Pricing and Profitability Management: A Practical Guide for Business Leaders

Making the Organizational Commitment to Change

Convincing an entire organization to modify long-established practices can be a wrenching experience for everyone involved. But properly managed it can lead to changes that will benefit virtually every member of the organization.

A consumer products manufacturer realized it needed to overhaul its organization to strengthen its pricing and profitability management after years of rewarding sales on volume alone. Unfortunately, the company had very few pricing capabilities, lacked a strategy to develop internal talent, and the leadership itself had minimal understanding of effective pricing management. The CEO realized that to transform the organization, strong leadership would be required. He designed an approach that focused less on building consensus than on a command and control style in which he was the involved and visible leader. He also appointed the CMO as the owner of the initiative; not because of his knowledge and experience, but because he was diplomatic and had a track record of building bridges across the different functions in the organization. Both the CEO and the CMO knew these qualities would be critical in building a pricing organization that needed to be effective across the existing functional silos (a silo being an organizational function that works largely on its own).

Together, the two executives designed a pricing organization that reported to the CMO. Where possible, they integrated the existing organizational ...