Outside-In is a business imperative

What are the challenges of succeeding in business in the 21st century?
Ask major companies and you would come up with the same list:
> Competition is fierce and global.
> Customers have become rebellious.
> Customers have expectations like never before.
> Customers demand choice, comprehensive information and the best price. 

Former IBM boss Lou Gerstner called this “commodity hell” and that is pretty much the nightmare for every business. With a list like this many businesses would claim to be already embracing the challenge and becoming customer centric with ‘voice of the customer’ initiatives. This is simply a collective delusion and is the root cause of why so many are failing the customer, the shareholder and their hardworking employees.

The delusion is easy to understand. Businesses have created departments that claim customer focus and extensively poll customer wants, seek feedback and then try to act on the information. While this creates an illusion of progress it is to a large part a futile exercise focused on fundamental misunderstanding of 21st century customers. Asking internal questions based on customer data results in such questions as “how do we improve service?”, “how can we reduce non value added work?”, and “how can we standardise?” . This thinking stems from a time when the world turned more slowly and is more appropriate to the 1950’s then this centuries new business reality.

To orientate to long term business and customer success we need to look at the enterprise from the Outside-In (OI) rather than inside-out. It is now about understanding customer needs (not wants) and eradicating all the things that do not contribute to achieving Successful Customer Outcomes (SCO’s).  

It is this Outside-In philosophy that leading global IT retailer Best Buy utilised to lead and dominate the consumer-electronics market in the US. In doing so Best Buy’s programme ‘customer centricity’ took the time to understand customer needs and accordingly align for the SCO, while long time competitors Circuit City and CompUSA struggled and ultimately went bust. Circuit City, previously successful in the 1980’s and 90’s did not understand the shift to Outside-In and continued to focus on reducing costs through laying off its highest-paid hourly employees, including salespeople, and replacing them with cheaper workers. At the same time (2007), then CEO Philip Schoonover rewarded himself with $7 USD million in compensation . Customers don’t like that old style way of managing business and voted with their feet.

Best Buy meanwhile moved to understanding the customer needs and directed their attention organising themselves accordingly. Early research suggested that men look for a specific product at a discount price so hence,  arranging stores around fast moving products, geared to guys worked in areas where the majority of shoppers were male. Alternatively in stores frequented by women the stores focussed on ‘bundles’ as women were shown to need say a digital camera with accessories such as cables, printer and other ‘value adds’. This was more important to that type of customer than discounted prices. As the Outside-In maturity grew audio-visual experiences were grouped together and themed as with the Magnolia theatre. Family oriented areas are now a familiar feature coupled with additions such as techie savvy Geek squad means Best Buy dominates a previously fragmented market. Their success is now being extended to Europe.

Making the leap from understanding to action requires a shift in perspective. Instead of functional specialist silo’s organised around division of labour and specialisation, enterprises rethink their centre of gravity. In what we call a Copernican shift the customer becomes the centre of the universe, rather than the legacy model were business organises itself inside-out as a pyramidal, left to right, top down structure.  In these legacy structures it is sometimes difficult to actually include the customer on the map – they are relegated to the extreme left or right, or into warlike metaphors such as ‘the frontline’. No great surprise that people working in these structures can be working very hard doing things right (following procedures, delivering projects, meeting departmental objectives) but really the customer isn’t their job. That surely belongs to someone else in marketing, sales or customer service? In the Outside-In world the customer touches everybody’s  job and the emphasis shifts to doing the right things and doing things right.

Breaking out of the straight jacket imposed by the inside-out organisation structure requires a different level of thinking, an incisive set of new techniques and tools, and a willingness to link every element of activity with SCO’s. A new focus embracing the customer experience as the process requires a renegotiation of partners, a realignment of relationships and investment in staff to ensure they can think and be customer centric. Reward structures become linked to customer success, rather than paying staff for turning up and following procedures.

Best Buy have broken the mould of their sector, as have others including Zara in fashion retailing, Southwest airlines, FedEx Office, Emirates, Chinamobile, Disney and many more. These companies are the leading success stories of the 21st century and understand the game has changed forever.

For most businesses today, adopting an Outside-In approach is a necessity for survival — the only sure way to ensure the organizational resilience that will keep a company out of the death spiral of inside-out commodity hell. The path finders have set the standard and established a winning set of approaches, tools and techniques readily accessible by all. Make that move now, before it is too late.

Do you use bad language?

Sometimes when we talk with colleagues, family and friends we create an unintended negative impact. I am sure you don’t use bad language consciously (not swear words of course) however the way we use words and intonation often creates this undesired negative effect.

The BP Group CPP Professionals and CPP Masters out there will know the importance of language in our Process transfromation and Outside-In programmes. In fact our referenced work, Robert Dilts, ‘Sleight of Mouth’ is an excellent primer for those seeking to help colleagues understand the need to reframe towards a customer centric view of the world.

Here is another perspective that might help offered by a global leader in cognition and NLP, Steve Andreas (he’s the tall guy on the left of the picture)

An example of the impact of nonverbal (tonal) qualities of a message.
Recently I sent a note to some colleagues mentioning that I had noticed that some people—more often women—ended a sentence or a phrase with an upward inflection that usually indicates a question. I asked if anyone had an understanding of this, since I didn’t want to rediscover something that was already understood. I got the wonderful response below from a linguist who asked not to be identified:

Read the full story at Steve’s blog at http://bit.ly/dzYdcY

Part 4 of 4: There are four distinctly Outside-In ways that you can rethink process and in doing so achieve Triple Crown benefits.

The previous three articles in this four part theme we reviewed ‘Understand and applying Process diagnostics‘ , the ‘Successful Customer Outcome‘ and ‘Reframing Process for an Outside-In world‘. Now finally we move our attention to the fourth way we can rethink process forever.

Rethinking the Business you are in.

In the Southwest airlines example reviewed earlier we referred to the different viewpoints of the ‘business’ you are in. The two views – one the organisations, regarded as inside-out reflect the activities and functions undertaken. So British Airways see themselves in the business of flying airplanes and approach the customer with that product/service in mind. They set about marketing and selling the flights and hope to pull the customers to the product through pricing, availability and placement. In a slowly changing world where customers have little choice this strategy can provide a route to success.

As we have already seen the tables have turned and the enlightened customer demands so much more.
Southwest and other Outside-In companies understand this challenge and take a customer viewpoint.
What business would you say these six companies are in: Hallmark Cards, Disney, Zara, AOL, OTIS elevators, China Mobile?  Try it from the customers perspective and you’ll arrive at a very different answer – try these, expression, joy, style and comfort, community, moving people, connectivity. Yes they are very different and will reframe the way you think of the service and products you provide. Go further and look inside your existing company.

Are you still separated into functional specialist areas providing specific outputs to other departments in the so called ‘value chain’? Do you have internal ‘service level agreements’ that specify what you’ll deliver and when? How much of our internal interaction adds ultimate value for the customer? This way of organising work imposes limitations on our ability to truly deliver successful customer outcomes. The Inside-out viewpoint is inefficient, prone to red tape, is extremely risk adverse (checkers checking checkers) and slow in delivering product and service.

Many inside-out organisations actually regard customers as an inconvenience rather than the reason why they exist.

What business are you in? Past, present, future?