Inside-Out or Outside-In? (Bookshelf Part 1)

Successful businesses inevitably must confront the paradox that the qualities which make them successful in the first place are often progressively squeezed out as they grow. Acute sensitivity to the needs of individual customers that is the cornerstone of a new firm is gradually displaced by attention to the aggregate of thousands or millions of customers; business structures that are "close to the customer" recede into regional management bureaucracies; frugality and careful spending choices are replaced by annual budget cycles. The list is endless, of course.

And perhaps worst of all, the next big idea, which was sitting right next to you all the time, is suddenly seized upon by a smaller, more nimble competitor; small firms so often see what big ones are blind to. You ask yourself, "Why didn't we think of that?"

The reason is that we're looking from the inside-out, while they're looking from the outside-in. Or, stated differently, they saw what to us was hidden in plain sight.

That's the premise behind Erich Joachimsthaler new book (and it's the title, too), and although the book is about 80 pages longer than it needed to be, the underlying topic is really important: How do we retain our ability to see? Joachimsthaler describes a model focused on first of all understanding demand, and the book has the virtue of a lot of big-company stories to illustrate its major ideas.

I found out about the book because the publisher sent me a copy, I suppose in the hope that I would mention it here. So that worked. I bring this up because it speaks to the nature of what makes a book successful: The way to succeed in publishing is to get people to talk favorably about your stuff - and that's true whether you're Nike, Ford, or Joe's Diner, or a political candidate, or a religion ....

Because while a product or an ideology or a philosophy may appeal to an individual consumer, it is eventually the action or inaction of a "community" that determines how successful a product is going to be. Hence, MySpace, Google, and Amazon ratings are all aggregate expressions of a community's values, derived not so much from opinion leaders as from opinionated people.

This is an interesting shift, as we used to refer to these aggregates as "markets." With the advent of the internet, though, and the emergence of Web 2.0, the term "communities" gives a better feel for what's going on. Why? Because the internet is a "many-to-many" medium of mass communication; in fact, the first such medium ever to exist.

Learning to understand the needs, behaviors, and expressions of such communities is a critical part of learning to see, and of turning what you see into what makes a difference.

In Bookshelf Part 2, tomorrow, I'll take a look at a couple books that address this very issue head on: Wikinomics and How Breakthroughs Happen.