I don’t normally write personal posts, as this is more of a “how to” blog. But today marks the anniversary of a decision that changed my life, so I’m making an exception in the hope that someone finds some inspiration and decides to re-dedicate themselves to their passion. My passion is running, and the reason I’m writing about it now is that today marks the one year anniversary of my return to the sport.
To those who knew me in the early 00’s, I was a pretty dedicated runner. As my “running resume” shows, I put in several marathons, including a BQ time and Boston itself. After we had our first son in January 2003, my times started to fade, and once we had our second, there just wasn’t the time, or maybe it was the energy, to continue doing something that, frankly, I wasn’t doing that well.
On came the 20 pounds, slowly but surely. Oh sure, I talked about running again, even did it occasionally while traveling. For my birthday in 2008, my wife bought me an elliptical trainer for my birthday. I probably used it a dozen times before giving up on it – I’m really not much of a cross-trainer. Fortunately, my wife now uses it regularly, so we are getting good use from it. For the 2009 edition of the birthday, my wife bought me a new iPod with the Nike+ sensor for tracking running times and distances. Maybe I just finally took the hint.
However, being a bit obtuse, it took me over a month to take the hint, as I didn’t start using it until a trip to a remote region in Japan in early April (note – in Japanese, “remote” means “like Akron”). I’ve always loved to run when travelling, and this trip was especially conducive to running, to recharge after (well technically, before) long days of dealing with jet lag, language barriers, and technical disagreements. I’m honestly not sure how I forced myself to get up every morning to do this, after the unknowable amount of beer we drank each night. Those of you who have been to Japan will be familiar with the custom of instantly topping off the glass after every sip – thus you have no idea how much you have had. But somehow it happened. And it felt good. Though I could not bring myself to drink the “Pocari Sweat” from the vending machine afterward – it just looked too much like the name.
When I returned, I kept running through April, and then for some reason took most of the month of May off. I believe this was a combination of my wife’s travel schedules and fictional excuses. I then bumped along for several months at 3-4 miles per run, 3-4 days per week, around a 9:00 pace – which for me is a bit of a “zombie” run. And I recall days of just resetting the clock for a later time when the alarm went off, and skipping the run for that day (hey, I ran yesterday, man).
- Bumping along through the summer of ’09 with no real goal in mind.
I think I got a little more motivated in late August, after a company physical indicated that I still had those extra 20 lbs, and my BMI (body mass index) was at 26 (recommended max is 25). I started picking up the pace and distance a bit. I found the Nike+ site to be good for statistics but not particularly social (OK, actually not at all), and it was only in late September that I would realize how important that could be.
A friend on from high school who I had found on Facebook, Athina Kaviris, organized a challenge for the month of October where everyone could set their own self-improvement goals. I was relatively new to Facebook but decided to join in, and committed to do 100 miles for the month. As the month progressed, I noticed people starting to comment on my runs (and I, of course, trash-talked in return). I also did a local 5K on a whim that month. Somehow, I finished third. Not in my age group – in the whole race. I even took a wrong turn. Now this was a small race (maybe 60 or so runners) and the 21:07 was nowhere near a PR, but I remembered that I actually enjoyed competing. I blew by the 100 mile goal and suddenly found my pace was consistently under 8:00 per mile. And oh, did I mention that I was fighting off H1N1 most of that month (according to my wife, the good doctor)?
I took on another 4-mile race on Thanksgiving, and felt pretty good when I calculated that I had finished at a 6:37 pace. When I re-ran the numbers and found it was actually a 6:23 pace, I felt even better. I came in 24th out of a few hundred that day, but didn’t stick around to see how I did in my age group. Now I knew I was onto something. I think it was that weekend that I floated the thought of getting back into marathons to my wife. She didn’t hesitate to support the idea, even though she knew it meant early morning alarm clocks, and occasional fatigue from too long of a run too early (but with the tradeoff being those 20 pounds melting away, and usually a better energy level).
It was about this time that I started thinking about my running brand as well. I know that’s an odd concept, but at the least it helped me let my mind productively wander while running. This led to the development of The Running Manifesto which, while a little extreme (OK, I’ll admit it), is not that far from how I approach running. I knew that I was re-discovering my enthusiasm for the sport, and there is no combination more powerful than passion and talent. How can you ignore that pull?
I also made two more breakthroughs at this time, both suggested by a friend I had met on Twitter, Tim Hibbard. The first was to move from the Nike+ to a Garmin GPS watch, to get better accuracy and more data on splits. I was finding the Nike+ to be about 10% short on distance as my pace improved. The second was to move over to dailymile to record my runs. Oh, and there was a third thing, which was to focus on achieving progressive splits. Suddenly, the data mattered and my world opened up to a few, then dozens, and eventually over a hundred other runners who have similar, passions, talent, and experience.
- Ramping up for the Cleveland Marathon and hopefully a Boston qualifying time.
So here I am, one year later, on the verge of achieving at least as as I was when I was at my prime over 7 years ago. I didn’t think I’d be able to do that again. I thought I was getting too old and too busy. Maybe age has brought wisdom instead of decay, and maybe busy-ness has kept me focused on being speedy. While I have to be careful not to get too overconfident (after all, this is all just training for now), I am credibly setting goals I never thought I would, like breaking a 3:00 marathon (not just yet, but maybe in the fall). I am also more patient and focused than I used to be on reaching those goals – I’m not running any other races until the marathon, so that I stay crystal-clear on my mission.
This post is my commitment to never go back to the “just get the miles” mentality that led to a loss of passion, and eventual cessation of my running previously. You, my esteemed readers, are the witnesses to that commitment, and I thank you all in advance for keeping me to it. Run on!
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Strategic Pricing Using Value Equivalence Lines
The number one variable that can impact your profitability is pricing. Yet it is amazing how little many marketing and product managers really understand about pricing strategies, and therefore use poor decision-making processes to set price plans. McKinsey consultants Michael Marn, Eric Roegner, and Craig Zawada have produced an excellent work on pricing approaches called The Price Advantage
in which they discuss pricing at three levels:
The product or marketing manager generally owns strategic pricing for their product or market. Unfortunately, it is all too easy to rely on simple pricing methods such as “cost-plus” models to establish pricing guidelines. There are three major issues with “cost-plus” pricing. The first two are the cost competitiveness of your offering and your margin expectations compared to competition. These are generally sorted out over time – you either improve your cost to get more competitive or adjust (most typically lower) your margin expectations.
The third issue is more significant and gets at the heart of poor pricing strategies. This is the fact that your cost typically has very little to do with the value that your solution brings to customers. It is conceivable, for example, that something that costs you $10 may bring $500 of benefit to a customer. Your cost-plus approach might price it at $15 when in reality you could command far more. Since you do need to “share” the benefit of your solution with your customer to encourage them to purchase, you wouldn’t be able to charge the full $500, but perhaps $100, or a 90% gross margin vs. the 33% or so you might realize under a cost plus strategy.
One tool to analyze and set pricing strategies described in The Price Advantage is the value equivalence line, or VEL. The VEL identifies the perceived benefits vs. perceived price tradeoff that various customers are willing to accept within a given market, as shown below. In this graph, offerings that are to the right and / or below the VEL are perceived to be of greater value / benefit for a given price. While obviously a simplification (and in particular, this approach does not work well in categories subject to frequent disruptions due to innovation, new entrants, etc.), there are several powerful insights you can be gain from the process and result of creating a VEL for your solution space. Most specifically, you can identify how your offering is positioned against competitive solutions and how adjusting your value proposition or pricing may impact your sales and margins.
The graph shows the positioning of several offerings (the ellipses labeled A, B, C, and D) in the same “market”. Note that these solutions can be different in nature, not just different versions of the same concept; you could compare materials like steel, plastic, and aluminum in their ability to fit the need for a certain component, for example. It also shows the pockets of demand (the bars along the line) based on various customer segments (and in a prior post I discuss a market segmentation approach). When positioning your offering, it is important to note that demand is not spread evenly along the VEL, and there may be no demand for a certain price/benefit combination. The graph also represents that fact that understanding of the price and benefit tradeoff may be a little vague (represented by the dotted lines on either side of the VEL) and perceptions of a given solution may vary from customer to customer (thus the ellipse to represent the offering instead of a dot). It is not critical to get the exact size of these bands or ellipses correct, but it is in general helpful to consider how broadly perceptions might vary, as narrowing these differences may be an effective strategy for better positioning you r solution.
As a theoretical example of using the VEL to inform pricing decisions, consider offering A, for which the provider desires to increase their market penetration. There are three ways to do so, as shown in the accompanying picture:
Note that each of these approaches may (and probably will) provoke eventual competitive reaction. The risk is greatest in scenario 3, as in fact the new offering from A will have shifted the VEL, and competitors are very likely to develop their own new higher-benefit solutions, reduce their prices, or both to re-establish their position on the VEL. Some uncertainly is also added to the demand patterns, as some customers will choose to pay less for their existing level of benefits, and some will take the additional benefits at the same price, thus splitting existing demand pocket.
While clearly a simplified approach, with some challenges involved in collecting the data needed (or, in many cases, making meaningful assumptions and estimates), the VEL tool is a powerful approach to analyzing pricing situations and feeding decisions. Like most good tools, much of the value is in developing and debating the data. Should you wish to learn more about VELs (as it is impossible to give them sufficient treatment in a single blog post), I’d encourage you to read The Price Advantage
.
Another good book recently published regarding the use of VELs (price-benefit lines) in assessing pricing situations, mostly from a crisis mode, is Beating the Commodity Trap by Richard D’Aveni, which I review in a subsequent post.
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