31. Expected Value - Chapter 6

"Innovation without alignment is just novelty. Strategic alignment without innovation is just stagnation. The magic happens at the intersection."

In the chapters so far, we've moved from understanding value to learning how to measure confidence and timing. Now, in this next chapter, Operationalizing Strategic Fit, we complete the picture. Because innovation isn't just about what's valuable or urgent, it's about what's right for your organization to pursue. This is where Freya and her team take the X V system to its next level, transforming a formula into a true decision framework.

Transcript

Speaker: 0:00

What's a uh uh uh What's a uh uh uh uh uh thank you for listening this far and for taking the time to explore how expected value comes to life in practice. In the chapters so far, we've moved from understanding value to learning how to measure confidence and timing. Now, in this next chapter, operationalizing strategic fits, we complete the picture. Because innovation isn't just about what's valuable or urgent, it's about what's right for your organization to pursue. This is where Freya and her team take the X V system to its next level, transforming a formula into a true decision framework. Let's dive in.

Speaker 2: 0:49

We've been counting all the pilots, posting metrics on the wall, but when the CFO is asking where's the value in it all Chapter six Operationalizing Strategic Fit.

Simon: 1:07

Innovation without alignment is just novelty. Strategic alignment without innovation is just stagnation. The magic happens at the intersection. Freya stood at the whiteboard with a marker in hand. The morning sun had barely cracked through the blinds, and already her pulse was quickening. Not from nerves exactly, more like anticipation. This was the first time her full team would apply the complete XV model to a live set of ideas. She'd written it in large bold marker across the top of the board. XV equals confidence multiplied by predicted value, multiplied by time sensitivity multiplied by strategic fit. Below it, in more modest handwriting, sat five ideas, real projects, not theoretical exercises. Each at a different stage, each with a story behind it. Some of those stories were messy, others had been clinging to life for longer than they should have. But today wasn't about sentiment, it was about clarity. Let's start with something easy, she said, motioning to the first idea on the list. An internal automation concept focused on reducing manual reporting in finance. Confidence? she asked, turning to the room. Eighty percent, replied the project lead. Head nodded. Estimated value? About half a million, said a team member. In time savings and error reduction. Freya jotted the number on the board. Time sensitivity. A brief pause. I'd say 1.3, offered Axel. The new finance system goes live in six months. If we don't automate before then, we'll be locked into bad workflows. And what about strategic fit? Freya asked. We know it's part of the formula, but we haven't really defined how to assess it properly. The room fell silent. While they understood the concept of strategic fit, in theory, they hadn't developed a systematic way to evaluate it. This is where we need to go deeper, Freya continued. Strategic fit isn't just a gut feeling about alignment. We need a structured framework to assess it consistently. From value to fit, the missing dimension. The XV model had changed everything. For the first time, Freya and her team had a live, evolving measure of value. They could talk about ideas with more than just instinct. They could score what they knew, track how their confidence shifted, and explain why some bets moved forward while others didn't. But something was still missing. It started with a feeling. An idea that scored high on XV, technically strong, validated by tests, with real value potential, but still made Freya uneasy. It didn't feel like it belonged. It wasn't the quality of the idea, it was something else, something strategic, and the more she paid attention to that feeling, the more she realized it wasn't an outlier. A handful of high XV ideas didn't align with their customer base or their brand or the markets where they held traction. Some would have required entirely new organizational capabilities or different regulatory navigation. Others would have taken the business into territory where they lacked the foundations to build a distinctive advantage. They weren't bad ideas, they just weren't their ideas. This is where most innovation pipelines begin to break down. Teams move from visibility to velocity, scaling ideas based on value without asking a more foundational question. Do we have the right to win here? The strategic fit framework was their answer to this trap. It wasn't designed to replace XV, it was designed to complete it. XV provided a view of how much value an idea could generate and how confident the team was in achieving it. But the strategic fit framework asked the question XV couldn't. Is this an idea we as an organization should pursue? Freya had spent years in innovation functions where promising ideas were pushed forward because they seemed exciting or important, only to get bogged down in delivery. Not because of poor execution, but because of poor alignment. The teams lacked the foundations, relationships, or core competencies to bring the ideas to life in a distinctive way. And worse, leadership enthusiasm often evaporated once those realities surfaced. The strategic fit framework forced the team to shift their perspective from idea-centric to organization aware. Over the next hour the team wrestled with what strategic fit really meant. It wasn't just about whether an idea seemed aligned with their strategy, it was about whether they were the right organization to pursue it, whether they had the fundamental advantages needed to win in that space. I think we've been treating fit too simplistically, Axel observed. We've included it in the formula, but we haven't truly operationalized what it means or how to measure it. Freya nodded. Exactly. We need to break down strategic fit into its core components so we can assess it consistently across different types of innovation. She drew a simple framework on the board. One high value problem two company advantage. Three market attractiveness. These four dimensions capture what we mean by strategic fit, Freya explained. It's not just about strategic priorities, but about our right to win in a particular space. The team spent the morning mapping their current portfolio against these four dimensions. The results were revealing and sometimes uncomfortable. Some high X V initiatives scored poorly on company advantage. Others failed to address truly valuable problems. A few showed strong fit across all dimensions. This clarifies our thinking about fit, Axel observed. It's not a vague sense of alignment but a specific assessment of our strategic position relative to each opportunity. Four questions that matter. Freya and Axel co-developed four critical lenses that every idea would be assessed through. They called them the dimensions of fit. Unlike XV, which had a numerical formula, the strategic fit framework was assessed qualitatively, but still rigorously, through scoring, discussion, and collective evaluation. Question one. Does it solve a high value problem? The first question was whether the idea solved a high value problem. That meant real pain for a real user, internal or external. It wasn't enough to be interesting. If no one was losing sleep over the problem, it didn't qualify as high value. This single question surfaced the team's tendency to fall in love with elegant solutions for issues that weren't mission critical. This dimension forced teams to distinguish between nice to have innovations and those addressing genuine pain points. It challenged the common pattern of solution first thinking, where teams became enamored with a technology or approach before clearly understanding the problem it solved. The scoring for this dimension ranged from zero point one minimal problem value to zero point three critical problem with significant impact. As follows Score zero point one problem is barely recognized by potential users or has minimal impact. Score zero point two problem is recognized and has moderate impact. Score zero point three problem is critical with measurable major consequences and broad impact. High scores required evidence, user interviews, market research or internal data showing the frequency, severity and impact of the problem. Opinions or assumptions weren't enough. Implementation note for problem value assessment. When evaluating problem value, consider these questions. One, who specifically experiences this problem? Two, how frequently do they encounter it? Three, what is the impact when it occurs? Four, have they tried to solve it already? If so, how? Five, would they pay money, time, attention to solve it? Six, is the problem growing or shrinking in importance? Be wary of problems that are intellectually interesting but lack urgency for actual users. Question two. Do we have a company advantage here? Next, they looked at company advantage. Was the organization uniquely positioned to deliver this idea? Did they possess core competencies, fundamental strengths they could leverage to create distinctive value? This wasn't just about having the skills, those could be acquired through hiring or partnerships. It was about having foundational assets, capabilities, or positioning that would give them a right to win. Freya had seen too many innovations fail, not because the team couldn't build the capabilities eventually, but because they lacked any meaningful foundation from which to create distinctive value. They could catch up to competitors technically, but would never establish leadership without some inherent advantage. This dimension addressed the organization's competitive positioning for the specific innovation being evaluated. It wasn't just about whether they could execute the idea, but whether they could do so better than alternatives including competitors, partners, or the status quo. The scoring scale measured the strength of advantage. Score zero point one, significant disadvantage or no clear advantage compared to alternatives. Score zero point two parity with alternatives or modest advantage. Score zero point three significant sustainable advantage that creates distinctive value. These advantages could come from many sources proprietary technology, unique data, established customer relationships, specialized expertise, protected intellectual property, or distribution channels. The key was that the advantage needed to be specific and relevant to the particular innovation. The assessment included both current advantages and those that could be realistically developed or acquired during implementation. But it distinguished between existing strengths and speculative future capabilities. Question three Is the market attractive and viable? Third came market attractiveness. Not just is there a market, but is this the kind of market we want to be in? Was it big enough? Growing, underserved, ready? This dimension cut through buzzwords and helped the team be honest about commercial viability. Market attractiveness incorporated multiple factors market size current and potential, growth trajectory, competitive intensity, margins and profit potential, entry barriers, regulatory complexity, customer acquisition costs, network effect or winner takes all dynamics. The scoring reflected the overall attractiveness. Score zero point one, challenging market with unattractive conditions or significant barriers. Score zero point two, moderate opportunity with mixed market conditions. Score zero point three, exceptionally attractive market with favorable growth and profit potential. This assessment required research and analysis beyond general impressions. Teams needed to substantiate their market assessments with actual data on market size, growth rates, competitive positioning and regulatory factors. The market dimension also considered timing, whether the market was ready for the innovation or still developing. Some markets might score high on potential, but low on current readiness. Question four, does it align with emerging trends and future direction? Finally, there was trend alignment. This was the future looking lens. Was the idea in line with where technology, regulation, and user behavior were moving? Were they surfing a wave or swimming against it? This dimension acknowledged that innovation exists in time. What matters is not just current fit but future relevance. It assessed whether broader social, technological, economic, environmental, and political trends were moving toward or away from the innovation. The scoring reflected alignment with emerging trends. Score zero point one, misaligned with or countering significant trends. Score zero point two, neutral or mixed alignment with trends. Score zero point three, perfectly positioned for multiple converging trends. Importantly, this wasn't about chasing fads or buzzwords, it was about understanding fundamental shifts that would impact the innovation's long term viability, demographic changes, regulatory evolution, technological advancements, sustainability imperatives, industry transitions, changes in customer behavior and expectations. This dimension was particularly valuable for preventing short term thinking, identifying innovations that might work today but would quickly become obsolete as trends evolved. Reflection questions for trend alignment When assessing trend alignment, consider What major trends will impact this space over the next three to five years? Are these trends accelerating, stabilizing, or declining? How might regulatory changes affect this opportunity? What technology evolutions could enhance or threaten this innovation? Are customer expectations and behaviors shifting in ways that support or undermine this idea? Does this innovation position us for where the market is going or where it has been? Together these four dimensions created a strategic map. They didn't predict success, but they revealed risk. Weak alignments in one or more areas didn't disqualify an idea, but it did force a conversation, and that conversation often exposed hidden assumptions or redirected energy to ideas that truly fit. These four dimensions, each scored from 0.1 to 0.3, combine to create the strategic fit, a numerical factor ranging from 0.4 to 1.2 that represents how well an innovation aligns with organizational capabilities and strategic direction. The strategic fit becomes the fourth component in the XV formula. A higher strategic fit amplifies the expected value of initiatives that are well aligned with the organization's strategic profile while reducing the expected value of poorly aligned ideas, even those with otherwise strong metrics. The strategic fit radar emerges. To visualize these assessments, Axel suggested a radar chart with the four dimensions. Each initiative would be scored on a scale from 0.1 to 0.3 for each dimension, creating a distinctive shape when the points were connected. The team immediately dubbed it the fit radar for its distinctive appearance when scores were connected visually. I love it, Freya exclaimed. It's our strategic filter. XV gives us the potential value, the fit radar tells us whether it fits our strategic profile in a way we can visualize at a glance. They tried it on several initiatives, including the Finance Automation Project one. High value problem score zero point two. Manual reporting was a significant pain point, though not critical. two Company Advantage Score zero point three. They had strong technical capabilities in automation and deep understanding of their financial processes. three Market attractiveness score zero point two. This was an internal efficiency play, not a market facing opportunity. four. Trend alignment score zero point three, perfectly aligned with their digital transformation strategy. Axel quickly plotted these scores on the four axes he'd drawn, connecting the points to form a shape. The visual was immediate and striking, a well balanced radar extending outward in all directions. This is a perfect fit for us, Freya noted. It addresses a real problem, leverages our strengths, and aligns with our direction. When they combined this with the other elements of the XV formula, the picture was clear. X equals zero point eight times five hundred thousand dollars times one point three times one equals five hundred twenty thousand dollars. The strategic fit of one point zero, calculated as the average of the four dimension scores, scaled appropriately, confirmed what they intuitively knew. This was not just valuable but right for them to pursue. The efficiency revelation. As they continued applying the framework to their portfolio, they evaluated a sustainability analytics platform that had been championed by several team members. The XV calculation looked promising, with solid confidence and significant potential value. XV equals 0.5 confidence, X1.5 million dollars in predicted value, X1.1 times sensitivity, X0.9 strategic fit, giving an expected value of $742,500. The strategic fit assessment was mixed with strong scores on problem value 0.3 and trend alignment, but weaker scores on company advantage zero point one and market attractiveness, resulting in a strategic fit of zero point nine. The XV is solid and the fit isn't terrible, noted a team member. So it's a go, right? Freya paused, studying the numbers. There's something else we need to consider. Let's look at the efficiency metrics. She calculated the cost per XV point. Cost per XV point is one hundred eighty thousand dollars, representing the initial cost for this phase divided by seven hundred forty two thousand and five hundred dollars. The expected value which derives an XV efficiency of twenty-four cents, meaning they were investing twenty-four cents to create one dollar of expected value. That's not bad, Axel observed. Now let's look at alternative approaches, Freya suggested. What if we pursued this through an open innovation challenge rather than building it entirely in-house? The team ran the numbers for an open innovation approach. Reduced development cost of thirty five thousand dollars with the same XV outcome. Cost per XV point equals thirty five thousand divided by seven hundred and forty two thousand and five hundred dollars equals four point seven cents. That's a five times efficiency improvement, Freya pointed out. The sustainability platform scored well enough on strategic fit, but when we calculated the cost per XV point at 24 cents using our internal approach versus 4.7 cents through open innovation, it became clear we needed a different implementation strategy. This insight prompted the team to explore alternative implementation methods. Rather than building the entire platform internally, they identified components that could be developed through more efficient approaches, including open innovation challenges, strategic partnerships, and leveraging existing solutions. By redesigning our approach while maintaining the strategic objectives, Axel explained, we reduced the cost per XV point by 80%, making this initiative much more attractive from an efficiency perspective. This example became a powerful illustration of how efficiency metrics complemented the strategic fit assessment, ensuring that initiatives were not only strategically aligned, but also implemented in the most resource effective way. Strategic fit tells us what to do, Freya observed. Efficiency metrics help us determine how to do it. Together, they ensure we're pursuing the right opportunities in the right ways. Practical application the strategic fit assessment process. Implementing the strategic fit framework effectively requires more than just understanding the framework. It needs a consistent assessment process that balances rigor with practicality. Freya's team developed a three stage approach. Stage one individual preparation. Before the assessment workshop, team members independently scored the idea on each dimension, documenting their rationale and evidence. This pre-work ensured thoughtful consideration and reduced groupthink during discussions. Participants were encouraged to research relevant data points, market size and growth statistics, competitive landscape analysis, internal capability assessments, technology and trend forecasts, and user research findings. This preparation created a foundation of shared information while preserving diverse perspectives. Stage two collaborative assessment The team then gathered for a facilitated workshop. Rather than immediately jumping to scores, they first discussed each dimension to establish shared understanding. What constitutes the problem and for whom? What specifically creates advantage or disadvantage? What defines this market and its conditions? Which trends are most relevant to this opportunity? Only after this alignment did they move to scoring, dimension by dimension. Critically, the facilitator ensured that scores were evidence based, not opinion driven. I feel it's a zero point two wasn't sufficient. Participants needed to explain why with specific examples or data. When disagreements arose the team didn't settle for averages. They explored the reasons behind different perspectives, often uncovering important assumptions or considerations. Stage three synthesis and response. After scoring, the team plotted the radar chart and analyzed its shape. The discussion then shifted from individual dimensions to overall strategic fit. What does this pattern tell us about our strategic position? Are there ways to adapt the idea to leverage our strengths? What capabilities would we need to develop to improve our advantage? How does this idea compare to others in our portfolio? This synthesis led to one of the four strategic responses pursue, adapt, explore, or pass, along with specific next steps and resource implications. The entire process typically took 60 to 90 minutes per idea, making it efficient enough for regular use but thorough enough to drive meaningful decisions. The challenge of fit reshaping, not just rejecting. The real test of the framework came the following week, when they evaluated Project Lighthouse, a customer experience initiative that had been championed by a team member for nearly a year. Lighthouse was their brainchild, a comprehensive customer journey platform that would transform how they engaged with users across touch points. They'd spent months building support, creating demos, and sharing his vision. The executive team loved the concept. Even the CEO had mentioned it in a town hall. As they worked through the fifteenth calculation, tension filled the room. The value potential was substantial, one point eight million dollars in revenue protection and growth. Time sensitivity was moderate at one point one, but when they reached confidence, the conversation shifted. Based on what we've tested so far, I'd put our confidence at zero point four, said another team member. The project lead started to look flustered. That seems low. We've done extensive user interviews and competitive analysis. True, the other team member acknowledged, but we haven't validated the technical integration assumptions, and the resource estimates are still rough. Others chimed in. The customer needs were well understood, but the solution approach remained largely conceptual. They'd done a lot of research but very little testing of core hypotheses. After back and forth discussion they settled on a confidence score of zero point three five. Then came the strategic fit assessment. The problem value scored zero point two, customer experience was a critical priority. Trend alignment was similarly strong at zero point three. Market attractiveness hit zero point three, but company advantage scored just zero point one. Zero point one, the project lead questioned, his voice tight, but we've been in this market for years. We've been present in the market, another person corrected gently, but not advantaged. Our competitors have more extensive customer data and established platforms. It's not that we couldn't build the technical capability, we could hire specialists or partner with experts. The question is whether we have any fundamental strengths we could leverage to create a distinctive offering rather than just catching up to competitors who are already ahead. The radar visualization made it painfully clear, a severe pinch on the company advantage axis, creating a distinctly imbalanced shape. Freya watched the project lead's face. His jaw was set, eyes narrowed slightly. This wasn't just another project for him, it was personal. What are we saying here? he asked. Finally. We kill Lighthouse. The room fell silent. Freya took a breath. What the data is telling us isn't that Lighthouse is a bad idea. It's telling us that we need to find a different approach. One that leverages our advantages rather than trying to compete head on where we're disadvantaged. She pointed to the radar. The problem is real. The trend is clear. The market matters. But our approach may need rethinking. The project lead said nothing for a long moment. Then he said, So we don't kill it outright today. We reframe it. Exactly, Freya nodded. What if, instead of building everything ourselves, we focused on the specific areas where we do have advantage, like our industry specific knowledge and customer relationships and partnered for the rest? The conversation shifted from defending Lighthouse as conceived to reimagining it based on the insights from the assessment. By the end of the session, they hadn't killed Ian's idea, they'd transformed it into something more focused, more distinctively theirs, and more likely to succeed. As they were wrapping up, the Lighthouse project lead approached Freya privately. I was ready for a fight, he admitted, but seeing it laid out that way, it wasn't about opinions anymore, it was about evidence and fit. Freya smiled. That's the point. These tools don't make the decisions for us, they help us have better conversations about the decisions we need to make. That night she added a note to the Strategic Fit Implementation Guide. The framework isn't just for killing ideas. It's for shaping them. Common pitfalls and how to avoid them. As with any framework, the strategic fit assessment can be misapplied. Freya's team identified several common pitfalls. One confusing strategic alignment with strategic fit organizations often mistakenly equate strategic alignment, connection to stated priorities with strategic fit, ability to win in that space. An idea might perfectly align with strategic objectives but still represent a poor fit if the organization lacks the capability to execute effectively. Solution Evaluate strategic alignment separately from the strategic fit framework, or incorporate it as a component of trend alignment rather than a substitute for the full assessment. two. Overvaluing trend alignment Innovation focused organizations, teams sometimes give excessive weight to trend alignment, pursuing cutting edge opportunities regardless of problem value or company advantage. Solution Enforce balanced consideration across all four dimensions and specifically challenge high scores in trend alignment that aren't matched by other dimensions. three inflating company advantage teams naturally want to believe in their organization's capabilities. This can lead to overconfidence in company advantage scores, particularly when the innovation touches on prestigious or exciting domains. Solution requires specific, documented examples of advantage rather than general claims. Compare advantage relative to best in class alternatives, not just direct competitors. four. Neglecting scale considerations The appropriate strategic response sometimes depends on scale. An idea might show perfect fit for a small scale implementation, but become problematic when scaled organization wide. Solution Assess fit at both pilot and full scale deployments, noting where fit might change with scope. five. Static assessment Strategic fit isn't static, it evolves as markets shift, capabilities develop and trends emerge. Treating fit as a one time evaluation misses this dynamic reality. Solution Reassess Strategic Fit at major stage gates and when significant new information emerges, tracking how the radar chart evolves over time. By recognizing and addressing these pitfalls, Freya's team maintained the integrity and usefulness of the strategic fit framework even as it became widely adopted throughout the organization. Combining fit and efficiency, the complete picture. The integration of strategic fit assessment and efficiency metrics created a powerful framework for decision making. Ideas could now be evaluated not just on their standalone value, but on their strategic alignment and implementation efficiency. During their next portfolio review, they assessed each initiative against these dimensions and made several pivotal decisions. One, the Data Lake Initiative had modest XV but exceptional fits, radar showing strong, extension in all directions, and excellent efficiency metrics five cents per XV point. It was accelerated based on its strategic importance and implementation efficiency. two. The augmented reality experience had impressive XV but poor fit, severe. Contraction on company advantage and concerning efficiency metrics eighteen cents per XV point. It was deprioritized despite its standalone value potential. three. The supply chain optimization initiative had strong XV and fit, well balanced radar. But initially poor efficiency metrics fourteen cents per X V point. Rather than abandoning it, the team redesigned the implementation approach, incorporating open innovation methods that reduce the cost per XV point to four cents. We're making fundamentally different decisions now, Freya observed. We're not just following the highest raw expected value, we're optimizing for strategic impact and implementation efficiency. The leadership team noticed the difference immediately. Innovation efforts now had a clear connection to strategic priorities, and the portfolio had greater coherence and focus. For the first time, the CEO remarked, I can see how our innovation investments directly advance our strategic agenda in a resource efficient way. It's not just about having good ideas, it's about having the right ideas implemented the right way. The visual system emerges. Over the next week, Axel worked with Freya to develop a more comprehensive visualization system. The goal wasn't just to score ideas, but to make the insights immediately apparent, to create what Axel called decision intelligence at a glance. The fit radar became their standard way to visualize strategic fit. Each idea received its own four-axis plot with scores from 0.1 to 0.3 marked on each dimension and connected to form the distinctive radar shape. A balanced radar extending outward in all directions indicated perfect strategic fit. Imbalanced shapes immediately highlighted specific weaknesses. For XV, the momentum chart became their primary visualization. It tracked each idea's XV score over time, showing not just the current value but the trajectory, how quickly confidence was building or eroding, how value estimates were being refined, how time sensitivity was shifting. The final piece came when Axel combined XV, fit and efficiency into a portfolio matrix. Each idea appeared as a bubble on this matrix, with XV on the vertical axis, strategic fit on the horizontal, and the bubble size representing efficiency, smaller bubbles indicating better efficiency. When they first plotted their entire active portfolio on this matrix, the insight was striking. Several high resource projects sat squarely in the bottom left quadrant, low value, poor fit. A cluster of promising ideas with both high XV and strong fit remained under resourced in the top right. This makes our reallocation decisions obvious, Freya said, studying the visualization. We need to shift resources from here, she pointed to the bottom left to here, moving her finger to the top right. The portfolio matrix became their primary strategic communication tool, simple enough for executives to understand at a glance, but rich enough to drive substantive decisions. The nuanced strategic response. The power of the strategic fit framework wasn't just in filtering ideas into yes or no buckets. It created a more nuanced set of strategic responses based on the specific pattern of fit. One. Pursue. The balanced radar ideas with strong balanced radar charts, high scores across all dimensions, resulting in a strategic fit near 1.2, represented clear strategic fits. These were opportunities where the organization had the right to win and should pursue aggressively. The pursue response meant allocating significant resources, executive sponsorship, and organizational commitment. These ideas deserved priority and protection even during resource constraints. 2. Adapt, the fixable imbalance ideas with strong scores in most dimensions, but a specific weakness in one area often represented opportunities that could be adapted rather than abandoned. For example, an idea with high problem value, market attractiveness, and trend alignment but low company advantage might be pursued through partnerships or capability acquisition rather than in-house development. The adapt response involved redesigning the approach to leverage strengths while mitigating weaknesses, changing the how without abandoning the what. 3. Explore the emerging opportunity. Some ideas showed strong trend alignment and problem value, but currently weak market conditions or company advantage. These represented emerging opportunities not ready for major investment but worth exploring and developing. The Explore response focused on limited, targeted investments to build capability, gain market understanding, or establish positioning for future advantage. These ideas became part of the organization's strategic options portfolio. 4. Pass. The fundamental misalignment ideas with consistently low scores or critical weaknesses in multiple dimensions represented fundamental misalignments. These opportunities might be valuable, but not for this organization. The PASS response meant consciously deciding not to pursue an idea, not because it was bad, but because it didn't fit the organization's strategic profile. This deliberate non-pursuit freed resources for better aligned opportunities. This nuanced set of responses transformed the strategic fit framework from a simple filter into a strategic system, not just saying yes or no, but showing how and when. Building a culture of fit. Over time, the strategic fit framework reshaped more than prioritization. It reshaped mindset. Teams began submitting ideas with strategic narratives already in place. They framed their proposals with clarity. Here's why this matters, why we're positioned to win and how this plays into what's coming. The culture shifted. Innovation wasn't about pushing harder, it was about selecting better. And that shift created momentum. The language of strategic fit became embedded in how teams discussed opportunities. What's our advantage here? Became a standard question. Is this really solving a high value problem? Challenge solutions in search of problems you might where are the market trends heading? Push teams to think beyond current conditions. This wasn't just terminology, it represented a fundamental shift from activity focused innovation to fit focused innovation. Teams began to instinctively consider strategic fit before investing significant time in idea development. One morning, Freya sat in a quarterly review with her COO. They were walking through active pipeline ideas. She noticed something. For the first time, every project on the board had both a current XV score and a complete strategic fit profile. They weren't arguing about which idea was flashiest or biggest or most exciting. They were discussing fit, value, and timing, like a leadership team reviewing a set of business units, not a brainstorm board. That was when Freya knew the system had matured. It wasn't just that the team had tools, it was that they had discipline. Perhaps the most valuable aspect of the strategic fit framework wasn't the framework itself, but the quality of strategic conversation it enabled. By providing a structured way to discuss fit, it elevated innovation dialogue from subjective opinions to evidence-based reasoning. The four dimensions created a shared vocabulary that bridged functions and levels. Finance, technology, marketing, and operations teams could all engage meaningfully in the same assessment, each bringing their expertise but speaking a common language. This alignment extended to executive conversations as well. When Freya presented innovation initiatives to leadership, the FIT radar provided immediate context. Executives could quickly understand not just what the idea was but why it fit or didn't fit the organization's strategic profile. As one CTO remarked after seeing the framework, this is the first time I've been able to have a truly strategic conversation about innovation. We're not just discussing features or timelines, but our fundamental right to win in these spaces. From singular decisions to system thinking, Freya paused before leaving the meeting room. The whiteboard was still covered in radar charts and scribbled X V scores. The day's session had been rigorous, honest, even difficult in moments, but as she stood there alone she felt something rare in innovation work. She felt calm. For the first time, decisions weren't being made by force of personality or by executive intuition or by who had the slickest slide. They were being made by clarity, by evidence, by fit. The system wasn't perfect, it would evolve, but it was working, not just in structure but in spirit. Her team was more focused, more curious, more confident. They weren't just reacting to ideas, they were shaping them, scoring them, stress testing them, letting go of the ones that didn't belong. And something deeper was beginning to shift. Freya wasn't building a team of idea managers anymore. She was building a system of decision intelligence, one that could scale, stretch, and sustain innovation as more than a sideshow. But she also knew something else. XV, strategic fit and cost were powerful, but they were still tools for individual bets. What came next was bigger. They began asking questions like how do we tie these decisions together? How do we balance our ambition across horizons? How do we manage the flow of innovation like we manage a business? She grabbed her notebook and scribbled three words. The portfolio lens. It was time to look at the whole system, not just the sparks, but the wiring. That's where the real transformation would happen. Key concept the complete expected value system. Expected value XV combines four critical dimensions to create a dynamic assessment of innovation potential. Each dimension captures a distinct aspect of an initiative's likely impact. One confidence. A measure one to one point zero of evidence-based belief in an initiative's potential. Unlike gut feeling, confidence reflects validated assumptions across technical feasibility, user need, market size, business model, and organizational capability. Confidence is dynamic, it evolves as learning accumulates. two predicted value V The potential impact if successful. This may be financial, revenue, cost savings, or strategic risk reduction, capability development. Value isn't a precise forecast but a directional estimate based on current understanding, typically expressed in currency terms dollars to create immediate business relevance. Three time sensitivity TS The timing factor zero point seven to one point five capturing strategic sequencing. Considerations this ranges from deliberate delay zero point seven to zero point nine when implementation would be premature to standard timing one point zero with no special urgency to critical urgency one point one to one point five for time bound opportunities. Time sensitivity recognizes that innovation value is maximized when timing is optimal, sometimes by accelerating, sometimes by deliberately waiting. four. Strategic fit F How well an initiative aligns with organizational capabilities and direction derived from the strategic fit assessment. Strategic fit is measured as a composite score, known as the strategic fit, which determines whether an organization is positioned to capture an opportunity's value through appropriate capabilities, market position, and strategic alignment. Strategic fit. The strategic fit evaluates how well an innovation aligns with your organization's capabilities and context. Unlike value metrics that measure potential return, the strategic fit determines whether your organization is the right one to pursue an opportunity. Each dimension is assessed on a 0.1 to 0.3 scale, visualized in the radar and combined for an overall strategic fit, ranging from 0.4 minimum to 1.2 maximum. 1. High value problem does this address a significant validated pain point? This Dimension evaluates problem severity, frequency, and willingness to pay. A high score point three indicates a critical problem with measurable impact that customers or users actively seek to solve. A low score zero point one suggests a nice to have without urgent demand or significant consequences. two company advantage. Do we possess fundamental capabilities that give us an edge? This isn't about having all skills in-house, these can be acquired, but rather core competencies that create distinctive value. A high score zero point three indicates unique positioning through proprietary technology, data, relationships or domain expertise. A low score zero point one reveals a fundamental capability gap that would make competitive differentiation difficult. three market attractiveness is the opportunity space viable and valuable? This dimension examines market size, growth trajectory, competitive intensity, regulatory complexity and margin potential. A high score zero point three indicates a growing market with favorable economics and accessible entry points. A low score zero point one suggests a saturated, commoditized or structurally challenging market unlikely to yield sustainable returns. four. Trend alignment does this fit where the world is heading? This forward looking dimension assesses alignment with technological evolution, regulatory direction, demographic shifts, and industry transformation. A high score zero point three shows strong positioning for emerging patterns that will shape the future landscape. A low score point one indicates misalignment with major trends, creating a headwind for long term success. Strategic responses The strategic fit assessment leads to four nuanced strategic responses based on the pattern revealed in the fit radar. one pursue balanced. Strong radar charts indicate opportunities to commit significant resources with executive sponsorship. two adapt. Imbalanced charts with specific weaknesses suggest redesigning the approach to leverage strengths. three explore promising patterns with current limitations warrant limited investment to build future positioning. four pass consistently weak patterns across dimensions indicate opportunities that aren't right for your organization. The efficiency dimension While not part of the XV formula itself, the efficiency metric cost per XV point provides a critical complementary perspective. Cost per XV point equals total investment divided by XV. This reveals not just what innovations are worth but how economically they can be developed. Different implementation approaches for the same idea, internal development versus open innovation, can yield dramatically different efficiency ratios, often showing a ten to twenty times advantage for open innovation methods. Visualization system When visualized as a radar chart, the strategic fit dimensions create distinctive patterns. A balanced radar extending outward in all dimensions indicates strong strategic fit. Lopsided patterns reveal specific weaknesses requiring attention. For portfolio management, the portfolio matrix combines XV, vertical axis, strategic fit, horizontal axis, and efficiency bubble size to create decision intelligence at a glance. The strategic fit assessment transforms the innovation conversation from is this valuable? To is this valuable for us. Together, these dimensions create a comprehensive view of an initiative's potential that goes beyond traditional ROI calculations by explicitly incorporating confidence, timing and fit alongside value projections. The XV formula transforms subjective judgment into structured assessment, creating a shared language for discussing innovation potential that evolves with learning. TLDR The Strategic Fit Framework complements XV by determining whether an organization has the right to win with a particular innovation. It evaluates strategic fit across four dimensions high value problem, company advantage, market attractiveness, and trend alignment. Each dimension is scored from 0.1 to 0.3, creating a strategic fit between 0.4 and 1.2 that becomes the fourth multiplier in the XV formula. When visualized as a radar chart, the framework helps teams determine whether to pursue, adapt, explore, or pass on ideas based on organizational fit. The Lighthouse project narrative demonstrates how the framework reshapes rather than simply rejects ideas, while the efficiency dimension cost per exver points helps determine not just what to pursue but how to pursue it most effectively. Over time, the framework shifts organizational mindset from activity-focused innovation to fit-focused innovation, creating a common language for strategic conversation about the organization's fundamental right to win in specific spaces.