Business Planning: Inside-Out or Outside-In Approach?

Have you ever wondered why your boss is making planning decisions that seem at odds with what you would do? Or, on the flip side, do your employees seem to question your planning decisions? It could be that they are operating from a completely different planning perspective.

There are a couple of questions you can ask yourself to determine what base business planning philosophy your business is operating from.

Is your company managed from the inside out with a focus on building on internal strengths and products to compete, or is it managed from the outside in, shifting priorities to meet external needs? Understanding the difference for yourself can help you make decisions on how to align your priorities to achieve successful Sales and Operations Planning. It can also help you to understand where your business is headed and the reasons behind why management makes certain decisions.

Inside-Out Business Philosophy

Planning from an inside-out perspective is the more traditional and conservative method. It focuses on how to offer better goods and services, get a greater share of the market, and operate more efficiently, all beginning with items that can be controlled internally.

When using an inside-out approach to business strategy, you would likely see effective use of company resources and core competencies as the propelling force pushing shareholder value. Inside-out strategists believe that by focusing on factors within the company’s control, they will be able to adapt and ensure better quality products and services.

Outside-In Business Philosophy

When you take an outside-in approach, you are focusing on the needs of the market, rather than your own internal objectives. Instead of considering what value you can get from an account, you look at win/win type situations and how the client may view your offerings from their perspective. The idea is that by analyzing what your clients need and how you can fill their needs, they will be more attracted to working with your company.

One caveat of this approach is that it can be taken too far. Firstly, because customers aren’t always able to explain what they need, and secondly, without an accurate and systematic way of gaining data, you may not be able to rely on the information you’ve gathered.

Case Study

A software start-up CEO made the unilateral decision to invite his top clients to a week-long all-expenses-paid session to obtain their feedback and comments on his companies product. As a small international company, this meant flying in clients from all over the world.

The staff of the software company could not understand why the CEO had planned this event. The software’s target was the hospitality industry. The company had a deep knowledge base. There were numerous experienced industry professionals on staff. Sales and helpdesk staff were already gathering relevant data from their interactions with clients.

From the perspective of the staff, this event was a waste of money. However, from the CEO’s viewpoint, he was gathering valuable information for outside-in business planning.

Was there a better way that this information could have been gathered? Do you think there is a lesson that can be learned from this situation?

Takeaway

When employees understand the “why” behind planning decisions, they are much more likely to feel invested in making business plans work. Whether you are a boss or an employee, understanding the perspectives of your co-workers can help you to manage change, make a point or understand the bigger picture.