Open up the Marketing strategy section of your Marketing plan. Now, ask yourself this question: Are these strategies based on ‘inside-out’ thinking or ‘outside-in’ thinking? Inside-out thinking begins with more traditional questions, such as: What are we good at? What are our capabilities? What are our products? Outside-in thinking looks at everything the company does through the eyes of the customer with an emphasis on creating and keeping customers by delivering exceptional customer value. If the answer is “mostly inside out,” then it might be time to take a different approach.

The Domain of Strategy

Many companies have focused heavily on internal processes, looking for a way to reduce costs and improve productivity. While this is essential to survival and driving short-term earnings, it doesn’t help a company address shifts in the market, new technologies, new channels or the entrance of new competitors.

This is the domain of strategy. Strategy is about defining and setting the long-term direction for your organization. Marketing as one of the primary external-facing entities (sales is another) within an organization, plays a central role in strategy development and execution.

Successful Marketing strategies leverage an outside-in approach, which takes seeing your customers as assets. If you want to take an outside-in approach to strategy, you must be willing to continuously invest in learning about and from your customers and to translate this knowledge into initiatives that will enable you to gain a competitive advantage, improve your market position, and ultimately your shareholder value.

The Benefit of an Outside-In Approach to Marketing Strategy

Take an Outside-In Approach to Create Your Marketing Strategy — Marketing Strategy benefits from an Outside-In Approach

Because Inside-out thinking begins with more traditional questions such as “what are we good at,” “what are our capabilities,” “what are our products,” and so forth, it can make a company rather myopic. When a company takes a customer-centric view — looking at everything the company does through the customers’ eyes — the focus moves to creating and keeping customers by delivering exceptional customer value.

Outside-in companies depend on Marketing to help them be customer-centric and to increase the direct dialogue with customers in order to see and adapt to patterns sooner. This responsibility, as well as finding growth opportunities and positioning the organization for the future, falls to the CMO. Successful CMOs are passionate advocates for customer value and build strong relationships with R&D and sales.

By taking an outside-in approach, Marketing can develop strategies that will improve its ability to attract, keep, and grow the value of customers, thereby improving its effectiveness and value — critical components of Marketing performance. As you build your Marketing strategy and offer counsel to your leadership team, we hope you are taking an outside-in approach.

The Risk of Inside-Out

Outside-in takes time, money, and talent, which is why companies tend to forgo this approach. But there’s a price to pay for a solely inside-out approach. When companies “hunker down, cut R&D, slow innovation, no longer experiment,” and put internal issues above serving customers, they are putting their survival at risk. This is all part of the inside-out thinking. Work by George Day and Christine Moorman found that “outside-in” companies perform better because they immerse themselves in the market, doing more experimentation in order to gain market insight and draw actionable ideas.

How do you know whether you are an inside-out company? If you are continually surprised by bad results, seem out of touch with who your customers are and what value you are delivering to them, the entrance of a new competitor or the emergence of a new product category, you may be falling into the inside-out trap.

Need to flex your Marketing strategy muscles? Check out George Day and Christine Moorman’s book, Strategy from the Outside-In: Profiting from Customer Value, which discusses taking an outside-in vs. an inside-out approach to strategy.

FAQ:

(written by Penn of Sintra.ai)

Q1: How can you tell whether your Marketing strategy is “inside-out” or “outside-in”?
A: Open the Marketing strategy section of your Marketing plan and ask: are these strategies based on inside-out thinking or outside-in thinking?

Inside-out thinking begins with internal questions such as: What are we good at? What are our capabilities? What are our products?
Outside-in thinking looks at everything the company does through the eyes of the customer, with an emphasis on creating and keeping customers by delivering exceptional customer value.

If your strategy is mostly inside-out, it may be time to take a different approach.

Q2: What is the “domain of strategy,” and why does it matter?
A: Many companies focus heavily on internal processes to reduce costs and improve productivity. While essential for survival and short-term earnings, this internal focus does not help a company respond to market shifts, new technologies, new channels, or new competitors. Addressing those external realities is the domain of strategy.

Q3: What is strategy, in practical terms?
A: Strategy is about defining and setting the long-term direction for the organization.

Q4: What role does Marketing play in strategy?
A: Marketing is one of the primary external-facing entities in the organization (Sales is another). As such, Marketing plays a central role in strategy development and execution.

Q5: Why do successful Marketing strategies use an outside-in approach?
A: Successful Marketing strategies leverage an outside-in approach because it treats customers as assets and prioritizes learning about and from customers. This insight is then translated into initiatives that build competitive advantage, improve market position, and ultimately increase shareholder value.

Q6: What does it take to execute an outside-in strategy effectively?
A: To take an outside-in approach, organizations must continuously invest in learning about customers and from customers—and then translate that learning into action.

Q7: How does outside-in thinking change the focus of Marketing strategy?
A: Inside-out thinking can make a company myopic because it starts with internal strengths and offerings. Outside-in thinking shifts the focus to creating and keeping customers by delivering exceptional customer value.