made and move on to more potentially lucrative ventures.

At the same time, depending on the relationship at hand, it may not require you to cut your losses but instead, simply scale back your own level of investment to match the ROI. This can be a smart move because you free up capital to invest elsewhere while you maintain the relationship at hand. We don't know what possibilities the future will hold. Diversity is the one of the keys to success.

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