Key Takeaways
- Pricing data is only as reliable as the way it is collected, interpreted and shared across the organisation.
- CEOs often receive summaries instead of the full story, making it harder to identify where margin is really won or lost.
- Better dashboards alone do not improve pricing decisions if critical information is filtered before it reaches leadership.
- Strong pricing performance depends on direct visibility, open communication, and a culture where uncomfortable insights are shared early.
Every CEO believes they’re making decisions from the best information available. Most aren’t. Not because anyone is lying. Because by the time pricing data reaches your desk, it has already been filtered, interpreted, and simplified by people answering completely different questions.
The reason isn’t concealment. It’s structural. By the time pricing data reaches a CEO, it has passed through several layers of interpretation, each shaped by a different organisational function with a legitimate but partial view of the problem.
The stakes of getting this wrong are larger than most boards appreciate. In one of the most cited pricing studies of the past three decades, McKinsey consultants Michael Marn and Robert Rosiello found that a 1 per cent improvement in price delivers an 11.1 per cent lift in operating profit, outperforming equivalent gains in volume, variable cost or fixed cost. That statistic has circulated in board packs and strategy decks for over thirty years. Very few businesses have actually captured it.
The gap isn’t a knowledge problem.
Most finance and commercial leaders know the maths behind Marn and Rosiello’s number. The gap is that a 1 per cent price improvement only shows up in operating profit if the person setting the price has an accurate, undistorted view of where margin is actually being won and lost, customer by customer, deal by deal. And that view depends entirely on the quality of the information reaching them, which is where this gets interesting, because that information is rarely as clean as it looks
No one owns the whole picture. They own the number. And the number is what you see.
Read This CEO Pricing Strategy To Improve Margin & EBIT
Three Owners, Three Questions
In most organisations, pricing data sits with one of three functions: finance, sales, or the commercial team. Each has a legitimate claim to the data, and each is answering a different question when it presents that data upward.
Finance owns pricing data because pricing drives margin, and margin is what finance is measured on.
The question finance is answering is whether the business is hitting its margin targets. Finance therefore presents the picture as percentages. These include margin percentage, discount percentage, and gross profit percentage. That’s a reasonable answer to the question finance is asking. It doesn’t, however, show which customers are eroding margin in absolute terms. It also doesn’t show what was agreed with customers but never reached the CEO. Finance isn’t withholding that information. It simply isn’t being asked for it.
Sales owns pricing data because every discount and exception moves through a sales approval.
Sales is answering a different question: are we winning? So its data is framed around volume, revenue and market share, not the gap between list price and realised price. That framing isn’t dishonest. It’s what the function is set up to report.
The commercial team, sitting between the customer and the business, is answering a third question: what does this account need to be protected and grown? Its data supports the next investment case, not a dispassionate account of what the business is actually charging and why.
Each answer is correct within its own frame. None of them, individually or together, gives a CEO the full picture. What reaches the top of the organisation is a number, not an explanation.
How Pricing Data Gets Filtered
Between the point where pricing data is generated and the point where it reaches a CEO, it typically passes through at least three informal decision points, not meetings, but judgment calls about what to raise now and what to leave for later. This pattern has a name in organisational research: the “mum effect,” a well-documented tendency for people at every level of a hierarchy to soften, delay or withhold unwelcome news as it travels upward, largely because they fear the consequences of being the one who delivered it.
The first decision point occurs between an analyst and their manager.
The analyst may have identified something uncomfortable: an unprofitable segment, a discount pattern that has compounded over several years, a product line where price realisation has quietly collapsed. The manager’s judgment isn’t about whether the finding is accurate. It’s about timing. If the board presentation is a fortnight away and the business is already under pressure, this may not be the moment to add another problem to the list. The finding isn’t altered. It’s contextualised.
The second occurs between finance and the commercial lead
When margin compression needs an explanation both parties can live with: a market shift, a competitor response, a strategic account investment. Rarely false. More often partial, one true cause presented as the whole cause, because it’s the version that avoids a harder conversation.
The third occurs in preparation for the CEO’s own review, where someone decides what earns fifteen minutes and what becomes a line item.
Nothing here is fabricated. But by the time the CEO sees it, a finding that warranted a full discussion has often been reduced to a single data point.
None of this reflects bad faith. It reflects a series of individually rational decisions, made by people managing the information they’re responsible for in a way that will survive scrutiny.
Why Pricing Data Gets Filtered
The people filtering pricing information aren’t trying to obstruct the CEO. They’re responding, rationally, to how the organisation has taught them to behave.
If uncomfortable data historically leads to a genuine investigation and a structural fix, people learn that raising it is worthwhile. If it instead produces defensiveness, unanswerable follow-up questions, or a request to come back with more context, people learn the opposite: that information needs to survive the room before it’s worth bringing into it.
There’s a feeling underneath this that rarely gets named out loud in a boardroom: fear. Not incompetence, not indifference. Fear of being the person who made the meeting harder. Fear of looking like they don’t have their function under control.
That fear is rarely irrational, because most organisations do, in practice, punish the messenger more reliably than they reward the message.
Harvard Business School’s Amy Edmondson, whose research on psychological safety is among the most cited in the field, has spent two decades studying why concerns get lost on the way up an organisation. Her core finding is deceptively simple: silence is invisible. When someone chooses not to raise a concern, there’s nothing for a leader to see. No red flag. No gap in the report. It simply isn’t there.
The clearest illustration of what that costs isn’t from a boardroom.
It’s from Cape Canaveral, the night before the Challenger launched in January 1986. Engineers at Morton Thiokol, the contractor that built its booster rockets, argued for hours that the O-ring seals hadn’t been tested anywhere near the forecast temperature and shouldn’t be trusted. Their concern was specific, technical, and correct. Under pressure from NASA, on a call that ran late into the night, Thiokol’s own executives overruled their engineers and signed off on the launch. Nobody involved believed they were taking an unreasonable risk. Each layer of the process genuinely believed it was passing up a defensible decision. The shuttle exploded seventy-three seconds after liftoff.
The warning existed. It reached every layer of the organisation. It simply arrived at the top wearing a different level of urgency than it left with at the bottom
Pricing data degrades through the same mechanism, minus the drama. A CEO who visibly reacts badly to one piece of uncomfortable pricing data doesn’t just lose that data point. Over time, they lose the whole category.
The problem was never the format of the data. The problem was who was in the room when the data was created.
This dynamic compounds at the top.
Like most people, CEOs tend to accept information that confirms a strategy they’ve already committed to and a story they’ve already told the board, not because of any particular flaw in judgement, but because that’s a well-documented feature of how people generally process information. It is far easier to accept the version of the numbers that confirms you were right than to go looking for the version that suggests you weren’t. That isn’t weakness. It’s how people are wired.
But in a chief executive, this tendency has organisation-wide consequences, and it’s a cost nobody else in the business pays. If a CEO filters out data that challenges the current direction, the people below will, over time, stop generating it. Not to protect the CEO, but because it’s the rational response to the incentives they’re operating under.
What’s Missing From Your Pricing Data
Set against this backdrop, what usually reaches a CEO is a margin percentage measured against a target set before market conditions changed, a trend line that shows direction but rarely cause, and a comparison against a competitor benchmark that may be well over a year out of date.
What’s more often missing is the customer detail: the account responsible for a fifth of revenue whose discount structure has quietly eroded margin for years, and which sales won’t renegotiate for fear of losing it. It’s missing the context behind individual decisions, verbal exceptions never formally recorded, commitments made before anyone with authority had signed off. And it’s missing the rationale: why this customer, product or channel is priced as it is, relative to the value it delivers.
In short, CEOs typically receive a number. They less often receive a reason.
How to Improve Pricing Data Visibility
Organisations that invest in better pricing dashboards, more sophisticated analytics or a dedicated pricing committee often find the data becomes cleaner without the underlying picture changing. That’s because the limiting factor was rarely the format of the reporting. It was who was in the room when the data was first interpreted.
The CEOs who do materially change their pricing visibility tend not to demand better reports.
Instead, they insert themselves earlier in the process, before the contextualisation, before the sequencing decisions about what makes the agenda, before the data is shaped into the version the organisation has judged safe to present. This isn’t about auditing the team. It’s a recognition that the picture reaching a CEO is always a downstream product of conversations that happened without them, and that the only way to see the raw version is to be further upstream.
In practice, that means direct exposure to pricing data at the point it’s generated, not just at the point it’s presented; direct conversations with the people managing key accounts, not just their summarised reporting; and a demonstrated pattern of engaging constructively with uncomfortable findings, so that raising them stops being a professional risk for the people below.
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The Question Worth Asking
Are you making pricing decisions with the wrong information? Most CEOs can’t answer that with confidence, not because the answer is necessarily yes, but because the systems designed to inform them were never built to be interrogated at that level. Better dashboards won’t resolve that. Being closer to where the information originates will.
If any of this feels uncomfortably familiar, you’re not alone, and it isn’t a failure of leadership. Most CEOs are working with a version of their pricing data that was never built to be interrogated this closely, and neither the people who curated it nor the CEO reading it are the ones at fault. I’d welcome the conversation. Message me directly.
Notes
Marn, M. V., & Rosiello, R. L. (1992). Managing Price, Gaining Profit. Harvard Business Review. hbr.org/1992/09/managing-price-gaining-profit
Dattner, B. (2010). The Mum Effect and Filtering in Organisations: The “Shoot the Messenger” Problem. Psychology Today.
Edmondson, A. Research on psychological safety and organisational silence, Harvard Business School.
Rogers Commission Report (1986) and contemporaneous reporting on the Morton Thiokol teleconference preceding the Challenger launch, including Salt Lake Tribune retrospective coverage.
Read This CEO Pricing Strategy To Improve Margin & EBIT
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