In the pricing world, we often make plans expecting that this year will be a lot like last year. That next month will be a lot like this month. That things are going to go along much like they always have.
That approach works great — until you experience a major unexpected event.
Right now, we’re in the midst of just such an emergency.
But it’s not the first time the world has experienced a crisis. And some of these past emergencies hold some lessons for us about how to deal with the current situation — and plan for the next one.
In a 1985 article for Harvard Business Review, Pierre Wack shared a planning technique that had worked well for Royal Dutch/Shell. He wrote:
Beginning in the late 1960s and early 1970s, Shell developed a technique known as “scenario planning.” By listening to planners’ analysis of the global business environment, Shell’s management was prepared for the eventuality — if not the timing — of the 1973 oil crisis. And again in 1981, when other oil companies stockpiled reserves in the aftermath of the outbreak of the Iran-Iraq war, Shell sold off its excess before the glut became a reality and prices collapsed.
The planners at Shell accepted the reality that big surprises are inevitable. Then they thought through some of the most likely surprises and come up with a response.
Of course, no one can be prepared for every eventuality, and we all really hope that worst-case scenarios never come to pass. But having a procedure and preparations in place makes it much easier to deal with the emergency when it actually happens.
We’re used to seeing this sort of emergency preparedness in other aspects of life. Your office building probably does fire drills. Your IT department probably has a disaster recovery strategy. Depending on your location, your community’s first responders have policies for handling fires, floods, earthquakes, tornadoes, and/or hurricanes. Your local newspaper has obituaries for famous people almost ready to print whenever their demise eventually occurs. Some politicians even devised proposals for responding to a global pandemic like the coronavirus.
In pricing, we need to be prepared for the inevitable eventualities as well. What are the next steps if there’s a large supply disruption? How should you respond if a price war begins? What should you do if customers have a spending freeze?
Having a plan means that when something bad happens, you don’t have to think about what to do next. Human beings do not do our best thinking under stress, so having a pre-made strategy makes it much more likely that we will respond well and in a timely way.
And fortunately, you don’t have to do all this planning and strategizing on your own. PricingBrew is full of resources to help you cope with the current emergency — and the inevitable next one. Here are some places to start:
- How to Avoid Pricing Panic
- How to Fight a Price War
- How to Combat Competitive Pricing Pressure
- The Fundamentals of Pricing Intelligence
Start preparing now for the next emergency — your future self will thank you.
We hope that you and your families are well. Stay safe!
How to Avoid Pricing Panic
How should you respond when something disruptive happens in your market? How do you avoid overreaction? How do you balance speedy action with smart action? And how do you prepare for the next disruption?
How to Fight a Price War
In this on-demand webinar, learn strategies and tactics for preventing a price war, handling "dumb" competitors, de-escalating and avoiding provocative situations, and winning without actually fighting.
How to Combat Competitive Pricing Pressure
What's the best way to manage competitive pricing pressure? In this 4-part training webinar, we share 20 strategies and tactics leading pricing teams are using to anticipate competitive moves, minimize their impact, and respond more effectively.
The Fundamentals of Pricing Intelligence
In pricing, it's easy to feel like you're making decisions in a vacuum. But there are many powerful sources of pricing intelligence you can leverage. In this on-demand webinar, learn how to design and implement systems for tapping into those sources of intelligence and how best to respond.