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Simplicity is the ultimate sophistication (from James Dodkins)

November 03, 2013

In 1996, Gilead introduced a “next phase” AIDS medication patients couldtake in a single daily dose. The new drug, Atripla, vastly improved patientquality of life. It vastly improved compliance. And it has given Gilead an80% market share of medication prescribed to newly identified AIDS and HIVpositive patients, despite introduction of directly competing, single doseproducts from larger competitors.

Atripla has dramatically grown Gilead’s revenue, along with producing near40% profit margins. Plus, manufacturing one medication is far less expensivethan making 17, matching revenue gains with cost reduction. But Gilead wasnot finished. Since 2006, Gilead has introduced single dosage treatment forhepatitis-B patients, who had to follow a similarly complex medicationschedule, and has initiated development of a similar medication forhepatitis-C.

Achieving Customer-Centricity

Through Outside-In, Gilead has become a customer-centric companyspecializing in quality of life and compliance as well as qualityefficacious treatments. However, a common first reaction might be, “Howobvious.” And a second might be, “Nothing much to it.”

Gilead did experience a blinding flash of the obvious. But untold numbers of“obvious” solutions to major customer problems go unnoticed becausecompanies can’t see through customer eyes­ or are afraid to do so. Outside-In forces the issue by starting with the customer­ not the product or thecompany or sales goals or profits.

“Nothing much to it?” Au contraire, there was a whole lot to it. Havinghelped many a company through this type of transformative change, I can reeloff a list of likely barriers Gilead faced: reorganizing R&D to focus ondrug delivery, a very different discipline than traditional pharmaceuticalresearch; changing support staff roles; laying off manufacturing staff andmanagement; repositioning the company; and that’s just for starters. WhatGilead achieved required transformational change, which stressesorganizations and often tests their resiliency? No surprise that so manyorganizations limit themselves to incremental change.

What’s new here?

As you’ve almost certainly recognized, some organizations have employedOutside-In thinking since their inception, as has U.S. department storechain Nordstrom’s, or at least for many years. But two things have changed.

First, Outside-In today extends far beyond identifying opportunities. Whilefull scale OI starts by aligning strategy with customers,it continues bynext aligning process with strategies and then technology with process. Inthat order. More specifically, following opportunity identification OIdetermines “what” work has to be done by “who” in order to turn opportunityinto reality. This strategic step defines organizational change as well aschanges to workflow and information flow. Then OI defines “how” the workshould be done and the technology enablement required, the tactical side.Not only does Outside-In expand the scope of customer-centric thinking toinclude implementation; but it also stretches traditional boundaries ofprocess to include the “what” and the “who” plus technology support ­beyondjust addressing the “how.” And that’s why we call it “Outside-In Process.”

The second change is the volume of Outside-In occurring. A number oforganizations have already completed the migration from “inside-out”(company-centric) to Outside-In (customer-centric). Others areopportunistically starting to migrate. And some laggards within their ownindustries have moved or are moving defensively, to avoid the fate ofCircuit City, CompUSA, WAMU (Washington Mutual Bank), General Motors andNorthwest Airlines ­all notoriously inside-out companies insensitive tocustomer needs.

More next week…