Analysis 35: Using “Win” and “Fail” Data to Help Develop a Performance Innovation Program
APPROACH: A company can use further analyses of instances of Win and Fail in order to help it develop its value proposition improvement imperatives. To do this, the company would analyze separately the information contained in failures and wins and then plan its value proposition improvements accordingly.
|A failure market is associated with two events that contain strategic information. There is different information for each event. The first event is the incumbent's failure. The company should understand how the incumbent fails in the marketplace. If there are only a few examples of failure, the company should look at the failure reasons for all competitors, weighted by the volume associated with those reasons, to develop a list of failure reasons in order of their importance. Where there are many examples, the company should develop a separate list of reasons for the company's failures and compare and contrast those with the failures of the average competitor in the marketplace.
An additional level of analysis depends on the number of observations the company has from the marketplace. With enough examples, the company could separate the reasons for "Get Out" volatility from those behind "Decrease Use" volatility. Get Out events are more serious for the company's long-term relationships than are Decrease Use events.
The second event associated with a failure is the volume gain that takes place after the failure. These reasons present a picture of the relatively weak strength of competitors in the marketplace. The strengths are weak because they were not great enough to "win" volume away from an incumbent supplier. Rather, the weak strengths had to wait upon the failure of the incumbent supplier before the strengths could be exercised in gaining volume.
Depending on the number of observations the company has available to it, the company can refine its understanding further. The company could compare its volume gain after incumbent failure reasons to those of the marketplace as a whole. A deeper analytical level would be to separate the reasons resulting in a "Get In" instance from to those resulting in an "Increase Use" instance. A Get In is a more valuable event than is an Increase Use event because it usually carries more volume with it.
|A "win" in the marketplace is different from a "failure" in that there is only a single piece of information about performance innovation associated with the win. The volume gainer won the volume by offering something that the volume loser could not offer. The volume loser, therefore, lost because the volume gainer offered something that he did not offer. So with a "win" there is not a second level of information available to the company, apart from the reason for the win.
As with a "failure", there are other levels to which the company can take the analysis if it has enough observations. The first level would be to compare the company's "win" reasons to those of the rest of the market. A second level of analysis would be to contrast and compare the reasons for wins resulting in a Get In situation from those that result in an Increase Use event.
A final level of analysis might evaluate both Get In and Increase Use reasons further to see which of those reasons resulted in a Get Out rather than a Decrease Use for the losing incumbent.
|ANALYSIS OF PERFORMANCE INNOVATION IMPERATIVES:|
|The analyses of the Win and Fail experiences above should help the company to develop its performance innovation imperatives. These imperatives help the company avoid failure in the future, as well as direct the company toward those innovations that will allow the company to gain volume in the marketplace.
The company must keep the customers it has and avoid elimination in the customer's buying decision. The company would use the first "failure" analysis to examine reasons why all competitors, or the company in particular, failed its customers. The company must correct these actual failings in its value proposition if it hopes to retain (that is, avoid Get Out and Decrease Use events) its current customer volume.
However, avoiding customer volume loss alone is not sufficient to avoid all failure. The company must also avoid elimination in the customers' buying decisions. These eliminations happen at three levels: The company can fail to be invited to bid; it can receive merely a cursory review, or it can be eliminated after careful evaluation of its bid by the customer. The analyses of each of these kinds of events should be weighted by the volatile volume the company failed to gain in order to create a rank ordered set of hidden failure reasons. These reasons are hidden in the sense that the company does not suffer an actual volume loss. Rather, its volume loss is an opportunity loss.
The analyses of "win" and "fail" also lead to imperatives for value proposition improvements that will enable the company to gain volume in the marketplace when the customers compare the company to its competition. The analyses of weak strengths, that is strengths create volume gain for competitors only after the failure of an incumbent, demonstrates attributes that will be of help to a company only when it faces a failing competitor. These attributes are much less important than are those aspects of the value proposition that enable a company to "win" volume outright against the average competitor. The analyses of the "win" reasons suggest the type of value proposition improvements that have major impact on a competitor's ability to gain volume in the marketplace.
|For a greater overall perspective on this subject, we recommend the following related items:
Symptoms and Implications: Symptoms developing in the market that would suggest the need for this analysis.
Perspectives: Conclusions we have reached as a result of our long-term study and observations.