Back in the 16th Century the English poet John Donne famously wrote that "No man is an island, entire of itself". In the 90s and the early Noughties you could be forgiven for thinking that vast conglomerates, with their celebrity CEOs, swollen by M&A activity and rapid emerging market expansion, were just that. Islands. Independent of countries and regions. Self-governing and no longer heavily reliant on any one customer grouping or financial backer.
However, today following the failure of some notable corporate behemoths and their subsequent government supported resurrection, John Donne's poem is as resonant for corporations as it is for individuals.
If we have learnt anything from recent financial turmoil and the evolution of social media and public skepticism it must surely be that businesses - irrespective of their size - are no longer able to sustain an ivory tower culture, only connected to their consumers and owners, insulated from the rest of society and immune to its challenges and common practices.
Today's ever-changing social, political, economic, technological and cultural environment makes businesses that are disconnected from society more vulnerable than ever before. Just look at the current public reaction all over the world to businesses like Amazon or Starbucks who have fabulous products and services, yet appear to be paying little or no tax in countries where they derive significant revenues.
The first stage for a business seeking a more fulfilling relationship with society is to find out more about the growing list of public challenges that are keeping us up at night. This 'outside-in' thinking sounds obvious, but is not something that most businesses are good at doing.
The degree to which businesses seek input from the outside world has been historically determined by whether the business has suffered from a reputational attack in the past, and whether the business is B2B or B2C. In the latter instance, clearly the appetite for public input has often been more significant. Today you see this divide being rapidly closed. Many consumer-focused businesses have become complacent - assuming that their wealth in marketing insights means that they are up-to-date and have never been disconnected with society.
Often we assume that at a minimum businesses have a range of insights from their own employees, but this is rarely the case. Most internal communications structures are designed for managers to communicate out - they can rarely cope with a reversal in information flow. IBM of course has been an outlier in this regard for some years. They famously used crowdsourcing to rewrite their values and develop ideas about how they could be activated.
Employees represent the low hanging fruit - balancing their insights with inputs from 'the 99 percent' is altogether more challenging.
The thousands of focus groups with consumers that businesses routinely leverage, or the big-data that businesses like Tesco collect, or even the bottom of the pyramid techniques that Unilever is using to expand its reach are collected through the restrictive lens of consumerism, i.e. perspectives are welcomed from current or potential consumers and are retained by marketing - in a silo - for market evaluation purposes.
There are several good models for getting broader information into the business. The first is directly through the board or a board committee. As an example, Goldman Sachs (okay, they need all the help they can get) has recently formed a public responsibilities subcommittee of the board. The second is through an internal think-tank, and McKinsey's Global Institute or Shell's scenarios team represents best practice.
Even when you have a model in place for getting the information into the organization the traditional composition of boards means that the absorption of external input and big data can be culturally challenging. Where there is no capacity or specific expertise in dealing with external information its management tends to be the responsibility of the CA chief, whose position has been elevated in recent years as a result of this emerging appetite. They have to ensure that not only the information is received and evaluated, but also that it is actually acted upon. And this is where the real competitive advantage is up for grabs. Absorbing and responding to broad 'outside-in' thinking can lead to elevated levels of innovation and allow boards and executive teams to more effectively evaluate the mid to long-term strategies employed by their business.
So what does best practice 'outside-in' thinking look like?
Firstly a structure needs to be designed to capture social, cultural, political, environmental and economic trends and perspectives. Often this is channeled through the use of an external board of advisors and advanced technology that efficiently tracks hundreds or thousands of issues and stakeholders (including employees). Once this has been institutionalized there are four focus areas where real transformational impact can be made:
- Diversity - Businesses should seek balanced inputs from a range of cross-generational, cross-cultural and geographically spread sources, not just the usual suspects.
- Curation - Once the doors have been opened to outside information it's important that the resulting intelligence is not filed away by marketing, HR or corporate affairs, never to be used again. The raw data should be bought to life visually, curated and made available to the business at large. In addition, this curation process will allow trends over time to be identified.
- Reaching the top - To have a real impact on business behavior it's important that outside thinking reaches the board of the corporation. The board should own this information - to ensure independence and balance - and use it as context for the formal evaluation of business strategy.
- Reaching the core - The fast moving world that we live in requires that businesses open a 'live' channel to the outside world, not simply a window. The injection of external information should be institutionalized as a process with the business allowing for real-time responses and managed by one person with the board as a client. They would be responsible for adapting and filtering the information through to all parts of the business where it can be used in ways that transform behaviors.
Ultimately, a greater appreciation of the hopes and fears of the world outside the boardroom will lead to greater organizational relevance. The alternative of course is irrelevance. Clearly no business would intentionally move in this direction, however many businesses unintentionally choose this route through fear of exposure or perceived misalignment with societal expectation.Suggest a correction