ROI has become the default decision filter in most organizations.
If a project has a strong return on investment, it moves forward.
If it doesn’t, it is delayed, reduced, or quietly abandoned.
This approach feels disciplined, objective, and rational.
It is also incomplete — and, in some cases, dangerous.
Because ROI is designed to measure financial performance over a defined period, not to answer the questions that matter most to leadership:
- Will this decision keep the company relevant?
- Will it reduce existential risk?
- Will it preserve the ability to adapt?
- Will it strengthen trust with customers and partners?
Treating ROI as a universal decision tool creates a structural blind spot: projects that protect the future are systematically disadvantaged compared to projects that optimize the present.
When the tool becomes the problem
This tension is particularly visible in innovation and transformation initiatives.
Many of these projects:
- deliver clear customer value
- strengthen strategic positioning
- build critical capabilities
- reduce long-term fragility
Yet they often struggle to show a clean, credible ROI upfront.
As a result, organizations end up doing one of two things:
- they reject projects that are strategically necessary but financially unclear
- or they artificially force benefits into ROI models that everyone knows are fragile
In both cases, the decision process becomes dishonest.
A simple question captures this limitation well. Written on a wall at the headquarters of Zappos, it reads:
“What’s the ROI of hugging your mom?”
The point is not that ROI is useless. It is that ROI is not the whole story.
Some forms of value are real, essential, and strategic precisely because they do not fit neatly into a spreadsheet.
The real issue: all value is treated as financial value
Most governance systems implicitly assume that all projects exist to maximize profit.
In reality, projects create value in different dimensions:
- some ensure survival
- some create future options
- some strengthen robustness
- some build learning and capabilities
- some deepen customer trust
- some protect financial breathing room under uncertainty
Using a single metric to evaluate all of them is a category error.
This is why a different approach is needed.
A different lens: the Strategic Project Arbitration approach
The Strategic Project Arbitration approach starts from a simple premise:
Not all projects should be judged in the same dimension.
Instead of asking only “What is the ROI?”, leadership teams explicitly ask:
- What kind of value does this project actually create?
- In which dimension does that value exist?
- What trade-offs are we consciously accepting?
This reframes decision-making from optimization to arbitration.
Below are the key dimensions this approach explores.
1. Continuity & survival
Some projects exist primarily to reduce existential risk.
Examples include:
- cybersecurity and resilience investments
- regulatory compliance
- reducing dependency on a single technology or supplier
These projects often have weak or negative ROI — until the day they are needed.
Their value lies in keeping the organization alive.
2. Strategic optionality
Other projects create future choices rather than immediate returns.
They may:
- open access to new markets
- enable future pivots
- lower the cost of change later
Optionality is rarely visible in financial projections, but it dramatically increases freedom of maneuver.
3. Business model robustness
Some initiatives make the business model less fragile:
- diversifying revenue streams
- increasing recurrence
- reducing exposure to cycles or single points of failure
These projects may reduce short-term margins while strengthening long-term resilience.
4. Learning & capability building
Many innovation projects exist to help the organization learn:
- about customers
- about new technologies
- about new operating models
Learning does not scale linearly and cannot be fully predicted — but organizations that stop investing in it slowly lose relevance.
5. Customer trust & relational capital
Some investments primarily strengthen relationships:
- improving customer experience
- increasing transparency
- delivering reliability rather than growth
Trust rarely appears in ROI models.
Its absence is immediately visible when it erodes.
6. Time asymmetry
A critical question often ignored is who pays when, and who benefits when.
Some projects:
- cost immediately and pay off later
- or deliver short-term gains while eroding the future
Understanding time asymmetry prevents organizations from optimizing themselves into decline.
7. Financial sustainability (not ROI)
Finance still plays a central role — but a different one.
Instead of asking whether a project maximizes returns, the key question becomes:
Is this project financially sustainable given the company’s current situation and uncertainty?
A project may proceed with negative ROI.
It should not proceed if it threatens the company’s ability to endure.
Finance acts as a guardrail, not a verdict.
What this changes in practice
Using this approach:
- innovation projects no longer need to pretend they are something they are not
- trade-offs become explicit rather than hidden in spreadsheets
- leadership discussions shift from justification to intent
The goal is not to remove tension from decisions.
It is to make that tension visible, deliberate, and governable.
Endurance over optimization
Profit remains essential.
But profit is a condition of survival — not its purpose.
Organizations that last are not those that maximize metrics in isolation, but those that invest deliberately in continuity, adaptability, and coherence over time.
ROI tells you how you performed. Strategic arbitration determines whether performance will still be possible tomorrow.
