The Math Changed. The Process Didn’t.

Bain’s observation that “12 is the new 5” may be the most important line in its 2026 midyear report. It captures what private equity firms and portfolio-company executives have been experiencing for several years: the math has become significantly harder.

Higher interest rates, elevated entry multiples, longer holding periods, and reduced reliance on multiple expansion have raised the operating-performance burden. According to Bain, a deal that may once have required 5% EBITDA growth to deliver a target return could now require 12%.

That is a fundamentally different value-creation challenge.

But while the math has changed, the process for improving commercial margin has not. Companies still need to answer the same basic questions:

• Where are we leaking margin?
• Which customers, products, and sales behaviors are driving the change?
• Where is cost moving faster than price?
• Which commercial actions should we prioritize?
• Are those actions being executed?
• And are they producing the expected result?

These are not new questions. Industrial businesses have been asking them for decades. What has changed is the difficulty of answering them consistently.

A complex manufacturer or distributor may have hundreds of thousands of customer-product combinations, thousands of daily transactions, multiple pricing structures, volatile input costs, customer-specific agreements, and decentralized sales teams with varying levels of pricing autonomy.

Within that environment, commercial performance is never driven by price alone. It is shaped by the interaction of price, cost, volume, customer mix, product mix, sales behavior, and market conditions.

The number of variables has increased. The data has become more fragmented. The pace of change has accelerated. And the number of decisions required to protect margin has grown beyond what periodic analysis and manual management processes can reasonably support.

That is why Bain’s focus on building a value-creation system matters.

A value-creation plan defines where the opportunity should come from. A value-creation system establishes how the organization will continuously find, prioritize, capture, and sustain it.

The distinction is important.

A pricing project might identify an opportunity and recommend a price increase. A commercial margin system must also determine where the increase is warranted, which customers require a different approach, whether sales teams are executing it, how customers are responding, where costs or mix are offsetting the gains, and what action should come next.

The process is continuous because the business never stops changing.

This is also where AI becomes meaningful.

Too much of the current AI conversation focuses on adding tools to existing work: generating content faster, summarizing information, or automating administrative tasks. Those applications can improve productivity, but they do not necessarily change the economics of the business.

The larger opportunity is to use AI to make the core value-creation process faster, more precise, and more scalable.

In commercial margin management, that means continuously scanning performance across millions of transactions, detecting meaningful changes, explaining why they matter, recommending specific actions, and helping the organization follow those actions through to measurable outcomes.

AI can identify patterns humans would struggle to see. It can monitor a scale of activity no pricing or finance team could manually review. It can surface the customers, products, and sales behaviors that deserve attention now rather than weeks or months later.

But AI alone is not the system.

The output still needs to reflect how the business actually operates. It needs to distinguish between unnecessary discounting and a legitimate competitive response. It needs to understand customer relationships, product roles, contractual dynamics, sales realities, and strategic priorities. It needs to combine technical intelligence with business judgment.

And it needs to drive action.

That requires more than a model or dashboard. It requires clear ownership, embedded workflows, ongoing governance, and accountability for results.

The most successful companies will not be those that simply deploy the most AI. They will be the ones that use AI to strengthen a proven operating process.

The process for growing commercial margin remains straightforward:

Identify what changed. Understand why it matters. Determine what to do. Execute. Measure. Adapt.

The math around that process has become much harder. The companies that build systems capable of running it continuously will be better positioned to meet the new value-creation bar.