Innovation By Outside-In Thinking: 3 Reasons Why You Should Adopt This and 5 Tips To Execute

When we decided to develop our first ever product, an online accounting software, we have no idea of how it works and what is acceptable to the market. We did it by reverse engineering existing accounting software online without careful assessment of the user needs especially Filipino accountants. We picked modules and sub-modules based on naive common sense. We did it inside-out.

Fast forward six months later, we showed what we developed to prospective clients, and it turned out that it was not sellable. We went back to our drawing board, and fortunately, we met an accountant who’s well versed with systems, and we learned that we have to redo 80% of our code. So we did, and our product evolved customer-driven or outside-in from thereon.

Outside-in by definition is an approach guided by customer orientation and customer value creation. It means that real customer problems and challenges drive the product features, operational process efficiency or human resource structure.

Why should we innovate by outside-in thinking? Here are some reasons and benefits:

  1. Customers are becoming more powerful. With the online reviews and social media feedback platform, companies have no choice but to listen to their customers. Spend efforts to maximize customer benefits rather than the shareholder returns.
  2. Market disruptions are popping here and there. People are a lot wiser. We can quickly learn something from the Internet andYouTube with the vast content and information overload; hence people can easily find ways to tap the whitespace of a particular market. There’s no way of knowing that whitespace if companies don’t listen or get feedback from the customers. So if you stop listening, then you’ll become obsolete.
  3. It improves customer delivery. Organizations who adopt the inside-out method define their delivery process based on theories or experience they got from their previous jobs. Every business is unique, so whatever process that is successful from other companies does not necessarily apply to your company. By outside-in thinking, companies should put themselves to the customer’s shoes, simulate the experience and practice empathy. Define the customer’s pain points and change the method based on those data. This method will definitely decrease customer attrition rate and complaints, an increase in repeat business and loyalty.

Here are some tips in executing business in an outside-in manner:

  1. In product development, obtain an understanding of what products or service that is available in your target market. Research why a particular group of customers are not buying them and not solving their problems. Develop a feature to solve that problem.
  2. In sales, understand their challenges and the reason why they made time for you before you make your pitch.
  3. In delivery, understand the customer journey. Please take note of all the touchpoints and check to see how you can improve them.
  4. In execution, improve your response time, close all issues and feedback and do not tolerate problems.
  5. In HR, train employees to ensure the organization is all on the same page in doing the above.

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