Stephan Liozu is the Chief Value Officer at Thales. His expertise includes Customer value modeling, value proposition design & value-based pricing, Business model innovation & differentiation strategies, Creative & disruptive innovation strategies, Change management & leadership training.
In this episode, Stephan shares how important it is for C-suite to be more than just focusing on the usual aspects of cost improvements, acquisitions, and cash flow management. There is a need for them to educate themselves in the pricing profession on how pricing can help them drive profitability, improve customer experience and satisfaction.
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Why you have to check out today’s podcast:
- Find out the need to convince the C-suite why understanding pricing is important
- Find out what the important objectives of the book are, ‘From the Profession to the C-Suite’
- Find out the soft skill courses you have to invest yourself in to become a better leader
“Invest in yourself, learn some of the soft skills, get a better-rounded person, and in 2021 invest in training in your soft skills, and I think that will help you for the rest of your career to become a better leader.”
– Stephan Liozu
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Topics Covered:
01:40 – What the C-suite has not done in the pricing profession
03:22 – What do C-suite pay attention to that they keep from wanting to do pricing
04:32 – Is thinking about cost a more tactical thing than pricing
06:28 – What’s missing in the C-suite when it comes to wanting to do pricing
07:53 – What’s behind pricing person not able to educate or inform a CEO in the organization
10:11 – What’s this book all about and what’s its purpose: ‘From the Profession to the C-Suite’
13:15 – What are the objectives of the book
15:53 – Much more on the value side much less on the pricing side
17:34 – What does work look like for Directors and VPs of Pricing
19:23 – What the leadership side of Pricing entails
20:34 – A chapter in a book dealing with strategic capabilities
21:30 – His personal mission for having the book
22:44 – What success for a company mean
23:16 – Stephan’s best pricing advice that will significantly impact your business
23:42 – Different courses you can invest in for soft skill improvement
Key Takeaways:
“We have to take the responsibility as a profession, not organizing ourselves enough, not publishing enough as a profession, not educating the C-suite enough. And I think we got to get to the point where we do it.” – Stephan Liozu
“The first objective of the book is to really show them the impact. Once and for all let’s put that discussion to rest. So, there is going to be lots of chapters on impact, showing case studies showing statistics.” – Stephan Liozu
“The second purpose is really to address the myth and the lack of understanding. So, we have papers around, you know, what pricing is now, especially post-COVID. You know, what it can do for you, why do you need it?” – Stephan Liozu
“We’re going to talk about the third objective and to show them what capabilities do you need to really do good pricing projects.” – Stephan Liozu
“I’m trying to convince a lot of the pricing people to invest in themselves and develop these soft skills and be able to tell stories and be able to understand the social fabric of their organization, who knows, well, this is kind of a sixth sense that we need to have.” – Stephan Liozu
“It’s a question of us as a profession to send books up to the C-suite for them to read it. And then more than that, it’s going to be difficult to do. But it will be, for me an objective that I always wanted to do. As you know, you and I are evangelists; we push pricing day in, day out. And I think we need as a profession to promote ourselves better and to start coordinating the messages that we have.” – Stephan Liozu
“Frankly, either we do nothing, or we try our best to do something and influence. And for us, it’s not like it’s going to change our life as far as income is concerned; my interest is really to get pricing much more on the radar and much more adopted, like other functions, like supply chain analytics these days. And it is a mission for me, I took it as a personal mission to really educate and get into the C-suite to make a difference.” – Stephan Liozu
Resources / People Mentioned:
Connect with Stephan Liozu:
Connect with Mark Stiving:
- Email: [email protected]
Full Interview Transcript
(Note: This transcript was created with an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)
Stephan Liozu
Invest in yourself, learn some of the soft skills, get a better-rounded person, and in 2021 invest in training in your soft skills, and I think that will help you for the rest of your career to become a better leader.
[Intro]
Mark Stiving
Welcome to Impact Pricing. The podcast where we discuss pricing, value, and the strategic relationship between them. I’m Mark Stiving. Today, our guest is Stephan Liozu. And here are three things you want to know about Stephan before we start. He is the chief value officer at Thales. What a fabulous title. He’s an adjunct professor and research fellow at Case Western Reserve University. And he has a PhD in Pricing, even though there’s no such thing. Welcome, Stephan.
Stephan Liozu
Hey, well, thanks for having me again, on the podcast.
Mark Stiving
It’ll be fun. So, just like you have a PhD in Pricing, it’s okay even though it doesn’t exist. Right?
Stephan Liozu
Yeah, I think we can say that. We do have a PhD, but you know, it will be too long.
Mark Stiving
Right, exactly. So, you were on in June last year, Episode 74, we covered some of the easy questions. Let’s jump into the hard stuff. Today we want to talk about pricing in the C-suite. What do you think is the big issue for pricing in the C-suite? Is it getting them excited? Is it getting them involved, engaged?
Stephan Liozu
Well, let me start by saying a vast majority of people in the C-suite got there because we are smart, we have a good experience, we get the business side of running a business. What we have not done as a pricing profession, is educate them, and get them to know really, how pricing can help them with driving profitability, improving customer experience, and satisfaction, and all that good stuff. Obviously, because of that general lack of education and maybe misunderstanding, pricing is not very often on these people’s radar. They typically go to the usual aspects, cost improvements, acquisitions, cash flow management, and all that good stuff that we know supply chain. And now, digital transformation. Pricing is really far away from the top 10 priorities in the C-suite. But I wouldn’t say that I would blame them for not embracing pricing, because most of them based on my research do not know much about pricing.
Mark Stiving
I would say, first of all, I love what you started with that most people in the C-suite are really smart people, they work hard. They got there for a reason, maybe there was some luck involved but there was a lot of skill involved to get there. I absolutely agree with that. And yet, it seems so obvious to me that pricing is important, the revenue side is important. And it seems like they know that, too. There’s something else that keeps them from wanting to do pricing.
Stephan Liozu
For a lot of them, they still consider pricing as a very tactical and granular activity. And most of the time when I speak with a C-suite executive, they will tell me, I look at growth, I look at sales revenue, I look at gross margin, profit margin, and pretty much I delegate to other people when I have to understand what’s in the details. Generally, the CFO, VP of Sales, Chief Commercial Officer, and they don’t really understand what’s under the hood, as far as all these techniques and methods and concepts because there’s so much they can pay attention to. It’s in a way it’s understandable. But on the other side, it’s a shame because you’re not realizing the full impact of some of the methodology and the techniques that have been around for 40 years that are truly transformational.
Mark Stiving
Yeah, it seems to me like some of the decisions they have to deal with digital transformation. Huge strategic decision, they’ve got to get the whole company focused and, let’s go make a big change. But then they spend a lot of time thinking about cost, which to me feels way more tactical than pricing feels.
Stephan Liozu
Yeah and in a way, it’s in the DNA. It’s easy, it’s right there. They do that throughout their career, I would say. They look at cost. Now don’t forget that lots of C-suite executive, CEOs, and likes came through finance and came through manufacturing and the industrial sector. They are CTOs. Frankly, there are not that many CMOS and CCOs that become CEOs. It is very driven by cost improvement, cost optimization, even cash flow optimization, tax optimization. When it comes to the subject of commercial optimization and marketing excellence, not many of them are fully educated in the topic. Now, obviously, we understand it, because they’ve been working a long, long time with marketing people. I don’t think they understand all these concepts and techniques of CPQs, and price sensitivity and all this segmentation. It goes back to us as a profession, reaching them to make it very easy for them to understand, especially now in the context of COVID-19. And what happened in over the last year, the name of the game is changed. We have to take the responsibility as a profession, not organizing ourselves enough, not publishing enough as a profession, not educating the C-suite enough. And I think we got to get to the point where we do it.
Mark Stiving
So, let me toss out an alternative hypothesis. I’m not going to disagree with what you’ve been talking about. And we’ll come back to this in a second. But you’ve been saying essentially, that the C-suite isn’t aware of our pricing? Do you think it’s possible that they’re aware, but they have no clue how to go about fixing it? Because it’s such a big problem it’s all-pervasive across the entire company?
Stephan Liozu
Well, I don’t have any scientific evidence of how many are educated. I don’t know where but I think generally speaking, they are very smart people, they understand when you tell them. They understand this is why lots of companies do hire pricing consultants. And generally speaking, when there is one of these big names doing a strategy project or doing organizational design project, within the C-suite, they’ll hear some of the pricing components coming in, and maybe there is going to be a pricing project to follow. Again, I think when they get it, they get it. And lots of companies, as you know, are doing great pricing transformations. They are doing pricing projects, putting CPQs and price optimization systems. It’s not like no one does it. What’s missing is that impetus, that realization, and that change of mindset in the C-suite that say, ‘Hey, we want to take it seriously, we’re going to do it.’
Mark Stiving
Okay, let’s go into how do we educate and get them up to speed. But it’s curious to me because people like you and I, we really want executives to embrace pricing, the power of pricing, and the fact that we can go transform companies, if they understand this better and focus on it. But when I think of a pricing person inside a company, I don’t see them as the people trying to educate or inform the C-suite.
Stephan Liozu
Yeah. And that’s very unique. I would say if you look at the pricing community that you and I engage with every day, first of all, you don’t have that many high-level VPs of pricing, the piece of pricing, the pricing in the vast definition that includes commercial excellence, generally speaking, analytics, with some aspect of marketing. So not that many, and you look at the PPS numbers are not, I think it’s in this single-digit number of pricing teams led by the VP, reporting one or two level, three levels down the C-suite. Generally speaking, these positions are directors or managers, and these do not have, they’re too far away from the C- suite. In between them and the C-suite varies, definitely some prioritization and bottlenecking. I think, despite the energy that many of these people put in creating transformation projects or proposals, and they don’t reach the C-suite, because frankly when there is a CMO with multiple avenues for investments, you’re going to make decisions before we move them to the C-suite. I don’t think we get that many moments of truth where a VP of Pricing or director of pricing is invited in the C-suite to make a 20-minute presentation on the impact of it. Generally speaking, there’s a lack of really indirect indices with direct relay to be able to carry the voice of the pricing organization. It is an issue, and I’ve been blessed. Like you do, I do research and I’ve been blessed in speaking with lots of very talented VPs of pricing that do have that direct relationship with a CEO or CFO. And that changes the game. You look at the most successful transformation that you hear at PBS conferences. The CEO sits down with a VP of Pricing every quarter and engages with them. So that is a game-changer when you get to that situation. Until then, you’re at the mercy of someone deciding yes or no, I’m going to put you in the C-suite.
Mark Stiving
Yeah, let’s talk about the book for a second, as we come back to what we want to do at the C-suite, you gratefully invited me to write a chapter for your new book that’s coming out. What is the book? And what’s the purpose?
Stephan Liozu
The book idea came up after you’ve seen some of the papers that are published around the state of the pricing profession, in the state of the software pricing space, and try to understand how well are we done for the last 10 years. From 2010, when Kevin Mitchell came out and said, only 5% of Fortune 500 companies have a pricing team. Well, I wanted to see if it’s true or not. So, I did a lot of research. And yes, we’ve improved, and it’s not 5%, it’s 15% of industrial or large industrial companies, and around 20% of global fortune 500 companies, good progress, but not enough. Not enough, clearly. Which means, on the other side, 80% of global fortune 500 do not have a pricing team. Then who does the pricing then? That’s my simple question. I hypothesized that the issue is in the C-suite, they have to make decisions, lack the understanding, and don’t know enough about pricing. Then I started engaging in interviews with the heads of pricing software companies and CEOs and realize that, indeed, there is a lot of misconceptions, and they’re not fully aware of the ROI. It’s not very clear to them what pricing is, who does it, what does it mean to do pricing projects, and based on that launched the Coalition for the Advancement of Pricing, which is a community on LinkedIn, and started to think about writing a book, From the Profession to the C-Suite. And I pitched the book to many companies, the software vendors, consulting companies, experts, academia, and then we’re going to have a book coming out this year with about 20 chapters for the C-suite.
Mark Stiving
Nice. And the idea is to convince the C-suite pricing is important, or is it to teach them how to do pricing? What’s the real objective?
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Stephan Liozu
The first objective is to really show them the impact. Once and for all let’s put that discussion to rest. There is going to be lots of chapters on impact, showing case studies showing statistics. And that will be good because we’re still in our discussion. It’s up to you. Is it worth the effort? We’re going to get the impact. So, that’s the number one topic, number two is…
Mark Stiving
Let me pause you for a second, Stephan. Doesn’t everybody just get the 1% 10% rule?
Stephan Liozu
They really do understand it. But show me the money. At the end of the day it’s a question now, is that going to be applied to us, and we don’t fully believe it. Frankly, the feedback that I got from my research is we don’t make the best ROI calculations as a profession. We have to improve on that, including with management scenario planning. It’s a bit of a lack of expertise there.
Mark Stiving
Okay, well, and then the second purpose.
Stephan Liozu
The second purpose is to really address the myth and the lack of understanding. We have papers around what pricing is now, especially post-COVID. What it can do for you, why do you need it? We’re going to have papers from the best strategy consultants out there, and obviously, they carry more weight than you and I together. You can see, they engage with the C-suite on a regular basis. Then we’re going to talk about the third objective and to show them what capabilities do you need to really do good pricing projects, and I think it’s important for them, I don’t expect C-suites to do projects themselves or to have pricing reporting into the C-suite. But when they’re going to do projects, what do you need to pay attention to and the usual aspects, salesforce compensations that having the right organizational culture in place, all that stuff, most of the time because we consider pricing as a clerical, tactical function. They don’t understand that aspect of strategy, the connection with sales, the culture in general. We’re going to have lots of different chapters that will address these three topics. And hopefully, because it’s coming from the profession and not one person, or someone who has done enough research or the message is stronger.
Mark Stiving
Well, let’s hope so. One of the things I find fascinating is your title, Chief Value Officer. When they think of pricing, most people think of that tactical, I need to put a number on a product type thing, where when we think of pricing, we think of creating, communicating, capturing value all of these different pieces. It feels to me, like that’s such a big deal for executives to truly grasp.
Stephan Liozu
Yeah, this is one of the misconceptions that we have to help them understand the definition of pricing, it’s going to vary from company to company, to from executive to executive. And it really depends on where you are in the maturity model, it depends on your marketing maturity depends on your customer, intimacy, maturity, and what problems you’re facing. On purpose, you don’t want to be called the Chief Pricing Officer because pricing in Thales is going to be much more tactical. And what we needed was more around value management, understanding differentiation, conducting segmentation, value propositions and all that good stuff. I wanted to be much more on the value side, and much less on the pricing side. And depending on your history in your company, maybe pricing is a baggage, so maybe you don’t want to put pricing in your title. That’s a reality of things. But for us, we went with value, I think it worked very well; we’re still doing quite a bit of pricing work. But for the last four years, I’ve been in Thales, more than four years now we’ve done maybe 60/70% of the work is on value management.
Mark Stiving
That’s how I think of pricing. More than anything else, I think of it as value, and how do we understand value and communicate value and all of those pieces. In the fortune 500 world, those that have pricing organizations, it seems to me that they have to act like internal consultants. And when you get the smaller companies, companies with pricing teams, probably actually do more pricing hands-on work. Is that what you see, as well?
Stephan Liozu
Yeah, so when you get to the level of directors and VPs of Pricing or whatever the title is, I think probably 20% of your work will be tactical analytics, understanding the deliverables and all that good stuff. But 80% will be evangelizing internally and building coalitions and communicating up, sideways, down and you have to be like a Swiss knife. And you have to understand emotional intelligence, change management; you have to be able to speak one day to the CFO the next day to an IT person, and then to a pricing analyst. It’s really a unique breed of leadership that frankly, we don’t see enough. And one of the books that I wrote was The Pricing and Human Capital. I spoke with about 12 VPS of Pricing, and how did they become VP of Pricing? Most of them came from sales from the business, from marketing, and they have the ability to speak several languages, and to evangelize within, to do what we just talked about, pitch to the C-suite, make them understand in simple terms, why we need to do customer segmentation, the importance of integrating everything within the commercial excellence area, and not just looking at charts and graphs and paretos. This is not what the VP of Pricing does. Unfortunately, we don’t have enough of this high-caliber VPs of Pricing in these organizations.
Mark Stiving
Yeah, so I’ll confess, I haven’t read that book yet, Stephan. But when I think of pricing people, I actually think of three key components. And I’m sure you’re going to tell me there’s seven or something. But I think of the analytics or the number side, I think of the strategic side. And then I think of the leadership side, and I think that leadership piece is the hardest of all, for pricing people to get their arms around to be able to do and that’s the communicating up, down, sideways with everybody.
Stephan Liozu
You’re right. This is all part of the soft skills. You’ve written a lot about soft skills. I’m trying to convince a lot of the pricing people to invest in themselves and develop these soft skills and be able to tell stories and be able to understand the social fabric of their organization, who knows this is a sixth sense that we need to have. At the same time, we need to understand how to run regression and all these quantitative methods. It’s unique, but we need more of them. One of the things that I got from the feedback from my research is a lot of C-suite people look at their organization. They tell me I don’t think that I have the right caliber of executives to run these projects. Meaning exactly what we talked about being able to handle the soft side and the hard side or the pricing, but also getting the salesforce onboard getting the supply chain on board. And sometimes they say, ‘Well, I don’t think we’re going to do it, I would love to do it. But I don’t have the time and the money to hire 10 people, and I have no one inside that could do it.’ That resonated with me when I got these answers.
Mark Stiving
Yeah, is there a chapter on that in the book? How do we convince them or help them find the right people to do this?
Stephan Liozu
Yeah, there’s going to be a couple of chapters dealing with capabilities and strategic capabilities, from the heart and the soft side. But we can deal with everything in one book, but I think we’re going to plant the seeds, and we’re going to have, I think, an awesome review of all the key components and the key messages we want to push forward. Then it’s a question of us as a profession to send books up to the C-suite for them to read it. Then more than that, it’s going to be difficult to do. But it will be, for me an objective that I always wanted to do. As you know, you and I are evangelists, we push pricing day in, day out. I think we need as a profession to promote ourselves better and to start coordinating the messages that we have. That’s why I’m blessed that you jumped on the book project, and we have your contribution in it.
Mark Stiving
Thanks. I think the book is a great idea. I actually think we’re going to have a real challenge getting executives who aren’t already committed to pricing, reading the book.
Stephan Liozu
Well, yeah, what usually happens is we get a book and they give it to their CFO or we give it to their CMO. But that’s fine, at the end of the day, as long as someone in the C- suite reads it. But in parallel, I’m also publishing papers in different journals with the same subject and we see it’s not just one book, it has to be multiple approaches to it. It has to be blogs, it has to be a podcast, we have to find a way to reach them. Frankly, either we do nothing, or we try our best to do something and influence. For us it’s not like it’s going to change our life as far as income is concerned, my interest is really to get pricing much more on the radar, and much more adopted, like other functions, like supply chain analytics these days. And it is a mission for me, I took it as a personal mission to really educate and get into the C-suite to make a difference.
Mark Stiving
Nice, nice. And it’s good to have people like you who really want that as a mission. You’re driving it; you’re pushing it. I love that. My mission is to help companies succeed. I like watching them succeed. And when they take my advice and are successful, that makes me super happy.
Stephan Liozu
And success for the company means successful people’s career and personal income, and satisfaction. You and I spend quite a bit of time with pricing professionals. And it’s not a very easy job every day. We want to make their lives easier. And we want to make them succeed as well.
Mark Stiving
Yep, absolutely. Stephan, we’re going to have to wrap this up. This has been fascinating, though. But we got to end with the last question. What’s one piece of pricing advice you’d give our listeners that you think could have a big impact on their business?
Stephan Liozu
Well, I would say right now, invest in yourself, learn some soft skills, get a better-rounded person in 2021, and invest in training in your soft skills. And I think that will help you for the rest of your career to become a better leader.
Mark Stiving
You know, I’m glad you answered that, that way. And I think it’s a brilliant answer. What do you think they could do? How could they invest in soft skill improvement?
Stephan Liozu
Right now, there are many different courses, whether on LinkedIn learning or pricing society, or you name it, the Khan Academy and look at what your personal weaknesses are, as far as easy communication. Is it convincing others? Is it understanding social interactions and get a course, I just design a few courses on LinkedIn for the Thales side, and various courses on influence with authority, there are courses on change management? Those are easy courses that you will learn some of the things you need to do to get other people in the organization to listen to you to believe you to go with you into battle. Those are for you will make a difference in your daily life.
Mark Stiving
Those are absolutely brilliant suggestions. Thanks, Stephan. And thanks for your time. If anybody wants to contact you, how can they do that?
Stephan Liozu
Well, the best ways to connect with me on LinkedIn and then send me a DM and I’ll gladly exchange with you and or you could join the Cap Coalition for the Advancement of Pricing. It’s a group on LinkedIn and we have discussions around the profession. So, join us.
Mark Stiving
Nice, nice. Thanks, Stephan. All right, Episode 111. 111 is all done. Please take a moment to leave us a review on whatever platform you use. And I would be extremely grateful if you go through the effort to figure out how to do it on Apple podcasts, they don’t make it easy, but it would be awesome for our podcasts to reach other listeners if you would. And finally, if you have any questions or comments about the podcast or pricing in general, please email me [email protected]. Now, go make an impact!
