Customer Decisions on Benefits

Hidden Negative Volatility

Capsule: Some Negative Volatility may be hidden or invisible to you. In many cases, the causes of hidden volatility inflict more damage than do the causes of visible Negative Volatility. Evaluate the causes for both hidden and visible Negative Volatility.

For helpful context on this step:

Videos:

• Video #33: Convenience Innovations
• Video #15: Definition of Convenience
• Video #14: Definition of Reliability
• Video #71: Overview of Products and Services Part 3: What to Do
• Video #37: Performance Innovation Tradeoffs in Hostility
• Video #28: Performance Versus Price in a Hostile Market
• Video #32: Reliability Innovations

Perspectives:

• “The Rust Belt Revival”
• “The Tallest Dwarf”
• “Use Subtle Strategy in Tough Markets”
• “The Leader’s Trap”
• “The Price Segment”

Symptoms and Implications:

• Competitors are changing features of the product
• Customers are more price sensitive

Some negative volatility may be hidden or invisible to you. The Company should evaluate the causes for both hidden and visible negative volatility. This analysis of hidden negative volatility directs your attention to areas of benefit differences with competition that might have escaped your notice. In many cases, the causes of hidden volatility inflict more damage than do the causes of visible negative volatility. There may be more total volume involved with hidden, than with visible, negative volatility.

• Audio Tip #69: Comparison of Reasons for Actual and Hidden Volatility

Hidden negative volatility occurs when the Company loses out in competition for any positive volatility in the market. This occurs in both the invitation and evaluation stages of a customer’s decision. The Company’s hidden negative volatility occurs when it is not invited by a customer to bid on current or additional volume (invitation failure) and when it loses out to other suppliers in competition for the volatile volume (evaluation failure).

• Audio Tip #70: Rounds in Evaluation Failures

Reasons “Why Not” Company: Industry Examples>>

• Audio Tip #71: Price Sensitivity Among Core Customers
• Audio Tip #72: Reliability Failures Among Outstanding Companies
• Audio Tip #73: Advice on Interviewing Customers

• Worksheet #14: Identifying Reasons for “Hidden” Negative Volatility

Hidden Negative Volatility Questions

	Analysis 32: Elimination Reasons for Volatile Customers
	Analysis 33: Reasons for Company Elimination

• What are the reasons, ranked in order of importance, that the Company is not invited to bid on volatile volume in the marketplace (invitation failure)?
• What are the reasons, ranked in order of importance, that the Company fails to win the sales volume of volatile customers in competition with other competitors (evaluation failure)? (Analysis 32 and 33)
• After the review of all the reasons for the Company?s visible and hidden negative volatility, what are the most important shortcomings the Company must overcome in developing its future value proposition?

• Audio Tip #68: Producing a Net Value Improvement for Customers

• Self Test #14: Identifying Reasons for “Hidden” Negative Volatility

Basic Strategy Guide Users Return To: Step 14

Summary Points

Next: Reasons for Positive Volatility