Dear friend,

Last week, I had the privilege of attending an exclusive session by Hermann Simon , as part of our IESE Business School (School Of Founders) sprint. Simon is a distinguished German author and businessperson, chairman of Simon-Kucher & Partners, a premier strategy and marketing consultancy, and the author of Hidden Champions , among other insightful books.

Simon unveiled the concept of price distribution to us, intriguingly visualized as a triangle rather than a rectangle. He offered a nuanced view of pricing strategy that emphasizes the variability and potential for maximizing profit by closely aligning price points with customer value perception.

This triangular distribution suggests that fewer customers are willing to pay the highest prices, a larger number are inclined towards the mid-range, and the majority are attracted to the lower end of the price spectrum. The key insight from Simon's model is the strategic identification of price points that capture the maximum willingness to pay, optimizing revenue potential across different market segments. This is an interesting insight for you to reflect on: Are your product offerings capturing as much of the triangle as you would wish to?

I pondered how this concept relates to our “offering” as employers, and how we can connect Simon's pricing strategy with the domain of human capital. We can explore the analogy of "value" in both contexts. Just as customers have varying willingness to pay based on perceived value, employees have differing levels of engagement and motivation based on the value they derive from their work experience. This value can stem from job satisfaction, career development opportunities, recognition, and work-life balance.

Just as customers have varying willingness to pay based on perceived value, employees have differing levels of engagement and motivation based on the value they derive from their work experience.

I love this invitation and invite you to join me in drawing a parallel to Simon's triangular price distribution: we may argue that employee engagement and motivation follow a non-linear, perhaps triangular distribution, reflective of how different engagement strategies impact employees. In this adapted model:

• At the highest point of the triangle, you might find highly tailored, individualized engagement efforts that significantly impact fewer employees - perhaps key segments or skills crucial for your business. These are akin to the high-value, premium pricing strategies that appeal to a niche segment.
• The middle section could represent broad-based engagement strategies that moderately impact a larger group of employees. This is similar to mid-range pricing, which captures a substantial portion of the market by balancing value and affordability.
• Finally, the triangle's base might encompass basic engagement practices that have a widespread but diluted effect, similar to low pricing strategies designed to attract the largest customer base.

Of course, this may oversimplify the complexity of directly translating concepts from market economics to human psychology. However, applying this framework to think about engagement and motivation through the lens of value perception can inspire us to explore innovative approaches to enhancing workplace motivation and satisfaction and experiment with more tailored strategies.

I always find it fascinating to draw parallels between marketing and human capital. Ultimately, it's always about “people.”

We would love to understand how you serve individuals' diverse needs and values and how you optimize to enhance satisfaction and performance.

How are you approaching employee engagement and motivation in your organization? How do you incorporate what employees value differently? How does your engagement design maximize impact by reflecting unique preferences and values for different employees?

Join the conversation!