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Global Advisors is a leader in defining quantified strategies, decreasing uncertainty, improving decisions and achieving measureable results.

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Global Advisors’ Thoughts: Is insecurity behind that dysfunction?

Global Advisors’ Thoughts: Is insecurity behind that dysfunction?

By Marc Wilson
Marc is a partner at Global Advisors and based in Johannesburg, South Africa

Download this article at http://www.globaladvisors.biz/inc-feed/20170907/thoughts-is-insecurity-behind-that-dysfunction

We tend to characterise insecurity as what we see in overtly fragile, shy and awkward people. We think that their insecurity presents as lack of confidence. And often we associate it with under-achievement.

Sometimes we might be aware that insecurities can lie behind the -ias, -isms and the phobias. Body dysmorphia? Insecurity about attractiveness. Racism? Often the need to find security by claiming superiority, belonging to group with power, a group you understand and whose acceptance you want. Homophobia? Often insecurity about one’s own sexuality or masculinity / feminity.

So it is often counter-intuitive when we discover that often behind incredible success lies – insecurity! In fact, an article I once read described the successful elite of strategy consulting firms as typically “insecure over-achievers.”

Insecurity must be one of the most misunderstood drivers of dysfunction. Instead we see its related symptoms and react to those. “That woman is so overbearing. That guy is so aggressive! That girl is so self-absorbed. That guy is so competitive.” Even, “That guy is so arrogant.”

How is it that someone we might perceive as competitive, arrogant or overconfident might be insecure? Sometimes people overcompensate to hide a weakness or insecurity. Sometimes in an effort to avoid feeling defensive of a perceived shortcoming, they might go on the offensive – telling people they are the opposite or even faking security.

Do we even know what insecurity is? The very need to…

Read the rest of “Power, Control and Space” at http://www.globaladvisors.biz/inc-feed/20170907/thoughts-is-insecurity-behind-that-dysfunction

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Strategy Tools

Strategy tools: Effective transfer pricing

Strategy tools: Effective transfer pricing

So much has been written about transfer pricing. Yet it remains a bone of contention in almost every organisation. Transfer pricing is not merely a rational challenge – it often raises the emotions of internal service users and providers who argue regarding scope, quality, price and value.

We have found that effective transfer pricing relies on some fairly simple best practices and critical success factors.

Many organisations recover costs as a regular ‘below-the-line’ deduction from operating division income statements. In our experience, charge out is almost always preferable. This results in internal value judgements and negotiation regarding delivery happening closer to time of use.

Internal prices / cost recovery plays a crucial role within an organisation: it ‘price signals’ to the buyer and the supplier of the service. Buyers make economic use decisions and suppliers make resource and capacity decisions. This fundamental function and consequence governs the optimal implementation of internal pricing / cost recovery.

We have typically seen that the realisation that internal pricing plays this role and the consequences of poor implementation are not well understood.

Results of poor transfer pricing implementation

Sub-optimal economic use decisions

Where costs / prices are higher than they should be, buyers pass this on as an inflated cost to their customers, experience margin squeeze, or utilise less of the service than they might have.
Strategically this can lead to incorrect decisions regarding the provision of services to the market and loss of market share.
Where costs / prices are lower than they should be, this can lead to overuse of a product or service and poor cost recovery from external customers.
Strategically this can result in the over promotion and sales of products and services that are achieving lower margins than thought, or that might even be making losses.

Sub-optimal investment and resourcing decisions

Incorrect pricing can lead to over- or under-investment in capacity and product or service quality. Further, the resourcing decisions will be incorrect should the price signal to the supplier be incorrect.

Political and emotional argument

Where buyers are unable to obtain assurance that an internal price is correct, there is typically resentment regarding the cost of the internal product and service and the sheltered position employees of the internal service provider occupy – in the buyer’s eyes free from commercial pressures.
Buyers and suppliers typically also argue regarding the quality of the service or product relative to the price paid.
Suppliers may react to criticism claiming their product or service is strategic in nature and refute its availability in the external markets.

Poor product / service quality

Poor price signals will result in lack of comparable product and service quality benchmarks. This can result in ‘gold-plating’ or poor-quality product and service provision.

Read more at https://globaladvisors.biz/2021/01/06/strategy-tools-effective-transfer-pricing/

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