The problem is not that innovation isn't creating value. The problem is that we lack a systemic way to measure that value before it is fully realized.
We focus on velocity, throughput, and activity, but we miss the one metric that actually matters to the CFO: Value.
Simon Hill, CEO and Founder at Wazoku, argues that to survive and thrive, innovation must learn to speak the language of finance. He introduces a new metric—Expected Value (XV)—designed to bring discipline, transparency, and predictive power to innovation portfolios.
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The Core Definition: What Are We Even Measuring?
Value creation as the core metric, not culture building or failing forward
Before we can measure innovation, we must agree on what it is. Over the last decade, the definition has often become bloated with buzzwords. Simon boils it down to one simple definition:
"The creation of new and novel value."
The operating word here is value. Most existing frameworks focus on the process of innovation—the inputs and the throughputs. But are we tracking the value? Most measurement systems are disaggregated and "black-boxy." They fail to show how innovation fits into the complex value chain of the organization.
The consequence is severe. "Many innovation roles are some of the shortest lived inside organizations." This isn't because innovators aren't working hard; it's because they struggle to articulate value in a way that Finance Directors understand. To fix this, we need a metric that is predictive, dynamic, and denominated in currency.
The Metric: Expected Value (XV)
Measure economic potential from minute one
We need a leading indicator. In sports, specifically soccer, there is a metric called Expected Goals (xG). It's a real-time measure that updates dynamically throughout the match—from minute five onwards, you can tell who should be winning based on positioning, angles, and player history. It is a dynamic measure that changes as the game evolves.
Even if a team loses, a high xG shows the system is working and they should have won.
Innovation needs its own version of xG. This is the Expected Value (XV).
The goal of XV is to answer a specific question: "Is there a way that we can build a tailored approach to assess the expected economic value of innovation activities from very early, from the idea stage?"
This metric allows you to measure the value of an idea "five minutes after you had it" all the way through to realized value. It transforms innovation from theater into a discipline that speaks the language of the P&L.
Four Specific Dimensions
The XV formula combines four dimensions into a single currency-denominated number: Confidence × Predicted Value × Time Sensitivity × Strategic Fit. Each dimension has a defined range, and the output updates dynamically as new evidence comes in.
Dimension 1: Confidence
Confidence is scored from 0 to 1.0, and it is the most important input. The starting point is an honest assessment of what can actually be proven: validated evidence, technical feasibility, willingness to pay.
Most intrapreneurs pitch at close to 100% confidence, but when those three things are interrogated, the real number is often far lower. For instance, a recent healthcare provider discovered their AI solution had no validated evidence of willingness to pay — which immediately collapsed their confidence score and flagged exactly where they needed to focus next.
Without a standardized definition of what 0.5 or 0.25 actually looks like in practice, confidence becomes spin. Organizations need to define those thresholds clearly so the metric is consistent across the portfolio.
Dimension 2: Predicted Value
This is the dollar figure the idea could reasonably generate — not the aspirational number, but what the current evidence supports. If a team is pitching a large opportunity but the validated conversations only support $1.5 million, the XV model anchors on $1.5 million.
That number is not fixed. Like expected goals in a soccer match, it updates over days, weeks, and months as new data comes in. Ultimately it must be traceable back to line items on the P&L or balance sheet — not a projection, but something finance can follow.
Dimension 3: Time Sensitivity
Time sensitivity acts as a multiplier ranging from 0.5 to 1.5. It scores above 1.0 only when there is a genuine market imperative — a first-mover advantage, a looming regulatory change, a competitive threat that makes speed strategically necessary.
The default question is always why speed is required at all, because many ideas would perform better with intentional deceleration. Urgency costs money, and if there is no strategic reason to rush, slowing down improves innovation efficiency.
Dimension 4: Strategic Fit
The first three dimensions answer whether this is a good idea. Strategic fit answers whether it is a good idea for this specific organization.
It is scored across four criteria — strategic alignment, competitive standing, emerging market trends, and skills and capabilities — rated high, medium, or low, then aggregated.
Fujifilm's move from film to cosmetics illustrates how to apply this: strong emerging trend, existing brand equity, and technical skills in film development that were directly analogous to cosmetics manufacturing. It scored high across all four criteria, making what looked like a well-founded radical leap.
Ideas that score low on strategic fit should be killed or spun out regardless of their standalone potential. The XV framework has no room for good ideas that are simply wrong for the organization pursuing them.
The Innovation Efficiency Ratio
If $100 are spent for $1 XV, this is a "zombie project" alert
Calculating the Expected Value is only half the battle. The other half is understanding what you are spending to generate that value.
"I've seen people's eyes light up and then sink because they realize they're spending hundreds of dollars to generate $1 of expected value."
This is the metric of Innovation Efficiency.
When you compare the XV against the cost incurred to date, you reveal the health of your innovation engine.
You cannot sustainably spend $100 to create $1 of expected value. One of the biggest sucks in innovation budgets are zombie projects that should have been killed a long time ago.
If the XV drops by more than a certain threshold (use 20% as a starting point) it should trigger a kill review: is this something to shut down, or are there assumptions that need to change to drive it forward?
The Concept of "Kill Credits"
Bank learning value, borrow for next initiatives
One of the most profound concepts is the idea of valuing failure through "Kill Credits."
In traditional accounting, a killed project is a total loss. In the XV framework, the learning has value. "We do learn. We build learning into the things that we're doing. That does have a value."
When a project is killed, the knowledge gained (about the market, the technology, or customer behavior) is banked as an asset—a "kill credit."
This knowledge is time-sensitive. It depreciates quickly, so the organization must "use it or lose it." When a new project starts, it can "borrow" from these credits. The team can say, "We are more confident in this new idea because we have learning credits from the seven projects we failed on last year.
This mechanism allows teams to show Finance that the learning from failure has actually improved the Expected Value of future initiatives by tangible dollar amounts.
Implementing the System
How do you move from theory to practice? Simon outlines a few principles for application.
Standardization is Key: You cannot have different definitions of "confidence" across the business. You need a standardized assessment framework—whether it's a sophisticated software platform or a simple spreadsheet—that defines the criteria for every stage.
Sponsor Accountability: Who decides the inputs? The sponsor. If a sponsor believes a project has 75% confidence when the team sees only 25%, the sponsor must put their name to that assessment. This creates skin in the game. It stops senior leaders from saying "I don't care, just do it" without accountability. It creates transparency not to punish, but to ensure alignment.
Portfolio View: Once you have XV for individual ideas, you can aggregate them. You can view the portfolio across different horizons (incremental vs. radical) and different types (Revenue Generating, Productivity Enhancing, Risk Avoiding). This allows you to benchmark the portfolio's total expected value against the total innovation budget.
Innovation Finally Speaks Finance
The introduction of XV signals one overdue shift above all others. In too many organizations, innovation teams and strategy teams never get in the same room.
When that gap exists, strategic fit scores collapse and XV drops, and suddenly the data makes visible what everyone quietly knew. The future requires a bilingual innovator, one who speaks the language of design thinking and the language of the P&L — XV is the bridge between the two.
