Episode 51 Mar 31, 2022

The Need for Speed: Overcoming Economic Volatility

Volatility is the new normal state-of-play in B2B. To unpack the best pricing response to protracted economic volatility, we spoke to the man writing the book on it: Holden Advisors Vice President of Pricing Jeet Mukherjee.

Jeet has over two decades worth of global experience in management consulting, strategy, analytics, marketing and pricing. He goes back a long way with our host, Barrett Thompson, from his time using Zilliant pricing solutions as a practitioner. In this episode, Jeet and Barrett emphasize the importance of making faster decisions and not being afraid to fail in the short term to capture long-term stability. Jeet also shares insights from interviews he conducted with pricing leaders and C-suite executives for his upcoming book.

Jeet Mukherjee

Jeet Mukherjee

The key for me is really the speed portion of it. And I think the more people understand that you don't have to be perfect to move forward. It's okay to be at 60%, 70%, you can pivot. It's okay to make mistakes and all the ones that I've found to be profitable companies, they all have that in common, which is they weren't afraid to fail.
- Jeet Mukherjee

Episode Transcript

Jeet Mukherjee: The key for me is really the speed portion of it. And think the more people understand that you don't have to be perfect to move forward. It's okay to be at 60%, 70%, you can pivot. It's okay to make mistakes and all the ones that I've found to be profitable companies, they all have that in common, which is they weren't afraid to fail. They thought speed was key in their strategy and they move forward. To me. That's sort of a great theme to have.

Barrett Thompson: Hello everyone. My name is Barrett Thompson. I'm the General Manager of Commercial Excellence at Zilliant. And I'll be your host for our podcast. I'm joined today by Jeet Mukherjee, vice president of pricing at Holden Advisors. Jeet has more than two decades of global experience in management consulting, strategy, analytics, marketing, and pricing.

He holds an MBA from Boston University's Questrom School of Business and has worked with clients in the distribution, pharmaceutical, healthcare, and technology sectors. Jeet, welcome to B2B Reimagined.

Jeet Mukherjee: Thank you, Barrett. It's a pleasure being here and thank you for that.

Barrett Thompson: Before we get into our discussion topic [00:02:00] today, can you tell us one surprising or interesting fact about you that we can't learn from your LinkedIn profile?

Jeet Mukherjee: Oh boy. Well, I'll tell you, I've been very lucky in my life. I grew up in India. I've lived in lots of different cities and places, countries like Japan, but through all my travels there's one habit that I picked up, which I can't get rid of, which is I'm a Browns fan. I love my Cleveland Browns and it's been a tough journey Barrett. It's been a very tough journey, but I'm sticking with them.

Barrett Thompson: Well, I admire the loyalty. I absolutely admire that. People can read into that what they will, but I'm going to give it to your credit.

Jeet Mukherjee: I appreciate that.

Barrett Thompson: You and I had the wonderful opportunity to work together extensively in the early 2000s. At that time you were with Ingram Micro when you were a customer of Zilliant, what do you recall about those days?

Jeet Mukherjee: Oh, those days were interesting. Right? Because first of all it's funny for you to say early 2000s because [00:03:00] it dates us both. So there's a lot there to unpack right there, but I was coming in and Ingram, obviously it's a very large distribution company and there's so many ways to process. And there's so much transaction. We knew that there was goodness there. And I remember sitting there in my office and going, if I can get just five, 10 basis points on the amount of just transactions there that are there, it would just completely change our profitability. It's just, that was sort of the genesis for even reaching out to a company like Zilliant.

It was that sort of interest in trying to squeeze a little bit of margin out of our investment.

Barrett Thompson: You guys were really great innovators too, because this was two decades ago. No one was talking about AI; data analytics had not become a thing. And yet you were eager and embraced the idea of taking that transaction data, extracting signals from it and using it to improve your pricing. So you're really way ahead of your time. It made a huge difference for Ingram, and I [00:04:00] sure enjoyed working together with you.

Jeet Mukherjee: Hey, I don’t know about way ahead of our time, but I do remember thinking I'm definitely not smart enough to look at product attributes, customer attributes and order attributes, and figure out the right combinations to improve profitability.

Barrett Thompson: There's only 8 million combinations at once, right.

Jeet Mukherjee: And I'm just not, I'm just not smart enough to do that on the fly.

Barrett Thompson: I'm certainly excited that we're reconnecting today and especially to talk about this. Quite frankly, it's on the minds of nearly every B2B exec team or pricing team that I'm speaking with.

And that is economic volatility because they're asking, well, what is the commercial implication for how I run my company and the impact it's having on my go-to market strategies? Should I be assuming this new baseline level of volatility and as a given in the future? And if so, or what should I do? How do I steel myself?

Or how do I prepare to respond to those. I think you're the perfect guest to tackle this gargantuan topic, because in fact, you're currently [00:05:00] writing the book on it. Could you share with our listeners what you're working on and how it came about?

Jeet Mukherjee: Well at Holden, we wrote the book on value based pricing, right? So we've got “Pricing with Confidence” that Reid Holden wrote years ago. And what was happening was we were kind of talking. I'm very lucky in that in the past few months, I've been able to chat with 20 plus leaders of different organizations from different industries and get their understanding of what the current challenges are that they're facing, which of those challenges are here to stay, which are very transactional in nature or short term in nature.

And how they're going to change, how customers interact with us in a B2B context moving forward, which would obviously drive how we have to behave different. So as I was going through those conversations, we realized that the value-based pricing book we have is phenomenal. It's got the basic principles that we need from a pricing strategy perspective.

But what we also need to do is think about the current conditions and the challenge. And give people a way to navigate through these [00:06:00] waters. So that's kind of the genesis and what we're working on is to write something that's effective for the times that we live in today.

Barrett Thompson: You recently interviewed two of my colleagues here at Zilliant for your book, our CEO, Greg Peters, and our VP of Products and Science, Pete Eppele. I'm curious to know what did you learn from speaking with folks like that on the technology and vendor side of the equation?

Insights that might not be immediately apparent when you spoke with the B2B distributors, manufacturers and service companies themselves, was there a difference?

Jeet Mukherjee: There was a huge difference. First of all, Pete and Greg are phenomenal. I've had a longstanding relationship with both of them and it's just, it was nice to have that conversation, that open dialogue from the industry perspective, one of the things that we hear or heard a lot was the concept of speed, the need for speed.

The first thought I had was there's no one better than I'd like to talk to then Greg and Pete, to get an understanding of what it means from a speed perspective to what [00:07:00] Zilliant does. And so we had a great conversation and there was three themes that kind of came out of that conversation. One was a notion, which I love this quote that Pete had, which is the notion of corporate data.

Instead of thinking about marketing data or thinking of finance data or supply chain data, or whatever. It's really focused on corporate data. The second theme that came out was forecasting, our ability to forecast better, quicker. And then the third piece is providing insights at the point of need. It's great to look at historics. It's great to provide insights to people, but if it's not there at the right place at the right time, then it's not used as often. So those were three themes that kind of came out that I think Zilliant has a unique perspective on, and I think they're in the prime spot to help there.

Barrett Thompson: Yeah, I appreciate those. And I've seen them at work and the difference that they make for customers. So that was what the vendor had as a unique viewpoint. What about the business execs themselves? What were their major themes?

Jeet Mukherjee: Their major theme looked at some things that well, if I take a step back [00:08:00] and think about what they talked about from a challenge perspective, I'll be honest, when I first got in there, I was thinking about the challenges they would talk about is data and ability to drive insights through data and cost of analysis is going down. Cost is going down. I thought, man, we're going to have a great conversation around all these fun things we can do around pricing and data.

That was kind of my predisposed sort of understanding of what could happen. And then when we started the conversations, this whole economic volatility, and what we learned was that I'll give you an example. I talked to a CEO of a great transportation company and he talked about the fact that supply chain is not really built for e-commerce, it's built for normal retail.

So as COVID happened and we came home, the pressure on e-commerce began or pressure on the supply chain started mounting because there's more people like us buying from home. So we're not physically going out and picking things up. We're having things delivered. So that fundamentally [00:09:00] changed things.

And his outlook was it's going to take us years to redo our supply chain in order to accommodate this e-commerce world, because there's difference in labor because the last mile now is delayed. Instead of us as consumers going out and picking things up. So there's a shift here that causes it. There's tremendous amount of volatility from an inflation perspective with uncertainty in the future.

So we kept on hearing three themes that came out, right. One was obviously the supply chain issue. The second theme that we got was inflation and then the labor. Those were the three. And then as we talked to the leaders, what we found was those three are there, but they're not really worried about the three.

They're really worried about the volatility and how do I manage volatility long-term because for them, the way they were looking at it was because the demand is high at the end customer level. It really doesn't matter that much about inflation. So the word inflation really doesn't matter what they're looking for are signals that says demand starts coming down. If the demand starts [00:10:00] coming down, that's a much bigger issue because then you go from inflation to potentially a deflated market, and that is a whole different slew of problems. So the forecasting piece becomes super important for them to understand where are the demand cycles and how, where are we in that cycle?

And what's about to come. Those are very important questions for leaders to answer.

Barrett Thompson: Now, I want to pick up on the cycle for a moment. In some conversations I've had, I can see that customers are feeling pain about a short-term event. That's happening. They want to respond to it and they should respond to it.

But others I think are asking about, “What can I do for a more sustainable long-term profit strategy to remain profitable wherever I am in the cycle, or be prepared to navigate the ups and downs of the cycles?” And I'm curious to know what your insight is about how well companies are straddling that line between the short-term and the long-term.

Maybe they're not straddling that very well. What did you see [00:11:00] when you took a look?

Jeet Mukherjee: Yeah, it's interesting. The companies that are used to a volatile market, so there's one very large global company executive that I chatted with. He deals with raw materials, supplies of raw material, and he distributes those things all over the world.

And for him, he deals with volatility, like not today, but yesterday - he dealt with it a year ago, 10 years ago, 20 years. He's like, my job is to manage risk. So for him, this is like nothing. So he's laughing at everybody else and he's like, I do this all the time. Whole process is set up and for him, the key for him to succeed long-term, his key was profitability, for sure.

Focusing on customers that are profitable. Two - it was speed. The need for speed. He called it sub second price. He talked about the need to turn around pricing fast, the need to have a portfolio of price types, as well as pricing strategies in his environment, because he didn't know when something was going to go down, when something was going to come up.

But if he had [00:12:00] a portfolio approach, then for him, he was able to maintain the profitable levels that he needed moving forward. But having said that there's obviously a lot of companies that aren't quite there yet. And I'll tell you another company that's on the other side, but no need to mention names, but this is a fairly large company also who weren't affected by supply chain, but they wanted to see if they could raise prices because everybody else was raising prices.

That was a terrible idea because your customers remember these types of things and you just don't want to do that. So you've got sort of the discipline and the undisciplined spectrum that's there.

Barrett Thompson: Thinking about that range of discipline I've seen when we're working with B2B businesses, we're rolling up our sleeves.

We're getting into that nitty gritty work. In some cases, we're trying to lift them out of a mindset where in many ways it feels like chasing the market. I get it. It's real pressure. My competitor lowered price. Or something happened to availability. I [00:13:00] didn't have availability. So how can I take an order?

I mean, I've heard this, I don't have inventory right now, but I could still take an order for someone who's willing to wait two weeks and put it on back order if I dropped the price as an incentive. So I see that as somewhat chasing the market and in our work, we've been trying to point them toward a more healthy, steady state where the system and the processes themselves are set up to where some of that unpredictability…You don't know when it's going to come. You just know that it's going to come, right. It's around the corner. I wonder what your take is on the state of maturity of businesses thinking this way. Are they looking toward building out a set of material capabilities or are they just scrapping to respond as best they can to a situation as it hits them sort of one after.

Jeet Mukherjee: I think there's going to be a lot of churn in the market and a lot of different industries. And I think people that are not forward thinking are not going to last and the anecdotes that I've heard. And [00:14:00] I'll give you a good one here, which is I interviewed a CEO and Founder and CEO of a large reseller technology products, reseller company.

And what they talked about was pre-COVID, they had about 650 customers that were buying regularly from them. And they dwindle that down to 250 over the last two, three years. And what they did was they basically took people that were creating a lot of noise in their processes. They took them out, it was unsustainable profits that they just felt like they didn't need to create a lot of attention for because - they didn't fire people by the way - they took their sales reps and focused in on the 250. And gave them better customer experience. They gave them better services. They gave them better other qualities to improve that relationship.

And what they found was their profitability went up significantly and they were able to create other services, value added services that really helped develop those relationships better. [00:15:00] Long-term. And right now they, they can have frank conversations about supply chain issues. They can have frank conversations about how to work together to mitigate risk, rather than it being a transaction that they have to lower their price.

Barrett Thompson: This is very intriguing to me because what it suggests is that beyond just thinking, “How am I going to modulate my prices and response to some particular volatility?”… Think more broadly about which customers do you really want to be serving? What part of the market do you want? Which products will you carry?

What's the value prop of carrying those? It's these all connect together, don't they? You can't solve for one without solving for the other.

Jeet Mukherjee: I think the good companies that do more and more of that, that will start having a rippling effect where either some of these end customers are going to change their behavior and act more like a partner, or they're going to start dropping out of the system. And it's not sustainable in a volatile market to have a transactional relationship.

Barrett Thompson: Well, Jeet, I understand you'll be taking these insights and more with you to the Professional Pricing Society [00:16:00] Spring Conference in April, where you're delivering a keynote address. I'm sure you're also going to run into Pete Eppele, whom we mentioned earlier.

He'll be on stage there in Chicago. I know we're all really keen to get back to these in-person events after the last couple of years of Zoom calls and the like - tell us a little more about the PPS event and what you're planning to share.

Jeet Mukherjee: Yeah, I think I'm really looking forward to it. It's obviously an industry event that everybody is familiar with.

So we're very fortunate to have the keynote this year. And for us, it's going to be storytelling. So I'll be on stage, essentially telling the stories of 20 plus interviews that I had with these leaders and what they said about how customers are going to be acting different long-term and what that means for us.

What do we need to do from a risk mitigation, from a speed perspective? How do we stop the bleeding right now? So what are some of the steps we can take to stop the bleeding? And then obviously one of the key components is going to be data because we talked, they talked a lot about [00:17:00] how there's M&A activity that are going up because the cost of capital is still low.

Which is great, diversifying your portfolio, but now we have disparate data systems, data sources. How do you get them all together and start getting insights to really unleash the power of what you just did through M&A? So all of those conversations were fascinating. And so on stage, we're just going to be reiterating those stories and hopefully people will find that valuable in the audience.

Barrett Thompson: I know they will, and it's a very effective way to learn, actually, not just the didactic, but sort of inspirational about seeing how other people like them are addressing the same needs and concerns. So I wish you luck with that.

Jeet Mukherjee: Thank you.

Barrett Thompson: Jeet, is there anything else you'd like to leave with our audience today before we say goodbye?

Jeet Mukherjee: I think we touched on it Barrett. I think we touched on a lot of things. The key for me is really the speed portion of it. And I think the more people understand that you don't have to be perfect to move forward. It's okay to be at 60%, [00:18:00] 70%, you can pivot. It's okay to make mistakes and all the ones that I've found to be profitable companies, they all have that in common, which is they weren't afraid to fail.

They thought speed was key in their strategy and they move forward. To me, that's sort of a great theme to have.

Barrett Thompson: That's the imperative for the new normal and B2B, isn't it?

Jeet Mukherjee: Yeah, that's exactly right.

Barrett Thompson: Jeet, I want to thank you again for taking the time to have this conversation. Thanks for sharing your perspectives.

Jeet Mukherjee: Thanks Barrett really appreciate it. Great seeing you. It's been awhile. So thank you very much.

Barrett Thompson: I also want to thank each of our podcast listeners for being with us today. Be sure to check out the link in the show notes for more information about the PPS Spring Conference, where both Holden Advisors and Zilliant will be speaking. At Zilliant we're committed to your success. If you need any assistance, please reach out to us. Would you also do us a favor and take a moment to rate and review the show in your podcast app? It helps us to continue to put out great free content. Until next time have a [00:19:00] great day.

Are you ready to learn how Zilliant can help you overcome your inflation challenges?

Reach out to us today to learn how we can help!