Call it innovation or call it disruption; the very nature of business and competition creates a “change or die” imperative that just can’t be ignored. Of course, the very nature of human beings to resist change and maintain the status quo for as long as possible is what ensures that these changes don’t happen overnight…even when they should.
Many readers will be too young to remember that once upon a time, pricing was an integral part of the marketing practice, as was product management and sales. When specialization became “the thing to do” for various reasons, product management, sales, and marketing communications were all separated into discrete functions. And along the way, pricing was essentially left out of the specialization push.
In the last couple of decades, that’s changed. We now see that most B2B companies of consequence have dedicated functions, specializing in the practice of pricing.
However, companies are now beginning to recognize that while specialization through discrete organizational structures can indeed increase focus and expertise, it can also lead to a tremendous lack of coordination, integration, and collaboration. In other words, while having specialized chefs working on individual ingredients may improve the quality of each, it certainly doesn’t guarantee that those ingredients will ultimately produce a tasty dish when combined. In fact, it may actually be working against that outcome.
Our research at PricingBrew has shown that forward-looking pricing teams are changing how they operate in order to address some of the unintended consequences of extreme specialization.
Some pricing groups are looking to infuse enhanced pricing capabilities further into the rest of the company—new product development processes, large deal negotiations, specific business units, etc. Other teams are leveraging their data-stores and analytical prowess to tackle other profitable growth-drivers such as customer retention, portfolio expansion, customer mix management, and so on.
In either case, these pricing teams are working to get beyond their defined “silo” and take a more integrated and collaborative approach—one that recognizes that a lot of different elements must all work together to produce a great result.
Change really is the only constant in business. But change is not always about doing something entirely new and different. Sometimes, change is about coming full-circle, returning to the past, and improving upon things that have all been done before.
In the future, we’re not likely to see a return to the monolithic organizational structures of the past. But from all indications, we’re definitely going to see a return to a much more integrated and collaborative state—one that recognizes that everything in business is connected, and no department or functional group can be truly effective on its own.
For more on the current state of the pricing practice and its future, check out these PricingBrew Journal resources:
- Embracing the Embedded Pricing Organization — Mark Burton, co-author of the book, “Pricing with Confidence: 10 Ways to Stop Leaving Money on the Table,” talks with us about the next evolution of the pricing department.
- New Benchmarks for Pricing Excellence in B2B — In our research, we’ve identified ten areas where “best practices” have been redefined; setting new benchmarks for pricing excellence in B2B. Use this self-assessment to see how your capabilities measure up.
- There’s More to Profit Than Price — For many pricing teams, expanding from “pricing” to “profitability” is the key to maximizing effectiveness. In this on-demand training session, we explore five of the other growth levers that really matter in B2B.
