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creating value for customers: two perspectives

value creation scenarios

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value creation

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Editor’s Note: This is actually the third posting in a set of three.  It builds on the content contained in the first two titled, “Creating Value with Modular Thinking,” and “4 Value Creating Scenarios,” as shown in slide 1 above.  

By Kenneth Rudich

Be it for-profit or not-for-profit, the overarching aim of marketing is to cultivate interactions that produce value creating outcomes.  The interactions themselves are the engines that help drive a business toward meeting its objectives, and they tend to be grounded in either one of two perspectives: the outside-in perspective or the inside-out perspective. 

the common ground

Though the two perspectives do differ, they also share some common ground:  

  1. both are focused on the implementation of the value creating scenario. 
  2. both seek to identify and address the six W’s — who, what, where, when, why, and how – as it pertains to their vantage point.
  3. lastly, most importantly, both tap into an identifiable market opportunity as their primary source of motivation.   

After that, they diverge in their thinking with the intent to converge in the end.  

outside-in perspective  

The outside-in lens identifies the nature, breadth and scope of the market opportunity.  This is sometimes referred to as a market opportunity analysis and it involves market research.  At the outset, it seeks to unearth the key characteristics of the opportunity, including what will be needed to deliver value fulfillment, and the requirements for building and/or maintaining competitive advantage.   

Over time it evaluates the extent to which the product or service is actually achieving value fulfillment, and whether there are gaps that need to be filled or other considerations that should be addressed.  It also looks for key directions and trends that are currently influencing or will influence the opportunity in the months and years ahead. 

Here is a sampling of questions it would explore:  

  • would it be advantageous to segment the market and, if so, how?
  • how might prospects and customers prefer to access the product/service?
  • how will they learn about the product/service?
  • how will transactions occur?
  • will support services be needed?
  • how will pricing influence customer decision-making?
  • who is the competition and how do we stack up?
  • what other external forces merit attention?  

inside-out perspective  

The inside-out lens concentrates on what the provider should do in order to satisfy its objectives.  

This includes, first and foremost, deciding whether it’s viable and worthwhile, especially if it’s a new market opportunity.  Or, if it’s already been mined or being mined, should it continue to be pursued.  These are product life cycle issues and they require a thorough understanding of the market opportunity analysis.  In a rapidly changing business world, the timely phasing in or out of an offering can be critical to the maintenance of the product/service portfolio.  

There’s also an array of decisions concerning things like marketing strategy and tactics, return on investment expectations, funding requirements, quality assurance, market share, the potential for growth, competitive stance, and so forth. 

Still another set of decisions will typically revolve around design matters like:   

  • the people (expertise) or human resources that are needed?
  • what the organization will look like?
  • the processes that should be put in place or revised?
  • the type of facilities that are required?
  • what technologies should be involved? 
  • what should be the design of the product/service offering?

when outside-in and inside-out converge 

The answers to these questions will help to identify the activities that should be plugged in to the value chain for any given interval of time.  The more elegantly this is done, the better off your business will be.

2 Comments

  1. Robin Plescia says:

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  2. Corliss Orsak says:

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