Valuation Change Request

We take the commonplace Engineering Change Request and remake it into the Valuation Change Request+ (VCR). The name change is in recognition that often much of the value in our commercial product will consist of intangibles (as supported by the tangible product or service offering). The intangibles are often much of the basis for the customer experience (e.g., brand name products). Individuals submit requests to change either tangible or intangible features of the prototype+ using the VCR form. The form describes the proposed changes, estimates to the change in product valuation+, and provides tracking for the completed request and change to valuation. The request is open for review across the commercialization+ team.

Valuation Change Request flips project management, as it is commonly understood, on its ear. Typically in project management an individual or group of individuals sits down at the beginning of a project, lays out all the tasks needed to complete the project, and uses this list to track progress. Instead we treat commercialization as a creative exercise, and no one can lay out the tasks ahead of time. Instead we ask you to submit upcoming tasks you propose to execute, and we subject them to a review:

  • Can the task significantly change product valuation, and if negatively, is there a contingency plan in place?
  • Does the task risk committing the project to an irrevocable course of action, and if so, are there other alternates?
  • Does one task interfere or preclude other tasks under consideration (or underway)? Does it improve or speed up other tasks?

We don’t reject tasks simply because they come from an alleged crackpot+. We don’t reject tasks because they might take too long. We view favorably tasks that merely reduce project risks or increase project opportunities. We let proposed tasks drive management of the project and not vice versa as is typically the case with project management.

We prioritize tasks based on their ability to arbitrate across Alternate Competing Hypotheses+ (ACH). We revisit and revise ACH assumptions on a continuous basis based on the outcomes of the tasks.

There is a common challenge in using this approach: how do we arbitrate across two seemingly irreconcilable paths when both are subject to great uncertainty? In the Lipitor™ example, we needed to decide between greater drug effectiveness with more drug safety issues, and lesser drug effectiveness with fewer drug safety issues. We let commercial operations+ arbitrate these decisions. What will be the consumer’s subjective experience in each case, and how can we, as marketing, influence these experiences? When in doubt, ask the consumer. In the case of a tie, the franchisee+ arbitrates, being careful in situations where pursuit of one of the means can shut down future options or means.

With VCR we do not tie the hands of any of our creative individuals. They can propose any task they deem valuable to advance either the amount, or the assuredness of product valuation. VCR is the operational counterpart to the ACH planning exercises. Change requests are open to anyone on the commercialization team.

We do need formal mechanisms to ensure all commercialization partners see and understand proposed valuation change requests. We need Q&A mechanisms. We need arbitration mechanisms. We need mechanisms that mete out consequences for tasks-gone-bad. But these have already been worked out for Engineering Change Requests. We simply take what has already been developed and customize it to include product valuation.

VCRs will often feed directly into the variables for the Commercial Equation+, which drives Product Valuation (see Pay-for-Performance+ Structure). There are many (half-dozen or more) dimensions that need to come together simultaneously. Shortfalls in any one can cause us to rethink and rework the others to get them all in sync (see here). So a single VCR can call for the immediate generation of several others. The franchisee is responsible for coordination and synchronization across all VCRs.

Importantly the VCR very clearly assigns responsibility. You get credit for work done well (i.e., your signature on the work). You get spotlighted for work done poorly. It will be made clear you don’t want to be in the spotlight too many times. VCR provides the paper trail for all work to be performed, work underway, and work completed.