The Outside-in Corporation Barbara E. Bund March 3, 2006

To be successful, a business must: Find some prospective customers Who have certain needs (or interests or whims or desires) That are satisfied sufficiently well by the business’ marketplace offering That customers decide to do something (rather than continue to live with the current situation) And customers select the business’ marketplace offering from among whatever alternative solutions they perceive And the customers pay enough that the business is adequately profitable © 2006 Barbara E. Bund

Surprisingly (amazingly, really) Few businesses base their marketplace strategies and actions firmly, consistently, and in detail on an in-depth understanding of customers -- Of what customers value … of how customers buy … what where customers get information … and so on. In other words, few businesses are really driven from the OUTSIDE IN. © 2006 Barbara E. Bund

A little experiment … a. The various employees of my organization would be very clear and consistent in their views of who are our customers, what we do for them, and how. b. Some would be pretty clear and consistent -- but either different people would have significantly different views or else a significant number of employees simply wouldn’t know. c. Many views would be unclear and, if we probed, we’d find that people believed very different things. © 2006 Barbara E. Bund

How can this possibly be (and then, what can we do about it)? Some very visible successful businesspeople have been entirely clear about the role of customer focus in their successes The early McDonald’s, the early IBM, Dell Computer The leaders of some very visible business turnarounds have also been entirely clear about the role of customer focus IBM, Tesco © 2006 Barbara E. Bund

And some highly influential business experts have been telling us for a long time What our business is is not determined by the producer but by the consumer. … The question can therefore be answered only by looking at the business from the outside, from the point of view of the customer and the market. What the customer sees, thinks, believes and wants at any given time must be accepted by management as an objective fact …. The first step toward finding out what out business is, is to raise the question: “Who is the customer?” - the actual customer and the potential customer? Where is he? How does he buy? How can he be reached? From Peter Drucker’s The Practice of Management, 1954

But the bad “inside-out” habit persists Marketing … encompasses the entire business. It is the whole business seen from the point of view of its final result, that is, from the customer’s point of view. From Peter Drucker’s The Practice of Management, 1954 To start out with the customer’s utility, with what the customer buysm with what the realities of the customer are and what the customer’s values are – that is what marketing is all about. But why, after forty years of preaching Marketing, teaching Marketing, professing Marketing, so few suppliers are willing to follow, I cannot explain. The fact remains that so far, anyone who is willing to use marketing as the basis of strategy is likely to acquire leadership in an industry or a market fast and almost without risk. From Peter Drucker’s Innovation and Entrepreneurship, 1985

Why is it so difficult to achieve and maintain an outside-in perspective? We never know as much as we want and need to know about customers. It seems dangerous, even irresponsible, to base your entire marketplace strategy on something (customers) you don’t and can’t know enough about. It’s so much more comfortable to focus on something else -- like Six Sigma, or teamwork, or …. © 2006 Barbara E. Bund

The habit of using that discipline What’s needed: A new discipline The habit of using that discipline © 2006 Barbara E. Bund

The Outside-in Discipline An explicit, customer-based reason for everything you do in the marketplace. Begin with CUSTOMER PICTURES: needs, buying and usage processes, communication habits OUTSIDE-IN STRATEGY: a consistent, coordinated set of marketplace tools, meant to address the needs of one or more segments of customers. An outside-in strategy is RIGOROUS: the customer pictures provide an explicit reason for every action. © 2006 Barbara E. Bund

Examples of outside-in strategies: Bic pens New Balance shoes Dell Computer © 2006 Barbara E. Bund

Benefits of the outside-in discipline Better strategies with higher probabilities of success Better communication of those strategies, resulting in better implementation A basis for recognizing and responding to changes in the marketplace Guidance in preparing for the future © 2006 Barbara E. Bund