Business Culture Change: Pricing Teams Are The Instigators Of Change
Business culture change is one of the most challenging parts of a pricing transformation. The hard reality for CEOs and boards alike is that culture can often make or break your business agenda.
A poor culture can quell progress on a new price software integration and delay the development of more sophisticated go-to-market strategies, models, pricing offers, commercial focus and price constructs.
The business culture change momentum that enables significant pricing improvements throughout and beyond the duration of a transformation, c
an’t just be achieved through top-down mandate. It lives in the collective hearts, minds and habits of people and their shared values, beliefs and perception that “changing pricing will drive more profitable outcomes for everyone” – sales, marketing, pricing, finance, the executive and your customers.
For CEOs seeking to develop a more agile, adaptive and innovative approach to pricing, pricing for profitability demands a rare balance of technical know-how, styles and behaviours from your leaders and teams.
Very often the teams you need to get you through a pricing transformation successfully are those who challenge traditional corporate culture and values, including the importance placed on operational excellence and through-put efficiency.
These people might not be in the business currently. You may or may not have a pricing leader or team set up yet or you may have an established pricing team already to manage pricing operations and administration. See our blog on commercial coaching for how to effectively progress in your pricing career.
There is a huge difference between a pricing support function and pricing decision function. Don’t expect a pricing support function to build the momentum required for large or complex price analytics and supply optimisation programmes.
How to implement business culture change
Taylor Wells believe that the most significant and profitable business culture change programmes come when businesses build an integrated pricing decision function with a competent pricing leader and team members that tap into each other diverse skills and coach sales on the rationale for change.
Support functions are largely administrative and are key to managing data systems for quoting and/or issuing correct prices from the system.
Decision pricing functions, conversely, have the expertise and pricing skills (technical and soft) to create better market strategies and analytics that capture more revenue and margin, no matter the historical differences that have occurred between divisions and teams (i.e., whether sales had but no longer has discretionary pricing power prior to establishing a pricing team).
We believe that CEOs and other executives can learn a lot from how effective pricing leaders and decision pricing teams initiate, engage and mobilise teams and stakeholders to adopt a new vision and team norms.
High performance pricing leaders and pricing decision teams are skillful at creating a climate of business culture change for pricing improvement initiatives that sales, marketing, finance and your customers want to be a part of.
Effective pricing leaders and decision pricing teams can influence, educate and create positive reasons for others to want to change an old pricing system. They leverage their domain expertise to test and trial practical pricing strategies and analytics that make more revenue and margin for the business.
Pricing decision teams utilise their domain expertise to educate people on fundamental pricing principles and provide insights on the market to help sales win more deals and support the executive to drive profitability.
Pricing decision teams co-opt existing networks and influencers in the business for leverage. They use the collective power of key stakeholders and teams to move your pricing into a modern era – i.e., one where it is possible to make more profitable pricing decisions in a transparent market without the fear of margin erosion, non-compliance, risk and profit downgrade.
It you do not have this profile of pricing or business culture change executive, manager or analyst in your business than we recommend hiring a small pricing decision team in the business to set your pricing project, initiative or transformation up for success.
Making a decision on business culture change is based on emotion. And, driving better pricing throughout the business starts with emotion too. Logic enters in competent delivery. Scientific enquiry and process. Analytical modelling.
Emotion is the number 1 driver for long lasting change. People change when they hear a genuine reason for why they need to unfreeze an old habit.
Effective pricing leaders and decision pricing team inject urgency into people because they demonstrate the pain and cost of doing nothing or settling for the status quo.
Businesses mistakenly believe pricing is always logical. It is not. Many start a pricing transformation with a logical call to action. This is mistake. A call to action has no emotional resonance; it does not connect with anyone. No one is listening.
People (even the most intelligent people) ignore logical reasons to change traditional pricing practices and excessive discounting. This is because logic bypasses human emotion. People are emotional. Logic does nothing to motivate people. Emotion is what motivates people to change on a fundament level.
You don’t need to hire a large pricing team to build significant momentum for change either. A small team of the right mix of people can mobilise people into working together to build a better pricing system that works for your business.
We advise hiring a group of passionate pricing experts that have the know-how and skills to deliver early wins. These wins, don’t have to be big wins, but they do have to be framed and owned by the pricing team in the right way.
Early wins are powerful in demonstrating competence to the rest of the business in particular the sales force. When sales view the pricing team as competent and see them making headway, they will go to them for advice.
This builds the pricing team’s credibility and profile in the business. Others will soon want to join; and within a much shorter space of time the pricing transformation will gather force and scale across the business.
Hire small but smart. Don’t waste your money on large project teams with limited pricing expertise or insight into underlying culture and talent management systems.
Make sure you build a small but effective decision pricing team with the right mix of skills, styles and capability to drive profitability.
Carefully select pricing leaders that can leverage their expertise and passion for pricing to embed better pricing at all levels of the business with minimal cost and disruption.
For an example of how pricing should be at the core of commercial strategy – see our blog on designing menu prices.
See our recent blog on everything related to revenue management jobs.