Gabazira's blog

This week’s blog, the second of a two series sequel, focuses on the ‘inside-out’ customer perspective – the so-called internal customer. The ‘Inside-out’ perspective deals with relationships and value-addition-contracting between:

• Departments
• Managers
• Individual employees (co-workers)
• Sister firms that form part of a conglomerate
• And other Internal Partnerships

There are two sides to understanding the ‘inside-out’ paradigm at the modern firm, and both need to be considered in tandem:

1. The ‘Inside-out’ approach vs. ideology

Value-addition and subsequent wealth creation at organisations are driven by internal beliefs, moreover more often than not, of the founder or CEO.

Apple’s Steve Jobs was a very good example of a charismatic cofounder-cum-CEO, that believed in the sustainability that the ‘inside-out’ paradigm brought to the brand. The Apple brand espouses, at least until the death of Steve Jobs: innovation, differentiation, simplicity, and a constant search for product excellence.  For all the latter, Apple is the most valued brand in the world.

Another equally good example of the CEO leveraging the ‘inside-out’ paradigm is President John Pombe Magufuli of the Republic of Tanzania.  Magufufli’s ‘inside-out’ paradigm, is starting to change the political machinations of government in Tanzania. Magufuli believes that a sustainable government should work in a certain way.  Mindful of a culturally corrupt ‘outside-in’ past, Magufuli is non-compromising on accountable and transparent government. Indeed, Magufuli’s purist style of government is starting to earn him accolades both in and outside Tanzania.

It is not far fetched to assert that if we get the ‘internals’ of the organisation right, the direct result is value creation and the accompanying brand loyalty.

2. The dichotomous manifestation of the ‘inside-out’ approach

On the other hand, the ‘inside-out’ discourse goes beyond the ideological matters in 1. above, to the actual manifestation/operationalisation of the paradigm. How does the ‘inside-out’ approach work after all? We get to see a dichotomous view of the ‘inside-out’ approach.

There is the ‘relationship contracting’ between parties on one side, and the ‘value-creation’ on the other. Of course, before we create value, we need to relate across departments.

a) Relationship-Contracting:

Just like the ‘outside-in’ paradigm believers relate with external customers, ‘inside-out’ believers have relationships amongst individuals, departments, partners, sister firms, etc. It sounds odd when people inside a company consider themselves ‘customers’, especially when we know there are ‘real’ customers outside the company.

The obvious question to ask is: are the so-called internal-customers, mostly company employees, usurping the position and entitlements of the right company customer?  Not all, it is a matter of context

In the same manner, that ‘outside-in’ believers keep their external customers ‘warm’ and happy, ‘inside-out’ protagonists also need to keep their internal relationships happy. Indeed, there is a relationship management aspect in co-worker team dynamics.

Of course, organisations can choose not to invest in appropriate-organisation-climate-assurance and simply ask their employees to deliver value for money irrespective of how they feel. Wiser companies appreciate that an unfavourable organisational climate ultimately undermines value-addition and wealth creation at organisations. Unhappy employees may be told to work, and may indeed oblige, but they may not be as productive as their happier peers, and this will ultimately rub off your ‘real’ external customers

Companies cannot treat internal customer satisfaction as a secondary matter. Companies need to listen to their employees and address whatever concerns they may have – these may be as simple as ensuring employees have access to beverages and snacks throughout the day; allowing them to work flex time; providing day-care facilities for infants; team building events, etc.

All the above helps to create a ‘home away from home for employees’. It does not cost so much after all, to invest in good organisational climate building

Sadly, many companies do not give appropriate attention to this subject – we continue to see bad blood between employees and companies; employees ask for certain privileges while employers resist the push to commit more resources towards employee privileges – indeed, as CEOs and their teams Zig, internal customers Zag!  We do not understand why!

b) Value-creation:

The ‘Inside-out’ paradigm is more than relationship contracting; ‘inside-out’ outfits cannot be complete if built on only the ‘relationship’ part. Sustainable ‘inside-out’ organisations are made on both the relationship contracting, but also value-creation agreements. Relationships only form the foundation against which employees and other internal stakeholders work to create value at organisations.

Let us use an Internet Service Provider (ISP) firm as our value creation example.  The marketing and billing departments at this ISP firm enter an internal value-creation agreement.  The marketers at their best attract customers to the ISP brand; to retain the customers, the marketers ask that billing management, a common point of customer frustration in the ISP industry, be managed exceptionally well.

A typical ‘inside-out’ fix the above problem would be: the marketing department committing the billing department to certain minimum deliverables i.e. monthly bills will be sent to customers a week before they are due, to allow enough time for payment processing on the customer side; and ultimately avoid the dreaded automatic disconnection of service and the reconnection hassles. The latter is the last thing a marketer wants to see.

If the billing unit cannot honour the above commitment, we anticipate some things happening: many unhappy trips by the marketers to the office of the boss; a tense relationship between the two departments; stress due to the loss of clients.  The bottom line is: without effective internal value creation, we risk wiping away wealth off the organisation’s bottom line.

The zig-zag reality and solution:

While the ideal for ‘inside-out’ believers is for companies to ensure that they have a strong ‘service’ culture, the truth is that as we saw in blog series 1, there is also constant bickering amongst internal clients at companies.

It must have something to do with human beings and the urge to protect our turf. It starts with the individuals and gets extended to the departments they work for.  The human power dynamic, ego, all manifest through our individual identities and undermine sustainable, harmonious working relationships.

Welcome to the dark side of the internal workings of the modern organisation.

When CEOs believe they have gotten the balance between internal service providers and customers right, a spanner is thrown in the works – when CEOs zig, internal customers, zag!

McKinsey’s focus on customer journeys, as opposed to touch points, may indeed be the long-term answer; CEOs and department heads should spend time mapping entire internal customer journeys and imbue this in the psyche of all employees