Mar 31, 2025 | Marketing, Strategy
Most businesses confuse price with pricing.
Price is just the number you slap on the tag. Pricing is the process that gets you to the right number, the one that optimises today’s profit while building tomorrow’s success.
Unfortunately, most businesses treat pricing as an inclusive way to do cost-plus calculations. The finance team sets a target margin, the sales team references the market leader, and the final number is more wishful thinking than strategy.
That is not pricing. That is strategic abdication.
Real pricing is deliberate. Strategic. Ruthlessly focused on outcomes.
You see strategic pricing in odd places.
That wine list at your favourite restaurant with the most expensive bottle first on the list. It is not an accident, done alphabetically, or random. That $500 wine is not there to sell, although occasionally it might. It is there to make the $70 bottle that costs $30 in the grog shop next door, look like a bargain.
Rolls-Royce does not put their cars into motor shows anymore. Why park next to a $30k Toyota and look ridiculously expensive when you can park next to a $10 million jet and look like a ‘pocket change’ purchase by comparison.
It’s called context, and it matters. Dan Ariely nailed this in a classic experiment using subscription costs to the Economist, and his MIT graduate students as the research fodder.
First version:
- Web only: $59
- Print only: $125.
- Web + Print: $125
Result? Almost everyone picked the combo. The web + print option made it look like they were getting a version for free.
Second version:
- Web only: $59
- Web + Print: $125
This time, far fewer picked the combo. Why? No dummy option to anchor the deal.
That’s the decoy effect in action. It works because humans do not make rational decisions. We make comparative ones. Smart pricing taps into that.
Great pricing is not about squeezing the lemon. It is about understanding your customer, your position, and your objective.
Most small businesses leave money on the table by setting their prices too low, hoping never to lose a sale. However, you need to lose a lot of sales to make up for the positive bottom line impact of even a very small increase in the average price.
Want to prove that to yourself?
Track the impact of a 1% price increase through your P&L. Assuming you are using actual costs instead of some sort of confected percentage calculations, the whole amount of the increase will drop to the bottom line as increased profit.
You will never just slap a price on a label again.
Mar 26, 2025 | Governance, Leadership
A question I always ask my clients is “what would a VC firm do if they took over management today?”
It always leads to deep and challenging conversations. It enables discussion that recognises the complexity of the strategic and tactical environment in which we all compete to live.
In a world changing as rapidly as the one we now inhabit, there is no such thing as a safe haven based on previous success. Nothing will remain unchanged over the coming decade.
The lessons we can learn from 30 years of VC activity can be used as a trigger for existing management to realign and regenerate for the future.
The question should be asked from two perspectives, as the answers will be different.
What changes would a VC firm make to the business?
Would I survive such an invasion?
Venture capital (VC) firms evaluate businesses through a rigorous lens, and when assessing a previously successful business facing headwinds, they focus on key indicators to determine whether it’s worth investing in, restructuring, or passing on entirely. Following are 14 of the obvious questions a VC would ask.
- What are the revenue, gross margin, cash flow, and profitability trends?
- What is the competitive position you hold? Is it differentiated and competitively sustainable?
- How would the culture be described?
- What is the picture of your current customer base, and prospecting success?
- What are the current driving forces in the market, and are they likely to persist?
- How does your business model work? Is it resilient and/or ‘pivotable’?
- What does the long term past look like? Is it smooth and cyclically predictable or erratic?
- Are business processes defined, consistently applied, and subject to continuous improvement?
- What is the quality of existing and future leadership and management?
- Are there any regulatory or legal risks?
- Does the business have potential for strategic development via M&A, takeover (taker or takee) or alliances?
- What is the ‘risk profile’ of the business? Ie is it an innovator, follower, or stuck in time?
- Are there valuable personal relationships in play?
- Exit potential for investors?
There is no reason to limit that conversation to a business, why not apply it to yourself?
‘If a gun young engineer/marketer/salesperson, (whatever you do) walked in today, and sat in your chair, what would they do?”
Mar 24, 2025 | AI, Governance, Leadership
It appears to me that there is a wave of intellectual agoraphobia driven by the sudden emergence of AI platforms and tools gripping many of those I interact with commercially.
My recently departed mother, in the last year or two of her life found it hard to leave the immediate environs of her home. She increasingly felt intimidated by change, and the tension of just interacting with the unfamiliar.
To me it looked like mild agoraphobia, but my siblings thought it was just a retreat from change because she felt unable to deal with it easily.
Agoraphobia is not just a fear of wide-open spaces or going outside the house. At its core, agoraphobia is about the fear of being trapped in situations where escape might be challenging, help unavailable, with no place to hide beyond the familiar. It’s a state of mental paralysis, driven by the anxiety of the unknown.
How does this psychological insight impact on an enterprise?
Plenty of businesses suffer from what could be called ‘commercial agoraphobia’. A stubborn unwillingness to venture into new territories, innovate, and embrace change. At board level it is passed off as a Conservative Risk profile’ in shareholders best interests.
In fact, directors and management are reluctant to leave the familiar comforts of old processes and established wisdom.
Even worse, some institutions and enterprises deliberately build barriers to prevent any sort of change filtering in, usually in the name of probity, governance, and consistency. To my mind that preference becomes intellectual agoraphobia.
This condition traps otherwise intelligent and capable leaders into rigid, immovable thinking, dismissing the forces exerting pressure on the business as passing. Even as change surrounds them, these people stick to the comfortable routines of the past.
This brand of agoraphobia thrives in echo chambers, fed by confirmation bias and groupthink. It is the subtle saboteur of growth, quietly whispering that risk is too high, change too uncertain, and innovation too risky.
However, staying inside this comfort zone guarantees eventual irrelevance.
The leadership of Nokia pre smartphone suffered from this affliction. Similarly, Kodak leadership failed, initially seeing the potential of digital photography, then killing it. Xerox missed the slew of innovations coming from their PARC labs. There is a long list of intellectual agoraphobics in our commercial history. IBM, Blockbuster (who had a leader but fired him as they did not like the message) Olivetti, Borders, and many others, a few of whom saw the light in time, such as Bill Gates’s late recognition that the internet would change everything and successfully pivot.
Intellectual agoraphobia leading to strategic stagnation.
The only antidote? Real leadership.
Leadership is not just about authority or charisma. It’s about the courage to challenge assumptions, dismantle outdated practices, and push beyond intellectual comfort zones. Leaders must confront intellectual agoraphobia head-on, fostering a culture where questions are encouraged, risks intelligently managed, and curiosity and adaptability prized above complacency.
It is like learning to swim as a kid. You must overcome that uncertainty and fear of the unknown to achieve an uncertain outcome.
Small businesses are as likely as large ones to suffer, more so as they often lack the depth of resources that gives large businesses a buffer. The benefit they have is agility, a great advantage in a homogenising world changing as rapidly as the one we currently inhabit.
Artificial intelligence is driving a tsunami of change across our commercial landscape.
Hiding from those changes by ignoring them, or dismissing them as a passing fad, will not be an option for long.
The only antidote is to get out there and play, learn, adopt, get some mud in your eye, and recognise that intellectual agoraphobia leads to commercial irrelevance.
Are you succumbing to Intellectual Agoraphobia?
Mar 20, 2025 | Branding, Change, Marketing, Strategy
We no longer own stuff, increasingly we are renting it in one form or another.
That lack of ownership discourages brand loyalty and makes defining the boundaries of a contested market all that much harder to do in a way that reflects the psychology of potential customers.
Years ago, while marketing fast moving consumer food products the logic was, we did 90% of the prep work in the packet. The strategy was to suggest to the overworked stressed woman who in those days did all the cooking, to add some garnish and therefore feel she owned the result. The best example is cake mix. Almost everything was done in the packet, all a cook had to do was add an egg, beat it with a fork, and stick it in the oven.
We’ve taken that idea much further now.
One of my sons lives in the inner the suburbs of Sydney and does not own a car. When he needs one, he simply uses the app and within a few minutes walk, there is a car waiting for him.
What we’ve lost in this process is the sense of ownership, the psychological comfort that something was ours. This spreads past the ownership of a car to things like music.
I have an irrational attachment to a couple of 50 year old vinyl records that played a significant role in my young life. The music on those records is ‘mine’. I do not play them anymore, don’t even have a working record player, but separating from those old vinyl records and their memories by association would be painful.
The challenge for marketers now competing in a subscription and rental driven world is how you replace that sense of ownership. If you can figure it out in your product category, you will win.
Mar 17, 2025 | Governance, Leadership
‘You understand why I did it? ……The man that passes the sentence should swing the sword.’
Those are the words of Edard Stark in Season 1, Episode 1 of Game of thrones as he explains to his son why he was the executioner of a deserter from ‘The Wall’
There is a lesson for all leaders in this passage.
As James Clear put it: ‘The one making the choice should also be subject to its consequences’.
The scale of modern economies and enterprises and the nature of the communities into which we have evolved since the industrial revolution have made this core tenet of management and leadership an extremely hard benchmark to reach. We have put the decision makers way above the normal flow of consequences from their choices.
Directors are there to represent the best interest of the shareholders they represent.
Politicians are there to represent the best interests of the majority of those they represent.
How often do you see the choices made by these groups, and many others up and down the scale of the social and economic edifices we have built in the name of the greater good reach that high moral standard.
Rarely it seems.
Perpetrators of ‘White collar crime’ that occupy seats of real influence are rarely prosecuted. Partly this is because it is often very hard to ‘prove’ in a legal sense, and I suspect also partly because it is a ‘victimless’ crime. However, such victimless crimes all have consequences, diffused amongst faceless stakeholders somewhere out there.
Occasionally, the consequences do come home to roost.
Elon Musk has made many choices in his life. Those choices made him a multibillionaire, an innovator who could do the impossible. Make digital payments of online purchases safe? Change the face of the auto industry? Land a space vehicle on a platform ready to be reused? These were all impossible, until he did them. By force of sheer will, determination, imagination, and an ability to attract incredibly smart people into his dreams, he did the impossible. Then he made a choice, to swing to a seemingly destructive position supporting a set of values completely at odds with those who had supported him and his businesses.
The consequences of that choice are becoming clear very quickly as the sales of Tesla cars around the world tank, contracts for the services of Starlink, a fantastic product are being cancelled, and the multibillionaire of today is rapidly becoming the sad millionaire of tomorrow. It will only take one bank to call in a loan made on the basis of the stratospheric value of Tesla shares a few months ago to blow the house of cards away, revealing the hollow commercial centre to be on display.
The one making the choice should also be subject to the consequences.
Elons choice to harness himself to a narcissistic sociopath that looked like the investment choice of the century in November last year, now looks like the absolute opposite. Musk will feel the consequences where it really hurts: his ego, self-belief, and $billions, as well as his ability to attract those who provide the means to make him so successful into his orbit.
Sadly, the impact of Musk’s choices will also be felt by many who have followed him, many without much more than a wish to ensure they were on the gravy-train.
The wider community will be worse off by the fall from grace of a remarkable innovator. However, I would not count out a revival, assuming my gloomy picture of the immediate future is correct. Musk, amongst his many traits is incredibly resilient.
