I was recently talking to the founder of an artisanal sausage company.

After validating the idea and gaining sales traction, this person was contemplating “upgrading” the company’s manufacturing processes to increase consistency and homogeneity in the end product.

I questioned why.

Their response: to operate more like a larger and established food manufacturer. By becoming super strict with quality assurance, the thinking was the product would have broader appeal.

As it turns out from research, the opposite is true.

Within a certain degree of tolerance, prospects favour artisanal sausages that vary a little bit each time they buy them — even within the exact same product line, like a juicy Käsekrainer.

The subtle inconsistencies in size, texture, and flavour make the sausages “feel more artisan”.

In other words: idiosyncrasies are a feature, not a bug. It’s a perceived essence of the product. Which, articulates the ‘artisanal’ Positioning.

This misalignment in approaching ‘how the sausage gets made’ and what prospects perceive and want is a classic example of inside-out thinking.

WTF is Inside-Out Thinking?

Inside-out thinking is the perspective of people inside a company, looking outwards. Mainly, towards prospects.

This perspective is guided by internal know-how, objectives, business logic, processes, and problems.

There is an implicit tension between this point-of-view and outside-in thinking; the perspective of prospects towards the company.

Companies want profit. Prospects want benefits.

I do not take such a binary view as that put forward by Elisabet Lagerstedt.

The optimal approach is surely a hybrid where the unique strengths and capabilities of an organisation are leveraged to establish an ‘unfair advantage’ in customer value creation (inside-out), working backwards from the minds of prospects to define the value creation direction (outside-in).

Whilst it is important to define the inside-out perspective as a means to identify unique strategic strengths and pursue business goals, growth-impeding problems can emerge when inside-out thinking spills over into designing how prospects perceive the value proposition.

Not just the product, but everything — marketing, sales, ops. Anything that impacts the customer journey experience.

How so?

An overweighted inside-out thinking company mindset starts with the internal capabilities, resources, and objectives of the organisation and then looks outward to leverage them (that part is OK), designing the output of this unique perspective into the fabric of business functions from the company’s point-of-view instead of the prospect’s (not OK).

This often has the effect of being a detractor of purchasing interest — particularly for startups, who do not have the resources, network effects, and inertia of established corporations.

How so?

It tries to force the prospect to meet the company where it is mentally and practically, and not the other way around.

That may work for the likes of Microsoft to an extent, but it’s an uphill struggle at the earlier stages of the company lifecycle spectrum (e.g. startups).

Example:

Conversely, outside-in thinking begins with prospects and customers, and then looks inward to determine how to effectively meet those external needs and demands (outside-in), ideally by leveraging unique internal strengths (inside-out).

Outside-in thinking is about understanding customer perceptions, behaviours, and needs, and then building and aligning internal processes, products, and messaging to meet those external motivators.

In other words, to see how prospects see you and mobilising internally to enhance or beneficially change that perception.

Sometimes, this means asking hard questions.

Problematic Inside-Out Symptoms

You can see symptoms of problematic inside-out thinking all over the place. In other words, inside-out thinking that is negatively impacting the prospect’s perception of the company’s value proposition.

Often, this is the result of the subconscious output of an inside-out thinking culture.

Examples:

• Marketing messages that implicity communicate what the company wants to achieve, instead of what prospects want to achieve.

  • 👉 “The next-generation of XYZ tech”

• Operational processes that are convenient for the company, but not for the customer.

  • 👉 “Do not reply to this email: [email protected]”

• Sales pitches that go into the weeds on the product and its features too soon, loaded with jargon words and acronyms.

  • 👉 “You can pull this report here and model it 101 different ways to get your IJT over PPR rating.”

• Product launches/updates that fall flat on their face or decrease interest.

  • 👉 “Introducing, the chocolate teapot 2.0”

• Policy changes that only benefit the company, and not the customer.

  • 👉 “To upgrade, click here. To cancel, call this number”.

This all adds up to a grand exercise in splashing internal complexity, problems, and goals in full view of the world.

Inside-out thinking can sometimes be like getting “high on your own supply” — unquestionably believing the company’s value proposition is the most competitive option without critically evaluating that prospects perceive it the same way.

Company executives can be totally out of sync with how they perceive prospects perceive their proposition vs. how prospects actually perceive their proposition.

Part of this is driven by ‘thinking asymmetry’.

Companies spend 100% of their time thinking about their category, brand, and solution. Prospects spend less than 0.1% of their time thinking about it. This can make it difficult to sync up on the same mental wavelength.

Exceptions and Examples

There are scenarios where building inside-out thinking into the value proposition can be favourable.

For example, with propositions that use low price as a key differentiator.

IKEA practices inside-out thinking at an operational and logistical level, forcing customers to meet their buyer journey design from an economic-efficiency standpoint.

How so? IKEA’s ‘affordable-chic furniture’ Positioning idea guides how they do business: distribution, packaging, communication, etc.

This works because prospects “get it”. They get the need for big maze-like warehouses and flatpack furniture. They consent to this ‘inconvenience’ and novelty because it reduces the cost of furniture.

Essentially, the inside-out thinking in this value exchange has become outside-in thinking through a mutual compromise with the prospect over price and experience. It’s gone full circle.

Another example is consensual indoctrination.

If a value proposition has an outside-in gateway mechanism to attract prospects (in order to first gain traction), strategically layering elements of inside-out thinking into the product experience can create a sense of esotericism and psychological investment — making it sticky.

In B2B enterprise software, a complex industry-specific, jargon, and feature-laden workflow product can be difficult for users to move away from, mentally.

How so?

This dynamic can create a sense of job security to stay with the product (“no one else internally understands this, but me!”) and insecurity in leaving it (“I don’t want to relearn a different way of doing things, discarding years of learning investment!”).

It programs the mind, sort of like Stockholm syndrome for software.

Another example: A rock band attracts fans with outside-in songs and then builds a deeper connection with inside-out songs that communicate nuanced emotional and internal complexity.

Nirvana famously referred to Nevermind as their “pop album”. On a scale, their breakthrough song ‘Smells Like Teen Spirit’ is much closer to outside-in thinking than “I Hate Myself and Want to Die’, which is closer to inside-out.

Another example: Bitcoin was a gateway concept for a rabbit hole of crypto/blockchain inside-out idea thinking craziness, some of which transitioned to outside-in. Bored Ape, anyone?

Common component

In all of these examples, the common component is a transition wherein the output of ‘inside-out thinking’ crosses over to become ‘outside-in thinking’ through a tacit contract and mental buy-in with the prospect.

The Bridge

Where there should be an incredibly strong bridge between inside-out and outside-in thinking is at the Positioning idea level.

This is a single strong idea and unique direction that “works in the mind” both internally and externally — aligning all stakeholders in the same direction. It guides and unifies every motion and decision a company makes, becoming pure leverage across all business functions.

The Positioning idea intersects inside-out and outside-in thinking by encouraging companies to focus on a direction they can execute proficiently and profitably (an internal perspective) while also deeply understanding what their prospects care about and aligning with it (an outside-in perspective).

For example: IKEA and its ‘affordance-chic furniture’ Positioning idea.

For a little more context, I previously wrote about how Salesforce built its Positioning idea: Cloud CRM.

Outside-In Focus

To stay focussed and maintain an outside-in perspective in your value proposition design, here are a six guiding principles you can utilise:

• Know your prospects. Get inside their heads, constantly. Understand the “why” — why do prospects perceive and behave in certain ways? What is the mental background supporting this?

• Leverage internal strengths: Identify your unique capabilities and design the value proposition to match both this and what you learn about your prospect’s perceptions and behaviours. This combination will make your outside-in proposition stronger.

• Critique decisions. Who does a business decision benefit more, the business or prospects? What is the motivation behind it? Who is more likely to understand it and draw the most value from it?

• Be intentionally, not accidentally, inside-out. Sometimes, inside-out thinking outputs can be optimal for use in designing how prospects perceive the value proposition (e.g. IKEA). Be deliberate about it.

• Customer-centric metrics: Utilise metrics that reflect customer demand, satisfaction, loyalty, and engagement.

Sometimes, it’s a matter of reconciling that what you want to be “true” does not always marry with the perceptions of prospects.

You can’t change a mind. You can only change your way into it.

That’s it for today. I’ll be back in your inbox soon.

Martin 🤘

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