Do you know how pricing works in your organization? Do you know who is meant to be doing what? Do you know what your involvement in it is? Do you know where to find these things out? In many organizations pricing isn't clearly defined and, even if it is documented, it's done badly. Here I'd like to introduce CRAPIDO® as a key component to help you design and build pricing processes to achieve your business goals through more consistent and predictable outcomes.
CRAPIDO® is a more complete, practical and usable Responsibility Assignment Matrix (RAM). It can be used to clearly define roles and responsibilities in pricing or indeed any other business process. Designing and documenting your business processes is an essential first step on the path to improve the way your business performs.
The are six integrated components to Business Process Documentation. Each is typically used with different audiences:
1) A Responsibility Assignment Matrix (RAM) – this is who gets to decide what, who does the hard work, who has to be informed, etc. etc. This where CRAPIDO® comes in.
2) Document the steps in your process in the form of a Business Process Flow-chart.
3) A list of Job Responsibilities by Job Function – which is an abstraction from (1) & (2). This is so you can sit down with someone and say, this is how you are/are not involved in these processes, and let me tell you why.
4) A Business Process Architecture of all your processes which outlines how they intersect and interrelate. This is so you can show folks how stuff fits together to enable them to envisage a complete picture. You will also need:
5) A Process for Updating Processes and
6) A Process for Updating Architectures. You need to be able to show that your processes and architectures are open to improvement, responsive to feedback and adaptable to organizational changes.
The basic problem with other Responsibility Assignment Matrices (RAM) is that they simply do not have enough roles: most have four or five, CRAPIDO® has seven. Count them. Seven. And while I am a great believer in less is more, this is not one of those cases. RAMs with four or five roles are at least two or three sandwiches short of a picnic.
Having had to use RACI & RAPID® extensively – only because they were the corporate standard – I found them extremely frustrating. From my perspective of defining pricing roles and responsibilities, they are limited and incomplete. CRAPIDO® has been specifically designed to eliminate those frustrations.
RACI misses out on Agree, Perform and Out-of-the-loop. All rather essential elements, particularly in pricing.
RAPID® critically misses out Informed and Out-of-the-loop. Informed is part of RACI, PACSI, RASCI, RASI, RACIQ, RACI-VS, CAIRO, DACI & RATSI but somehow does not make it into RAPID®. This particularly problematic for pricing where communication of pricing decisions – both internally and externally - is crucial.
PACSI lacks a Recommender; RASCI is a bit kumbaya but nevertheless slightly improved version of RACI; RATSI misses out the Agree and Out-of-Loop roles and also doesn't have a clearly called out role for Recommend. But one thing they all have in common: insufficient roles.
RACI-VS comes closest with six roles but is really only suited for very bureaucratic or structured environments. Those extra roles are Verifier and Signatory, neither of which is really needed in business.
CAIRO is strangely the only other RAM which includes Out-of-the-Loop but still manages to be incomplete. Out-of-the-Loop is not just some crap I made up. Out-of-the-Loop is the opposite of In-the-Loop in case you’re unclear. If you’re in THE pricing meeting, you’re "In-the-Loop". If you’re out of THE pricing meeting, then you’re "Out-of-the-Loop". Really. Oh, and if your pricing meetings aren't that vital, maybe you should put some effort in to making them that vital (before your competitors make theirs more vital than yours).
There's some other subtle stuff that you can do with your RAM:
I could give you an example of bad practice here but frankly I'm not going to visually pollute this website with some of the rubbish (transl. garbage) I've had to endure in the past. But you have to imagine, column headers with vertically rotated text in primary colors and, yes, Arial font. But there again, if you want to disguise lousy content or try and dissuade anyone from even reviewing your lousy content, that's an excellent way to do it.
Here are some examples of Process Attributes that you could be using - or some variant of this - to consistently define the dimensions of your processes.
Hint: one way to leverage this is to create a global process with a minimal number of variants.
Wink: Pick your best selling selling product, your best selling upgrade, and your best-selling add-on as three product standards, with (again) the minimum numbers of variants for everything else.
Nudge: use the taxonomy to re-cycle Process Attributes and save yourself from having to reinvent parameters for your each of your processes from scratch.
Well, here it is in all its technicolor glory. Who gets to do what by job function, by process.
All told, it's small, but I hope you'll agree, perfectly formed.
It's all agreed, documented and then parked on an internal website. Now no-one can claim that they don't know what the process is, how to get involved, what their role is. It should be reviewed at least annually with quarterly opportunities to modify if required. All disagreements on who should be doing what will dissipate to a distant memory.
The real skill is making sure you have have an agreed philosophy for the allocation of decision-making responsibilities, the right processes defined (the rows), and, oh yes, and use Out-of-the-Loop to take out groups or individuals who don't add value and often slow the process down. O!
The 1st thing it will not help you avoid is taking the initiative and putting the effort into to documenting your processes. CRAPIDO® will make it easier, but at the end of the day it will require some initiative and effort on your part.
The 2nd problem is not keeping processes up-to-date particularly to reflect organizational changes. Include process updates as a standard part of your strategy & policy updating process. If you like, have a process for updating processes …..
The 3rd biggest problem is simply missing or overlooking a process which delivers a key competitive advantage. Can you imagine that you’re not doing something which could deliver a key competitive advantage? No? Have you ever asked yourself the question? You should. You really, really should.
The 4th problem is that making sure that once you’ve done this, don’t stop. There is more to do, much more, specifically ensuring that all your processes are complete, integrated, synchronized and then optimized. Are all your processes complete? Fully integrated? Synchronized? And optimized? Of course not. Check out my End-to-End-Pricing paper published by the Professional Pricing Society: https://www.thepricingfactory.com/wp-content/uploads/2016/05/Pricing-Advisor-April-2016-The-Pricing-Factory-v4.pdf
Finally, and most importantly, for some unknown reason, CRAPIDO® makes assigning roles & responsibilities somehow more digestible, less painful and more fun than it would be otherwise. Now, can you say that about any other Responsibility Assignment Matrix!?! I thought not.
CRAPIDO® - well, let’s just say it and get it out there - for the Crap You Do!