What mindset does your organisation have – Outside-In or Inside Out?

Published in the July 2021 edition of Moneywise Magazine.

By Engaged Strategy|2021-07-29T14:50:57+10:00July 15th, 2021|

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At times I have pondered why is it that so few brands are truly customer focussed and staff focussed.

There are many reasons. They may not fully understand and appreciate massive economic benefits of customer and staff engagement. They may only be focussed on short-term gains. The leadership culture may have a stronger focus on shareholder value and profit. Of course, enlightened organisations know that if you look after staff, they in turn look after your customers. And if customers are loyal and recommend you to others and give you positive reviews, then shareholder value takes care of itself.

I strongly believe that in addition to the above, a key reason for the lack of customer and employee focus is based on the prevailing mindset. According to George S Day and Christine Moorman, there are two ruling paradigms or mindsets in business today: the inside-out approach and the outside-in approach. The overarching goal for all businesses is to create shareholder value. These two approaches use very different means to achieve that end.

The inside-out approach is guided by the belief that the inner strengths and capabilities of an organisation are the most important factors. The metrics used are internal such as sales, revenue, supply chain, costs and others that are largely efficiency-based. I call it a factory mindset.

Imagine you work for a brand that sells marketing strategies with a heavy focus on search engine optimization (SEO) marketing. You understand the business completely; you understand all the technical nuances of SEO strategies; and you breathe and dream about SEO. Personally, everyone in your organisation believes that SEO is extremely important for any business to enhance its marketing outreach. Hence, all your strategies are tailored around providing the best SEO strategies for the market you operate in.

During an economic downturn phase, you meet with a few business heads to sell your products and services. You tell them all about the importance of SEO and how it can help them turn around their business in difficult times. And they look at you incredulously for what they need now is a more affordable form of marketing that gives them a greater guarantee of leads converting to clients straight away. SEO is probably the least of their priorities.

For organisations that are too inside-out in terms of mindset, this approach can create dangerous myopia. As an example, according to a Bain & Co. study, 80 per cent of executives believe their brands deliver a great experience, but only 8 per cent of their customers agree [Source: Closing the delivery gap – James Allen, Fred Reichheld, Barney Hamilton and Rob Markey]. Does it really matter what you do if your customers do not appreciate it?

In comparison, the outside-in mindset is driven by customer value creation, customer orientation and customer experiences.

The outside-in mindset aims to achieve long-term shareholder value by listening and providing value to customers better than the competition, while providing a seamless customer experience with emotional resonance. The internal culture is customer-focussed and customer insights are used to drive improvements and innovation. There is also a strong belief that at the end of the day, the source of all revenue is your customers. This is because your customers decide to select you over others in the market – which are your competitors; they make a decision to stay loyal to your brand and repurchase; and finally, they decide whether they should give you a positive or negative referral.

The outside-in strategy delivers outcomes that an organisation needs to leverage to drive long-term shareholder value.

But what works for staff engagement?

The exact same inside-out vs outside-in mindset applies to staff engagement.

I remember meeting a CEO to outline an employee engagement program. His response was: “Why do I need an employee engagement program? Staff get paid anyway, so that should be enough”. To help him understand, I outlined the economic benefits of employee engagement and highlighted that the reason Executives are where they are because they are strongly self-motivated. However, not all staff are self-motivated; some look for motivation externally which helps them deliver great customer experience.

Imagine an organisation that has a majority of grumpy staff or demotivated employees who are only working for the monthly salary credit for their sustenance. They are the people who only do a job; they do what is outlined for them to perform. But they do not go above and beyond to deliver more than what is expected of them. When such employees interact with customers, they transfer these emotions of discontent to them thus negating the organisation’s efforts to deliver great customer experience.

But how does an organisation engage employees? Is it by providing more benefits? Is it by enhancing salaries? Well, there are several methods to do it, but the most powerful method that has a long-term benefit is to engage employees by aligning their personal goals to the organisation’s goals. Let me explain this with an example. Customers of gyms want to get fit. Gym instructors and trainers are people who want to help others get fit. By providing staff with a variety of ways to help them achieve their personal purpose and mission such as to include healthier food options or a health tracking app, the gym aligns individuals’ goals (that of both trainers/ instructors and customers) with the organisation’s goals of providing fitness, and thus the brand reaps its rewards.

When an organisation combines the outside-in and inside-out process, it can find the middle ground between customer requirements, employee needs and also factors in its own internal strengths and capabilities when developing strategies for growth and sustenance in the short-term and long-term. These insights, in combination with aligning the organisation’s purpose with staff’s purpose, can drive profitability by enriching the experience of both its staff and customers together.

Listening carefully to staff and understanding pain points and drivers to improve staff engagement will help staff go above and beyond their call of duty. This powerful action by staff is key to any business achieving long-term success.

Hence, irrespective of whether you are a B2B or a B2C brand, when you bring together the outside-in and inside-out processes to design strategic initiatives for your business, it creates a virtuous circle that encompasses customer experience and employee engagement within a healthy and sustainable eco-system.

Article by Christopher Roberts

Managing Director, Engaged Strategy

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