Innovative Leaders Think Outside-In, Not Inside-Out

by Rod Collins

 

Traditional business leaders often assume that everything that is needed to be successful out in the marketplace is contained inside their organizations. As a consequence, these managers tend to think inside-out and view the outside world more as a conceptual market than as a collection of human customers.

Inside-out thinking reinforces the notion that bosses are more important than customers. This explains why traditional corporate cultures seem to be more interested in pleasing bosses than delighting customers. In the inside-out organization, the focus of business is on the transaction. As a result, we sometimes find that traditional managers don’t attach any real value to their customers because consumers are viewed merely as market mechanisms for the transaction of products into profits.

Innovative leaders, on the other hand, think outside-in. That’s because they put the customer at the center of everything they do. They understand that, if they want to truly know what’s most important to customers, they will never have everything they need to succeed within their walls. Outside-in organizations understand that managing in a rapidly changing world means that managers cannot rely solely on the knowledge of their inside experts. They assume that market reality is subject to accelerating change and that management’s first job is to continually align its strategies and its products with what’s most important to customers. In the outside-in organization, the focus of business is on the customer experience. Thus, if customer values are at odds with management policy, the first step of managers who think outside-in is usually to reconsider the value of the policy.

LEGO is a company that is thriving today because more than a decade ago, its people learned the value of thinking outside-in when they responded in an unusual way to a security breach. In the late 1990s, four weeks after the release of the first version of LEGO’s Mindstorms kits, a student hacker cracked the software code for the new product and created a better version. Rather than defensively protecting its copyright and beefing up its security, LEGO realized that the hacker meant no harm. In fact, the student was a loyal LEGO enthusiast who was only interested in making the product better. So, LEGO’s managers decided to think differently by choosing to embrace rather than to fight the hacker and reaching out to all LEGO enthusiasts to invite them to co-create the next generation of Mindstorms kits.

Today, LEGO supplements its 120 paid designers with 100,000 loyal enthusiasts. Thinking outside-in has literally brought the company free resources. There’s no better way to understand what’s most important to customers than by inviting them to become voluntary co-creators, especially when they care about your products.

 

Rod Collins  (@collinsrod) is Director of Innovation at Optimity Advisors and author of Wiki Management: A Revolutionary New Model for a Rapidly Changing and Collaborative World (AMACOM Books, 2014).