CEO Proposes Expected Value Method for Consistent Business Idea Evaluation
Businesses often struggle with selecting which ideas to invest in due to inconsistent evaluation methods. Simon Hill, CEO of Wazoku, a leading provider of crowd-powered R&D and venture building, has proposed a solution to this challenge.
Hill suggests calculating the expected value of ideas by multiplying four key factors: confidence in the idea, predicted value, time sensitivity, and strategic fit. This method helps compare dissimilar ideas on a level playing field.
To implement this, Hill recommends a quarterly evaluation process. In a one-hour session, teams can silently score ideas based on these factors, compare them, and make informed decisions. Focusing on evidence, economics, timing, and fit enables faster, better choices that align with strategy and value creation.
To assess the efficiency of investments, Hill proposes dividing the total investment by the expected value. This gives the cost per expected value point, helping determine which idea offers the best return.
Simon Hill's approach to evaluating ideas using expected value calculation can help businesses make more consistent and efficient investment decisions. By following a quarterly evaluation process and considering confidence, predicted value, time sensitivity, and strategic fit, companies can better align their investments with their strategic goals and create more value.
