Being a Change Agent

All firms want to change. Ask anyone, look at job descriptions, and review strategic statements, chances are you will find some element of change in what you hear and what you read. Most firms, however, talk the walk but not walk the walk. Change is something you talk about but, in reality, it is difficult to design and execute in most firms. So if you consider yourself a “change agent”, you are part of an endangered species. Driving change in firms takes time, requires courage and confidence, and necessitates a unique combination of skills. If you are labeled a change agent, you might become an enemy of the conservative culture, be considered as the ”guy who always want to change”, be seen as the person “who is difficult to manage”, or may be just be characterized as the pain in the neck by many of the traditional and conservative leaders.

It is risky business and you have to be ready for a bumpy ride. At the end of the day, you have to do a thorough job at evaluating the firm’s capacity to change, the top leaders’ inclination towards change, and the slope of the mountain you are facing. Based on that evaluation, you have to then design a change agenda over time that will be adapted to these organizational characteristics. You will have to pace the speed of change, adopt an incremental versus disruptive change approach, and spend a lot of time persuading and convincing people to get on board.

Fundamentally, if you face a very conservative culture in a firm that has experienced success for many years, you might think twice about engaging in change programs or taking a position where change is in the job description. The board at this company might require innovation and change but the top management might not be ready for change. Change is most difficult to do in successful companies. Leaders in these companies might lack the breakthrough thinking capabilities to look beyond success and to project future bumps along the way. It takes visionary skills to anticipate issues and challenges, and to prepare the organization for pro-active change so that the it can navigate around market turbulences without major breakdowns.

Most companies will wait for a crisis to do brutal needed changes. So change is difficult. But pro-active and breakthrough change is even more complicated. I speak by experience. Being a change agent is not an easy position whether you are in top management or not. I still think it is worth the investment and the experience. If you do change well, you will bring people along with you and have amazing human experience. You will become an agent of hope helping people transform towards greater things. The reward of working in teams with people who embrace change will outweigh the experience of managing skeptics and people who want to take you out of the organization. Change is a rich human experience!

Value Management

Value and management are two words that are fairly vague in nature. They are used quite often for different things in different contexts. Put them together and you come up with a concept that is very difficult to define. Early this year, I published a paper on the conceptualization of value-based pricing (see my academic paper section) based on the results from 44 interviews with top managers in industrial firms. The bottom line of this paper is that everyone has a different definition of what value-based pricing is and what it can do for their business. There is not standard definition. Each respondent created their own conceptualization. The same goes for value management. This is rooted in the fact that value itself is difficult to define, to grasp and to materialize in the organization. In fact how is possible to design and implement value-based programs when everyone inside and outside the firm defines value differently? Recently, a group of pricing and value pundits wrote a position paper to establish a standard definition of value management is. This paper is available free of charge in my web site store or via this download button {nicedownloads:4}

Sustainable Value Management

My conceptualization of value management takes a holistic approach to business strategy and include a strong link between the three critical dimensions of value management: value creation, value assessment and value capture. In this conceptualization, I make a strong connection between innovation, value and pricing. I conjecture that these three elements form a dynamic system to can generate greater profit levels for organizations. Many firms I talked to struggle in the area of value creation and therefore have a pricing problem to capture something that does not exist. I challenge them to look at the level of differentiation created through their innovation process. So the transformation process towards sustainable value excellence starts with significant investments in innovation to generate differentiation and create value. Once value is created, it is critical to measure it and then capture it through value-based pricing. To make the wheel turn in a sustainable fashion, it is then imperative to have strong re-investments in R&D and innovation. That is what the best-in-class innovative companies do. A fixed portion of net profit are re-invested in the firm’s innovation process to maximize long term value. It takes money to make money!

Pricing Disruption

The words disrupt and disruption are used more and more in the areas of business strategy and innovation. The definition of disruption in Wikipedia is “an event which causes an unplanned, negative deviation from the expected delivery … according to the organization’s objectives”. Clearly this definition is too limitative and fairly negative. The word disruption carries negative connotations. So does the word revolution for that matter. I used these words quite a bit in my writings and I adopt a different definition which includes a more positive and dynamic tone. For me the word disruption in business, innovation and pricing conveys a sense of dynamism, pro-activeness and counter-intuitiveness that can generate excitement in markets. It is all about being alive and injecting positive mindful energy in business.

Disruption is about thinking differently and proactively, making choices and decisions that might be seen as different but in the end are breakthrough, and generating different customer reactions. Disruption means looking at problems differently, adopting innovative problem solving approaches and implementing programs that are unexpected or surprising. Disruption is about anticipating issues and making proactive moves to go around them. It is not waiting for crises to happen to take actions, to make changes, to challenge the status quo.

Pricing Disruption

There is not a better place to adopt disruptive approaches than in strategic planning. In my business experience, I have witnessed “copy-and-paste” approaches to long range strategic planning. But disruption in pricing is also needed. Being positively disruptive in pricing means taking a leadership position in value and pricing management, inventing pricing models that the rest of the industry wants to adopt, launching innovative offerings that are priced high and right and that competitors cannot compete against. When Apple launched the iPad at the initial price point, competitors laughed at them and called it ridiculous. Who is laughing now?

Being disruptive in pricing and value management can carry business risks and has to be carefully evaluated. Just read about how JC Penney and Netflix fell flat on their face with disruptive changes in their pricing strategies. This is risky business. Changes in pricing have to be mindfully tested with customers and carefully experimented with.

Are you being innovative enough in pricing? Can you create positve disruption in your pricing models? Pay attention and start slow. Be bold, joint the pricing revolution!

A User’s Guide to Value Modeling

Value modeling is a science that cannot be improvised. Critical business decisions from product development, through marketing to pricing and sales are based on value models. Consequently, many people need to apply the proper techniques, steps and value assessment methods to support these important decisions. There is no other way around this!

The key question thus becomes where to find the most relevant and actionable information with which to build a value model and to perform Economic Value Estimation (EVE®). The information available about value modeling is highly fragmented. The LeveragePoint website is the best place to find the most relevant literature and case studies on the subject.

There are books touching on the process of dollarization, monetization and other methodologies. They are, however, incomplete, too theoretical and in some cases even obsolete. This is why Steven Forth and I decided to make a contribution to the field of value management by creating a comprehensive eBook listing all relevant and modern information about value modeling.

This 116-page eBook is a theoretical but also practical user’s guide providing anyone who is interested with a step-by-step approach, practical examples, dos and don’ts of value modeling, a glossary and a list of resources. In this book, we provide fifteen examples of value models across several industries and business contexts. Each model shows the value drivers and variables used to build the value model. This type of real world example is not available anywhere else.

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Contact Stephan

  +1 (484) 347-1458
  sliozu@gmail.com