Inside/Out or Outside/In?

By Doug Ready, Senior Lecturer, MIT Sloan; Founder, ICEDR

As companies set their sights on the future they seem to fall into one of two camps: those guided by inside/out thinking and those by outside/in thinking. The role of the corporation guided by inside/out thinking is to achieve sustainable, profitable growth. An outside/in philosophy places the company’s core purpose at the heart of its business model, with the view that a collective, dedicated effort toward a higher goal will produce positive business outcomes as well.

Since it has become almost a threadbare comment to say that a company’s talent strategy should be closely aligned with its enterprise and business strategy, it seems essential to examine what role a company’s talent strategy plays under each philosophical umbrella. Given the thesis above, an inside/out talent philosophy will be guided by the logic that capabilities are built in pursuit of strategies that are crafted to fulfill a well-articulated vision. An outside/in talent philosophy, on the other hand, is guided by the desire to unleash the power of employees’ passion in pursuit of a collective ambition. A key question arises: Is one talent philosophy superior to the other? I would argue the answer is no.

When Alan Mulally led Ford Motor Company through its radical transformation he was guided, rightly so, by inside/out thinking- Ford would do whatever it would take to build the capabilities it needed to become competitive once again. He stripped costs, drastically reduced the company’s work force and placed a premium on innovation and product quality. Mulally built the strategic, organizational and talent capabilities Ford needed to not only survive but to thrive. With the talent that survived and with an influx of new blood, Mulally then built a team based upon his now-famous working together philosophy.

Now consider the approach taken by Pascal Soriot, the recently appointed CEO of Astra Zeneca. Early in his tenure Soriot faced an aggressive takeover bid by Pfizer- at a time when his company’s product pipeline was in trouble, its innovation-making capabilities were being questioned, and its cost discipline was sub-par. Reflecting on what it would take to bring Astra Zeneca back to profitability, Soriot challenged his senior staff and scientists to state publicly why they were proud to work at the drugs company and what hole there would be in the world if the company didn’t exist. Tapping into the passion his employees felt for developing products that helped save lives, Soriot brought the company together- enough to fend off the Pfizer takeover attempt and enough to give the company the chance it needed to get Astra Zeneca back on track. He subsequently made the tough choices of cost cutting and realigning the company’s portfolio and pipeline development processes.

Both approaches worked remarkably well, and in my view, both CEOs are incredibly successful leaders: one driven by inside/out thinking and one by outside/in. Talent leaders need to be ready to design and execute a human capital strategy that supports both philosophies when circumstances (and CEOs) change.