Quadrant Shifting
The Verification Quadrant is not destiny. Capital investments can move tasks to better positions. These are the five moves that change where a task sits on the grid.
The Grid
Select an investment type below to see how it shifts tasks on the quadrant.
Verification Trap
Do Not Automate
Automate Now
AI Sweet Spot
Calculation Difficulty →
The Five Moves
The Capital Allocation Frame
Each of these five moves is a capital investment. The same questions you would ask about buying a machine apply here:
NPVWhat is the present value of all future labor savings minus the investment cost? A verifier that saves 40 hours/week at $50/hour is worth $104k/year before discounting.
DEPRECIATIONModels depreciate (distribution shift, competitive catch-up). But verifiers and data moats can appreciate - each failure case makes them smarter. The net rate determines whether this is a wasting asset or a compounding one.
RISK-ADJUSTEDThe Dollarized Confusion Matrix gives you the variance. High cost asymmetry means high variance in outcomes. Risk-adjusted return = E[NPV] - λ × Var[NPV].
MOATWhat does it cost a competitor to replicate your position? Models: low moat (commodity). Data from operations: high moat. Custom verifiers encoding institutional knowledge: highest moat.
DUAL CURVEPhysical assets depreciate. Knowledge assets have a dual curve: the model depreciates (like a truck) but the data and verifiers appreciate (like land under the depot). Invest in the appreciating side.
The Decision Sequence
These tools form a workflow:
1.DIAGNOSE - Plot the task on the Verification Quadrant. Calculate the Templeton Ratio.
2.CALIBRATE - Use the Dollarized Confusion Matrix to set the right threshold from error costs.
3.INVEST - Choose which shift moves the task to a better quadrant. Evaluate the investment using capital allocation math.
4.VALUE - Calculate the NPV of the automation to compare against physical alternatives. Same math, different asset class.