Develop an “Outside-In” Perspective

In recent years much has been written about the importance of managers’ gaining and “outside-in” perspective. Although he may not have used those exact words, there is no doubt that the intellectual father of outside-in is Peter Drucker. You need only follow the books to see why this is important and  is true (Hansel and Gretel used bread crumbs. Peter Drucker left his trail with books).

In his 1954 groundbreaking work, The Practice of Management, Drucker wrote that “there is only one valid definition of business purpose: to create a customer. I called that “Drucker’s Law.” He added the following in order to make sure his message got through: 

“It is the customer who determines what a business is. For it is the customer, and he alone, who through being willing to pay for a good or a service, converts economic resources into wealth, things into goods. What the business thinks it produces is not of first importance—especially not to the future of the business and to its success. What the customer thinks he is buying, what he considers ‘value’ is decisive—it determines what a business is, what it produces and whether it will prosper. The customer is the foundation of a business and keeps it in existence. He alone gives employment.”

That may sound somewhat obvious now, but I assure you, it was anything but that half a century ago when the management boom was just coming into its own and few people or companies taught anything remotely related to management (at least, not the way we think of management today). That’s when Drucker really entered the scene in a big way. But he was just getting started.

In the 1960s Drucker put more meat on the bone by explaining that:

“The executive is within an organization…He sees the outside only through thick and distorting lenses, if at all. What goes on outside is usually not even known firsthand. It is received through an organization filter of reports.”

Drucker went so far as to call an executive a prisoner of an organization, meaning that all of his or her time is taken up by others. He felt that having others be the keeper of your time was the worst way to manage or lead anything. The most effective managers not only saw the marketplace clearly, they went to great lengths to make sure that any barriers that existed between them and the marketplace were toppled. Jack Welch echoed this theme when he described GE as a “boundaryless organization.”  That’s why Welch hated walls—all kinds of walls—such as those that existed between departments, people, etc.

Come back Friday to read more on how to overcome some of the things that keep managers from being more effective in their jobs.



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