Based both on a macro view of today’s markets plus lots of ground-level observations, I’d estimate 95% of companies say they put customer interests first; 10% understand what that means; and perhaps 3% actually do so. With potential competitive gain in migrating from company interests first (inside-out) to customer interests first (Outside-In) dangling like a carrot in front of business, why is there so little movement?

Putting it plainly, migrating from I-O to O-I is much harder than it looks. It’s change. Lots of change. And to answer the title question, disruptive change, especially at the organizational level. Yes, line employees do struggle with having to learn new skills or working with different people in different roles. But when making the I-O to O-I migration, resistance at this level usually pales in comparison with the fights going on overhead―struggles to protect silos, gain new turf, rule over the largest number of employees and even have the largest office (or largest sunroof on the company car).  

So we have irresistible force (customers) versus immovable object (corporate silos). And buyers are at worst in a punishing mood, or at best quick to leave when seller operations start going south. Just ask GM, Ford, Chrysler, the ghosts of Circuit City & CompUSA, Sprint, Nortel, Bearingpoint, etc.―all of which lost ground or went under because they ignored customer needs and preferences, not because of the recession.

Does anyone see any give on the corporate side? Or will fear of change and change avoidance create lots more casualties?

I confess – I often don’t. But responding to emergencies requires thoroughly thought out process that mobilizes the right resources the right way at the right time. If you don’t plan out responses beforehand you get BP in the gulf coast or Toyota stomping all over its meticulously crafted brand.

But these disasters didn’t trigger me writing this. Instead, it was a superbly well-executed emergency response that still has me shaking my head in appreciation.

In the U.S., we have many, many people contracting salmonella from eating eggs. First, one egg-producing company had to recall about 350 million eggs. Then, a second producer had to recall 150 million more. This second producer supplied Costco, where we buy eggs.
Within scant hours of the recall, I received a well-produced robo-call (so well-produced I didn’t hang up) telling me I’d purchased eggs at Costco that could be carrying salmonella and had been recalled. I was instructed not to use the eggs but bring them back to a store for a full refund.

Can you imagine identifying a gazillion egg purchasers with their phone numbers from membership records and calling them in very little time with a cut-through” message? Yes, good intent towards customers is ultimately responsible. But executing the plan took exceptionally well predefined process and following it to a tee. Kudos to Costco, which I frequently include in my short list of Outside-In, customer first companies.

How about sharing some examples, good or bad, including the process or lack thereof apparently behind them?

Giving customers what they want the way they want it often does them no favors. In particular, providing customers immediate gratification often comes at a cost to actual value delivered.  Customer empowerment complicates this issue. Not that I would ever say a bad word about customers (or clients), but they can be incredibly short-sighted at their own expense. Nonetheless, they’re really feeling their oats, and many take an “our way or the highway” stance.

Should we strike a balance between placating/satisfying and delivery maximum value―or go all one way or the other?

Lior Arussy from the Customer Experience side of business just relayed an interesting observation in a Customer Experience Group (Linkedin) post―that executives frequently claim only new organizations can go customer-centric because you can’t change the DNA of more mature companies. He was asking for contrary examples, and I fed him a bunch (Best Buy, UPS, USAA, most upscale hospitality chains). And I actually forgot among the toughest environments for migrating to customer-centricity―retail car dealers―where multiple regional networks have now successfully crossed the threshold from inside-out to Outside-In.

 But Lior’s question started me thinking about commonalities among companies adopting O-I versus starting that way. And after cogitating more than a bit on this question, including revisiting many years’ worth of clients―some who crossed the threshold, others that got part-way before flinching, I believe I did find the “secret sauce:”

The recipe is: one part steely-eyed recognition that customers now hold the upper hand in buyer-seller relationships; one part shrewd assessment of how to take advantage of this customer empowerment; and one part dispassionate willingness to redesign their organizations from top to bottom―and from the customer in―regardless of where the bodies fall (or fly). And BTW, not one ounce of goody-two-shoes empathy for customers. O-I is a cold, calculated business choice for companies that successfully migrate from inside-out to Outside-In.

Companies that try to go O-I because “it’s the right thing to do” don’t get far. While leaders are empathizing with customers, they’re also empathizing with employees and dithering over decisions about which people and what silos have to be moved around, aside or out to make way for a customer-in designed organization―which needs fewer employees, supervisors, managers and executives than an inside-out company, not to mention greatly shrunk silo walls.  

Other views?

Through my travels across Linkedin groups, I’ve read (and received) innumerable comments saying this approach or activity or that was started by ____________ in year ____ because they wrote about it in their book, “______________.” I even had someone seriously claim our Visual Workflow approach to Outside-In didn’t exist until 2002 because there was no “academic literature” describing the underlying principles until then – despite HYM and others deploying it regularly since 1996 (actually, I had written a book describing the principles in 2000, but that didn’t count because I didn’t write it during my 10 years teaching graduate B-school). These comments come from marketing, HR (and its related components) but especially from process thought leaders regarding the starting points for customer-centric process. 

So here are the real questions:

 If an academic or a process theorist or even a heady practitioner writes about something they can’t make happen at street level with any frequency, should they lay claim to it? If so, I should lay claim to all of Don Peppers and Martha Roger’s work initiating “One-to-One Marketing” in the 1990s, because I’d been writing about it in the 1980s – without, unfortunately, popularizing it.

 Or if someone writes about customer-centricity in a Lean, Six Sigma or LSS book, has customer-centricity been part of that approach since then? 

 I say “No” to both questions. We don’t practice theory. Concepts to me are only real when there’s empirical evidence they’re being practiced and popularized both. For all the words written about customer-centricity now being integral parts of Lean, 6S and LSS, we still don’t see real world, customer-driven implementations. And when I’ve asked Linkedin commenters/readers (repeatedly) for examples of Lean, 6S or LSS taking companies from inside-out (company-centric) to Outside-In (customer-centric), I’ve heard deafening silence. Except for Toyota examples.

What do you say?

Hey – I’ve been through this entirely too many times. At the start of the relationship marketing movement; when B2B database marketing got serious; when “micromarketing” started; with TOC (Theory-of-Constraints); and in spades with CRM. All sure bets practitioners could take to the bank. All supposed slam-dunks coopted by parochial economic interests – whether by advertising agencies, media outlets, Six Sigma & Lean, CRM software companies, etc.. Looking back on this history makes me fear O-I is ready for a face-plant.

We’re hearing too much ungrounded exuberance, too many excessive claims, too many ungounded predictions about O-I. And saying that market conditions will force business to go Outside-In  ignores history. Let’s face it straight up. O-I will succede if we make it sufficiently attractive to companies, not because the market “forces” companies to go O-I. And accomplishing this will require much more from the O-I community than the community’s yet prepared to give.

We’re changing market phases now from “Innovators” to “Early Adopters.” To get there, we have to do more than prosletyzing the O-I concept. And to reach some of the penetration levels O-I aspires to, we’re going to have to move on to “Early Majority” clients – which will require an execution level the movement’s not yet close to.

To get O-I into the meat of the marketplace, I believe we have to accomplish four, difficult tasks:

1. Do it right:  Migrating from inside out to Outside-In is a three-step journey: a.) aligning strategy to customers (which requires finely honed planning skills); b.) aligning process to strategy (which we’re best at); and c.) aligning technology to process (which the movement often ignores). Sure we can accomplish quick wins with process change or a customer experience initiative - provided the company already leans O-I, like Best-Buy, Fed-X, Trader Joe’s and USAA . But delivering Outside-In enterprise-wide, to its fullest capabilities requires all three alignment elements, not just one.

2.  Train O-I practitioners across the alignment spectrum:  We have lots of O-I practitioners trained in aligning process to customer strategies. Almost none trained in aligning strategies to customers. And way fewer trained in aligning technology with process. We need to provide training in all aspects of O-I. We’re not doing it.

3.  Focus on the steak. not the sizzle:  It’s easy to toss off claims that O-I is the greatest thing since sliced white bread. It’s another thing to make it work. And making it work in organizations not already O-I of their own volition demands properly and persuasively framing the long-term benefits of the inevitable organizational change required to migrate to O-I, rather than pumping the bellows. We need to stop discounting organizational change requirements and start confidently justifying them.

4.  Over-deliver instead of overpromising:  Overselling sweeping, non-specific benefits or offering growth, profitability or expense-reduction bromides hurts Outside-In in the long run. Face it, helping clients achieve broad-based O-I success requires a “grind it out” mentality. We create value incrementally, step-by-step. Enterprise-wide, O-I does not create whopping revenue gains, profitability gains or expense reductions in a flash – or even a year. Double-digit improvements? Very often. But not quantum leaps. Puffery destroys credibility. Remember, our clients are customers. Overselling them on the benefits of Outside-In is very inside-out.

Outside-In has cleared the “Innovator” phase. But we’ll need to change what we say and what we deliver to make substantive progress penetrating the “Early Adopter” segment of companies. And then we’ll have to make even more dramatic changes to enter the mainstream and penetrate the “Early Majority.” As a community, I believe we have a whole lot of hard work ahead of us before we can  bring Outside-In to the corporate masses. Are we ready?

What do you believe?

The first question back from most will be: “How do you define BPM?” True to my proclivity for defining terms including “BPM” by their real world use, rather than aspirational musings by thought leaders, I define BPM as:“The totality of formal, structured business process design/management methods developed for use by trained process professionals.”

If that’s how we define “BPM,” does O-I process fit under this umbrella? No, it does not. While O-I process approaches including Visual Workflow, the CEMM Method and Human Process fit the first part of the description, when we get to “developed for use by trained process professionals,” that’s inaccurate. None of the primary O-I approaches requires employee training except for initiative facilitators/leaders―and some of these folks find Visual Workflow, for example, so intuitive they can pick it up on the fly.

Outside-In practitioners don’t need belts to hold up their process pants.

Not needing heavy training in process techniques, process-speak, process-symbology and the like makes O-I process very accessible to a broad spectrum of employees, which is critical to O-I’s success. O-I process focuses on work directly or indirectly affecting the customer experience―which is another way of saying front/back office and service work, much of it performed by knowledge workers. Knowledge workers don’t “just do what they’re told.” Nor do they have the time and inclination to go off and attend process classes. Process approaches for the O/S (office/service) either heavily involve knowledge workers without prior process training or they don’t work. That’s why LSS, Six Sigma and Lean, when applied in the O/S, suffer from a much higher relapse rate than diet programs.

So no, Outside-In process stands apart from BPM, IMHO. It’s “process to the people,” instead of process for professionals.

Other opinions?

When business conditions and contexts change in ways that require significant professional adaptation, most managers go in one of two directions, with a small minority taking a third path:

1.  DISPUTE:  They acknowledge change but claim their training & skill sets are immutable. What worked before will work in the future (with enhancements). We’re already there” is a common line of defense.
2. DENY:  They ignore change, believing their environment is immutable. “Process works by a fundamental set of rules and always will” is a catch phrase.
3. ACCEPT:  In early stages of change, a minority comprehend that neither their skill sets nor their work environments are immutable, and they can’t be married to anything but success.

 Why is this question relevant? Fundamental economic changes, demographic changes, technology advancements and globalization together have radically changed our business environment―with buyers big winners and sellers both short- and long-term losers. Consequently, business is fast losing its ability to act independently of customers, and customers are more and more proactive in demanding business be done “their way.”

Process: 

 Process, which creates perhaps 80% of customer experience, must respond. Not by being nice to customers. Not by trying to give them most of what they’re asking for. But more fundamentally by letting customers drive the “what,” “who,” and “how” of process design, just as they’re already starting to drive business strategies. Outside-In Process is the first significant process response to change. Others may come along. But regardless of where process people go, they need to go “somewhere else,” and soon.

Marketing:

The new emphasis on customer experience discounts the importance of  creativity, promotional communication (including promotional branding), customer analytics (including databases) and lots of other traditional marketing stuff. Hence, lots of marketrs will have to leave their comfort zones before their comfort zones leave them. Outside-In overall, which fuses customer-centric planning with process design, is one escape route. There may be others. But marketers too need to act fast to avoid being very dis-comforted.

Which path will you take? 

Will you dispute? Deny? Or adapt?

Please, no comments like “You can’t manage what you can’t measure.” That’s bunk. Always has been. Always will be. And to support my harsh stance on this ridiculous statement, I’ll cite none other than Albert Einstein, who kept a sign on his Princeton office wall saying:

“Not everything that matters can be measured. But not everything that can be measured matters.”

In many cases, trying to measure growth in share of customer stemming from improved customer experience triggered by introduction of Outside-In process quickly becomes a fool’s errand. We can get halfway there by measuring improvement in customer experience (although doing so requires a very high level of research expertise, beyond simple NPS scores). But even these measures are subject to influence from contextual changes. And freeing changes in share of wallet from contextual changes defies research. Hell, we can rarely measure the thickness of the wallet, so how do we calculate the share?

So what are the alternatives to direct measurement? Or does anyone want to argue with Einstein?

Based on our experience, the most effective way in most situations is establishing intuitive “cause & effect” relationships where certain actions well-performed will enhance customer experience in ways that should broaden relationships – or directly trigger additional business from customers, as should be the case for new products/services. While research can’t statistically measure the effects in most cases, they can validate the connections using Kano studies (not VOC, C-Sat or especially not NPS).

Not precise enough for you? Then you don’t belong measuring anything to do with people, customers included.

So what should O-I implementers do instead?

We (HYM) commonly characterize O/S (office & service) work as O-I’s natural domain and production as more apropos for inside-out approaches, especially Lean, which is our preference. Since most work directly affecting customers happens in the O/S, this creates for a nice, clean, understandable distinction. But every once in a while, complexity does help – as is the case with accurately describing the O-I/production process dividing line.

Case in point. A very high volume reconditioner of capital goods interviewed us for a process engagement intended to increase throughput (we formally kick off next week). The company’s customers had voted with their wallets that they wanted to sacrifice pristine quality for a lower finished price point, which made throughput and efficiency the primary goals. Sounds like a job for Lean (or LSS) rather than O-I, no?

No. During an initial day observing we quickly discovered the major impediments to reducing cycle time. Communication breakdowns and slowdowns only addressable through systems architecture changes plus an infusion of new, communication-based process automation technologye. Yes, we’re to recommend plant layout changes and work force disposition and training, but this client’s primary issues aren’t origi9nating on the shop floor.

From our perspective, neither Lean nor LSS redesign communication process well, especially at the level of specifying systems architecture and application layer changes. In contrast, the full O-I regimen - which aligns strategy to customers; process to strategy; and then technology to process – gets deep into enabling technologies. So we made what I believe is fair representation saying that O-I was a better fit than Lean or LSS, crossing over the basic O-I/production process dividing line. The client agreed with our thinking.

I know our saying that Visual Workflow, the O-I approach we use, will outperform Lean and Lean Six Sigma in this setting will rile up some traditional process types, who’ve at least had safe competitive refuge from O-I Process on the production side. But I’d venture a prediction that we’ll soon see more encroachment by O-I on what’s been accepted as traditional process space as O-I continues to grow in share of overall process redesign work.