Outside-in Part 1 - The Process Revolution Starts Here

Six Sigma and Lean's bodies lie smouldering and decomposing in the ashes of the 20th century. A revolution is upon us. Some are wise enough to have seen it coming, some have only recently found it and the others, well, they'll soon adapt or die.

What I am talking about is an approach that is so radically different from the ways that we have traditionally approached process improvement that it forces you to totally alter your current mindset. It is an approach that is the secret weapon of some of the world's greatest companies such as Google, Apple and Virgin.

It's called Outside-in.

On paper outside-in sounds like a "no brainer" - it's about looking at process from the customer's experience. I'm sure you think you already do that, but if you aren't using outside-in already I can categorically tell you that you aren't. Outside-in uses a method to systematically look at the customer's experience from end to end, rather than looking at improving the customer's experience by altering internal processses - this is inside-out thinking. Whereas inside-out thinking puts a bandage on the effect, it doesn't eliminate the cause - the wound still bleeds.

As organisations we have become crippled by our internal processes. We've become so entwined in what we do day to day we've forgotten why we exist - to serve our customer - to give them what they need, to give them what they want and sometimes to give them what they don't know they need yet! The customer is our reason for being, without them we cease to exist, yet through our bureaucracy and our bulk we become a bloated beast of burden - unable to move rapidly to meet the needs of the lightning fast pace of life around us. In the end, we sink and die whilst the nimble climb higher and higher.

When we use Outside-in to optimise process we achieve three things simultaneously - We reduce costs, improve the customer experience and as a result improve revenue. This we call "the triple crown".

Sounds to good to be true? Well, it's not. And here's why:

• Whilst Marks and Spencer flounder in the UK, Zara are achieving world domination
• Whilst Delta and United airlines are dying in the states, Southwestern airlines is flourishing
• Whilst Best Buy expand, their major competitors have gone bust
• Whilst Nokia try to sell outdated phones Apple kill the market with the iPhone
• Tesco has surged to be the no1 supermarket in the UK, now bidding to buy the former no 1
• Ryanair become the most profitable airline in Europe whilst BA implode
• Whilst british banks go bust, bank Santander is posting huge profits

What do these victors have in common? They all use Outside-in to achieve the "triple crown".

So, do you think Lean and Six Sigma will help you to achieve all that? Thought not.

Welcome to the revolution.

- TPN

Comments

[Robert]

This Triple Crown is very good Ninja! There is a trend in business these days to ignore the "Improve Customer Experience" bit, and I am sure this is why we see Crowns becoming lopsided.

[Roger Tregear]

Craig, I can't let this rant and it's predecessor go unchallenged. It's so far off the hype scale as to be unmeasurable.

What you are saying is that if you do process analysis and improvement badly then you won't get the best results. Not hard to agree with that. The problem is that you make a sweeping assertion that doing it "badly" equates to Lean/Six Sigma. Not sure why you think having a standard and effective methodology for analysing and improving processes is a problem, whether it’s Lean/Six Sigma or any other As Is – To Be – To Do methodology.

All process work is (or should be) about improving outcomes for the customers and other stakeholders of the process. Some of those customers may be internal, some may be external. Clearly it is true that if you only have internal customers then you won't be around long but that doesn't make them unimportant. Try running a revolution without the folks in Finance. Did Richard Branson sack all his accounting people because they were a bit too inside-out? I don't think so. I expect that detailed and standardised financial control is part of the Virgin group success formula.

I’ll accept all of the obvious comments about some people losing sight of the need to deliver value to external customers. What I don’t accept, and surely you don’t either, is that there is no place for careful, detailed analysis of processes to remove waste and improve their effectiveness. Try running an airline without the entirely “internal” process of maintaining aircraft maintenance records.

What Zara et al have done is substantially change aspects of their industry’s business model orthodoxy – and they’ve got it right. Many others make the wrong changes and fail of course. What they have NOT done is ignore their “internal” processes as you call them.

Roger

[The Process Ninja]

Hi Roger - I actually agree with you - somewhat. I do think that Six Sigma and Lean can add value to an organisation, but as a holistic approach I believe they fail. To tighten up and improve processes they can work. I haven't used outside-in in my last 5 years of process improvement work but I know that I have helped improve processes! I never made "a sweeping assertion that doing it "badly" equates to Lean/Six Sigma" - I simply think that outside-in as a technique can overall produce better returns in terms of process optimisation and customer alignment. I never said that we should ignore internal processes, I only said that we need to change the way that we approach their optimisation. All I am essentially saying is that I believe that there is now a better way to approach process optimisation than Lean & Six Sigma. You can drive a horse and cart to get to work, but if you can get there by car why would you?

[Roger Tregear]

If "outside-in" means think about the customer for whom the process delivers value then that's what everybody should always have been doing with any technique. Some processes have external as well as internal customers. Fix the processes that are broken, not just the ones that have external customers. It's not either/or.

[The Process Ninja]

"Should" is the word...outside in is applicable to whoever the customer is - that can also be an internal customer - but at the end of the day everything should align with the end customer. Any "internal process" ultimately has a customer impact.

[steve towers]

The effervescence aside much of what you say is bang on. The numbers tell it as it is and those die hard inside-outers are going the way they should - out of the game. It really is about the customer and anything that doesn't contribute to customer success is potentially dumb stuff (in the context of the 21st century reality).

Accordingly there are way too many inside-out approaches, and associated tools and technologies that do not fit with this new reality. If what you are doing does not make customers lives simpler, easier and more successful you may be part of the problem.

Good on you TPN - tell it as it is.

By the way cast your vote in the annual survey at http://bit.ly/v8EMZ

[datadevil]

I think I am more with Roger on this one. If you are not looking at the VOC in any instance in which you are making improvements, then you are only doing it to look busy or keep your job.

Why would you take on a project that had no effect on a customer? If there are companies doing this, and I believe that there are, then it is not the Lean/Six Sigma letting them down, rather the one driving it!

[The Process Ninja]

The problem is that the VOC part comes too late - by this stage you have already selected the process to look at - therefore your customer experience is limited to the confines of your process. Outside-in removes this limitation by starting with the customer experience, then defining the process. When you start with process and try to optimise it you simply cannot achieve what outside-in can. The blinkers are already on...

[Siggy Sig]

Process Ninja, first time reader and poster here...

In my experience at one of the world's largest companies, and ostensible inventors of Six Sigma, we all are far too worried about meeting internal silo metrics to worry about taking an outside-in approach.

Moreover, it doesn't really matter what your toolset is, if your leadership is not positioning the firm strategically to optimize around the right things.

A focus group would never have dreamed up the iPod. No, Apple (and others) have the ability to discover and fulfill needs that customers don't even realize they have - good old Kano Analysis in all its glory. THEN they can use Lean, Six Sigma, DFSS, TQM or whatever else you like to optimize execution, and continue to learn from customers and improve their products and services.

Lean and Six Sigma shouldn't be proclaimed dead - we need them more than ever nowadays.

[The Process Ninja]

Outside-in was the technique that fostered the idea for the iPhone...

Honestly unless you do the course you just won't get the possibilities of outside-in. I highly recommend you do the course. It will change the way you think about process forever.

[Ron Pereira]

First time poster... fellow blogger... and lean and six sigma fanatic!

Since I also run a business I applaud your marketing skills. Very well done Mr. Process Ninja! Very well done.

However, Mr. Ninja, your assessment of lean and six sigma being dead is way off... but you'll have to join my 5,000+ daily subscribers over on LSS Academy dot com to read why.

So, please stay tuned Mr. Ninja and Mr. Ninja readers... stay tuned.

;-)

p.s. Aren't ninjas dead?

[The Process Ninja]

Well this one is still alive!

Well, maybe not quite dead, but the process revolution is upon us ;-)

[Tim]

The first premis of Lean is Value and value is determined by the customer. VoC (Voice of the Customer) is as integral to Six Sigma as the heart is to the human body.

The great shame about the process improvement industry is that it has been hijacked evangalistic do gooders to such an extent that the real market misinterprets the opportunities as religious zeal and steer clear. The risk is that BPx (you choose the last letter) is seen as a fad, and it isn't.

The path forward requires practionions to be level-headed, recapture the voice of BPx and thoughtfully incoporate the various tools, concepts, approaches, methodologies etc into a rigiourous professional domain of expertise that can be implemented, taught, researched and improved so that it brings value to those who employ it.

Enough zeal, lets get back to business.