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In 1975, the city of New York was on the verge of bankruptcy, and due to this precarious position the main bank partner was in danger of going under too. In an effort to correct the situation, the president of the bank left the bank to join a group of financial experts, whose joint task was to steer the city out of trouble…which they eventually did. This is just about the most extreme case imaginable when it comes to defining the role of management: the president had to leave the bank to save the bank!

In everyday modern terms, the lesson is that two inexorable forces drive the best managers. The first is that they work ‘outside in’ and the second is that they work ‘inside out’. To work ‘outside in’ means that the manager’s thinking and focus starts with the market to be served. All organisational revenues, and indeed a company’s reputation, flow from the market to the business. Customers are not conscious of this special power that they possess, and nor do they need to be, but the fact remains that customers, and they alone, determine the success or failure of companies, their shareholders and staff. So, when I say that the best managers work ‘outside in’ to start with, this refers to their consistent concern for the external world of customers, concerning what they want (in service) and need (in results). These managers then work ‘inside out’ to ensure that the internal world of the business is designed to be a perfect match for the external world of the market.

Conversely, the worst performing managers just work ‘inside out’, with little or no appreciation of market dynamics. These menial managers attend endless, meaningless meetings, and engage in interminable admin work, because this is their vision of management duties. All of this means that what the company sends to market, in terms of propositions and people, are almost always seen as being weak and inappropriate…and so the market gets what they can out of such petty players, in terms of lower prices, etc. Put a sales rep in the office and he will be ‘busy’ all day, and this is the daily disease afflicting bosses who work ‘inside out’!

There is a vast difference between being busy and successful, and so no matter how hectic and demanding office life might seem to be, it is not the place where success is created. The only things you find inside a business are costs: people cost money, so do buildings, vehicles, office furniture, appliances…in fact just take a moment to look around your office, and everything you will see is just a cost. All income flows start with the customer, in the external world of the market, and he either sees good reason to spend with you or he doesn’t…hence the need for management to ‘start’ and specialise in this area.

Managers who work ‘outside in’ before working ‘inside out’, are those we call leaders, simply because everyone in the business knows full well that they know exactly what they are talking about. This is called ‘conviction’, and it is the number one quality of excellent managers…often referred to as ‘passion’ in the business world. Sadly, the managers that just work ‘inside out’ have no conviction at all, which means that staff know that they have nothing to offer, and so to look big these managers often specialise in micro-management…which is also known as being ‘king of the midgets’.

When I was appointed to a senior management role many years ago, I was quite worried about how I was supposed to lead the charge, so to speak. I had heard about leadership but I didn’t know what it involved, and almost every course I had to endure suggested that personality was the key. This is utter nonsense. Some of the most compelling women and men I have met in management, are very quiet people…but everyone is interested in what they have to say, because they speak with authority and empathy about the external world of customers.

After creating ‘boards of clients’ in Australia and New Zealand, and learning about success from the highest performing customers in our market, all over the world, I started to become more and more useful to our customers, our staff and our company. It is impossible to be useful if you do not work ‘outside in’ first, then work ‘inside out’.