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The Folly of Inside-Out Product Thinking


Inside out jacket

Inside out just doesn’t fit right

Ever run into this deductive reasoning?

  1. Customers like our existing products and our company
  2. We are building a new product that reflects the priorities of a company executive
  3. Therefore, customers will like our new product

It’s a clear violation of the First Law of Product: Customers decide what products they like, not companies.

Inside-out thinking is a situation where the wrong reasons are applied to decide which products are to be developed:

  • That market is so big, let’s build something for it
  • My intuition says this is the next big thing
  • This new product will position our company for what is important to us

Those reasons are actually not entirely out of the question for success either. The things that define truly inside-out thinking are (i) an impulse guided by a “we need” , not a “the customer needs” mentality; and (ii) skipping customer validation or ignoring troubling feedback from customers during validation. When you see those two dynamics at play, you’ve left the realm of sophisticated decision-making. You’re in the land of gambling with shareholders’ money. Sure, some inside-out products will succeed. But that’s analogous to saying that some lottery ticket holders win too. It’s a sucker’s bet.

Inside-out thinking is a pervasive thing. I came across this table in Gerry McGovern’s book, The Stranger’s Long Neck. McGovern surveyed  SMB users of a website Microsoft runs – Pinpoint – that helps find IT solutions built on Microsoft technologies. The SMBs were asked what their top tasks were when they visited Pinpoint. McGovern then did something interesting: he asked the Microsoft team what they thought users’ top tasks were.

The table below outlines the results:

Customer Microsoft
Internet security Customer relationship management
Backup and recovery Internet marketing
Security Network management
Desktop support Sales/lead generation
Data/document management Billing

That’s a stark difference between what users value and what Microsoft thought they did. Or perhaps what Microsoft wished users valued. As McGovern notes, “And just like every other organization on the planet, what Microsoft wants is not always what the customer wants.”

This isn’t to pick on Microsoft; it really is the case at companies everywhere. Microsoft just happens to have been open enough to share their own experience here.

You can recognize it when it happens. Here are the Top 3 signs of inside-out thinking:

  • The spreadsheet says it will be big!
  • I don’t need customer validation, they don’t know what they want anyway
  • The Board/CEO/other senior executive is pressuring us to do this

Inside-out thinking is poor decision-making, it’s a bet with terrible odds, and wastes resources. Tough to understand how we can be so methodical with other operations in the organization and still go seat-of-the-pants in this area.

Update: I hadn’t seen his tweet at the time I published this post, but Box founder/CEO Aaron Levie offers another consequence of inside-out thinking here:

I’m @bhc3 on Twitter.

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About Hutch Carpenter
Senior Consultant for HYPE Innovation (hypeinnovation.com)

2 Responses to The Folly of Inside-Out Product Thinking

  1. Your MS example shows that they should have stuck with IT centricity in the carrier layer, but thought they had migrated to late mainstreet in the technology adoption lifecycle and on to the carried layer in the software as media model. Easy enough to do. And, not a problem that non-protocol software vendors would have or ad tech companies. But, ad-tech companies have similar problems when they manage themselves as a tech co, rather than an ad co.

  2. Jep Alan says:

    IMO – It is too easy to say ‘inside-out thinking is dangerous’ and ‘inside-out thinking is pervasive’. Any product manager with more than 6 mos on the job knows this. Many companies ‘get by’ (survive, not thrive) on a business model that is built on the inside-out-thinking shortcuts you cite. The real question is ‘how do you change the business model, culture, processes, and resource allocation strategies’ of a company that is getting by on ‘inside-out thinking’ (or even embracing it)? This is a huge challenge and the crux of many a product manager’s frustration. How does one implement this PM ‘best practice’ in an organization where every fiber goes against it?

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