Organisations must supplement internal wisdom with external insights
Technology now enables firms to see what consumers are doing in real time; it makes it possible for products and experiences to be customised, even personalised, as never before, and it supports extensive business partnering and collaboration.
From a consumer perspective, today’s web, mobile and social technologies make it much easier to develop community content and participate in co-creation activities. All of these trends will strengthen greatly over the rest of this decade. By that time ‘outside-in’ forces may rival or even exceed the importance of internal capabilities in many firms.
Listen and learn
So what does it mean for a business to be outside-in – to really be driven by marketplace signals, needs and dynamics? As digital technology creates new ways to listen to the market and rapidly respond to change.
For decades companies have claimed to be market-driven, customer-driven, solutions-driven and the like. The reality is, however, that many companies struggle to see past their own internal company perspectives; their long-standing systems, silos and cultures are still the dominant business realities.
It’s not enough for companies just to listen to their best customers. Most firms do this quite well. More important is a broader, external market orientation that can detect and respond to the early market signals. It is this that will eventually transform a firm’s core business.
Internal company capabilities will, of course, always be a critical part of the value creation process. But whereas internal know-how was once virtually synonymous with the value proposition of the firm, today a significant rebalancing is under way.
For every major type of traditional internal value creation activity, there is now an increasingly powerful external counterpart. When we talk about companies becoming more outside-in, we are essentially urging you to put more emphasis on the listening to customer and external feedback.
How do you shape up?
While most companies listen to customer feedback, it’s primarily the leading web companies such as Google and Amazon that embody the most aggressive outside-in approach. For more traditional firms, the changes are likely to be partial, as the answers to the questions below often reveal:
- Are business decisions mostly made by gut feel, or are they based on hard data?
- Is your firm sufficiently leveraging its wider ecosystem, or is there still a ‘not invented here’ syndrome?
- Does your firm have an integrated view of the customer, and is this view easily available to your customers online?
- Can your firm effectively listen to, understand and rapidly respond to relevant marketplace conversations?
- Are external sources of information about your firm and market becoming more insightful and timely than your internal data sources?
- Does your firm react and move with the speed of the market, with minimal internal friction?
How is IT impacted?
These questions raise issues well beyond the traditional remit of Enterprise IT, but they also have many IT-specific implications. For reasons we all understand, Enterprise IT is often the most internally focused part of the company, with employees and business units routinely referred to as IT’s “customers”.
Similarly, IT networks have been designed to wall off the outside world; IT projects are managed according to internal company timetables, and outside IT services and information are often viewed with suspicion. We recommend that our clients think carefully about each of the questions above from an IT perspective, and be willing to take a strong stand where necessary to move their organisations away from an excessively internal focus.
More positively, adopting an outside-in perspective can help business and IT better communicate about the issues of most pressing importance to the firm. Enterprise IT should try to adopt the end-customer’s perspective as much as possible.
The bottom line is that technology now enables us to leverage external market resources as easily as the resources inside our own organisations – and sometimes more easily. The implications of this shift will be increasingly profound, and will be one of the principal drivers of future business change.