Excerpts from the Introduction
Excerpts from the introduction in: The Demand Perspective: Leading from the Outside-In”
…Ranjay Gulati, the Jaime and Josefina Chua Tiampo Professor at Harvard Business School and expert in business growth in turbulent markets, set about to answer similar questions (about the factors of resilience or obsolescence) when, starting with the economic downturn in 2000, he followed the performance of a group of companies for nearly a decade. He reports his results in his book, Reorganize for Resilience.
The difference-maker between resiliency and obsolescence, he found, was a company’s market orientation: whether it was focused inward on its own products and priorities or outward toward its customers and markets.
He explains why:
Embracing an outside-in perspective—focusing on creatively delivering something of value to customers instead of obsessing over pushing your product portfolio—builds an inherent flexibility into organizations.
Customer centricity, for Gulati, refers to nothing short of putting your customers at the center of your business. Think from their perspective when you prioritize or innovate, design your organization around the sole objective of serving them better and faster, spend an inordinate amount of time and effort on figuring out their every thought and move, and delight in doing whatever it takes to constantly come up with new and better solutions to their problems.
Like Gulati, I found that the associations in my study that were experiencing decline were bureaucratic, silo-oriented, and focused on the inside. Their leaders tended to identify more with the association sector than with the industry their association is in. And perhaps as a result, they got their cues for how to lead and manage from the way “associations did things” rather than from what the industry and clients needed.
Not that these organizations were not committed to the improvement of their sectors and service to their members. They were, and most had long histories of contributions to prove it. However, their contribution was on their terms according to their definition of the profession, service, products, communication, “member” relationship, and priorities—definitions that were increasingly at odds with actual practice and market developments.
Without exception, the membership organizations of my study that were growing and were seen by their members as key resources for their success were customer-centric, flexible, curious, energetic, and non-hierarchical. Their commitment to customers was not limited to formal statements, processes, or events but was demonstrated by daily contact and ongoing conversations with members; flexibility in accommodating individual needs and tastes; and allocations of time, mindshare, and resources.
The premise of this book is that to break the logjam associations are in and leap forward to a different level of competitiveness in today’s fluid and fast-paced environment, leaders need to reorient their core business from inside-out to outside-in and, by doing so, change the basis on which they compete for, capture, and deliver value.
Gulati’s description of the inability of conventional businesses to move from talk to action and the role of silos in blocking “a clear line of sight to the customer,” applies to associations:
As I delved deeper into companies seeking to become more customer-centric, the biggest gap I discovered was the one between awareness and action. Much to my surprise, even if an organization and its employees became consummate listeners and tried to make sense of what they were hearing, they were often immobilized to do much with their insights. Why? The more I researched, the more it became apparent that the problem had to do with internal silos. Most organizations today are still typically built around product and geography and do not have a clear line of sight to the customer. These silos not only create proverbial blind spots for firms but also impede coordinated action toward addressing what may be identified as central for their customers…. Ultimate success cannot come without a supple organization that has fluid internal and external boundaries.
Associations as a whole, as many frustrated executives have repeatedly told me, are not known for suppleness and speed. They are weighed down mostly by unyielding governance structures, multiple approval layers, quasi-political systems of representation and consensus-based decision making, and prescriptive procedures and policies. This lack of flexibility makes speed and coordination difficult and hence leaves even the most visionary leaders stuck in no man’s land between talk and action.
This is why the focus of this book is on helping leaders transition from talking the talk to walking the walk of change and member centricity. To this end, my research focuses on the human side of organizations: culture, mindset, assumptions, values, habits, patterns of thinking, and relationships and how these shape decisions and actions. It is these unwritten rules of behavior, culture, underlying values, motivations, and assumptions that become the de facto drivers of organizations and often pose invisible hurdles to growth and innovation. It is also the intangible and usually hidden and squandered sources of value—speed, creativity, knowledge, community, relationships, capabilities, etc.—rather than the usual portfolios of products and events that are today’s springboards of innovation, market leadership, and growth.
By focusing on a handful of cases and delving into the combination of tangible and intangible factors that determine outcomes, this book provides a different playbook for leading knowledge services today, helps leaders uncover value and opportunities that were hidden or discounted, and helps leaders identify and re-align the real drivers of change.
The new playbook requires leaders to stretch beyond the comfort zone of familiar assumptions and tools and lead instead by building strategic relationships and long-term capabilities, enabling cultures of openness and innovation, and identifying new bases for value and competitive advantage.
The New Map of Critical Realignments
The book lays out a two-pronged path for outside-in leadership:
- Realigning/reorienting core pieces of your business from the customer’s perspective; and
- Converting intangible assets (innovation, relationships, and so forth) into economic outcomes.
The roots for both decline and breakthrough turnaround in the organizations in my study can be traced to six strategic pivots that drive focus, culture, priorities, decisions, and actions, namely how an organization:
- Thinks, prioritizes, assesses its challenges and sees the world;
- Learns and views the value of learning;
- Perceives the value of its assets and translates it into value for the customer;
- Views the nature of the business it is in and organizes around it;
- Engages and views its relationship with people;
- Exercises leadership and defines roles and responsibilities.
The book is organized in the form of a hypothetical journey from inflexible, product-driven systems to the flexible and customer-driven organizations that lead in today’s markets. Like a 21st-century business version of Odysseus, readers progress along this journey by realigning with demand the six strategic pivots above, one by one, to build six critical new competitive capabilities.