For years now, there has been talk about an organization’s personality, psychology, or culture, and how to determine where your company falls into place. Not only does this culture indicate how you approach the marketplace with your products or services, but it also impacts the way departments interact within your organization, as well as how departments operate internally. Culture will have an enormous impact on strategic planning, appetite for capital investment, human resource model, and YES even how you manage the price lever.
According to Inc., “Corporate culture refers to the shared values, attitudes, standards, and beliefs that characterize members of an organization and define its nature. Corporate culture is rooted in an organization’s goals, strategies, structure, and approaches to labor, customers, investors, and the greater community.”
Whether you are viewing your organizations heartbeat through the various culture lenses of; Bureaucratic – Competitive – Community - Entrepreneurial, Clan – Adhocracy – Market – Hierarchy, or other labels, you need to understand how to build your Pricing Department, and Pricing Strategy around the current culture and potentially future culture, in order to maximize your ability to manage price effectively.
If the Organization is modeled as being Clan oriented, it would certainly ensure that there was a dedicated Pricing Department, but the larger strategic decisions guided by a cross-departmental Pricing Council. This approach would maximize the collaborative nature of the Clan, and further ensure confident decisions are being made.
Alternatively, in operating like an Adhocracy, initiate Price Testing and differential Pricing Strategies utilizing cross-functional Sprint Teams. In doing so, our management of the Price Lever would take advantage of the Agile nature of the organization, as well as the appetite for Change.
Next, a Market Culture would be most interested in maximizing the competitive nature of departments and individuals. This environment would empower the Pricing Department with an Analytics Engine allowing for acute and accurate measurements. Then, aligning compensations plans (ex. Price Realization vs. “just” Volume) for Price Setter, Price Users, and Price Influencers to meet the overall Business Goals most effectively.
Lastly, a Hierarchical setting would be focused on rigid processes and rules of engagement for handling normal and non-standard business transactions. Additionally, with more formal operating protocols within the Pricing Department, as well as interdepartmental operations, will streamline the actions of this highly procedural environment.
Peter Drucker, the founding father of the modern business, is often quoted as having said, “Culture eats strategy for breakfast.” Proper alignment is key to business success across all operational levers.
ConsilieX can assist you in identifying your current culture, and then build a Pricing Strategy to help you maximize your top and bottom-line growth.
Call us today.
