Inside-Out Versus Outside-In

Courtesy of Bright Hub

There are two ways to look at one’s business: “inside-out” or “outside-in”. Let me go through each in turn.

The first approach starts with what one first possesses before looking at anything else. It raises questions such as what one’s organisation has in terms of capital, equipment, core competencies, human resources, customer relationships and distribution networks and how these could be leveraged upon.

Typically, an inside-out organisation asks itself questions such as the following:

– What are we good at? Conversely, where do we suck?

– How have we progressed or regressed over the last few years?

– Which division or function should we channel our resources to?

– How do we leverage our strengths and compensate or eliminate our weaknesses?

Such an organisation often embraces a more reflexive form of management. It is mindful of its own history, aware of its growth trajectory over the years, and has its pulse on internal benchmarks and milestones. An inside-out organisation is also finely attuned to what its team of managers and staff are capable of doing, as well as its organisational climate.

Organisations embracing the second “outside-in” approach shift their focus outwards. Unlike the first, their primary concerns deal with factors such as the shifts in their operating environments, customer preferences, suppliers and competitors. Often more entrepreneurial than the first, these organisations are usually more excited about opportunities which lie outside the box rather than introspect about internal dynamics.

Typically, an outside-in organisation questions itself on the following:

– Where are the growth markets available for our business?

– How can we tap on a nascent opportunity that is available?

– What are the prevailing trends in consumer tastes and how should we meet them?

– How can we better serve the needs of the market?

With its eye firmly trained on externalities, such an organisation is less mindful of its limitations compared to the first. It puts a premium on customer care and excellent service, ensuring that no stone is turned to be the best that it can be in the business. Often, it is heavily directed in a top-down manner to seize opportunities quickly.

Of course, the real world isn’t that simple. Most organisations will fall somewhere in between the continuum of inside-out and outside-in thinking.

While outward facing functions like marketing, sales, business development, and visitor services would need to adopt outside-in thinking, management roles like HR, finance, planning and operations would need to consider both inside-out and outside-in strategies.

Any organisation which spends too much time navel-gazing will sooner or later sound its own death knell in a hyper-competitive marketplace. At the same time, organisations which do not understand their limitations while opting to pursue pretty rainbows may also fall flat on their faces.

The best organisations skillfully employ both approaches. They are mindful of where their strengths and gaps are while honing their organisational “radars” to detect impending opportunities or threats. Such organisations know that the most effective business strategies need to consider both internal practicalities and external shifts in the same breadth.