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A chat with a Six Sigma Master Black Belt on Pricing

Frank Hurtte

Greg Preuer is the latest addition to the Strategic Pricing Associates (SPA) team. He also holds the credentials of a Six Sigma Master Black Belt. Most readers have probably heard the term Six Sigma bantered about in conversations with their customers. As a quick review, here is the Six Sigma Process as described by Wikipedia:

"Six Sigma seeks to improve the quality output of process by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes. It uses a set of quality management methods, mainly empirical, statistical methods, and creates a special infrastructure of people within the organization ("Champions", "Black Belts", "Green Belts", "Yellow Belts", etc.) who are experts in these methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified value targets, for example: reduce process cycle time, reduce pollution, reduce costs, increase customer satisfaction, and increase profits."

Since most of my experience with Six Sigma is directly tied to manufacturing issues, I asked Greg about the concept of Six Sigma and pricing. "While it is true that most of the early Six Sigma work focused on manufacturing issues, all of my training and experience is commercially focused. I became a Six Sigma Master Black Belt in commercial process while working for GE. I have been involved in projects, led projects and supervised the leaders of many Six Sigma efforts over the years. All were commercially focused in nature," commented Mr. Preuer.

Since the title of Master Black Belt is not one we come across on a regular basis, I researched the credentials. In order to be certified as a Master Black Belt the individual must:

  • Attend approximately 160 hours of class room training.
  • Complete 10 personal projects
  • Lead 25 team projects

Team projects typically involve 10 Black Belts, each of whom handles three to five individual projects per year.

There is another level of expert called Six Sigma Green Belt. These are people who have been Six Sigma trained but handle other roles outside of the Six Sigma process. For instance, this might be a supervisor in the shipping department who provides detailed information specific to shipping to the Six Sigma team and handles his normal job as well.

Aside from his previously mentioned Master Black Belt work at GE, Greg applied the same concepts while successfully serving as the Director of Pricing at Cooper Lighting. Feeling much can be learned from the experience of others, we asked Preuer to tell us what he learned during his nine year tenure in this position. His comments made us think:

"Over time we discovered the most critical part of moving the pricing process forward came in helping people deal with change. Establishing a plan for the human reaction to all change is incredibly important.

Secondly, we discovered that if you want a process to stay in place over the longer term, you need to automate it. I know this sound counterintuitive, but think about this; if a person has to 'crank the engine' to make the process work, they tend to ignore the strategic and take care of the urgent. This is an elephant boneyard of projects where the process has ground to a halt because of the leadership burned out handling little urgent issues along the way. Automation solves those issues."

After many years of leading a pricing team, Mr. Preuer's addition to Strategic Pricing Associates makes a great deal of sense. He summarized it with this quip, "I am driven to help others, and in this role I can help not just one company, but a whole industry." This comment brings us to a new SPA offering.

The emergence of the Pricing Professional

In the coming months, Greg and the SPA team will be developing a program for training others in a Six Sigma Black Belt of Pricing program. Here's why. There is no Bachelor's Degree in Pricing Leadership. Everyone who comes into the role comes from a different perspective. Some from Inside Sales, Customer Service, a few from the IT world, still more are salespeople who have learned a few tricks by trial and error. For most distributors, the Pricing Department is either a stepping stone to something else or a parking lot for those approaching retirement. In spite of the amazing bottom line potential of a well-run pricing process, few companies have a defined training plan for the person who makes it happen.

The soon to be released first of its kind training will train pricing leaders in applying time tested Six Sigma techniques specifically to the pricing process. This program is not an SPA add-on. Greg describes it as "nearly SPA agnostic and applicable to even those who want to try a do-it-yourself pricing tool." However, he did go on to state, "it is Strategic Pricing Associate's approach to providing the automation tools to make a pricing process that first attracted me to the company as a customer and later to join as one of the associates."

During our 60 minute interview, Mr. Preuer demonstrated his ability to think outside the box and shared a hundred pages worth of observations and ideas. Stay tuned for more from this guy. I know I am.