Whitepaper

From Narrative ROI to Explainable Economics

The credibility crisis coming for AI-generated business cases

Understand why explainability is becoming non-negotiable, what auditability actually requires in practice, and how to use AI to accelerate value work without sacrificing trust.

8-10 min readBy ValueNovaUpdated December 2024
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Why This Whitepaper Exists

AI is transforming how business cases are built. Models that took days can now be generated in minutes. But speed without explainability is creating a new credibility crisis. CFOs can't trust what they can't understand.

This whitepaper exists because the future of value engineering lies in explainable economics—AI-accelerated analysis that remains transparent, auditable, and defensible. You'll learn why explainability matters more than ever, what it requires in practice, and how to leverage AI without sacrificing the trust that makes value work effective.

The Coming Credibility Crisis

AI tools can now generate impressive-looking business cases in minutes. This is both an opportunity and a threat:

The Opportunity: Faster iteration, broader coverage, more sophisticated analysis.

The Threat: Black-box outputs that can't be explained, validated, or trusted.

CFOs are already asking: "Did a human build this? Can you explain how it works? What assumptions are baked in that I can't see?"

The organizations that thrive will be those that harness AI's speed while maintaining the explainability that trust requires.

What Explainability Actually Means

Explainability isn't just about being able to trace calculations. It has four dimensions:

Logic Transparency: Can someone follow the reasoning from inputs to outputs? Are the "physics" of value creation clear?

Assumption Visibility: Are all assumptions explicit, sourced, and modifiable? Or are some hidden in algorithms?

Source Traceability: Can every data point and benchmark be traced to its origin? Is that origin trustworthy?

Outcome Attribution: When results differ from projections, can you identify which assumptions were wrong and why?

AI-generated business cases often fail on multiple dimensions. The calculations are correct, but the reasoning is opaque.

The Auditability Imperative

As AI generates more business cases, auditability becomes non-negotiable:

Regulatory Pressure: In regulated industries, decisions based on unexplainable models may not be compliant.

Stakeholder Demand: Boards, CFOs, and procurement increasingly require documentation of how projections were derived.

Accountability Requirements: When projects underperform, someone needs to explain what went wrong. Black boxes don't allow for learning.

Trust Preservation: Relationships survive when you can explain honestly why a projection was off. They don't survive when you can't.

Auditability isn't overhead—it's the foundation of sustainable value work.

AI as Accelerator, Not Replacement

The right mental model for AI in value engineering:

AI Accelerates: Data gathering, benchmark research, scenario generation, sensitivity analysis. These tasks benefit from AI speed without requiring deep explainability.

Humans Govern: Assumption selection, logic design, stakeholder communication, judgment calls. These require human accountability and explainability.

Collaboration Wins: The best outcomes come from AI handling volume and humans handling judgment. Neither alone is optimal.

This means building workflows where AI does heavy lifting but humans remain in the loop for decisions that matter.

Building Explainable Systems

Explainability must be designed in, not bolted on:

Assumption Architecture: Every model should have a clear assumption layer that's visible and modifiable, regardless of how the model was generated.

Logic Documentation: The reasoning chain from inputs to outputs should be documentable in plain language, not just formulas.

Source Libraries: Benchmarks and data points should come from maintained, sourced repositories—not hallucinated by AI.

Audit Trails: Every change, every version, every decision should be traceable.

Human Checkpoints: Critical decisions should require human review and approval, with documentation.

These principles apply whether you're using AI, spreadsheets, or purpose-built tools.

The Explainability Advantage

Organizations that invest in explainability gain competitive advantage:

Faster Approval: CFOs approve faster when they understand and trust the model.

Better Relationships: Customers trust vendors who can explain their value claims clearly.

Improved Learning: When you can trace why projections were right or wrong, you get better over time.

Reduced Risk: Explainable models are less likely to contain hidden errors or inappropriate assumptions.

Talent Attraction: Strong practitioners want to work with systems they can understand and improve.

Explainability isn't a constraint on AI—it's what makes AI-accelerated value work trustworthy.

Key Frameworks

Four Dimensions of Explainability

The components required for a business case to be truly explainable.

Logic TransparencyAssumption VisibilitySource TraceabilityOutcome Attribution

AI Role Framework

How to appropriately divide work between AI and human judgment.

AI Accelerates (volume tasks)Humans Govern (judgment calls)Collaboration Wins

Explainable System Components

Design elements required for building explainable value systems.

Assumption ArchitectureLogic DocumentationSource LibrariesAudit TrailsHuman Checkpoints

How to Use This Whitepaper

  1. 1

    Assess your current models against the Four Dimensions of Explainability

  2. 2

    Evaluate how you currently use AI in value work against the Role Framework

  3. 3

    Audit your systems for the Explainable System Components

  4. 4

    Identify gaps where explainability is missing or weak

  5. 5

    Plan improvements prioritized by impact on trust and approval speed

  6. 6

    Build explainability requirements into any new tools or processes

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