Outside-In Strategic Modeling

The roots of good strategic decision making are in cultural and organizational norms and patterns. One principle, which we call the outside-in strategic perspective, is essential for excellent strategy. This perspective led a company to recognize that its current strategy was counterproductive and that it must make almost a 180-degree turn. While many companies start with themselves and project market shares, earnings, and so forth out into the environment, the outside-in strategic perspective reverses this to start with the environment and work inwards to the company. In this case, we used a framework that starts with consumer spending in various entertainment areas and divided revenues along a simple value chain of retailers, wholesalers, and producers. An influence-diagram-based model led to counter-intuitive insights about the most valuable segments.