Blog, Pricing

The New Reality of Pricing & Commercial Transformations

By Stephan Liozu
August 8, 2019

In previous posts, I explained the impact of digitalization on both pricing and the commercial functions. I touched on tools, processes, and skills to develop in order to successfully conduct these transformations. Now we need to elevate the discussion and focus much more on transformational leadership, culture, and the strategic imperative.

Ask pricing and commercial professionals what is missing to be driving transformations faster and you will usually get responses around leadership, culture, and strategy. 

8 factors that can make or break pricing and commercial transformations

  1. Speed is the new business currency. Digitalization is just accelerating the need to transformation sales and pricing: Speed is the new currency of business. Huge investments in digital tools and systems provide a boost to the business cycle and accelerate the need to go faster in pricing and commercial transformations. That includes speed in design, speed in execution, speed in technological deployment, and speed in mindset disruption. What used to take 10 years now needs to be done in 2 to 5 years.
  2. Interdependency between sales and pricing. You cannot transform pricing without sales and vice versa: the interdependencies between sales and pricing are increased because of systems such as CRM, CPQ, sales automation, and business intelligence platforms. If you do a pricing transformation, you will for sure modify your commercial policies and processes. If you transform your commercial approach to inject a boost in productivity, you will most likely use CRM or CPQ and therefore will have to get pricing take care of. Both are joined at the hip.
  3. Pricing maturity. Pay attention to your current position in commercial and pricing maturity: an organization with different commercial and pricing maturity will have to play catch up somehow. Maturity assessments are a good way to get started and can be used to design your change roadmap. Vendavo recently developed a commercial maturity assessment which is a great resource to start the conversation.
  4. Transformation teamwork. Make sure your commercial and pricing transformation fit in the grand scheme of things: someone needs to pay attention to the rest of the transformation workload. Most organizations will conduct multiple transformations at once. That really drains the energy and resources of the organization. That also creates potential duplications. Check with your transformation office if you are lucky to have one. Piggy back on other transformational projects. Steal process documents shamelessly!
  5. Why now? Doing transformational work when business conditions are good is hard work. Why change when we are doing well? Doing the same work when business conditions are tough and the business model is suffering is fairly impossible. There is usually no budget or headcount and cost cutting is typically the number one priority in that situation. You will need to create a storyline for top management of why now.
  6. Leadership support. Whatever the transformation, leadership support is key: nothing happens without the C-suite. You read this over and over. Yet, it is hard to get their attention. When the business is doing well, they want more growth and innovation. When business is tough, they want cost reduction and cash flow protection. It takes a special breed of leaders to give time, resources, and political clout to the types of transformation we are discussing here.
  7. Strong organizational alignment. A cross-functional approach is essential: nothing happens at high level without strong alignment. Not only do you need functional alignment, but you need cultural, hierarchical, and geographical alignment. To get there, design your work with cross-functionality in mind. That means more travel expenses for cross-functional activities like workshops, training, simulations, problem solving sessions, blueprinting sessions, etc.
  8. ROI, ROI, and ROI. In the end, success breeds investments and more success. You cannot make your transformational roadmap too theoretical or too fuzzy. You need to apply a strong discipline of calculating and promoting ROI for all your transformation bricks. That is the only way to get attention from the C-suite and to secure the next wave of investments for pricing and commercial programs.

Transformational change is both a design and execution challenge. You need to be a great designer to develop a strong roadmap. Transformational skills are a competitive advantage in the age of digitalization. So ask yourself these questions: who designed your pricing and commercial transformations? What is the grand plan for all transformation work? Are you making a strong financial impact to the organization?

To learn more about getting leadership engaged in the commercial transformation process, download our whitepaper: 5 Things Every CEO and CFO Must Know About Pricing

 

  • B2B Pricing , commercial transformation

    Stephan Liozu

    Stephan M. Liozu, Ph.D. is the Chief Value Officer of Thales Group and is the Founder of Value Innoruption Advisors, a consulting boutique specializing in pricing, value, and change management. Stephan holds a Ph.D. in Management from Case Western Reserve University where he researched the topic of transformational change and leadership in pricing.