From the Outside-In: The Path to Relevance

“Insanity,” Albert Einstein said, “is doing the same thing over and over again and expecting different results.”

For most associations, doing the same thing is operating from the inside-out—seeing the world from the perspective of their organization rather than its customers; and organizing on the basis of internal logic—around silos of products and functions rather than market segments, customer challenges, projects or solutions.

Few questions stymied the CEOs we interviewed in our research more than the question about what they saw as the greatest value they delivered to their customers. Their answers usually consisted of lists of existing programs or recitations of their mission statements, mistaking what the association thought was of value for value proposition.

The point is that value propositions are NOT about you but about your customers’ experience.   The only thing that counts as value proposition is your customers’ perception of your value to them and the outcomes they experience.   Your organization’s opinion or committee’s conclusions about your value do not count.

While your members may attend your events, for example, the reason they chose them over myriads of other options may be factors you never thought of or considered peripheral: the intimacy of the experience; convenience of the schedule; the audience your events attract; opportunities for follow-up discussions on line. Anyone of these could become a basis for a fresh value proposition and breakthrough business line. Yet these nuanced nuggets of customer value are missed unless an organization has an outside-in focus, investing in understanding customers rather than generating products and ideas internally.

The inside-out thinking of most associations, and inability to identify and resonate with the things that matter the most to their customers and markets, is a very serious liability. A value proposition is the reason customers pick your services over others. If association leaders cannot put their finger on exactly why customers should choose their services over others, they cannot grow and increase their relevance no matter how many cool gadgets and innovative programs they adopt. They remain stuck on the status course which is a fast track to irrelevance.

So, what makes the “Facebooks” of the world—and by extension, your association—an indispensable part of someone’s life? The first recourse they automatically turn to for something that matters to them?

In his book, Re-Organize for Resiliency, Ranjay Gulati, the Jaime and Josefina Chua Tiampo Professor at Harvard Business School and expert in business growth in turbulent markets, found that the companies that were able to survive economic downturns and emerge as market leaders, were those that had succeeded in truly re-orienting all aspects of their business around demand, embodying what Gulati calls an “outside-in” mindset—making customer value the starting and end points.

We found similar patterns in our research into associations and other membership organizations.  Organizations that are experiencing growth are those whose relevance resonates with demand. These organizations are flexible, people-centered and invested in helping customers (members) succeed rather than attached to their own products, missions, policies, processes or categories.

Relevance today equates to capabilities for outside-in thinking and execution. To reach this destination you need to enter a different mode of thinking and doing business; and re-think every aspect of your business from the perspective of your customers–outside entrenched assumptions, committee-led mechanisms and formulaic patterns of thinking. The use of social media is critical for enabling the execution of outside-in organizations focuses on relationships, continuous learning and collaborative innovation.

Without this fundamental re-orientation, changes based on products, strategies, structures and messages will leave you “doing the same thing” and getting similar results.

What does outside-in thinking mean in practice? The shift from inside-out to outside-in, simple as it sounds, has revolutionary implications.

Customer-centric, outside-in organizations have moved relationships from the periphery to the core of all levels of their business. This results in a key shift from producing and pushing products you think have customer value, to crafting specific strategic solutions with and for customers.

Solutions require holistic, contextual and continuing knowledge of customers. This changes the tone of the conversation with them from tactical to strategic; from information delivery to two-way conversations.  It also changes the focus of the business from production to relationships. Focusing your association’s business on understanding customers’ problems is the difference maker in uncovering breakthrough innovations that move your organization to completely new levels of competitiveness.

Gulati offers the case of Fresh Express as an example. By understanding what mattered to customers the most, the company realized that the greatest value it could deliver to them was not just salad, but the convenience of not having to wash the salad greens and chop them up into a salad.

The company would not have risen to what is now, a $2.5-billion-a-year industry, without a revolutionary shift to outside-in thinking that allowed it to realize that busy consumers wanted companies to make the whole salad for them rather than simply continue to tweak the packaging of their lettuce.

This shift to outside-in thinking requires a mental shift and the capacity to innovate beyond products and outside the confines of narrow categories. Aiming to solve customer problems allows an organization to see how various assets connect to each other and add up into solutions for various member/customer segments and specific challenges. The trend for knowledge service today is toward integrated solutions rather than single, disconnected products.  Instead of innovating by adding more of the same, customer-centric orientations are focused on re-imagining, re-configuring, bundling and leveraging in new ways what they or their partners already have.

A host of new sources of value are emerging. Providing access to multiple assets around the glob, for example, could be of far more value to customers than being the sole producer of your products and benefits.  Moderated and strategic interactions among members and enabling key relationship could be the basis of value propositions and competitive advantage by themselves.

Associations for the most part, have not recognized and leveraged such  new sources of value and competitive advantage based on interactivity and collaboration beyond the generic and undifferentiating “networking” that they promise. Purposeful and moderated interaction has increasingly become an important, and often expected, source of new value for both service providers and manufacturers.    LinkedIn, for example, built its entire business model on providing solutions to the needs for connection, collaboration, community participation and co-production that are critical to today’s professionals.  Sermo is a physicians’ network that provides physicians with a moderated online platform on which they can exchange information and discuss difficult cases.  The insights and information in these conversations are leveraged as high value content to attract corporate subscribers—from sectors that serve, supply, finance etc. doctors –who pay hefty fees to access these conversations at various levels.

Associations need capabilities for discerning constantly new opportunities for providing fresh value to them, outside established formats, and for identifying new sources of value beyond products, especially those based on enabling relationships, strategic interaction and community development. They desperately need to leverage and integrate strategically new modes of production, delivery, learning and development—primarily the strategic rather than ad-hoc use of social media platforms—as the bases of value creation and competitive advantage today. Becoming a partner in the continuous crafting of new solutions connects you with members/customers where they live and integrates you with what is uppermost in their minds, as it happens. This is the path to relevance and indispensability.

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