The Illusion of Value Creation
The Value Paradox | Part II
Why completing the work is not the same as solving the problem.
There is a particular satisfaction that comes with completing a project.
The final deliverable has been submitted. The presentation has been approved. The system has gone live. The last milestone has been marked complete.
For the people responsible for delivery, these moments matter. They represent months, sometimes years, of effort.
But something curious happens when we begin treating these moments as evidence that the original problem has been solved.
A new system is not the same as a better service.
A completed strategy is not the same as improved decision-making.
And a trained workforce is not necessarily a workforce that behaves differently.
These distinctions seem obvious when stated plainly. Yet organisations continue to invest considerable resources in interventions whose success is judged primarily by whether the promised work was completed.
Perhaps the problem is not that organisations fail to create value.
Perhaps it is that they declare victory before discovering whether the value has actually emerged.
The Comfort of Completion
In the first article of The Value Paradox, I explored a deceptively difficult question: Who decides what value is?
Different stakeholders can examine the same intervention and arrive at different conclusions about its worth.
A funding organisation may focus on contractual commitments. An implementing partner may point to completed deliverables. An institution may assess whether its capabilities improved. The people receiving a service may be concerned with whether their experience actually became better.
These perspectives are not necessarily incompatible. But they do not always align.
This was the starting point for what I described as the Value Disconnect: the distinction between value promised, enabled, realised, and recognised.
But what happens when everyone agrees on what an intervention is supposed to achieve?
The business case is compelling. The investment is approved. The work is delivered according to plan.
Does that mean value has been created?
Not necessarily.
Completion tells us something important about delivery. It does not settle what happened because of that delivery.
And the problem extends beyond project management. It appears in the way businesses assess profitability, governments evaluate public investments, and institutions judge organisational transformation.
When Profit Is Mistaken for Value
In 2022, Shell reported approximately $42.3 billion in income attributable to shareholders.
It is an extraordinary figure by almost any ordinary standard.
But does earning more than $42 billion necessarily mean the company created an equivalent amount of economic value?
Not quite.
Profit tells us something important about financial performance. But it does not, by itself, establish whether the returns generated were sufficient to justify the capital committed to producing them.
Consider two hypothetical businesses.
The first generates $100 million in annual net operating profit after tax but requires $2 billion in invested capital.
The second generates $30 million but requires only $100 million.
The first appears more successful if we compare operating profits alone.
But its return on invested capital is 5%, compared with 30% for the second.
Now suppose both businesses have an estimated cost of capital of 10%.
The first earns less than its cost of capital. The second earns considerably more.
Despite generating a larger operating profit, the first business earns a return below its assumed cost of capital, while the second generates returns comfortably above it.
This is the logic behind Return on Invested Capital (ROIC) and the Weighted Average Cost of Capital (WACC).
ROIC measures operating returns relative to invested capital. WACC estimates the return required by those financing the business.
Their relationship helps establish whether a company is generating returns above the opportunity cost of the capital it employs.
Economic value depends not only on what a business earns, but also on what it must commit to earn it.
The hypothetical figures are illustrative, not estimates of Shell’s actual ROIC or WACC. Nor does Shell’s reported profit establish that it failed to create economic value.
But the example reveals a broader limitation of headline performance measures.
Even positive economic returns do not settle every question about value. Customers, employees, communities, and the environment may experience consequences that financial accounts do not fully capture.
An impressive result is not necessarily a complete account of value.
The same reasoning becomes relevant when organisations invest in transformation.
Instead of reporting billions in profit, they report systems deployed, strategies developed, employees trained, and milestones completed.
The numbers may be accurate.
But do they establish that the investment achieved what it was intended to achieve?
When the Business Case Becomes a Delivery Plan
Most organisational interventions begin with a promise.
A digital transformation programme will improve efficiency.
A new operating model will reduce duplication.
A consultancy engagement will strengthen performance.
A public-sector reform will improve access, accountability, or service quality.
These expectations form the basis of a business case.
The business case explains why resources should be committed, what benefits are expected, and how the proposed intervention compares with alternative uses of those resources.
In principle, it connects investment to anticipated value.
But once an initiative is approved, the organisation’s attention often shifts.
The original question, “Why are we doing this?”, gradually gives way to a different set of questions.
Are the deliverables on schedule?
Has the budget been utilised?
Have the required approvals been obtained?
Is implementation proceeding according to plan?
These are legitimate management concerns. Without them, even worthwhile initiatives can become expensive exercises in disorder.
The problem emerges when delivery indicators become substitutes for the benefits that justified the intervention.
Imagine a company investing in a customer relationship management system to improve retention.
The system is procured, configured, tested, and deployed. Employees receive training. Data is migrated.
The project closes.
But customer retention remains unchanged.
Perhaps employees are not using the system consistently. Perhaps the underlying service problems were never addressed. Perhaps the system provides better information, but nobody has changed how customer complaints are handled.
The intervention has created a capability.
It has not necessarily created the intended value.
A subtle shift in accountability has occurred.
During approval, the organisation asked whether the proposed investment would produce worthwhile benefits.
During implementation, it asked whether the promised solution was being delivered.
At closure, it answered the second question and treated it as though it had answered the first.
The business case had effectively become a delivery plan, while the original value proposition remained untested.
The NHS Experience: When Delivery and Value Diverge
One of the more revealing examples comes from England’s National Health Service.
Launched in 2002, the National Programme for IT was an ambitious effort to modernise healthcare information systems across the NHS.
Its objectives included improving the availability and use of patient information, developing electronic care records, and establishing digital infrastructure capable of supporting a more connected health system.
The proposition was compelling.
Better information could support clinical decisions, reduce duplication, improve coordination, and make services more efficient.
But delivering technology and realising those benefits proved to be different challenges.
In its 2011 assessment, the UK’s National Audit Office reported substantial delays in implementing detailed electronic care records.
It also found that systems deployed in acute hospitals had delivered mainly administrative benefits rather than the clinical benefits originally anticipated.
This distinction matters.
An administrative system may improve scheduling, record management, or other organisational processes. These can be valuable achievements in their own right.
But they do not automatically demonstrate improvements in clinical decision-making, patient outcomes, or the wider performance of healthcare services.
The programme also produced infrastructure with continuing practical value.
National services such as NHSmail, the Spine, and digital imaging capabilities formed part of the wider digital foundation developed during this period.
Describing the entire programme as a failure would therefore obscure meaningful achievements.
Yet describing it as a success simply because useful infrastructure was delivered would be equally incomplete.
The difficulty lies in the relationship between what was produced and what had originally been promised.
The financial evaluation reflected this uncertainty.
In its 2013 review, the National Audit Office examined Department of Health forecasts of approximately £10.7 billion in lifetime benefits against £9.8 billion in lifetime costs for programmes previously managed under the national initiative.
These were forecasts, not a final accounting of realised value.
A substantial proportion of the anticipated benefits remained in the future, and their eventual realisation was uncertain.
Expected benefits are not the same as demonstrated benefits.
A programme can have a credible rationale, produce useful assets, and still fall short of its original ambitions.
It can also create benefits that emerge unevenly, later than expected, or in forms different from those initially anticipated.
The NHS experience resists a simple success-or-failure narrative.
It asks us to distinguish what was delivered, what became operational, what changed in organisational practice, and what benefits were ultimately realised.
These questions are connected.
They are not interchangeable.
The Value Realisation Gap
One way of describing the distance between expected benefits and those ultimately realised is through the idea of a Value Realisation Gap.
The concept is not new. It has been explored through benefits realisation, investment appraisal, business analysis, and organisational change, including more recent discussions about the difficulty of translating projected financial gains into operational results.
What interests me is a particular dimension of this problem: how value can become diluted as responsibility moves through an organisation, even when the people involved are fulfilling their respective responsibilities.
Consider five connected stages.
1. Promise: What Should Improve?
An organisation identifies a problem or opportunity and establishes what it expects to achieve.
The promise might involve lower costs, better services, improved decision-making, stronger institutional capability, or reduced risk.
At this stage, value exists as an expectation supported by assumptions.
The first vulnerability is assumption risk.
The problem may have been diagnosed incorrectly. The projected benefits may be optimistic. The proposed intervention may not be the most effective use of available resources.
A well-written business case does not eliminate these uncertainties.
It makes them visible enough to examine.
2. Delivery: What Has Been Created?
The intervention produces something tangible.
A system is installed. A strategy is developed. A process is redesigned. Training is delivered.
These outputs may be necessary conditions for improvement.
But the second vulnerability is substitution risk.
As delivery progresses, the organisation may begin treating the existence of the solution as evidence that the underlying problem has been addressed.
The project produces what it promised to produce.
Whether that production was sufficient to create the intended improvement remains another question.
3. Adoption: Is It Being Used?
The organisation begins using what has been delivered.
Employees adopt the system. Managers apply the framework. Clinicians follow the revised procedure.
This introduces adoption risk.
People may resist the solution, lack the skills to use it, or find that it conflicts with their existing responsibilities.
Even where formal adoption occurs, usage may remain superficial.
A new reporting system may be populated because compliance requires it, while decisions continue to rely on informal information channels.
The organisation has adopted the tool without adopting the behaviour that would make it valuable.
4. Change: Is Performance Improving?
Adoption begins to alter how the organisation operates.
Decisions become faster. Errors decline. Coordination improves. Resources are used differently.
Here, the vulnerability becomes performance risk.
The new way of working may not produce the expected improvement.
A digital process may reproduce the inefficiencies of its paper predecessor.
A redesigned approval process may reduce the number of steps while increasing the workload associated with each one.
Or an improvement in one department may simply transfer costs and delays elsewhere.
Change has occurred.
But its consequences are not necessarily beneficial.
5. Value: Was the Improvement Worthwhile?
Finally, the organisation examines whether the changes produced worthwhile benefits relative to their costs, risks, and consequences.
Did the investment justify the resources committed?
Did intended beneficiaries experience meaningful improvement?
Were important costs or disadvantages shifted onto other stakeholders?
Were the benefits sustained long enough to matter?
This introduces value assessment risk.
An organisation may correctly identify improvements but evaluate them against an incomplete definition of value.
Financial savings may be achieved at the expense of service quality.
Higher productivity may coexist with employee exhaustion.
A successful intervention for one stakeholder may impose substantial costs on another.
The final assessment therefore requires more than confirming that something improved.
It requires examining whether the improvement was worthwhile, for whom, and under what conditions.
The five stages are not necessarily linear.
Adoption may reveal design problems that require further development. Benefits may emerge before implementation is complete. Some outcomes may become visible only after considerable time.
But the framework highlights a recurring problem.
At every transition, anticipated value can be lost, delayed, reduced, or redirected.
The Value Realisation Gap is not simply the difference between a target and a result.
It is also the accumulation of assumptions, dependencies, and decisions that determine whether an investment becomes a meaningful improvement.
Where Value Gets Lost
The five stages explain how value is expected to emerge.
But they also reveal something more interesting.
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Value does not necessarily disappear because an intervention fails.
It can disappear because responsibility changes hands.
A strategy team develops a compelling business case. A project team takes responsibility for implementation. An operational department is expected to adopt the solution. Managers are expected to translate adoption into improved performance. Senior leadership eventually evaluates the results.
Each group may fulfil its immediate responsibilities.
Yet no single group may remain accountable for the complete journey.
This creates a distinction between local success and collective value creation.
Each team may be evaluated against objectives that are reasonable within its own area of responsibility. The difficulty arises when those objectives are not connected to an enduring responsibility for the original benefits.
In such circumstances, an organisation does not necessarily suffer from a lack of accountability. It may have plenty of accountability, but directed towards different measures of success.
The strategy team can demonstrate that the investment was justified by a credible forecast.
The project team can demonstrate that the solution was delivered.
The operational department can demonstrate that staff received training.
Managers can demonstrate that the new process is being followed.
And leadership may receive a dashboard showing that every major milestone has been achieved.
Each statement can be accurate.
The problem is that their collective accuracy does not necessarily establish that value has been created.
This is what makes the illusion difficult to detect.
It does not always depend on misleading information or poor intentions.
It can emerge from an accountability structure in which each participant is rewarded for completing a different part of the journey.
The evidence accumulates.
The original question disappears.
Why Good Projects Can Produce Disappointing Outcomes
It is tempting to explain unsuccessful transformations through poor project management.
Sometimes, that explanation is justified.
Projects may suffer from inadequate planning, unrealistic budgets, weak governance, or technical problems.
But delivery failure is only one possibility.
A technically successful project can still produce disappointing outcomes.
Consider a hospital introducing an electronic medical record system.
The software works. The servers are operational. Users have been trained.
From a technical perspective, implementation may be successful.
But clinicians might find the system difficult to navigate.
Data entry could consume additional consultation time.
Departments may continue maintaining parallel paper records.
Critical information may remain inaccessible because the system does not communicate with other applications.
The technology has been delivered.
But the operating environment has not necessarily changed in the way the organisation intended.
This is why implementation requires more than installation.
It depends on the interaction between technology, people, processes, incentives, and institutional capacity.
There is also the question of how much change an organisation can realistically absorb. Even a well-designed intervention may struggle when employees are expected to adopt multiple reforms while maintaining their existing responsibilities and service commitments.
A system designed around an ideal workflow may struggle in an organisation whose actual practices are considerably more complicated.
A reform that assumes staff have sufficient time, resources, and authority may fail when those conditions are absent.
A strategy that requires coordination across departments may remain ineffective if those departments have competing priorities.
In such cases, the intervention may not be inherently flawed.
The organisation may simply lack the conditions required to realise its potential.
This raises a question that business cases often acknowledge but implementation plans can underestimate:
What must the organisation become capable of doing for the promised benefits to materialise?
Without an answer, delivery risks becoming an expensive exercise in creating unused potential.
When the Numbers Tell Only Half the Story
If delivery indicators are insufficient, the obvious response is to measure outcomes.
But even outcome measurement requires care.
Imagine a public hospital introducing an appointment management system.
After implementation, average waiting time falls from 90 minutes to 55 minutes.
That is a meaningful improvement.
But what caused it?
Was it the new system?
Did patient volumes decline?
Were additional clinicians recruited?
Did the hospital change its operating hours?
Or did several factors contribute?
This is the problem of attribution.
A change occurring after an intervention is not necessarily a change caused by that intervention.
A rigorous assessment should consider the baseline, relevant external influences, and, where feasible, what might have happened without the intervention.
There is also the problem of unintended consequences.
Suppose a department is evaluated primarily on the number of applications it processes each day.
Staff may become faster at completing routine cases while spending less time on complex applications.
The headline productivity indicator improves.
But applicants with more complicated needs may experience longer delays or poorer service.
The indicator has captured one dimension of performance while obscuring another.
These problems do not make measurement pointless.
They make measurement a matter of judgement.
A useful performance framework should connect activities to outcomes, examine competing explanations, and consider whether improvement in one area has created costs elsewhere.
It should also distinguish between leading indicators and realised benefits.
System adoption rates, training completion, and workflow compliance may provide early evidence that an intervention is progressing.
But they are not substitutes for examining whether the intended improvements have emerged.
A good indicator tells us something important. A poor interpretation asks it to tell us everything.
Who Owns the Benefit?
The problem becomes especially visible when we ask a question that project governance does not always answer clearly.
Who is responsible for ensuring that the benefits actually materialise?
A project manager may be accountable for implementing a system.
A consultant may be responsible for producing recommendations.
A technology vendor may be contracted to deliver specified functionality.
But the intended benefits often depend on decisions made by people outside the delivery team.
A department head may need to redesign workflows.
Supervisors may need to reinforce new practices.
Finance teams may need to adjust resource allocations.
Senior leadership may need to resolve institutional constraints.
If these responsibilities are not clearly assigned, the organisation can find itself in a peculiar position.
The project has an owner.
The deliverables have been accepted.
The implementation has been declared complete.
But the benefits have no clear owner.
This is not merely an administrative oversight.
It reflects a deeper separation between those responsible for delivering change and those responsible for making that change valuable.
The distinction is especially important in consultancy and technical assistance engagements.
External specialists can diagnose problems, develop frameworks, introduce tools, and support implementation.
But many of the benefits depend on what the receiving organisation subsequently does.
If responsibility for those benefits is unclear, it becomes difficult to determine whether an intervention is progressing, whether corrective action is required, or who has the authority to make those corrections.
A more useful approach would assign benefit ownership alongside delivery responsibilities.
For every major expected improvement, the organisation should be able to identify who is accountable for achieving it, what conditions are necessary, how progress will be assessed, and when the results are expected to become visible.
This does not guarantee success.
But it reduces the likelihood that a completed project will be mistaken for a completed transformation.
From Deliverables to Demonstrable Improvement
What would change if organisations treated value realisation as seriously as project delivery?
The first difference would appear before an intervention begins.
Rather than defining success primarily through activities and deliverables, organisations would establish what should improve and how they intend to recognise that improvement.
A digital system would not be justified solely by its functionality.
Its business case would explain what decisions, processes, or services the system is expected to improve.
A training programme would not be evaluated only through attendance and satisfaction.
It would examine whether participants acquired relevant capabilities and whether those capabilities influenced subsequent practice.
A consultancy engagement would distinguish between the successful completion of its contractual scope and the longer-term organisational improvements that motivated the engagement.
These distinctions also require realistic expectations.
Not every intervention can be held accountable for outcomes beyond its influence.
A consultant cannot guarantee that a client will implement recommendations. A technology vendor cannot control every aspect of organisational adoption. A training provider cannot independently determine whether managers reinforce newly acquired skills.
But the limitations of direct control should be made explicit rather than allowing responsibility for value to disappear altogether.
The second difference would be in how organisations monitor progress.
Instead of waiting until the end of a project to ask whether it succeeded, they would examine the assumptions connecting delivery to expected benefits.
Are users adopting the solution?
Are the intended operational changes occurring?
Are the benefits emerging at the expected rate?
What unintended consequences are becoming visible?
And what needs to change if the original assumptions prove incorrect?
This turns evaluation from a retrospective judgement into an ongoing management responsibility.
The third difference concerns honesty about uncertainty.
Business cases are built on assumptions about the future.
Some assumptions will prove correct.
Others will not.
An organisation committed to value creation should be willing to revise its expectations when evidence changes.
Sometimes, that means redesigning an intervention.
Sometimes, it means extending support.
And sometimes, it means acknowledging that the original investment is unlikely to deliver sufficient benefit to justify continued expenditure.
The purpose of evaluation should not be to protect the original business case.
It should be to improve the decisions that follow.
The Unfinished Transformation
I began this article with the satisfaction of completing a project.
The final presentation, the approved strategy, the operational system, and the completed milestone all provide tangible evidence that work has been done.
And that evidence matters.
Without delivery, many improvements would never become possible.
But possibility is not the same as achievement.
Shell’s financial results illustrate why an impressive profit figure cannot, on its own, establish economic value without considering the capital required to generate it.
The NHS experience illustrates why substantial investment and useful digital infrastructure do not automatically establish that the wider benefits of a transformation have been realised.
Different sectors. Different objectives. Different methods of evaluation.
Yet a common analytical problem remains.
We often become so focused on demonstrating what has been produced that we give insufficient attention to what that production was supposed to make possible.
Perhaps the real test of an intervention begins when the delivery team announces that its work is complete.
Does the organisation use what has been created?
Does that use change how it operates?
Do those changes produce worthwhile benefits?
And does anyone remain accountable for finding out?
These questions do not diminish the importance of completing projects.
They remind us that completion and value are not interchangeable.
The distinction also leads to a more uncomfortable question.
Even when an intervention does produce meaningful benefits, what happens after the consultants, project teams, or external specialists leave?
Can the organisation preserve those improvements?
Can it adapt them?
Can it continue creating value without the people who helped initiate the change?
Because creating value once is one achievement.
Building an organisation capable of sustaining it is another.
Author’s Note
This is Part II of The Value Paradox, a three-part series examining how organisations define, create, demonstrate, and sustain value across private enterprise, public institutions, and organisational transformation.
The reflections and interpretations presented here are my own, informed by professional observations, established research, and published evidence. Organisational examples are hypothetical unless otherwise identified. They are intended to illustrate broader systems challenges rather than comment on any particular organisation, project, or individual.
The five-stage framework presented in this article is my own synthesis of established ideas in benefits realisation, investment appraisal, organisational change, and business analysis. The term Value Realisation Gap and the broader distinction between anticipated and realised benefits are already present in professional literature. My interpretation focuses particularly on how fragmented accountability can obscure whether intended value has materialised.
The views expressed are personal and do not represent those of any organisation with which I am or have been associated.
References & Further Reading
- Shell plc (2023). Fourth Quarter 2022 and Full Year Results. Financial results reporting income attributable to shareholders of approximately $42.3 billion for 2022.
- Shell plc (2024). Annual Report and Accounts 2023. Financial performance, capital employed, and return measures.
- National Audit Office (2011). The National Programme for IT in the NHS: An Update on the Delivery of Detailed Care Records Systems.
- National Audit Office (2013). Review of the Final Benefits Statement for Programmes Previously Managed Under the National Programme for IT in the NHS.
- International Institute of Business Analysis (2015). A Guide to the Business Analysis Body of Knowledge (BABOK Guide), Version 3. Particularly the Solution Evaluation knowledge area.
- Marhelski, W. (2025). The Value Realization Gap. LinkedIn, 3 December 2025. https://www.linkedin.com/pulse/value-realization-gap-wayne-marhelski-tbvyc/
Next in the series: What Remains When the Consultants Leave?
Why lasting transformation depends on what organisations can do without external support.
