Four Steps to Growing Profitably Outside-In

Have you ever struggled with the fuzzy front end of solution development? Ever been confused about whose role it is to innovate for profitable growth, when it should occur and why more innovation is not being generated.  Are there other barriers that may be keeping you from realizing more profitable growth? A recent survey of 270 corporate leaders in strategy roles concluded that the top barriers to effective innovative strategy development were:

  1. Lack of alignment
  2. Cultural Issues
  3. Inability to react to customer needs
  4. Lack of vision 

These barriers relate to an organization that is chronically focused on operational excellence and growth via predictable low risk ventures.  Ventures that can be confidently planned and executed.  The team inside the building interacting with the customer know the product gaps and line extensions customers want and deliver on those line extensions.  This type of activity does not measure up to a superior alternative which is a systematic, step-by-step process revealing practicable knowledge of the ground truths about the customer’s journey, pain points and unmet needs that they are willing to pay for.  An effective innovation strategy can be developed and executed with that knowledge.

At Group Atlantic we have found that an Outside-In strategy takes customer value as its starting and end point. Companies using this approach are focused on creating and nurturing their customers by providing high caliber customer value. They put themselves in the position of their customers, and view themselves from their perspective. These four steps consistently improve successful in overcoming the top barriers:

  1. Alignment
  2. Discovery
  3. Pilot
  4. Scale

Outside-In thinking allows early adopter companies to thrive, while others will struggle to redefine their value. The sequence of four steps enable a company to commit to a process that has clear expectations, incremental investment and a risk profile that reduces through each step. Let’s take a closer look at each of the four steps.

Alignment

Want to save time and other resources, while also keeping your employees informed and motivated? Lack of strategic alignment is one of the primary reasons why many businesses fail to achieve their objectives. 

During the alignment phase, it is important to set clear goals and expectations.  A written charter that quantifies and qualifies the goals of strategic growth initiative is critical to success.  The most successful growth strategy charters identify quantifiable objectives while also providing aspirational goals.  Quantifiable objectives provide a numerical goal and timeline.  An example can be doubling contribution margin within 3 years.  The aspirational description guides the scope of the strategy.  Examples are transformative development or regaining industry dominance.  These types of descriptors guide the magnitude of the endeavor beyond incremental improvements and encourage new thinking that leads to novel solutions. 

Discovery

The discovery phase involves a skillful, planned voice of customer (VOC) exercise.  Customer segments are identified by charting the customer journey with internal voice of business input.  Based on these inputs, the target customer and voice of customer methodology can be planned and executed.  The output of this phase identifies the most compelling problems effecting your customer’s business and where unmet needs exist.  These problems are categorized as must have, performance based and differentiators.  Innovative solutions to these problems can be delivered through a product, service or customer experience.  Based on the pain points and competitive landscape, a growth strategy can be developed and tested with potential customers.  Different types of VOC can be used to test the value of the strategy with target customer segments like qualitative analysis or conjoint analysis.  By employing effective VOC, the risk of a defined strategy missing its goals is materially reduced.  Often, intellectual property is developed in this phase which increases the probability of maintaining the competitive edge uncovered during this phase.

Pilot

Do people always do what they say?  Of course not.  Developing a pilot strategy to test the buying behavior of the target customer segments regarding the VOC tested strategy is the next step.  Constructing a minimal viable offering that delivers the intent or a subset of the solution tests the target segment willingness to buy at the expected price point.  It also can test the viability of the delivery methods and sales channels ability and willingness to provide the new solution. A minimal viable offering can be offered without committing to the full investment required of a scaled up solution.  Piloting is a lower risk approach that enables the strategy to be fine-tuned to meet the previously unmet market needs. 

Scale

Sales, margin and adoption rate data gathered during the pilot phase enable lower risk scaling decisions to be made.  The most profitable, newly patented product or service that has resonated with the target customers can be safely scaled to a larger audience.  This step can enable meeting the original charter goals from the align phase of doubling margin and transforming the market.  Leveraging success can enable the standardization of this process within an organization for managing the fuzzy front end.

Some example outcomes of using this process are:

– 9 provisional patents filed by an OEM that has refreshed a 20-year old product line

– $20M in new revenue for a $1B OEM based on a new service offering to a new customer segment

– 75% adoption rate of an IOT strategy by a remote sales force

Conclusion

With all the recent changes in the market, it’s more important than ever to know and understand your customers.  When revenues are down, it is natural to focus on short-term strategies that eliminate costs, yet an internal focus can debilitate your business down the line.  Instead, enterprise should focus on external trends, customer behaviors and new technologies that are changing the industry landscape going forward.

It is possible to overcome the obstacles of the fuzzy front-end process and deliver new, protected, innovative solutions by following a Market Powered Growth process that incorporates the align, discover pilot and scale steps.

Contact Group Atlantic to discuss conducting an assessment, workshop or consulting engagement so that your organization can leverage the Market Powered Growth process into highly profitable margins.

To learn more, please visit us at Market Powered Growth.

Brendan Doorhy

Brendan Doorhy worked as an engineer, product manager, program manager, business development manager and the director of a $60M business. He worked in the automotive, engineering consulting and IT industries. He brought innovation to every role he held evidenced by his 30 US patents. As a leader within a $1B OEM, Brendan led teams that developed products and solutions that contribute more than $100M of annual revenue. He led the Intelligent Management Systems business unit. This $60M business comprised 100 engineers, product managers, program managers and business development managers in 3 continents. He developed a software center of excellence in the US and a hardware center of excellence within EMEA. Also, within this role, Brendan contributed to the business case, due diligence and integration of the company's first ever acquisitions. As a strategic growth program leader, Brendan developed a new growth business targeting a new customer segment of IT system integrators. This was accomplished using an eight-step market driven growth methodology. This process included value proposition hypothesis, target segment interviews/discovery, business case development and execution. This resulted in a new business initiative that generated a high margin $20M growth revenue in year three.

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