Issue link: https://pros.com/learn/i/1180904
The Conventional Wisdom Made Sense For decades, the conventional wisdom has held that the expected "journey" for a B2B pricing function is evolutionary in nature. Accurately described by the idiom, "crawl, walk, run," the basic concept is that pricing functions should start by developing some rudimentary capabilities. Over time, they can then incrementally develop the more sophisticated capabilities their companies really need to compete and succeed. We often see "maturity models" associated with this approach, further reinforcing the idea that pricing capability development is largely an evolutionary process. Of course, the expected cadence for this "crawl, walk, run" journey is step-wise and linear. As such, the implication is that you must go through all the incremental steps and stages, in order, over time. This step-by-step, evolutionary pricing journey would typically look like this: 1. Dedicated pricing analysts are hired. 2. These people then gather the necessary data to conduct manual analyses using spreadsheets or generic BI tools. 3. When some pricing issues are identified, manual processes and practices are then put in place to address them. 4. Over time, these processes are improved based on feedback and performance. 5. Eventually, pricing technology may be employed to automate these processes and provide more scale and speed. Though this evolution might take years, it's easy to see why this approach became the default. It's very intuitive. And frankly, until just a few years ago it was the only option available to most pricing teams. But That Was Then and This Is Now The conventional "pricing journey" as we've described sounds familiar, doesn't it? Astute readers will realize that the basic dynamics are similar to the absurdities in the earlier thought experiments—i.e. starting with the telegraph and incrementally "evolving" your way into 5G smartphones...eventually. This may seem like a harsh assessment. But we feel compelled to make this point in the strongest possible terms: While the evolutionary "crawl, walk, run" approach to developing pricing capabilities might have been perfectly appropriate just 5-7 years ago, that is no longer the case. In recent years, the situational environment has changed in some very dramatic ways. Today, the pinnacle of best practice in B2B pricing...the 5G smartphone or CRM system in our thought experiments...is within reach of most pricing teams, regardless of their size or so-called "maturity" level. And failing to recognize this new reality significantly increases your risk of falling further and further behind. © Copyright MindBrew • All rights reserved. • May not be used or reproduced without permission.