Valerie Howard interviews influencer and author Dr. Stephan Liozu on why a “Value Mindset” is so key to an organization’s success. Dr. Liozu shares how a value-focused mindset can help your business to accelerate better decision-making that drives greater value to clients and improves profits. Valerie shares the five keys to value transformation as outlined in his book “Value Mindset” and Dr. Liozu expands on what’s needed to start that transformation in today’s environment.
In This Episode
[0:34]: Dr. Liozu defines the “value mindset” and why it matters.
[2:20]: What drove Dr. Liozu to write the book on “Value Mindset”.
[4:05]: Valerie asks how a value mindset approach can help businesses manage through today’s COVID-19 crisis.
[4:59]: Dr. Liozu dives into why just training employees on approaches for driving value will not be enough.
[7:07]: Valerie and Dr. Liozu uncover just how many corporate initiatives are too many.
[10:30]: Valerie shares the five keys to starting your value transformation as outlined in Dr. Liozu’s “Value Mindset”.
[12:15]: Why a growth mindset is so necessary to delivering on value.
[14:00]: Dr. Liozu shares how you can hear him speak about “Compelling the C-Suite to Invest in Pricing” at Outperform.
Valerie Howard: Well, welcome to Coffee Chats with the PROS. I'm so excited to be joined here for another Coffee Chat with Dr. Liozu. It's such a pleasure to have you here today, Dr. Liozu. As our audience is likely to know, Dr. Liozu is a influencer in the pricing space, a well-renowned book author, practitioner, and most importantly, researcher. He's done a ton of research in the space and a lot of that you can find in his various books. The one that we're going to dive into today is Value Mindset....
Dr. Stephan Liozu: Good to be with you.
Valerie Howard: Thank you so much, Stephan. Can you tell us, how do you define the value mindset? What is a value mindset?
Dr. Stephan Liozu: Well, I think you've got to start with mindset. A lot of the time when we do pricing things, we have to push people to do them, we have to beg them to do them, we have to incentivize them to do them. But how do you get in a situation they do it without you asking for it? Which means it enters their normal routine, their norms and values, their preferences and priorities, so you don't have to beg them, you don't have to motivate them. They do it because they believe that it's important. Now you add value to this, and it's exactly that. How do you get the people showing up at work in the morning and paying attention to value and not discounting, looking at their KPIs and data, and they're refreshing their value props and preparing their next negotiation with value drivers and value messages.
Dr. Stephan Liozu: It becomes a natural way of life, the daily routine. As you can imagine, there's functions that are critical for that to happen, is sales as a priority obviously, customer service, customer success and pricing with who have interaction with the customer. That's how I looked at value mindset is really entering the concept of customer value in the day-to-day life of various functions, and it becomes a way of life.
Valerie Howard: It's like an underlying value to be driven by value or something.
Dr. Stephan Liozu: Correct.
Valerie Howard: Well, what triggered you to write this book on value mindset?
Dr. Stephan Liozu: Between my PhD and when I joined Tallis, I had a stint as a consultant, and I did a lot of work in change management and change leadership. Helping very large industrial companies conduct their value and pricing transformation. And then as I got along these big project, I realized, what I had written in my Pricing Journey book about the 5C model and change management, it was not enough. It was great, but it was not enough. How do you actually get under the skin of people? How do you convince them to do things? Especially when you have people who've been in their job for 20,30 years, they've done discounting the same way, they sold on the volume for the same way, they had a daily routine.
Dr. Stephan Liozu: Really realized that during these transformation, we had to do something else. We had to do coaching and experiential learning programs, and then I did this with my clients and we developed a lot of frameworks and techniques, and then it triggered the book. As at some point, there's so much you can do in the transformation. It's going to go very well for 18 months to two years, at some point, you're going to see a plateau of activities, and you're going to have people go back to the old ways. You may have a change of leadership. It's about creating irreversible change. If tomorrow I disappear, they still do the work that you ask them to do. We don't go back to the old ways. That book came along, as you can see, it's a psychology book on how to really get under people's skin and motivate them without you being behind them, breathing down their necks.
Valerie Howard: Absolutely. I think to what we've talked about earlier, it really moves pricing from a tactical perspective to a very strategic perspective. Now, I want to read you one of the quotes that you mentioned in that book. To get it right I'm going to have to read it, but you referenced Peter Senge and his perspective on the fact that, "The only sustainable competitive advantage is an organization's ability to learn faster than the competition." I think that's very, very well stated, so important to surviving, especially challenging times that we're facing today. It's July of 2020, we're in the middle of the COVID-19 crisis, so what's your perspective on those organizations that have successfully adapted a value mindset and how they are, I guess, surviving today's environment?
Dr. Stephan Liozu: The theory of mindset is not mine, it's Carol Dweck. She is a famous psychologist out of Stanford. She wrote a great book called Mindset. A lot of companies are embracing these today because they realize that traditional training is not enough. It's actually a failure. You sit people in rooms and they only remember 10% of what you taught them, and then eventually they forget it all. In times of turbulence that we have right now, and when you make great investments, you got to make sure people absorb it. People can use it. Really, there's a difference between training and learning. The whole concept of mindset requires deep learning. You have to look at this from the lenses of adult learning theories, and then also, experiential learning. Because people learn different ways, but when you teach them and then you ask him to apply it, the chance of being absorbed it's much greater.
Dr. Stephan Liozu: That totally changed. This is why in the book, I have a chapter on learning. You got to do something else, you've got to be disruptive in your learning approach because you're teaching very, very skilled and experienced people to change their way of working. It's not by putting them in a room for two days and then asking them to drink from the fire hydrant, and then assuming they took it and they absorbed it. It's a whole different approach to learning. Now, a good example of a company that have adopted this is Microsoft. Microsoft has put growth mindset at the heart of their strategy. They give people the opportunity to learn and do their own learning path. They talk mindset everywhere. I was lucky to attend a presentation from the CMO of Microsoft, and it's clear that the CEO has put learning and mindset at the heart of their strategy.
Valerie Howard: That's fantastic. I love that book by, it's Carol Dweck, is that right?
Dr. Stephan Liozu: Carol Dweck.
Valerie Howard: It's a wonderful book about, I guess, working together to think about not just doing the right thing, but continuously learning what the next right thing is. On that point, I think what's really interesting is that in a lot of organizations, they're challenged to find alignment. You talk about how important alignment is in driving forth a value mindset. What we see, in a lot of organizations, is unfortunately investing in their pricing function is typically a back-burner initiative, and it's not seen as aligned to their corporate initiatives, which may already have a list of 16 to 20 different initiatives. What's your perspective on helping organizations to align to a value mindset?
Dr. Stephan Liozu: Well, I can tell you that the first demonstration of lack of alignment is when you go in an organization and you ask them, "List the top strategic priorities for your company," and then you have a list of 15. Right there, how do you manage 15 strategic corporate priorities? It's impossible. There's so many people that... Eventually you find the same people in every meeting because they jump from priority to priorities. It really starts at the top, and it starts with very good strategic visioning. Putting the right word in the vision and showing the right pillars of your strategy and then rallying around the truth around these division. Then all the goals are cascading in the organization, and the systems are aligned to support the goals. The compensation systems are aligned to support the goals.
Dr. Stephan Liozu: And then everybody works in tandem, with no silos, into a cohesive, aligned execution plan. Everybody gets paid on profits. But at the end of the day, Valerie, is a lot of the time I go in the organization and I ask them, "Do you want profit or do you want volume or do you want market share? What do you want?" You can't have it all. If you want volume, then be a low price, penetration pricing, there's a lot of different techniques behind it. You use the systems differently. But if you want profit and profitable growth, then you have to be able to say no to offers, and focus on the right customer segments and all that stuff that we talked about daily and day in, day out in pricing.
Dr. Stephan Liozu: The misalignment starts at the top, and when the C-suite is not fully aligned, it creates a total misalignment in the structure. This is why the A of alignment is part of the 6A framework of Value Mindset. It's critical. As a matter of fact, I have a new paper that I'm getting published on the influence of alignment and collaboration on the adoption of pricing. One way to really increase the alignment is the pricing council. Having a multi-functional pricing council. I show that statistically, positively related in the results. We could do another webinar on the whole topic of alignment and collaboration.
Valerie Howard: Absolutely. I think you're so right. We talked earlier in our previous Coffee Chat about how pricing can report into multiple different functions, and that's because every function really has a hand in pricing and you need the collaboration and input from all those departments. Really great point on that. Well, I know in this book, Value Mindset, you also offer some specific advice on how organizations can get started with their value transformation. If you don't mind, I'm going to talk through the five points. I've got to read them just because I don't have great memory.
Valerie Howard: But the first one was aligning on that value dashboard. The second one being providing specific daily practices for improvement. The third, accumulating and communicating evidence for success. Fourth, praising efforts towards driving a value mindset. And then fifth, focusing on personal transformation. I think you're so right, it's so much more than the numbers. But I'm curious, is there any way you might modify this advice for today's economic conditions?
Dr. Stephan Liozu: Well, I think there's probably more than five points, but I really summarized a lot of the points, tried to make it very easy for people to remember five points. Some of them apply today. When you do corporate transformation, at the end of the day, it's the aggregation of personal transformation. People have to believe in it. We have to put skin in the game, we have to put sweat equity. That is not just leadership, it's everybody. Then we have to create resilience. Resilience right now, in times of crisis is essential. But when you do very complicated complex projects, sometimes pricing transformation can be very complicated, like ERP deployment, or large software deployment. You have to give people the ability to learn and to self-develop.
Dr. Stephan Liozu: If they fall, if they fail, they get up and start again and start again. It's the essence of the growth mindset. You never stop. If you fail, you get up and start again and start again and you ask for help. You're willing to invest in learning and doing different things. Right now I can tell you that lots of companies are redesigning their organization and the footprint of their teams. If you're stuck in your own way, and you say, "No, I'm not going to do this, or I'm never going to try it," it's not going to be good for you for the long term.
Dr. Stephan Liozu: Some of these principles are all about hope, going through crisis, going through difficult things and getting on board, having faith in your leadership, having faith in... Pricing has been done so many times, there's so many success stories out there, and it's important for you to create your own success stories inside for people to believe in. It really can be applied to pricing in general, a large project transformation, but also today. Everybody needs to be ready for tough times. We're not out of a troubled water, and it's going to take a little bit of time to get back and get pushing again.
Valerie Howard: That brings me back to the quote that we mentioned earlier. That a lot of competitive advantage can be driven by your ability to learn faster. There's a lot to, I think, make sense of in today's uncertain times, unfortunately. But those who, to what you said, can be more resilient and adaptive to that will really, probably gain some lead on the competition here. Thank you so much for your very practical, very timely perspective, Stephan. Now, I know that you're also presenting at Outperform this October. It's a very practical, very useful presentation about compelling the C-suite to invest in pricing. Can you tell us a little bit about that presentation?
Dr. Stephan Liozu: It's exciting because I've been doing quite a bit of research on how to get the C-suite on board, because it starts in the C-suite. I think they are very intelligent people and once they understand what pricing is all about, how do you do it and what the success is, I think it should be an easier sell in the C-suite. I've been doing quite a bit of research over the last 12 months and I'm going to share some of that in the Outperform presentation. I think it's going to help practitioners and leaders in pricing to really craft different messages, to organize differently, to communicate to the C-suite, maybe a bit differently, because at the end of the day, they hold the keys to more investments and to more attention given to pricing.
Dr. Stephan Liozu: I think as a profession ourselves, we need to organize better to be able to convince them to get more share of investments. Because we compete against other functions that are very good at getting their share of investments, manufacturing, innovation, supply chain. We got to be good as well.
Valerie Howard: But what I've seen is that the executives that have found success with their pricing transformations often see that as such a compelling use case. When they move on to other organizations, that's one of the initiatives that they start with with their new roles in the new organizations as well. I think what we can do to convince the C-suite to get that ROI from the amazing pricing transformation projects would be fantastic.
Valerie Howard: Well, thank you so much, Stephan. We know it's going to be a fantastic session at Outperform, so for those of you that are interested in registering, you can find out more about that at pros.com/outperform. Thank you so much, Stephan, it's been a lovely conversation. I've loved hearing from you about the value mindsets and how that's so important to organizations. Thank you.
Dr. Stephan Liozu: Thank you.