Keeping Customers Buying: At What Price?

Austere times suppress spending even in the face of no change in inherent demand for a good or service. How do your sales change as you raise or lower pricing?

How cyclical is your business? What discounts or premiums are built into the pattern of your cycle?

A cohesive pricing strategy with fine tuned price adjustments can help your business nuture demand into sales with retention of as much revenue as possible. All too often price adjustments are made on an across the board basis. Flatline pricing adjustments both produce the least optimal financial result for a given level of change and indicate a deficiency of either understanding the market or the capacity to execute skillfully.

The plot below gives a visual image to the dynamics of demanded capacity (1.0 equals sold out) at various pricing levels (1.0 is the average price of the standard product) across a multi-tiered product line (Economy through Deluxe).

The darkest green is the highest demand. The mountain ridge going from bottom-left to upper-right reflects the nature of lower prices for economy products and premiums for deluxe products.

A key learning from this study was that the standard plus product (ST3) was over-priced. Priced correctly it should equal or exceed the demand for the standard product.

An additional learning was the inferiority of the economy product, as no level of discounting seem to generate demands equivalent to the standard product. here the solution would be either improvement to the product or shedding of capacity depending upon which made more sense.

To read the full story of this specific applied pricing strategy and its ability to support a purposeful and succesful effort to raise revenues just click on the link for On The Case.

For more information on Metamorphosis Consultant and author Patrick O'Shei, click here.

Transformational Leadership: Problems, Solutions, & Structure

Patrick O'Shei, in "Uncommon Wisdom", writes about the link between "problems" and "solutions".  Capable leaders have the awareness to recognize what the "frame" around these two orientations is, within which they and their organizations might operate:  When confronted with a challenge, do you see problems? or do you see solutions & possibilities?

A solution orientation is always broader and longer in scope, results-oriented and anticipates future implications.  Seeds of both new opportunities and future problems get planted along with new solutions.  A solution orientation is akin to playing chess where past play and the current board both provide data and guide the player; she subsequently can evaluate each potential move in terms of the potential impact on the future.

As an analogy:  A sinking ship is a problem--but what is the best solution? The solution orientation discerns between:

• Immediate problems and urgent failure (a penetration to the hull of the ship, leaking seams or joints in the hull of the boat, a terrible storm),
• Constraints on current performance (poor ship design, misuse or neglect of the ship) and
• Faulty application/ approach (using the wrong ship for the task, using a ship instead of a bridge).

While urgent problems may require pumping quickly and getting the sinking boat back to harbor, most long term leverage comes from understanding what outcome you seek and the possible solutions for creating that outcome.

Organizations and people who see first and predominantly "the problems" they face, may both effectively handle current problems--and entrap themselves in a world where they accomplish less, spend too much (over and over again), and ultimately fail. This occurs because they can only see solution of their problems in terms of eliminating the problem itself.

In his book, The Path of Least Resistance, Robert Fritz declares that "structure determines performance". When we implement solutions, they create structure. "Excellent" solutions--generated from a robust consideration of possibilities, alternatives, questioning of desired outcomes, and reflecting on underlying purposes--produce desired results for longer periods of time without creating significant new problems. Excellent solutions leverage strengths across "what works" in the world.

As a leader, visualizing the desired outcome, in full, rich, clear detail--is an important part of generating solutions, as the gulf between current problems (reality) and the desired outcome may only be bridged in the mind initially. Some excellent solutions require a number of steps. Each step addresses current reality with an implementable solution--and each fully anticipates a future solution, naturally producing both interim results and providing leverage for achieving the future solution. This path of leveraged solutions is akin to building bridges, where organizations take intermediate steps in coordinated fashion, to bring into being one overall solution that really works.

excerpted from "Uncommon Wisdom/ A Solution Orientation:  What Floats Your Boat", Patrick O'Shei, 2/2010.

What Conditions Make for Top-Performing Senior Teams?

In a wide array of recent engagements with companies and projects, covering an array of senior executive teams led by CXO's, we observe that SOME perform with real synergy - where the teams are able to create dramatic, innovative value beyond the individual contributions of their members - while energetically engaged with each other, connected in important emotional and psychological ways.

OTHERS...  cannot create business outcomes, are slowed by friction, full of unhappiness, rife with defection and "retirement-in-place".

What leads to these dramatically different outcomes?  Observation suggests that results do not FOLLOW "good feelings" on the team, but precede or run in parallel with good feelings.  Further, the role the senior leader plays in the group, and how s/he plays that role, has some impact - that the "leadership stance" the senior leader is able to create, can dramatically organize and motivate positive team process and outcomes  or work against good outcomes.  The stances of individual team members - leaders in their own right - shape the dynamics of the team.  Finally, observation suggests that the personal connection of each member to the team's shared commitment (its mission, or purpose, or objective) is fundamental to the ways the team operates.

In your observations of senior teams - in your organization - what have you observed about how top performing senior teams work - and what contributes to their success or failure?  What stories about "best" team experiences can you share?

© Jaggat ... | Dreamstime.com

 

Managing the "Right Stuff" - Leadership Lessons from the NBA

The No-Stats All-Star - NYTimes.com

I’m not a basketball fan. Before reading this article, I couldn’t have named a single player on the Houston Rockets – and in fact, had never heard of Shane Battier, who is the subject of this article.  Shane Battier, his approach, and the observations made about the larger “mode of managing” illuminated here have leadership repercussions what we focus on, where we find ourselves as a society and an economy today – and I can feel the tremors rippling through leader- and management development as well.

In summary:  Shane Battier is an individual with undistinguished individual statistics.  However, he does many of the "right things", the unselfish things, the ego-less things... those things that make his teammates' performances improve, that dramatically improve his team's overall odds of winning games - and increase opponent's odds of losing.  The Houston Rockets have been able to create a "meta model" of performance - and measure these intangible but very real contributions of Shane Battier - and in fact, of every Houston Rocket.

[Note to author Michael Lewis: Basketball isn’t the only ‘arena’ where we should be looking at team-level performance metrics (and the ways that individual performance affects the team and other members on it). Basketball isn’t the only place where we should be attending to “team dynamics” and team performance – instead of individual performance. It isn’t the only place where we should be thinking about metrics and measures that really matter to the long-term health and vitality of the enterprise. Just thought you’d want to know.]

Our economy – and esp. the financial system, set up with incentives and loose regulation for the Masters of the Universe, could drive sales (see this note elaborating a view on the financial system meltdown). 

Apparently, however, this system could not review the odds as well as Daryl Morey and Shane Battier, apparently can’t digest and respond to data as well, or understand from the data what it is that they should be doing.  Apparently, this system and the leaders and players in it, could learn a lot about managing – and about winning, overall as a team - from watching the NBA, and from studying the Houston Rockets.

The No-Stats All-Star - NYTimes.com

Article Excerpts:

Statistical Anomaly His greatness is not marked in box scores or at slam-dunk contests, but on the court Shane Battier makes his team better, often much better, and his opponents worse, often much worse.

Here we have a basketball mystery: a player is widely regarded inside the N.B.A. as, at best, a replaceable cog in a machine driven by superstars. And yet every team he has ever played on has acquired some magical ability to win.

He may not grab huge numbers of rebounds, but he has an uncanny ability to improve his teammates’ rebounding. He doesn’t shoot much, but when he does, he takes only the most efficient shots. He also has a knack for getting the ball to teammates who are in a position to do the same, and he commits few turnovers. On defense, although he routinely guards the N.B.A.’s most prolific scorers, he significantly ­reduces their shooting percentages. At the same time he somehow improves the defensive efficiency of his teammates...

... the big challenge on any basketball court is to measure the right things. The five players on any basketball team are far more than the sum of their parts; the Rockets devote a lot of energy to untangling subtle interactions among the team’s elements. To get at this they need something that basketball hasn’t historically supplied: meaningful statistics.

There is a tension, peculiar to basketball, between the interests of the team and the interests of the individual. The game continually tempts the people who play it to do things that are not in the interest of the group.

... [in the game], the player, in his play, faces choices between maximizing his own perceived self-interest and winning. The choices are sufficiently complex that there is a fair chance he doesn’t fully grasp that he is making them.

... instead of grabbing uncertainly for a rebound, for instance, Battier would tip the ball more certainly to a teammate. Guarding a lesser rebounder, Battier would, when the ball was in the air, leave his own man and block out the other team’s best rebounder.  A player whom Morey describes as “a marginal N.B.A. athlete” not only guards one of the greatest — and smartest — offensive threats ever to play the game - but renders him a detriment to his team.

Knowing the odds, Battier can pursue an inherently uncertain strategy with total certainty. He can devote himself to a process and disregard the outcome of any given encounter.