How companies managed after recession?
As companies face the most turbulent market conditions since the Great Depression, many see survival as their primary goal, yet stabilising sales and price declines while making draconian cuts need not be the extent of a company's ambitions. My research uncovered that some companies have circumnavigated the challenges posed by turbulent markets and have positioned themselves for breakaway success after the recession. How have they managed it?
By looking at company strategies starting in the last downturn in 2000 and continuing into this one, I found that those companies built around an inside-out mind-set—those pushing out products and services to the marketplace based on a narrow viewpoint of their customers that looks at them only through the lens of their products—are less resilient in turbulent times than those organized around an outside-in mind-set that starts with the marketplace, then looks to deliver creatively on market opportunities. Outside-in orientation maximizes customer value—and produces more supple organisations.
Embracing an outside-in perspectivefocusing on creatively delivering something of value to customers instead of obsessing over pushing your product portfolio—builds an inherent flexibility into organizations. While this perspective is beneficial under all market conditions, its advantages become particularly acute in adverse and turbulent markets, making you inherently more responsive to market shifts, a competence that's especially important in markets where firms must radically alter what they produce, what they sell, and how they sell it. Rallying around customer problems thus results in the resilience that protects businesses from economic storms.
One recent study has shown even broader evidence of the bottom- and top-line power of fostering resilience through a customer-centered outside-in approach. The study examined whether the actual purpose companies pursued mattered.
Among purpose-driven companies, customer-driven companies were significantly more successful than shareholder-driven ones, providing a 36 percent advantage in shareholder returns, compared with their industry median; shareholder-aligned organizations provided only a 17 per cent advantage. In sports terms, that's a rout. Yet reaching that position requires both insight and action.
Developing outside-in insights
Since the 1980s, bagged salad has risen from nonexistence to a $2.5 billion-a-year industry, but developing and delivering bagged salad was not a simple matter of packaging. Rather, it was the result of a revolutionary shift to outside-in thinking that never could have been achieved without a pliant mind-set and supportive organizational architecture.
The creative leap that allowed companies like Fresh Express to turn a commodity product into a growth juggernaut required looking beyond the traditional questions that most companies ask about their customers: What do they like and not like about my product? How much did they pay for it? Where do they prefer to buy it?
While valid, these product-centric questions provide a distorted understanding of the marketplace. To gain a more holistic picture, companies must view the marketplace through the lens of their customers. The question is how does the making and consumption of salad relate to their busy lifestyle? Ask those questions, and you will see that what busy customers truly want is for you to make the whole salad for them.
Answers like that one are almost impossible to uncover when the inquiry is inside-out—when the questions start with the product and then move to the customer.
By looking at company strategies starting in the last downturn in 2000 and continuing into this one, I found that those companies built around an inside-out mind-set—those pushing out products and services to the marketplace based on a narrow viewpoint of their customers that looks at them only through the lens of their products—are less resilient in turbulent times than those organized around an outside-in mind-set that starts with the marketplace, then looks to deliver creatively on market opportunities. Outside-in orientation maximizes customer value—and produces more supple organisations.
Embracing an outside-in perspectivefocusing on creatively delivering something of value to customers instead of obsessing over pushing your product portfolio—builds an inherent flexibility into organizations. While this perspective is beneficial under all market conditions, its advantages become particularly acute in adverse and turbulent markets, making you inherently more responsive to market shifts, a competence that's especially important in markets where firms must radically alter what they produce, what they sell, and how they sell it. Rallying around customer problems thus results in the resilience that protects businesses from economic storms.
One recent study has shown even broader evidence of the bottom- and top-line power of fostering resilience through a customer-centered outside-in approach. The study examined whether the actual purpose companies pursued mattered.
Among purpose-driven companies, customer-driven companies were significantly more successful than shareholder-driven ones, providing a 36 percent advantage in shareholder returns, compared with their industry median; shareholder-aligned organizations provided only a 17 per cent advantage. In sports terms, that's a rout. Yet reaching that position requires both insight and action.
Developing outside-in insights
Since the 1980s, bagged salad has risen from nonexistence to a $2.5 billion-a-year industry, but developing and delivering bagged salad was not a simple matter of packaging. Rather, it was the result of a revolutionary shift to outside-in thinking that never could have been achieved without a pliant mind-set and supportive organizational architecture.
The creative leap that allowed companies like Fresh Express to turn a commodity product into a growth juggernaut required looking beyond the traditional questions that most companies ask about their customers: What do they like and not like about my product? How much did they pay for it? Where do they prefer to buy it?
While valid, these product-centric questions provide a distorted understanding of the marketplace. To gain a more holistic picture, companies must view the marketplace through the lens of their customers. The question is how does the making and consumption of salad relate to their busy lifestyle? Ask those questions, and you will see that what busy customers truly want is for you to make the whole salad for them.
Answers like that one are almost impossible to uncover when the inquiry is inside-out—when the questions start with the product and then move to the customer.
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