Unrealized Value -- Ambiguous to Me

Last post 09:33 am April 18, 2019
by Alex Crosby
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09:19 am March 19, 2019

I do not understand Unrealized Value as covered in the Evidence Based Management Guide (Jan.2019).

This guide, defines Unrealized Value (UV) as "...the potential future value that could be realized if the organization could perfectly meet the needs of all potential customers." 

To make a valuation based on the assumption "...if the organization could perfectly meet the needs of all potential customers" is a huge "if". The number of potential customers for many companies is 10x, 100x of where they are at right now or will ever be. One can dream but it is thoroughly useless from a valuation perspective.  

Also, the term "unrealized value" has a very specific meaning in finance about the value after the liquidation of current assets. This could be stretched to mean fulfilling current portfolio of requests. It is quite different from the notion here of "perfectly" meeting needs of "all potential" customers. 

What am I missing?

/Don

12:02 am March 20, 2019

To make a valuation based on the assumption "...if the organization could perfectly meet the needs of all potential customers" is a huge "if". The number of potential customers for many companies is 10x, 100x of where they are at right now or will ever be. One can dream but it is thoroughly useless from a valuation perspective.

Would it become more useful if it was frequently re-evaluated, and not projected as a dream? Do you think that market share, and customer/user satisfaction, might be reasonable measurements if they were kept up to date?

10:21 am March 22, 2019

What correlation could you make with the words "if"  and "future" in this context?

08:55 am April 17, 2019

Would it become more useful if it was frequently re-evaluated

Hi Ian, how might one begin evaluating this in any empirical form?

10:17 am April 17, 2019

They'd hypothesize that a certain change in their practices would result in a certain effect on (say) market share or customer satisfaction. Progress may then be inspected and adapted each Sprint, or to the transformational cadence of the host organization.

09:33 am April 18, 2019

I see, so the difference between CV and UV in a very high-level view might be:

CV: Our current value is <this> much. This is based on <this> evidence.

UV: We believe <this> change will bring <this> value.  At the end of the Sprint, based on <this> evidence, we believe this direction of change will now bring <this adapted> value.