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Leading from the Outside-In

Check out Anna Caraveli’s new book published by ASAE, The Demand Perspective.

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Perhaps you and your organization grapple with some of the questions that preoccupied the executives I interviewed for my book as they contemplated how to take their organizations to a next phase.

  • Should we create radically different membership and business models?
  • Should we go “global”?
  • Should we still have a print publication?
  • How can we increase attendance at our conference?
  • How can we increase engagement?

How do you get to answers? If you turn inwards to your organization and circle of insiders, then you are likely an inside-out organization. This means that your primary focus is on your own products and policies. You first develop programs or services and put in place plans or policies and then sell or implement them. You are likely organized into silos around your products or functions and operate on the basis of bureaucratic management systems. Chances are that these internal processes of Q & A will keep you running in circles–spawning a slew of new programs, reports and initiatives that bear little connection to each other and do not add up to compelling, customer value.

What If, on the other hand,

Instead of: You asked:
What should our next phase of growth or impact be? What direction are our customers going in? What new challenges and opportunities are emerging for them that they may not even be fully aware of? What do the need to succeed?
How can we increase retention and attract the next generation of members? How closely do our services resonate with the problems that keep our members “up at night?” How can we deliver higher value at greater speed?
Should we change our membership model? How do our members engage with each other, learn and solve problems? How do they use our services and what do they want to achieve with them? How can we adapt service delivery and value creation to best suit their needs?
Should we go global? Where do our customers want and need to go. Is access to global markets essential to reaching their desired destination and in which way?

 

In this case, your organization would look at the world from the outside-in and see the world through the customer’s eye. Outside-in organizations first understand the problems and issues that matter the most to their customers and then craft constantly fresh solutions for them. As a result they are flexible and can rapidly adapt to new customer needs.

Inside-out organizations, on the other hand, are trapped in an internal, insular dialogue and are obsessed by their own products and policies, thus missing the only driver that could propel them to a new level relevance and innovation: their customer. They run in place, rather than with their customers, falling increasingly behind.

Because most associations are inside-out, they are at a great competitive disadvantage. The problem is that there is a fundamental mismatch between rigid, siloed business architectures built from the inside-out and a fluid, fast-paced, consumer-driven market that requires speed and undivided customer focus to be competitive. New, supple, lean, for-profit competitors that have re-invented the stale, dues-for-benefits membership concept as collaborative communities are rapidly encroaching in what was and could be association territory. They are not weighed down by complex governance structures or layered decision-making processes. Their connection to customers is not blurred by territorial concerns or attachments to legacy programs and “the way things are done” in association. Their only focus is the customer.

This is why this book lays out a path of fundamental re-orientation rather than of addition or subtraction.

Its premise is that to break the logjam associations are in and leap forward to a different level of competitiveness in today’s fluid and fast-paced environment, leaders need to reorient their core business from inside-out to outside-in and, by doing so, change the basis on which they compete for, capture, and deliver value.

And guess what! Market orientation and the type of relationship you have with your customers determine economic returns.

Starting with the economic downturn in 2000, Harvard Professor Ranjay Gulati followed the performance of a group of companies for nearly a decade. He analyzes the results in his book, Reorganize for Resiliency and concludes that companies, like Best Buy, that survived the downturn and thrived were all organized from the outside-in:

Those companies built around an inside-out mindset—those pushing out products and services in the marketplace based on a narrow viewpoint of their customers that looks at them only through the narrow lens of their products—are less resilient in turbulent times than those organized around an outside-in mindset that starts with the marketplace, then looks to deliver creatively on market opportunities.

Like Gulati, I found that the associations in my study that were experiencing decline were bureaucratic, silo-oriented, and focused on the inside. Without exception, the membership organizations of my study that were growing and were seen by their members as key resources for their success were customer-centric, flexible, curious, energetic, and non-hierarchical.

I wrote this book to help leaders on all levels lead their organizations on a journey from inside-out to outside-in. Without an unencumbered focus on the customer, associations miss insights and opportunities that can make the difference between “nice to have” and “critical to have” in members’ perception of the association’s value.

By focusing on a handful of cases and delving into the combination of tangible and intangible factors that determine outcomes, this book provides a different playbook for leading knowledge services today, helps leaders uncover value and opportunities that were hidden or discounted, and helps leaders identify and re-align the real drivers of change.

The book lays out a two-pronged path for outside-in leadership:

  1. Converting intangible assets (innovation, relationships, and so forth) into economic outcomes
  2. Realigning/reorienting core pieces of your business from the customer’s perspective.

The book will walk you through the execution of 6 foundational realignments that determine your organization’s focus and orientation:

 

From To
Inventive thinking Tactical, inside-out thinking Inventive, outside-in thinking
Mindset of continuous learning Information Understanding
Passive knowledge Collaborative Discovery
Customer-centric value propositions Just making a promise Delivering on a promise
The new engagement Participation Connection
In the business of unique solutions Standalone products Integrated solution
Motivating leadership Hierarches Partnerships
Operational management Strategic leadership

The new playbook requires leaders to stretch beyond the comfort zone of familiar assumptions and tools and lead instead by building strategic relationships and long-term capabilities, enabling cultures of openness and innovation, and identifying new bases for value and competitive advantage.

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(photo credit)

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