Set Up Your Pricing Team Like a Submarine Crew

There is no doubt about the potential of pricing to grow profitability and top line among executives. Alongside digital transformation initiatives, investments towards pricing SaaS systems and CPQ solutions are at their rise. As such investments are significant and their profit potential is great, I wonder why the same attention is NOT dedicated to the talents needed to secure the benefits of such pricing transformation efforts in the long run.

While frequently the discussions focus on how to organizationally position the pricing function and how to equip it with advanced pricing systems and processes, I have experienced that in many cases it is even a greater challenge to set up and develop the right team of top talents to get the job done right and sustainably.

A while ago I had the great pleasure to listen to a highly inspirational submarine Commanding Officer about his insights towards leadership, team spirit and purpose while serving on a nuclear-powered attack submarine. I was amazed how much pricing teams have in common with submarine elite crews — and more importantly, why senior executives should think and act in the same way as a submarine commanding officer.

To better understand the parallels with pricing organizations and the specific relevance of the human factor on a submarine, we need to envision the work environment there. It may constitute one of the most stressful and psychologically demanding work environments. The crew needs to cope with extreme conditions — underwater, in isolation, under tough weather conditions, in a submarine powered by a nuclear power plant, with no or highly limited external rescue or support in the case of emergency. This means nothing matters more to mission demands and success than the crew members operating this system, their team spirit, values, and ability for teamwork and positive attitudes — as well as a sense of importance and trust in their ability to control potential dangers.

These are some of the key learnings you should apply when upgrading your pricing organization.

1. The crew is the key

Considering the submarines’ work environment and the critical mission, would you assemble the team with “available bodies” to operate these multi-billion-dollar weapon systems, or staff it with high-caliber individuals? You may respond — “definitely the best talents!”

Now reflect on how the pricing team is treated from a hiring perspective at your company and ask yourself: “Do we apply the same sense of attention and importance in staffing the pricing team given the great profit potential it can deliver?”

Remember: 15 up to 40% of your profits could be directly attributed to pricing (see also The Price Advantage by Walter L. Baker, Michael V. Marn, Craig C. Zawada).

The Royal Navy states to the question “what’s it like?”: “Submariners are some of the Royal Navy’s most exceptional personnel.” The same should apply to your company’s pricing team. Your pricing department should be a designated destination for internal and external high-potential talents.

2. Don’t underinvest

Similar to the submarine crew, the pricing team needs to master stress while making deal desk decisions in real time, taking risks and controlling them. They need to manage the tension between balancing revenue and profitability.

One of the main, common pitfalls that can throw pricing initiatives and their RoI off track is underemphasizing the building of requisite pricing skills and conviction.

Aim not too low when finding new talent for the future pricing function — that talent is what will help secure the benefits of the company’s investment in the pricing change effort.

3. Diversity is crucial

On a submarine, multiple roles and skills need to be covered due to the given demand for autonomy and its complexity. CDR Robert Palisin, Maine’s Blue Crew commanding officer, claims:

Everyone is expected to know how to save the boat. My cooks should and do know how to fight a fire in the engine room, just like my nuclear-trained mechanics are expected to know how to isolate a power supply if smoke comes from the sonar shack. Everyone on a submarine is the damage control party — everyone.

As digitalization and disruptions change your business, the pricing function is evolving constantly. In the pricing roles I had to deliver or facilitate, you could think about characters like: The Analyst, The Consultant, The Negotiator, The Researcher, The Data Scientist, The Contract Manager, The Auditor, The Sales Coach, and so on.

The pricing talents in your organization need to cover multiple roles and sets of hard and soft skills, covering a breadth of areas from the highly quantitative to the highly strategic. Tim J. Smith illustrated in a great way the dimensions you need to look at when assembling your pricing team.

Considering the emotional nature of pricing decisions, your pricing team and its leader need to cover multiple characteristics, among them: great interpersonal and leadership skills, high level of empathy and resilience, credibility in the organization, openness and curiosity to new ideas, high degree of intellectual agility, high team spirit, and a sense of the importance of their service to the company (see Pricing Done Right by Tim J. Smith).

The role of the pricing function is to support and coordinate pricing decision making and implementation. It is a cross-functional activity at the centre of your business. Set up your team accordingly.

If you are lacking the right talents in your own organization in the short term, leverage external expert support to accelerate your pricing journey while you target and develop in-house or hire external talents.

4. Do not compromise

The Commanding Officer I was listening to also briefly shared the hiring process. As serving on a submarine is a highly attractive destination in the navy, there is a high amount of high-skilled applicants — unlike I have experienced for pricing roles frequently. Therefore, a rigorous and strict selection process is applied to seek and hire the best talents.

Your pricing leader, supported by the HR department, should develop an adequate selection process for targeted talents. Take the time and investment to make the right choice. External head-hunters specialized in pricing can be of great help. With the best talent on board, your payoff will be rapid.

5. Training, training, and more training

Rod Powers states:

Being a submariner is demanding from a technical standpoint, so you’ll need to be skilled. You’ll continue to receive training throughout your career on a submarine, and you’ll be expected to handle just about every role on a sub, from electrician to galley cook.

Your pricing team members, likewise to submariners, need to be eager to learn and experiment with a “lifelong learning” mindset.

Beyond the pricing team, building up pricing skills and attitude is a broad organizational task and is not finished with a few training sessions and user training on new pricing systems. You need a structured and targeted training program across the organization. Your pricing team will learn and enhance their skills best over time. Reinforce their efforts with regular coaching and mentoring by internal and external senior experts and executives.

Do you have respective pricing and negotiation training programs in place? Does your pricing team benefit from regular coaching and mentoring? If not, your pricing “toys” and processes have a high likelihood to fail at the last mile.

A Royal Navy Warfare Specialist stated: “My time in the Submarine Service has given me transferable skills. Now I’ve got a proper trade, have gained qualifications, and I get the satisfaction of knowing I’m part of something special.” With the right investment in your pricing team, you will benefit from highly engaged, highly skilled and loyal employees. And you will create a pool of great talents for other leadership roles in your organization.

6. Give control and create leaders

In Leadership Advice from a Nuclear Submarine Captain — the David Marquet story — we can learn a lot about giving control and creating leaders. This story matches the speech I was listening to and perfectly resonates with the demands towards a pricing team.

You need to develop critical thinking leaders instead of followers — people who win both the hearts and minds of their business partners and peers.

Pricing professionals must be humble and be confident enough to state, without arrogance, their informed opinion regardless of the popularity of the idea.

— Tim J. Smith

I absolutely second this assessment.

Conclusion

You need to focus at least equally on the human and the technical side if you invest in digital pricing transformation initiatives and build up or enhance your pricing team. Personally I believe the attention needs to be even higher on the human side, as technology and advanced analytics make life easier on the data science side nowadays.

Seek the best talents in and outside of your organization. Cover the interim period with external support until you have the right talents on board and have established your own talent pool.

Pricing is more about people than numbers.

I could not make a better final statement than this one (statement seen in one of the insightful posts on pricing from Mark Stiving).

Accelerate your pricing team.

References

• The Price Advantage (Wiley Finance Editions) by Walter L. Baker, Michael V. Marn, Craig C. Zawada
• Pricing Done Right by Tim J. Smith: The Pricing Framework Proven Successful by the World’s Most Profitable Companies (Bloomberg Financial)
• Mark Stiving — Impact Pricing
• David Marquet — Leadership Nudges
• Rick Campbell — Welcome to Submarine 101
• Rod Powers — Requirements to Serve on a Submarine
• Shaul-Kimhi — Understanding Good Coping: A Submarine Crew Coping with Extreme Environmental Condition
• Royal Navy — Submarine Service

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Originally published on LinkedIn in July 2021. PricingWorks helps B2B companies build pricing organizations that capture value and deliver profit. Book a scoping call to discuss your pricing team setup.