The Dangers Of An Outside-In Approach To Improving A Business

Peter Shields (pictured below) is expert at assisting individual and collective leadership and author of Leadership Alchemy – a book about transforming business value from the inside out. In this guest post for B&T, Shields takes a look at the “outside-in” approach to assessing any business and the dangers it brings…

According to a 2016 report by Consultancy UK, the global consulting sector is one of the largest markets in the professional services world, raking in $250 billion a year in sales. How much of those $250 billion spent on outside technical expertise could be saved by generating the solution from within your business?

Society, technology and corporate culture are changing so rapidly, it’s hard to keep up. The temptation to pursue the latest business improvement is ever-present, with every new product promising to be a silver bullet for your business problems.

These products are marketed using buzz-words like agile, innovative and continuous improvement – this might make you feel like you are missing out on the efficiency and productivity gains everyone else is enjoying. But when do you need to look outside the business for help, and when can you rely on the expertise of your own team?

Technical versus adaptive challenges

Business problems can generally be categorised as either technical or adaptive. Technical challenges often demand specific expertise that your business doesn’t hold; an outside-in approach. Adaptive challenges are those that can be overcome from within, by changing the way you do business.

When a technical advance changes the game in your industry, it’s understandable you might call on some expert outside help to get your organisation up to speed. But businesses also tend to look to external consultants to find technical solutions for adaptive challenges, which can creates more problems than it solves.

“The single biggest failure of leadership is to treat adaptive challenges like technical problems,” said Harvard leadership luminary Ronald Heifetz in his book Leadership on the Line.

That said, sometimes there is simply no other option. If you’ve done your homework and you’re confident outside-in is the way to go, tread carefully. Here are a few tips to help you avoid the pitfalls of the outside-in approach to business improvement.

Understand what ‘best practice’ means to you

There are plenty of consultants out there offering to share their ‘best practice’ tools and strategies for a hefty fee. Realistically, it could be a while before you achieve ‘world’s best practice’, if at all. By that time, those who established the best practice may have moved on, or you might discover their solution doesn’t fit your business. Money that could have funded important projects has now been spent outside the business. Visualise what best practice looks like in your business – no one else’s – and aim for that.

Listen to the consultant, but listen harder to your employees

Beware of demotivating your own staff by prioritising outside opinions. When people feel they’re not being heard, they check out and lose motivation. After making such a big investment in the organisation’s future, that’s the last thing you need. Let the users of the new system choose which option they prefer. There may be aspects you hadn’t thought about and if you catch them straight away, these can be incorporated. If you don’t, expect it to be an expensive process.

Enterprise resource planning (ERP) projects are a common culprit. These integrated software systems promise to make things easier and more efficient, achieving best practice in a flash. But sometimes, they simply don’t benefit the end user.

According to Gartner Research vice-president Carol Hardcastle, even today, around 75 per cent of all ERP projects fail, despite their focus on delivering a better experience for customers and staff. The ideas, opinions and enthusiasm of your own team should not be underestimated. Save time and money by seeking their input from the beginning.

Manage your ego

Some people in leadership positions are trying so hard to succeed, they do a lot of telling, micro-managing and unilateral decision-making. Their staff risk falling into what leadership author Peter Block calls caution and dependency – both of which stifle innovation. If you are privileged enough to lead a team of people, check your ego at the door and lead in a balanced, consultative way. The results will be worth it.

All businesses want to improve, but the game-changers are those who do so through a combination of good leadership, a healthy organisational culture, and efficient systems and processes. If you need outside help to achieve best practice in any of these areas, take your time and get it right the first time around. You might just become a market leader.