Pricing Teamwork Makes the Dream Work
Pricing is not a solo activity. Granted, pricing professionals do make individual contributions to their teams and companies. But pricing has too many interconnected and interdependent parts for you to ever expect to tackle all your pricing problems on your own. If you do decide to go lone wolf, you should be aware that you will be working against several forces.
Your team must co-create the solution
First, in order to design a durable pricing solution, you must co-create with your team. Pricing lies at the intersection of Marketing, Sales, and Finance. You cannot create a pricing solution in a vacuum and assume that it will meet the needs of all your stakeholders.
There must be an opportunity for the team to offer feedback, and you must be prepared for iterative improvement. That means that your initial understanding and solution must be ready to evolve with the project.
(I have written previously on the importance of empathy and collaboration when creating a solution.)
Your team can provide essential context
Second, in some cases you can’t even understand your starting point without your team. Yes, you want to work on the solution. But before you can begin working on your solution, you must understand your current situation. If your company has a multi-layered pricing process, then there may not be one single person who can provide you with sufficient context to understand the process and its effects. Rather, you will need to assemble your team and seek out the subject-matter experts who can bring clarity to the confusion before you can complete your project.
I worked with a team once that demonstrated what can happen when people engage in a process without understanding the larger implications of what they were doing. I was working on connecting their commercial policy to my transactional analysis. I learned that the individual functions of the rebate portion of their commercial policy had been atomized to a significant degree. Each team member appeared to have access to a little corner of the print, but nobody could see the whole picture. Diving deeper into their process for managing rebates revealed the disconnect.
Individual 1 was responsible for proposing an initial menu of rebates for that year based on the company work plan and strategic goals. Individual 2 would then join the process, review the proposed rebates, and offer feedback. After Individual 1 and Individual 2 agreed on the rebate specifics, Individual 2 would manage the negotiations with customers. Once a customer agreed on a price, then Individual 3 would have to enter the details into their system to track accruals accurately. Finally, Individual 4 managed the annual rebate payout to the customer after books closed for the year.
There is nothing wrong with the specialization of labor. It’s part of the process that built the wealth of our modern world. Specialization leads to efficiencies which lead to higher productivity which leads to economic growth which leads to the creation of more wealth.
However, you may encounter a challenge when a pricing process becomes so fragmented that no single person understands how the many components impact each other. And if nobody understands it, I very much doubt that anybody is measuring it and managing it. And in this case, there was nobody looking over the whole process to determine whether their rebate strategy was effective or how it was impacting profits.
It took several attempts for me to accurately understand how this company’s rebate process worked. I realized that I was collecting puzzle pieces in my executive interviews, but I was interviewing the team one at a time. It was only after reviewing my notes later that I began to pick up on inconsistencies in how various team members described the process. Eventually, I had to pull Individuals 1 to 4 into a single meeting so that we could sort out the confusion and identify the source of the miscommunication. My team helped me to reach clarity through their combined effort and understanding.
Multiple heads are better than one
The simple fact is that it generally helps to work on complicated problems in a collaborative environment. This is especially true when that team environment is not entirely homogenous. Diversity of backgrounds, experience, and specializations will make your team more intellectually robust. This can generally help keep faulty assumptions and cognitive biases from taking root.
Sometimes it helps just to see a problem from a different perspective. Different people will help you to achieve that shift in perspective.
In pricing, it is difficult to make any progress at all if you approach a project as an individual. You will very much need the support of your team. At the end of the day, this is just not a career for those who don’t play well with others. Pricing professionals need the support of their team to make an impact, and we shouldn’t let our egos tell us otherwise.