MARKETING SPECIAL... From Inside Out to Outside In Thinking

 From Inside Out to Outside In Thinking 

Putting customers first entails more than meets the eye.

Guide to moving beyond deceptive milestones and reaching breakthrough success

In Greek myth, Narcissus was a beautiful youth who fell in love with his own reflection. When he couldn't stop admiring himself to the exclusion of all else, he eventually withered and died. Business leaders should view this tale as cautionary. Companies too often become transfixed by themselves and their own products. They view the marketplace from the inside out and end up ignoring the very people who will be using their goods or services. At the extreme, this kind of internal orientation can supplant an organization's very purpose - a dangerous navel-gazing that can permanently alienate customers.
To break this spell, a company needs to ask a straightforward but probing question: are we selling or solving? If you define your raison d'être in transactional terms, you are apt to create an organization whose thick boundaries restrict the flow of information. You pour your energy into product or service optimization, training your attention on design, supply chain, and quality control. Your marketing and sales teams see customers through the lens of the company's goods and services, and simply look for creative ways to convince them to buy from you. These internal processes are crucial to get right, but they're far from the whole story.
Companies' intent on winning in the global market ought to pay at least equal attention to external matters. They must look beyond themselves, and initially even beyond their customers, to comprehend the problems that customers need help solving. Hyper-competition, having rendered the old "make-and-sell" model obsolete, calls for probing customers' needs and working backwards from those needs to proactively look for ways to tackle them.
A proactive stance entails not just listening to customers but also digging deeper for the insight to articulate a problem even before the customer recognizes it. Consider a customer who wants a new TV. The retailer can sell a TV at a decent profit and wrap up the transaction. Alternatively, the retailer can ask how the customer intends to use the TV and offer professional advice about how and where to install it, the best cable options, and the like. A truly forward-looking retailer like Apple sees such transactions as an opportunity to develop proactive new offerings that anticipate customers' needs.
    This shift in thinking takes time because it alters the company's basic purpose: It is now in the business of identifying a problem space and devising solutions. The shift is not merely a matter of design or manufacturing optimization. Instead, problems that were once out there are now in here too; they become issues that everyone at the company experiences as the customer does.
    The journey from inside-out to outside-in thinking is a genuine journey: the road never ends because markets keep changing. In the course of my research, I've pinpointed four milestones to guide companies as they set out to redefine their purpose and identity. Sometimes companies mistake the final two milestones for destinations rather than intermediate waystations, but seeing beyond partial or illusory victories is imperative.
Milestone 1: Inside-out. The company focuses on the distinctive features and functionality of its products and services. Its offerings are largely shaped by its existing capabilities, and its stance toward customers is "We make; you take." The prevailing belief is that as long as the company builds products that it considers great, and sells them enthusiastically, the venture will succeed. This model may work as long as competition remains limited and/or the market remains stable and predictable.
Milestone 2: Sharpen rusty tools. The company acknowledges the importance of embracing its customers. Recognizing that these customers are heterogeneous, it leverages market research to define the marketplace more precisely. Targeted market research may even shape product design and development, but the governing ideology remains rooted in the make-and-sell model. These initial steps can result in a heady sense of accomplishment that is deceptive. Many companies think they have reached the end game when they build sophisticated segmentation models and design strategies around those segments, without ever fully grasping that segmentation is a business tool, not a business strategy.
Milestone 3: Try our solution . . . please! A tougher task awaits a company that moves beyond Milestone 2. It understands the urgency of comprehending its customers' needs and proactively looking for ways to own some of them. The company cultivates deeper customer relationships, and the more precise knowledge that these relationships generate gives the firm an edge: the agility to be more responsive. But here, too, deception can snare an organization. Though it is intensely focused on customers, it is still trying to solve their problems with the offerings it is optimized to produce. In other words, the thinking process begins outside but ends up back inside, focused on its own products or services.
Milestone 4: Outside-in. The firm's shift in perspective and identity is complete: It engages the market from the outside in rather than jerry-rigging solutions with whatever parts happen to be inside the firm. The company is no longer restricted by a strategy that mandates selling specific products; it has become agnostic about whether it or a partner or even a competitor produces the pieces that solve customer problems. This stage of the journey is close to a destination but not the destination itself. Because markets, customers, and problems are ever-changing targets, the firm must continuously reconfigure itself and its network to keep pace with the market and stay ahead of customers and their unarticulated needs. If successful, the company will both shape-shift with the market and make the market shift with it.
    When plateaus look like peaks, organizations risk cutting their journeys short prematurely. Each stage presents deceptions that can mislead a firm into mistaking a mere higher-altitude base camp for the summit. To avoid such misreading, the company must change how it engages the market. The company isn't waiting for customers to "reach in" with a demand; it reaches out first to ascertain market needs. In pursuit of a more thoroughgoing grasp of its customers' businesses and lives, it invites customers to become partners in a collaboration that transcends a mere series of transactions.
    Turning "delivering solutions" from marketing cliché to market reality requires vision and fortitude. It also takes the humility to listen to customers, the curiosity to look beyond what they tell you, and an empathetic appreciation of the urgency of their needs. As they were with Narcissus, these qualities are in short supply at companies that take an inside-out view of the world, yet without them, there is no way to build an outside-in mentality. Leaders need these qualities, and they need to share them enthusiastically throughout their organization, even to the point of overhauling the firm's very mission and identity. Done right, identity work of this kind leads to great products, great topand bottom-line growth, and customer stickiness. Outside-in thinking is less about invention than it is about ongoing reinvention.

Harvard's Ranjay Gulati  CDET 130510