The “Inside-Out” and “Outside-In” Approaches and Their Applications
All companies have their own strategy on how to achieve success, which, nevertheless, can be generally described as ‘inside-out’ and ‘outside-in’ approaches.
The ‘inside-out’ framework implies finding the inner capacity and capabilities of an organization in order to attain the desired results. It is a resource-based view that highlights the importance of organizational resources such as people and infrastructure (Grünig and Kühn, 2018). The main advantages of the approach are the capacity to optimize operations, achieve better efficiency, the ability to cut costs, and the creation of a strong team of professionals (Hunter, 2020).
Nevertheless, the inside-out approach has drawbacks which include a possible failure to respond to the changes in demand and the possibility of losing valuable resources such as experienced leaders (Panibratov, 2017). can provide an organization with the ability to generate new demand, and. The ‘inside-out’ framework is beneficial in conditions when there is a need to maximize the performance of an organization without employing additional resources (Stigter & Cooper, 2016). One of the examples of adoption of the view is Cadbury, a company whose primary resource which guaranteed its success was its chocolate recipe (Hunter, 2020b). Yet, the ‘inside-out’ approach will fail in industries with constantly changing demand and trends such as fast fashion.
The ‘outside-in’ approach involves focusing on external factors such as the needs of the customers. Essentially, it is a view that an organization has to constantly adapt to the market environment and react to its changes (Paauwe & Farndale, 2017). Its primary advantages include being ability to respond to changing demand, having the capacity to innovate under pressure, and achieving an excellent customer experience (Jarvis, Morales, and Ranadive,2016).
Yet its drawbacks are the inability to sustain such an approach on a long-term basis because constant innovation is impossible and the lack of organizational efficiency resulting in excessive expenses (Rust, 2020). The approach works best in the conditions requiring increasing sales through the adoption of new trends present on the market (Day, 2020). Thus, it will not function properly in highly competitive industries such as the airline one with the lack of room for innovation. A solid example of the implementation of the approach is Amazon’s Kindle which sissified the clients’ demand for a small device for reading digital books (Debruyne & Tackx, 2019). Thus, the ‘outside-in’ approach should be a primary choice for companies wishing to increase value for clients.
Day, G. (2020) ‘The yin and yang of outside-in thinking’, Industrial Marketing Management, 88, pp. 84–86. Web.
Debruyne, M. and Tackx, K. (2019) Customer innovation: delivering a customer-led strategy for sustainable growth. London: Kogan Page Publishers.
Grünig, R. and Kühn, R. (2018) The strategy planning process: analyses, options, projects. New York: Springer.
Hunter, P. (2020a) Corporate strategy. London: Routledge.
Hunter, P. (2020b) The seven inconvenient truths of business strategy. London: Routledge.
Jarvis, A., Morales, L., and Ranadive, U. (2016) Achieving customer experience excellence through a quality management system. London: Quality Press.
Paauwe, J. and Farndale, E. (2017) Strategy, HRM, and performance: a contextual approach. Oxford: Oxford University Press.
Panibratov, A. (2017) International strategy of emerging market firms: absorbing global knowledge and building competitive advantage. London: Taylor & Francis.
Rust, R. (2020) ‘Outside-in marketing: why, when and how?’, Industrial Marketing Management, 89, pp. 102–104. Web.
Stigter, M. and Cooper, C. (2016) Solving the strategy delusion: mobilizing people and realizing distinctive strategies. New York: Springer.