Part 2: Pricing Hero Interview with Chris Chrisafides of The Dow Chemical Company
Posted by Tapan Bhatt on Wed, Nov 04, 2009 @ 12:44 PM
As part of our Pricing Hero interview series, we recently had a chance to talk to Chris Chrisafides of the Dow Chemical Company. This blog post includes Part 2 of our two part interview with Chris. Part 1 of the interview was posted on the blog last week.
As a global company, how did you manage working with diverse businesses and driving change? Chris: Up front, when we sat with the leadership of the business, we explained that the commonality is having someone that is strategic in the business and has an overarching view of what's happening, and then someone that can act as an analyst. We took that standardized approach and methodology, and it was consistent, regardless of the business and the region. Although the businesses we engaged with were geographically diverse, and selling very different things with different numbers of transactions, revenue levels, and profit numbers, we stuck with a universal approach.
Also, through the qualitative portion of the process we focused on the nuances of each business and what the differences are. You've got to have what we call a SPOC, or a single point of contact, just like a strategic account manager and a strategic relationship with a customer. This is a traffic cop, if you will, that manages this standard process and a lot of the analysis. If you simplify it and standardize it, you can handle the different levels of complexity on all of these different businesses, and we've been able to do that. We have the universal approach and best practices as our base, and then customize it according to customer profiles.
How important is pricing change management as we go through this very difficult economic time, across the economy and also in the chemical business?
Chris: When we first rolled out our pricing change management strategies the market was going down? And we asked ourselves, "Is this the right time to do this?" "Are we going to be able to act on anything we find?" We agreed that there will always be cycles in the economy and in the business climate out there, but an outlier is an outlier whether you fix it now or you fix it later. We have consistently been able to take action, or in some cases, inaction, as a result of our pricing diligence, going through and analyzing when we have outliers and when we have leakage. So, generally speaking, pricing change management is critical as markets move, and in difficult economic times it's even more important because every pricing decision carries more weight.
In a way, there has been increased energy around pricing over the last year or two, and people now recognize that their competitors, peers and customers are getting smarter. More business use their pricing systems to make better decisions and utilize data to get a granular look at things that they couldn't see before. So if you're not doing it, you are at a competitive disadvantage.
What are some challenges that you've seen in your pricing journey that you think other organizations might face in theirs?
Chris: Organizations need to make sure they have executive sponsorship, and that they keep it simple. Different industries have different modes of operation. Industries that are more finance savvy or have a stronger engineering or R & D focus tend to really scrutinize data, but what's important is to remember the basics: An outlier is an outlier. Even if it's not exact and perfect in terms of the data that you're pulling together, if you look at things on a relative basis you can still find where you have issues and where you're not keeping up. This and getting everyone aligned across the organization are critical.
Another major factor, at least for our journey, is having people on the team working with the businesses that have carried the bag in the field. Having that experience and knowing when something is a real issue and when it's not, and then using different examples or situations where you're able to convince a customer or have a conversation with a customer or address an issue in a rational and fair and transparent way makes all the difference. The biggest issue is that moving price is a very difficult thing. But as difficult as it is, you'll actually gain credibility with your customer when you look at pricing change management and know it inside and out.
From your perspective, how do you measure the success of pricing change management? What has the impact of pricing change management been in your organization?
Chris: It's an interesting question. From a metrics standpoint, you must track actions and details like anything else, but from a senior leadership perspective, when asked how much benefit we have generated, people talk about the ongoing execution of these pricing initiatives, tools and practices that are now evident as behavior changing and critical to our company going forward. This is a culture change that has been a journey and we've embarked on this and we are well on our way because of these exercises and capabilities.