Have you ever found yourself in a meeting, whose primary purpose was to make some key decisions about your business, and yet you find yourself in a heated debate about what numbers to use to make the decisions?  Believe it or not, it happens more than you might think.  Over the past couple of weeks you might have seen my posts on pricing.  A meeting about pricing strategy is usually, if you’re doing it the way you’re supposed to, a meeting where you will have participants from sales, marketing, finance and operations…so pretty much the key members of your leadership team.   Why?  It’s mainly because pricing requires input (read numbers) from all of those organizations to provide a complete picture from which you can make an intelligent decision, especially if you’re using it as a competitive weapon.

Last time I wrote about one of the risks associated with price strategy, specifically on an internal analysis that aligns customers with your sweet spot with respect to margins.   It may seem obvious that pricing decisions factor in a deep understanding of how you make money, but as our founder Steve Anderson likes to say, the devil is always in the details.  In this case, it’s the variability cost-to-serve that presents opportunities to drive more revenue from existing relationships (using higher prices) to improve your bottom line.  This is great news times like these where finding new sources of revenue seems all but impossible.  However, that’s not the only thing you should be worried about. What about external pressures?

As I was writing about risk management practices I ran across an interesting blog post by CEB’s James Fitzmaurice on why you should audit your corporate strategy.  In it he cites a destructive price war (6% of the time) as one of the reasons that led to a market cap decline of over 50% in top 20 fortune 1000 companies, so it represents a strategic risk.  Other key factors include:

In my last post, I wrote about the CFO as a Value Integrator and the need for CFOs to start thinking about how they can help their peers in other parts of the organization by focusing on helping them solve problems by mapping their own unique expertise to the challenges these other business executives face.  Earlier, while doing some other research on Risk Management I ran across a rather interesting Corporate Executive Board (CEB) blog post on the Six Myths of Risk Management and, as you might suspect, one of these myths crossed my mind as I was writing the Value Integrator post.