A.T. Kearney 82/ Outside-In Perspectives: Maintaining an outside-in perspective – best practices in staying current with market trends Dr. Dale S. Rogers Nevada Logistics Institute Reno, NV 11 August 2015 Dr. Dale S. Rogers Nevada Logistics Institute Reno, NV 11 August 2015

2 Outside-In Perspective Overview nHaving an inside-out perspective nDeveloping and maintaining an outside-in perspective nExtending the outside-in perspective nHaving an inside-out perspective nDeveloping and maintaining an outside-in perspective nExtending the outside-in perspective

3 HAVING AN INSIDE-OUT PERSPECTIVE Impact of an internal focus without external understanding

4 Peter Drucker – The Practice of Management “It is the customer who determines what a business is. For it is the customer, and he alone, who through being willing to pay for a good or for a service, converts economic resources in the wealth, things into goods.” Source: Peter Drucker (1954). The Practice of Management “If we want to know what a business is we have to start with its purpose…There is only one valid definition of business purpose: to create a customer.” Source: Peter Drucker (1954). The Practice of Management “It is the customer who determines what a business is. For it is the customer, and he alone, who through being willing to pay for a good or for a service, converts economic resources in the wealth, things into goods.” Source: Peter Drucker (1954). The Practice of Management “If we want to know what a business is we have to start with its purpose…There is only one valid definition of business purpose: to create a customer.” Source: Peter Drucker (1954). The Practice of Management

5 Inside-Out Perspective “We've been inside-out for over 100 years. Forcing everything around the outside-in perspective will change the game.” Source: Jack Welch, Former CEO of General Electric “We've been inside-out for over 100 years. Forcing everything around the outside-in perspective will change the game.” Source: Jack Welch, Former CEO of General Electric

Honda

7 Evolution Oldsmobile Main Plant, Summer 2011, Lansing, Michigan

8 Digital Equipment Corporation

9 Burroughs Calculating Machines  Over 5,000 parts, with as many as 2000 moving together at any one time.  Most technologically advanced calculator of its time  Price comparable to that of a new car.  Options such as non- add, non-print, and individual clearing keys for each column. Class

10 DEVELOPING AND MAINTAINING AN OUTSIDE-IN PERSPECTIVE Embracing an external understanding

11 Structure Drives Behavior nStructure determines behavior nBehavior does not determine structure nStructure determines behavior nBehavior does not determine structure

12 Constituents

13 Outside-In Perspective nSuccessful companies often suffer from the “Not Invented Here (NIH)” syndrome nA key way to break out of this is to look at the firm from the perspective of customers and potential customers nMaking sure that strategies and actions are chosen and implemented from a strong external perspective nSuccessful companies often suffer from the “Not Invented Here (NIH)” syndrome nA key way to break out of this is to look at the firm from the perspective of customers and potential customers nMaking sure that strategies and actions are chosen and implemented from a strong external perspective

14 Coca-Cola Non-Carbonated Beverages

15 EXTENDING THE OUTSIDE-IN PERSPECTIVE Customers in complex supply networks

16 Complex Supply Networks

17 Attenuation nAttenuation is a decrease in signal strength during transmission. n Attenuation is the opposite of amplification, and is normal when a signal is sent from one point to another. n If the signal attenuates too much, it becomes unintelligible, which is why most networks require repeaters at regular intervals.networksrepeaters

18 Customers? Customer needs? Do customers want to satisfy needs? How badly? Customer perception of benefits? Customer knowledge & awareness? Customer information sources? Customer buying processes? Customer conversion costs? Customer communication processes & needs? Customer alignment with organization?

19 Outside-In Discipline Customer Pictures Analytical Rigor Marketplace Opportunities

20 Strategy Management Translate the Strategy Manage strategic initiatives Communicate the strategy Review the strategy Update the strategy

21 Vantage Points 5 Complete Customer Order Fulfillment Complete Customer Order Fulfillment Finance View Finance View Operations View Operations View Partner View Partner View Customer View Customer View Competition Supplier View Supplier View

22 Dual Perspectives nInside-out perspective Internal benchmarking nOutside-in perspective External benchmarking Voice of the customer nInside-out perspective Internal benchmarking nOutside-in perspective External benchmarking Voice of the customer

23 Concluding Thoughts Preserve the core Stimulate Progress