Goal Setting: The Truth About Change

Every executive I’ve ever met seems to love change programs. They’re excellent fodder for any update you need to send up the line. And in some cases, they might even generate actual results…

That being said, organizations appear to systematically misjudge the time and effort required to deliver these beasts. Various statistics from leading consulting firms point to a high failure rate for corporate strategic initiatives. Perhaps some of these might have been salvageable with different assumptions.

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Getting Run Over By a “Paid For” Truck

I stared at the email and fumed. What do you mean we lost the business?

This wasn’t driven by pride or ego. We really HAD provided them our best price, quoting a pricing level where we should have been assured of victory. This proposal was offered at break-even pricing to protect other business in the account. On a generic spec, commodity grade product. Where we had the lowest cost in the wholesale industry.

And we had just… been owned. Not merely losing the business, but getting buried.

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Strategic Flaws of Statistical Price Targets

These days, everyone in the analytics space has a pricing product to talk about. Toss enough transaction data points at the problem, you’re going to get a few insights that may help you earn higher margins. Even better, moving the pricing process to a modern software tool often improves your control over pricing errors and sales rep concessions.

Can this work? Absolutely. For an organization with weak pricing practices, the first wave of pricing optimization often yields brilliant results.  For a typical manufacturer or wholesale distributor, this can raise your net profit margin by one to three percentage points. Given the low margins in many of these industries, this is a meaningful improvement in the overall profitability (and thus, valuation) of the business.

But you need to have a careful plan for Act II. There are limits to how far you want to ride this horse.

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