The Outside-In Imperative

[Note: I'm hard at work writing my next book, "You're Either Outside-In or Upside-Down." From time time, and where the content is appropriate, I'll revise a chapter so it works as a blog and post.]

Want to watch change in progress? Just look at the turnaround in buyer-seller relations in industrialized nations. Business is having a “Galileo moment.” After assuming for decades customers revolve around companies, guess what? Business is learning its world is round, and companies revolve around customers–at least that’s the rotation for companies planning to stick around a while.

Understanding is not always a precursor to action

But learning this lesson rarely translates into doing–at least doing enough to become customer-centric. Companies don’t switch to revolving around customers with a memo saying, “Beginning at noon next Monday, we’re going to be nice to customers.” Obviously. But they don’t get there with 1-to-1 marketing strategies, either. Or with sales, marketing and service using CRM software. Or with implementing more customer-friendly service policies. Or with customer analytics. Or with social networking. Or with all the above tactics. No matter what consultants and software salespeople claim.

Moving to a customer-centric business model goes way beyond these incremental changes–and way beyond the comfort levels of many companies. Organizations achieve customer-centricity through transformative change–starting with new beliefs and new cultures, which give rise to new strategies plus new work that converts strategies into actions. And to further the degree of change, new work dominoes change from organizational realignment to redesigned technology support.

Tough to achieve? You betcha. But some companies have already made the transition. In fact, some companies have been customer-centric since formation. They’re the lucky ones. But how did companies having to migrate to customer-centricity get there? There’s one common factor,“Outside-In.” They didn’t call their journey “going Outside-In.” In fact the term only surfaced several years ago, in conjunction with a Virgin Mobile customer-centric initiative. But they’ve all followed the same pattern. Now, more companies are following in their footsteps. And when something new happens frequently enough, spurred by champions “spreading the gospel,” we give it a name (hopefully not a three-letter acronym). Hence “Outside-In.”

So what is it?

Outside-In is the fusion of planning and process design into one, integrated, customer-centric activity.

The planning part redesigns strategies from a thoroughly customer perspective. And by “strategies” I don’t mean marketing, promotion, branding, stuff that advertising agencies do. I’m talking products, services, delivery, in some cases core business direction–all invented or renewed with an adult dose of innovation. It starts with “finding your inner customer,” “seeing through customer eyes,” “standing in customer shoes,” or whatever you want to call it. And results in companies raising the competitive bar, often high enough that others can’t clear it. If, that is, new strategies trigger new work.

That’s the process piece. Defining what work should be done to implement new strategies; who should do it; how it should be done; and ¬enabling technology requirements. Some call this “customer-centric infrastructure,” others “customer-optimizing operations,” but it doesn’t matter. Just no TLAs.

Worked together, these two Outside-In elements align strategy to customers; process to strategy; and technology to process–creating the spine of a customer-centric company.

Outside-In creates a framework for designing, organizing and simplifying the migration to customer-centricity–true customer centricity. The type that adds new value to customers as the only reliable means of adding new value to the company. Not that the transition is ever “simple.” But business will have to get there. Because when one player in a sector goes Outside-In, others will have to follow, or risk being left to an unhappy fate.

Squish

Just look at what happened to consumer electronics chains in the U.S. once Best Buy went Outside-In. Circuit City and CompUSA might as well have been bugs beneath a work boot. Squish. But that’s the usual fate when a competitor beats you to putting customers in the center of your business circle. Squish.

True, some companies survive by scurrying to change reactively. UPS has stayed profitable while scrambling to match customer-centric moves by FedEx. But how many companies have the strength and resources of UPS?

Despite the probability of facing dire consequences sooner or later, many change-averse companies continue to sit rather than change. As a past client once said to me, “I know we have to change, but we can’t stop doing what got us here.” They circle the wagons to protect themselves from customers fighting to take over the center of their circle. Or, perhaps a better analogy, they engage in a tug-of-war with customers over who controls buyer-seller relationships. Just one problem. There’s an 800 pound gorilla on the customer end of the rope, and she ain’t budging. And just wait until she gets impatient and starts pulling. When she does pull, companies will have to get Outside-In quickly, if they’re not already–or risk going upside-down.

Don’t wait until you’re forced to go Outside-In. Proactive change works so much better than reactive. Twice the gain with half the pain. So best to get a handle on Outside-In now, while you can still leave competitors behind.