The Virtual Distance Ratio: The New “DuPont Formula” for calculating Return on Computer Mediated Communications (RoCMC)

In the 1980s when I was a participant in the Chase Credit Training Program, I remember vividly how fascinated I was about how the DuPont Formula came into being. It was the first “equation” I had come across that used less “traditional math” and more of human ingenuity to reveal an entire system of financial analysis that when carefully analyzed could be validly configured into a precise metric – that being Return on Equity. This kind of “modeling” was something I had never seen produced for such a practical purpose and it went on to become the “gold standard” for how to calculate this most important aspect of business.

Developed at E.I. du Pont de Nemours and Co in 1919, it was derived from intense research and analytical prowess motivated by the frustration around a lack of precision in determining how to understand a complex, multi-dimensional measure of such significance to the enterprise.

In fact, according to the website “The Balance”, sourcing their information from CIO Magazine, the most striking aspect of the discovery was that:

“The DuPont model is so valuable because it doesn't just want to know what return on equity is; rather, it allows you to know what specific variables are causing the return on equity in the first place. By measuring and highlighting those underlying realities, it becomes easier to target them; develop corporate policies to improve or modify that which can be optimized; and take control through intelligent, purposeful, decisive action.”

Fast-forward 80 years later to 2002 when while pursuing my Ph.D. at Stevens Institute, I wondered if a formula similar to the DuPont model might help us to see “the realities” of what was going on among the people working in a system of work processes almost entirely resting on computer mediated communication (CMC) as their main support. 

And if it was possible to find such a formula, it was my hope that it could do as DuPont did 100 years ago: ‘to measure and highlight the underlying realities, making it easier to target them; develop corporate policies to improve or modify that which can be optimized; and take control through intelligent, purposeful, decisive action’ – only this time as applied to what I felt were troubling behaviors developing around our mounting attention to screens instead of each other.

When we first discovered the Virtual Distance Model in 2004 and statistically substantiated that it was highly accurate in pinpointing the variables (causes) that were responsible for many new and sometimes highly dysfunctional social behaviors, we also showed these same behaviors had a direct impact on both a person’s experience of meaningful work as well as corporate performance. 

So at the time, we had found the formula to not only calculate a “return on computer mediated communication” but like the DuPont Formula – we could also show what aspects were causing different business outcomes and take appropriate action.

But we could not claim this at first for an important reason; to get to something that is mathematically valid, as opposed to something that is simply statistically valid (the difference being that to be statistically significant means you've shown there's a "likely" probability that your results "are not false" which is very different than mathematics where you actually have to prove you can use "equal to", "greater than", etc. between variables - not just a probability that something is not likely to be this or that), one needs a lot of data, lots of data – tens of thousands of data points to get to an underlying mathematical formula.

Also, in psychology, we know individual differences make it difficult to predict anything about a person’s behavior. And most research measures “attitudes” more than “behaviors” – meaning much social science research is often used to assess what is claimed to be a behavior – what people actually do or how they act. But it turns out more often than not – researchers instead end up finding "attitude patterns" that can be fairly easily distorted unintentionally most of the time - depending on the research design, by the way questions are asked and a host of other methodological complexities.

But just because it may be rare to do something like find mathematically valid patterns in human behavior and change that behavior based on certain interventions, doesn’t mean one shouldn’t try. 

Return on Equity for example is now considered an “economic” value and we know that economics is considered for the most part, to be a “behavioral science”. 

So it is not impossible. It just takes a long time to collect enough data through rigorous methods to then validate and make a substantiated claim.

In the case of Virtual Distance I felt the stakes were just too high not to continue the Virtual Distance work despite the uphill battle I knew I’d be facing beyond the original work because on its face – at that time – no one would or could internalize the notion that the kind of technology mediation we were starting to rely on so heavily - while it can be very helpful as a tool – as we showed through the Virtual Distance Model, can also cause serious problems to our “human being and wellness” and those unintended consequences needed to be corrected.

So the challenges were great and the bar quite high, even being a bit “audacious” as my Dean put it. Yet – that same person urged me to continue the pursuit and told me to “dare to be audacious” as he wrote to me at that time. And given his career, which included his position as a former Undersecretary of the US Navy, I took his encouragement seriously. 

So we did indeed show that reducing the three main factors of the Virtual Distance Model in their proper proportions and various combinations also statistically improved all kinds of outcomes; from trust and employee engagement to financial success and innovation. But at the time I was awarded my Ph.D. and for many years afterward, although our work continued and became highly beneficial to global companies as a statistical and also practical model, we just didn’t have enough data to make a mathematical claim.

Until now – some 20 years or so later.

For our just released book which we began writing more than a year ago, we re-aggregated more than 1400 studies conducted over 15 years with people working in companies in more than 55 countries, 36 sectors and that employ more than 5 million people. And we found relationships that were so quantitatively “powerful” that we were finally able to compute a stable ratio between the three Virtual Distance factors and their relative weights in terms of their impact on outcomes. 

We called it The Virtual Distance Ratio. 

Like the DuPont Model discovered more than 100 years ago, the Virtual Distance Model led us to see what it is about our changed behaviors based on computer mediated communications that causes relationship quality changes between one another, ourselves and our leaders that we all care most about. And with that element of mathematical certainty in place, we could construct what is much like the DuPont Formula but in our case, calculates and exposes the causes that impact outcomes most with regard to a Return on Computer Mediated Communications (RoCMC). 

And with that information, not only can we now calculate that number and whether it’s relatively high or low, but we can also predict specific solutions that will enhance versus degrade both performance and the experience of meaningfulness at work and in many other parts of our lives - no matter where we are physically located from one another.

As a researcher, social scientist, mathematician, computer scientist, a Mom and an entrepreneur, it is an exciting breakthrough on many levels because it is so very rare to be able to study something long enough using all of your experience and an unchanging instrument over time, to get the kinds of statistical relationships and statistical power to be able to achieve mathematical precision.

While our ability to seamlessly connect via video using our devices is arguably the infrastructure that’s keeping us going in terms of work, we mustn’t forget that while we can and should adapt for now - our happiness and human health that's derived from vibrant, felt social relations are always subject to degradation when Virtual Distance gets too high. 

And right now, most people are unaware, yet arguably operating under extreme Virtual Distance. But even now, we can apply the Virtual Distance formula and decrease its impact even though we are remote – as we have shown over and over again. 

We can focus on building stronger Affinity through prescriptive means – despite our physical separation. And reducing Affinity Distance has the most impact on raising a sense of shared experience and purpose as well as stabilizing business continuity.

If you’d like more information please go to www.thepowerofvirtualdistance.com and subscribe for upcoming announcements about webinars and other related materials that we will continue to release into the foreseeable future. 

Our next webinar will be held in partnership with the Columbia Business School Alumni Association on May 7, 2020 at 6pm. To register please go to https://www.cbsacny.org/events/EventDetails.aspx?id=1372785