Download PowerPoint Presentation - LGO

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
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