Jason Fried

July 14, 2022

Return On Effort

Over the last few days, a few department heads at 37signals got together for an offsite gathering, lead by Bill Joy from The Joy Group.

We've worked with Bill in a somewhat different capacity in the past. This time he was here to help us understand some truths about how we really run the business, make decisions, and value what's worth doing. When I say value, I don't mean a list of generalized "values", or the bullshit phrase of "adding value", but how we attribute value when evaluating our options and making tradeoffs.

It was a very honest discussion, and I think it helped crystalize a number of things that we either take for granted, don't realize we do, or we haven't been able to elucidate and share broadly.

One thing you realize when getting into this kind of work is that when something's an instinct, it feels so natural that you just assume everyone else thinks the same way. And it's a point of frustration when others don't approach something the way you can't help but approach it. But it's an unfair expectation. How could they? How would they? Why should they?

Perspective resets like this are always helpful. David and I shared our prescription for seeing situations and scenarios, which helped others wear our glasses to bring other things into focus. Change wasn't the primary goal of these sessions — understanding was. We all definitely feel more aligned now.

One thing that came out the discussion was the idea of Return On Effort. Not ROI, but ROE. ROI is dry, ROE is juicy. ROE wasn't a term we'd ever used before internally, but when someone suggested it, it really resonated.

ROI is too financial a term to define how we look at things. Surely you can look at investment in terms of time rather than money (although time is money, and all that), but still, any time you use the term "investment" you're going to steep your thinking in finance.

Yeah sometimes there's a mismatch between how much money we spend on a specific outcome, but most of the time, for us, we care about how much effort we spend. And when too much effort is spent on something small and inconsequential, it offends our sensibilities far more than too much money spent on something that wasn't worth it. Effort that isn't commensurate with the outcome sparks a deep visceral reaction.

It's also one of the reasons we don't estimate how long something's going to take, we define our appetite for it. That's essentially pre-defining the effort we're willing to make to get what we want. That's a core principle in the Shape Up process.

It was refreshing to find the thing we can talk about in terms others can understand. David and I knew it, we felt it, but it wasn't something we've ever directly communicated this way. We didn't have a great label for the instinct we feel so innately. Now we do.

How we incorporate the statement and the sentiment is yet to be seen, but step one is done.

-Jason